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CVR Energy Reports 2017 First Quarter Results And Announces Cash Dividend of 50 Cents

SUGAR LAND, Texas, April 27, 2017 /PRNewswire/ -- CVR Energy, Inc. (NYSE: CVI) today announced net income of $22.2 million, or 26 cents per diluted share, on net sales of $1,507.1 million for the first quarter of 2017, compared to a net loss of $16.2 million, or 19 cents per diluted share, on net sales of $905.5 million for the 2016 first quarter. First quarter 2017 adjusted EBITDA, a non-GAAP financial measure, was $80.4 million, compared to first quarter 2016 adjusted EBITDA of $36.2 million.

"For the 2017 first quarter, CVR Partners reported strong operational performance with high on-stream rates at both its Coffeyville, Kansas, and East Dubuque, Illinois, fertilizer facilities," said Jack Lipinski, CVR Energy's chief executive officer.

"CVR Refining's Coffeyville and Wynnewood, Oklahoma, refineries performed exceptionally well during the 2017 first quarter, posting a quarterly record for combined crude oil throughput of 214,369 barrels per day (bpd)," Lipinski said. "In addition, the joint venture between subsidiaries of CVR Refining and Velocity Midstream Partners recently completed construction of the crude oil pipeline connecting the Wynnewood refinery with the SCOOP play in central Oklahoma. The pipeline commenced operations in mid-April.

"As I mentioned in the CVR Refining first quarter news release, the Renewable Fuel Standard continues to be a disaster searching for a solution," he continued. "The wild volatility in the market for Renewable Identification Numbers (RINs) during the first quarter once again proves that RINs are not fundamentally priced but are in fact manipulated. The cost to produce a D-6 ethanol RIN is currently between 6 cents and 10 cents, yet it trades 40 cents higher. This is the price manipulation in the market that must stop and CVR Refining supports the efforts of the many refiners and independent gas station dealers to reform this misguided regulation."

Petroleum Business

The petroleum business, which is operated by CVR Refining and includes the Coffeyville and Wynnewood refineries, reported first quarter 2017 operating income of $66.0 million on net sales of $1,423.5 million, compared to an operating loss of $56.0 million on net sales of $834.0 million in the first quarter of 2016.

Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $11.54 in the 2017 first quarter, compared to $7.19 during the same period in 2016. Direct operating expenses (exclusive of depreciation and amortization), including major scheduled turnaround expenses, per crude oil throughput barrel, for the 2017 first quarter were $5.29, compared to $7.02 in the first quarter of 2016.

First quarter 2017 throughputs of crude oil and all other feedstocks and blendstocks totaled 228,612 bpd, compared to first quarter 2016 throughputs of crude oil and all other feedstocks and blendstocks of 195,859 bpd.

Nitrogen Fertilizers Business

The fertilizer business, which is operated by CVR Partners and includes the Coffeyville and East Dubuque fertilizer facilities, reported first quarter 2017 operating income of $5.3 million on net sales of $85.3 million, compared to operating income of $19.7 million on net sales of $73.1 million for the first quarter of 2016.

For the first quarter of 2017, consolidated average realized gate prices for UAN and ammonia were $160 per ton and $308 per ton, respectively. Average realized gate prices for UAN and ammonia for the Coffeyville facility were $209 per ton and $367 per ton, respectively, for the same period in 2016.

CVR Partners' fertilizer facilities produced a combined 219,200 tons of ammonia during the first quarter of 2017, of which 80,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 341,900 tons of UAN. In the 2016 first quarter, the Coffeyville facility produced 113,700 tons of ammonia, of which 15,100 net tons were available for sale while the remainder was upgraded to 248,200 tons of UAN.

Cash, Debt and Dividend

Consolidated cash and cash equivalents was $803.6 million at March 31, 2017. Consolidated total debt was $1,165.2 million at March 31, 2017. The company had no debt exclusive of CVR Refining's and CVR Partners' debt.

CVR Energy also announced a first quarter 2017 cash dividend of 50 cents per share. The dividend, as declared by CVR Energy's Board of Directors, will be paid on May 15, 2017, to stockholders of record on May 8, 2017.

Today, CVR Partners announced a 2017 first quarter cash distribution of 2 cents per common unit. CVR Refining announced that it will not pay a cash distribution for the 2017 first quarter.

First Quarter 2017 Earnings Conference Call

CVR Energy previously announced that it will host its first quarter 2017 Earnings Conference Call for analysts and investors on Thursday, April 27, at 3 p.m. Eastern. The Earnings Conference Call may also include discussion of company developments, forward-looking information and other material information about business and financial matters.

The Earnings Conference Call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1003/20616. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8291.

For those unable to listen live, the Webcast will be archived and available for 14 days at https://www.webcaster4.com/Webcast/Page/1003/20616. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13659740.

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. 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. For a discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings. These risks 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 press release are made only as of the date hereof. CVR Energy disclaims any intention or obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

About CVR Energy, Inc.

Headquartered in Sugar Land, Texas, CVR Energy is a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries through its holdings in two limited partnerships, CVR Refining, LP and CVR Partners, LP. CVR Energy subsidiaries serve as the general partner and own 66 percent of the common units of CVR Refining and 34 percent of the common units of CVR Partners.

For further information, please contact:

Investor Contact:
Jay Finks
CVR Energy, Inc.
(281) 207-3588
InvestorRelations@CVREnergy.com

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

CVR Energy, Inc.

Financial and Operational Data (all information in this release is unaudited other than the balance sheet data as of December 31, 2016).











Three Months Ended 
 March 31,


2017


2016


(in millions, except per share data)

Consolidated Statement of Operations Data:




Net sales

$

1,507.1



$

905.5


Operating costs and expenses:




Cost of materials and other

1,221.2



736.8


Direct operating expenses(1)

138.1



141.4


Depreciation and amortization

48.6



37.9


Cost of sales

1,407.9



916.1


Selling, general and administrative expenses(1)

29.1



27.2


Depreciation and amortization

2.5



2.1


Operating income (loss)

67.6



(39.9)


Interest expense and other financing costs

(27.0)



(12.1)


Interest income

0.2



0.2


Gain (loss) on derivatives, net

12.2



(1.2)


Other income, net



0.3


Income (loss) before income tax expense (benefit)

53.0



(52.7)


Income tax expense (benefit)

14.8



(21.8)


Net income (loss)

38.2



(30.9)


Less: Net income (loss) attributable to noncontrolling interest

16.0



(14.7)


Net income (loss) attributable to CVR Energy stockholders

$

22.2



$

(16.2)






Basic and diluted earnings (loss) per share

$

0.26



$

(0.19)


Dividends declared per share

$

0.50



$

0.50






Adjusted EBITDA*

$

80.4



$

36.2


Adjusted net income*

$

23.1



$

8.4


Adjusted net income per diluted share*

$

0.27



$

0.10






Weighted-average common shares outstanding - basic and diluted

86.8



86.8


______________________________

* See "Use of Non-GAAP Financial Measures" below.




(1)

Direct operating expenses and selling, general and administrative expenses for the three months ended March 31, 2017 and 2016 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses and selling, general and administrative expenses.











As of March
31, 2017


As of
December 31,
2016




(audited)


(in millions)

Balance Sheet Data:




Cash and cash equivalents

$

803.6



$

735.8


Working capital

787.9



749.6


Total assets

4,053.2



4,050.2


Total debt, including current portion

1,165.2



1,164.6


Total CVR stockholders' equity

836.9



858.1












Three Months Ended 

 March 31,


2017


2016


(in millions)

Cash Flow Data:




Net cash flow provided by (used in):




Operating activities

$

137.2



$

21.6


Investing activities

(25.6)



(51.7)


Financing activities

(43.8)



(53.2)


Net cash flow

$

67.8



$

(83.3)


Segment Information

Our operations are organized into two reportable segments, Petroleum and Nitrogen Fertilizer. Our operations that are not included in the Petroleum and Nitrogen Fertilizer segments are included in the Corporate and Other segment (along with elimination of intersegment transactions). The Petroleum segment is operated by CVR Refining, LP ("CVR Refining"), in which we own a majority interest as well as serve as the general partner. The Petroleum segment includes the operations of the Coffeyville, Kansas and Wynnewood, Oklahoma refineries along with the crude oil gathering and pipeline systems. Detailed operating results for the Petroleum segment for the three months ended March 31, 2017 are included in CVR Refining's press release dated April 27, 2017. The Nitrogen Fertilizer segment is operated by CVR Partners, LP ("CVR Partners"), in which we own approximately 34% of the common units as of March 31, 2017 and serve as the general partner. On April 1, 2016, CVR Partners completed the merger (the "East Dubuque Merger") whereby CVR Partners acquired a nitrogen fertilizer manufacturing facility located in East Dubuque, Illinois (the "East Dubuque Facility"). The Nitrogen Fertilizer segment consists of a nitrogen fertilizer manufacturing facility located in Coffeyville, Kansas, and the East Dubuque Facility beginning on April 1, 2016, the date of the closing of the acquisition. Detailed operating results for the Nitrogen Fertilizer segment for the three months ended March 31, 2017 are included in CVR Partners' press release dated April 27, 2017.



















Petroleum
(CVR
Refining)


Nitrogen
Fertilizer
(CVR
Partners)


Corporate and
Other


Consolidated


(in millions)

Three Months Ended March 31, 2017








Net sales

$

1,423.5



$

85.3



$

(1.7)



$

1,507.1


Cost of materials and other

1,201.3



21.8



(1.9)



1,221.2


Direct operating expenses (1)

89.2



35.9



0.1



125.2


Major scheduled turnaround expenses

12.9







12.9


Selling, general and administrative

20.0



6.9



2.2



29.1


Depreciation and amortization

34.1



15.4



1.6



51.1


Operating income (loss)

$

66.0



$

5.3



$

(3.7)



$

67.6










Capital expenditures

$

19.6



$

4.1



$

0.5



$

24.2




















Petroleum
(CVR
Refining)


Nitrogen
Fertilizer
(CVR
Partners)


Corporate and
Other


Consolidated


(in millions)

Three Months Ended March 31, 2016








Net sales

$

834.0



$

73.1



$

(1.6)



$

905.5


Cost of materials and other

722.3



16.3



(1.8)



736.8


Direct operating expenses (1)

88.3



23.7





112.0


Major scheduled turnaround expenses

29.4







29.4


Selling, general and administrative

18.5



6.4



2.3



27.2


Depreciation and amortization

31.5



7.0



1.5



40.0


Operating income (loss)

$

(56.0)



$

19.7



$

(3.6)



$

(39.9)










Capital expenditures

$

44.0



$

1.7



$

1.8



$

47.5










(1)

Excluding turnaround expenses.



















Petroleum
(CVR
Refining)


Nitrogen
Fertilizer
(CVR
Partners)


Corporate and
Other


Consolidated


(in millions)

March 31, 2017








Cash and cash equivalents

$

408.8



$

81.5



$

313.3



$

803.6


Total assets

2,371.8



1,328.4



353.0



4,053.2


Total debt, including current portion

541.4



623.8





1,165.2










December 31, 2016








Cash and cash equivalents

$

314.1



$

55.6



$

366.1



$

735.8


Total assets

2,331.9



1,312.2



406.1



4,050.2


Total debt, including current portion

541.5



623.1





1,164.6


Petroleum Segment Operating Data

The following tables set forth information about our consolidated Petroleum segment operated by CVR Refining, of which we own a majority interest and serve as the general partner, and the Coffeyville and Wynnewood refineries. Reconciliations of certain non-GAAP financial measures are provided under "Use of Non-GAAP Financial Measures" below. Additional discussion of operating results for the Petroleum segment for three months ended March 31, 2017 are included in CVR Refining's press release dated April 27, 2017.











Three Months Ended 

 March 31,


2017


2016


(in millions)

Petroleum Segment Summary Financial Results:




Net sales

$

1,423.5



$

834.0


Operating costs and expenses:




Cost of materials and other

1,201.3



722.3


Direct operating expenses(1)

89.2



88.3


Major scheduled turnaround expenses

12.9



29.4


Depreciation and amortization

33.3



30.9


Cost of sales

1,336.7



870.9


Selling, general and administrative expenses(1)

20.0



18.5


Depreciation and amortization

0.8



0.6


Operating income (loss)

66.0



(56.0)


Interest expense and other financing costs

(11.2)



(10.8)


Gain (loss) on derivatives, net

12.2



(1.2)


Income (loss) before income tax expense

67.0



(68.0)


Income tax expense




Net income (loss)

$

67.0



$

(68.0)






Gross profit (loss)

$

86.8



$

(36.9)


Refining margin*

$

222.2



$

111.7


Refining margin adjusted for FIFO impact*

$

222.5



$

120.5


Adjusted Petroleum EBITDA*

$

114.5



$

35.1


______________________________

* See "Use of Non-GAAP Financial Measures" below.




(1)

Direct operating expense and selling, general and administrative expenses for the three months ended March 31, 2017 and 2016 are shown exclusive of depreciation and amortization and major scheduled turnaround expenses, which amounts are presented separately below direct operating expenses and selling, general and administrative expenses.











Three Months Ended 

 March 31,


2017


2016


(dollars per barrel)

Petroleum Segment Key Operating Statistics:




Per crude oil throughput barrel:




Gross profit (loss)

$

4.50



$

(2.20)


Refining margin*

11.52



6.67


FIFO impact, unfavorable

0.02



0.52


Refining margin adjusted for FIFO impact*

11.54



7.19


Direct operating expenses and major scheduled turnaround expenses

5.29



7.02


Direct operating expenses excluding major scheduled turnaround expenses

4.63



5.27


Direct operating expenses and major scheduled turnaround expenses per barrel sold

4.97



6.40


Direct operating expenses excluding major scheduled turnaround expenses per barrel sold

$

4.34



$

4.80


Barrels sold (barrels per day)

228,522



201,970


______________________________

* See "Use of Non-GAAP Financial Measures" below.


















Three Months Ended 

 March 31,

Petroleum Segment Summary

2017


2016

 Refining Throughput and Production Data (bpd):








Throughput:








Sweet

197,853



86.6

%


170,728



87.2

%

Medium



%


1,513



0.8

%

Heavy sour

16,516



7.2

%


11,914



6.0

%

Total crude oil throughput

214,369



93.8

%


184,155



94.0

%

All other feedstocks and blendstocks

14,243



6.2

%


11,704



6.0

%

Total throughput

228,612



100.0

%


195,859



100.0

%

Production:








Gasoline

118,955



51.9

%


105,878



54.2

%

Distillate

89,907



39.2

%


77,996



39.9

%

Other (excluding internally produced fuel)

20,298



8.9

%


11,519



5.9

%

Total refining production (excluding internally produced fuel)

229,160



100.0

%


195,393



100.0

%

Product price (dollars per gallon):








Gasoline

$

1.54





$

1.04




Distillate

1.58





1.05














Three Months Ended 

 March 31,


2017


2016

Market Indicators (dollars per barrel):




West Texas Intermediate (WTI) NYMEX

$

51.78



$

33.63


Crude Oil Differentials:




WTI less WTS (light/medium sour)

1.42



0.13


WTI less WCS (heavy sour)

13.77



13.62


NYMEX Crack Spreads:




Gasoline

14.68



15.84


Heating Oil

15.54



11.91


NYMEX 2-1-1 Crack Spread

15.11



13.88


PADD II Group 3 Basis:




Gasoline

(1.96)



(5.88)


Ultra Low Sulfur Diesel

(1.58)



(1.01)


PADD II Group 3 Product Crack Spread:




Gasoline

12.71



9.97


Ultra Low Sulfur Diesel

13.96



10.90


PADD II Group 3 2-1-1

13.34



10.43












Three Months Ended 

 March 31,


2017


2016


(in millions, except operating statistics)

Coffeyville Refinery Financial Results:




Net sales

$

951.3



$

528.0


Cost of materials and other

808.4



462.7


Direct operating expenses(1)

50.7



47.6


Major scheduled turnaround expenses



29.4


Depreciation and amortization

19.1



16.8


Gross profit (loss)

73.1



(28.5)


Add:




Direct operating expenses(1)

50.7



47.6


Major scheduled turnaround expenses



29.4


Depreciation and amortization

19.1



16.8


Refining margin*

142.9



65.3


FIFO impact, unfavorable

1.5



3.9


Refining margin adjusted for FIFO impact*

$

144.4



$

69.2






Coffeyville Refinery Key Operating Statistics:




Per crude oil throughput barrel:




Gross profit (loss)

$

6.22



$

(2.94)


Refining margin*

12.15



6.75


FIFO impact, unfavorable

0.13



0.40


Refining margin adjusted for FIFO impact*

12.28



7.15


Direct operating expenses and major scheduled turnaround expenses

4.31



7.96


Direct operating expenses excluding major scheduled turnaround expenses

4.31



4.92


Direct operating expenses and major scheduled turnaround expenses per barrel sold

3.87



6.89


Direct operating expenses excluding major scheduled turnaround expenses per barrel sold

$

3.87



$

4.26


Barrels sold (barrels per day)

145,555



122,838


______________________________

* See "Use of Non-GAAP Financial Measures" below.




(1)

Direct operating expenses for the three months ended March 31, 2017 and 2016 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses.















Three Months Ended 

 March 31,


2017


2016

Coffeyville Refinery Throughput and Production Data (bpd):








Throughput:








Sweet

114,243



80.6

%


92,938



80.3

%

Medium



%


1,513



1.3

%

Heavy sour

16,516



11.7

%


11,914



10.3

%

Total crude oil throughput

130,759



92.3

%


106,365



91.9

%

All other feedstocks and blendstocks

10,915



7.7

%


9,344



8.1

%

Total throughput

141,674



100.0

%


115,709



100.0

%

Production:








Gasoline

74,538



51.6

%


64,033



54.8

%

Distillate

59,444



41.2

%


47,147



40.3

%

Other (excluding internally produced fuel)

10,335



7.2

%


5,768



4.9

%

Total refining production (excluding internally produced fuel)

144,317



100.0

%


116,948



100.0

%











Three Months Ended 

 March 31,


2017


2016


(in millions, except operating statistics)

Wynnewood Refinery Financial Results:




Net sales

$

471.1



$

304.8


Cost of materials and other

393.1



259.4


Direct operating expenses(1)

38.6



40.6


Major scheduled turnaround expenses

12.9




Depreciation and amortization

12.8



12.6


Gross profit (loss)

13.7



(7.8)


Add:




Direct operating expenses(1)

38.6



40.6


Major scheduled turnaround expenses

12.9




Depreciation and amortization

12.8



12.6


Refining margin*

78.0



45.4


FIFO impact, (favorable) unfavorable

(1.1)



4.8


Refining margin adjusted for FIFO impact*

$

76.9



$

50.2






Wynnewood Refinery Key Operating Statistics:




Per crude oil throughput barrel:




Gross profit (loss)

$

1.83



$

(1.10)


Refining margin*

10.36



6.41


FIFO impact, (favorable) unfavorable

(0.15)



0.68


Refining margin adjusted for FIFO impact*

10.21



7.09


Direct operating expenses and major scheduled turnaround expenses

6.83



5.74


Direct operating expenses excluding major scheduled turnaround expenses

5.12



5.74


Direct operating expenses and major scheduled turnaround expenses

per barrel sold

6.89



5.64


Direct operating expenses excluding major scheduled turnaround expenses per barrel sold

$

5.16



$

5.64


Barrels sold (barrels per day)

82,967



79,132


______________________________

* See "Use of Non-GAAP Financial Measures" below.




(1)

Direct operating expenses for the three months ended March 31, 2017 and 2016 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses.















Three Months Ended 

 March 31,


2017


2016

Wynnewood Refinery Throughput and Production Data (bpd):








Throughput:








Sweet

83,610



96.2

%


77,790



97.1

%

Medium



%




%

Heavy sour



%




%

Total crude oil throughput

83,610



96.2

%


77,790



97.1

%

All other feedstocks and blendstocks

3,328



3.8

%


2,360



2.9

%

Total throughput

86,938



100.0

%


80,150



100.0

%

Production:








Gasoline

44,417



52.4

%


41,845



53.4

%

Distillate

30,463



35.9

%


30,849



39.3

%

Other (excluding internally produced fuel)

9,963



11.7

%


5,751



7.3

%

Total refining production (excluding internally produced fuel)

84,843



100.0

%


78,445



100.0

%

Nitrogen Fertilizer Segment Operating Data

The following tables set forth information about the Nitrogen Fertilizer segment operated by CVR Partners, of which we own approximately 34% of the common units as of March 31, 2017 and serve as the general partner. The financial and operational data include the results of the East Dubuque Facility beginning on April 1, 2016, the date of the closing of the acquisition. Reconciliations of certain non-GAAP financial measures are provided under "Use of Non-GAAP Financial Measures" below. Additional discussion of operating results for the Nitrogen Fertilizer segment for the three months ended March 31, 2017 are included in CVR Partners' press release dated April 27, 2017.











Three Months
Ended 

 March 31,


2017


2016


(in millions)

Nitrogen Fertilizer Segment Business Financial Results:




Net sales

$

85.3



$

73.1


Cost of materials and other

21.8



16.3


Direct operating expenses(1)

35.9



23.7


Depreciation and amortization

15.4



7.0


Cost of sales

73.1



47.0


Selling, general and administrative expenses

6.9



6.4


Operating income

5.3



19.7


Interest expense and other financing costs

(15.7)



(1.7)


Other income, net

0.1




Income (loss) before income tax expense

(10.3)



18.0


Income tax expense




Net income (loss)

$

(10.3)



$

18.0






Adjusted Nitrogen Fertilizer EBITDA*

$

20.8



$

27.9








* See "Use of Non-GAAP Financial Measures" below.




(1)

Direct operating expenses for the three months ended March 31, 2017 and 2016 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses.











Three Months Ended 

 March 31,


2017


2016

Nitrogen Fertilizer Segment Key Operating Statistics:








Consolidated sales (thousand tons):




Ammonia

61.9



24.4


UAN

321.6




267.0






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




Ammonia

$

308



$

367


UAN

$

160



$

209






Consolidated production volume (thousand tons):




Ammonia (gross produced) (2)

219.2



113.7


Ammonia (net available for sale) (2)

80.0



15.1


UAN

341.9



248.2






Feedstock:




Petroleum coke used in production (thousand tons)

132.6



126.9


Petroleum coke used in production (dollars per ton)

$

14



$

17


Natural gas used in production (thousands of MMBtus)


2,091.2




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

$

3.41



$


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

1,476.0




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

$

3.59



$






Coffeyville Facility on-stream factor (4):




Gasification

98.9

%


97.7

%

Ammonia

98.5

%


97.2

%

UAN

96.8

%


91.4

%





East Dubuque Facility on-stream factors (4):




Ammonia

99.6

%


%

UAN

98.2

%


%





Market Indicators:




Ammonia — Southern Plains (dollars per ton)

$

387



$

375


Ammonia — Corn belt (dollars per ton)

$

424



$

441


UAN — Corn belt (dollars per ton)

$

215



$

229


Natural gas NYMEX (dollars per MMBtu)

$

3.06



$

1.98










(1)

Product pricing at gate represents net sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure that is comparable across the fertilizer industry.



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



(3)

The cost per MMBtu excludes derivative activity, when applicable. The impact of natural gas derivative activity during the periods presented was not material.



(4)

On-stream factor is the total number of hours operated divided by the total number of hours in the reporting period and is included as a measure of operating efficiency.

Use of Non-GAAP Financial Measures

To supplement the Company's actual results in accordance with GAAP for the applicable periods, the Company also uses the non-GAAP financial measures noted above, which are reconciled to our GAAP-based results below. These non-GAAP financial measures should not be considered an alternative for GAAP results. The adjustments are provided to enhance an overall understanding of the Company's financial performance for the applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods.

Adjusted net income (loss) is not a recognized term under GAAP and should not be substituted for net income (loss) as a measure of our performance but rather should be utilized as a supplemental measure of financial performance in evaluating our business. Management believes that adjusted net income (loss) provides relevant and useful information that enables external users of our financial statements, such as industry analysts, investors, lenders and rating agencies, to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance. Adjusted net income (loss) per diluted share represents adjusted net income (loss) divided by weighted-average diluted shares outstanding. Adjusted net income (loss) represents net income (loss), as adjusted, that is attributable to CVR Energy stockholders.











Three Months Ended 

 March 31,


2017


2016


(in millions, except per share data)

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss):




Income (loss) before income tax expense

$

53.0



$

(52.7)


Adjustments:




FIFO impact, unfavorable

0.3



8.8


Major scheduled turnaround expenses

12.9



29.4


(Gain) loss on derivatives, net

(12.2)



1.2


Current period settlement on derivative contracts (1)

1.2



21.4


Expenses associated with the East Dubuque Merger (2)



1.2


Adjusted net income before income tax expense and noncontrolling interest

55.2



9.3


Adjusted net income attributed to noncontrolling interest

(16.7)



(6.6)


Income tax benefit (expense), as adjusted

(15.4)



5.7


Adjusted net income

$

23.1



$

8.4






Adjusted net income per diluted share

$

0.27



$

0.10


Refining margin per crude oil throughput barrel is a measurement calculated as the difference between the Petroleum segment's net sales and cost of materials and other. Refining margin is a non-GAAP measure that we believe is important to investors in evaluating the refineries' performance as a general indication of the amount above their cost of materials and other at which they are able to sell refined products. Each of the components used in this calculation (net sales and cost of materials and other) can be taken directly from our Petroleum segment's Statements of Operations. Our calculation of refining margin may differ from similar calculations of other companies in the industry, thereby limiting its usefulness as a comparative measure. In order to derive the refining margin per crude oil throughput barrel, we utilize the total dollar figures for refining margin as derived above and divide by the applicable number of crude oil throughput barrels for the period. We believe that refining margin is important to enable investors to better understand and evaluate the Petroleum segment's ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance.

Refining margin per crude oil throughput barrel adjusted for FIFO impact is a measurement calculated as the difference between the Petroleum segment's net sales and cost of materials and other adjusted for FIFO impact. Refining margin adjusted for FIFO impact is a non-GAAP measure that we believe is important to investors in evaluating the refineries' performance as a general indication of the amount above their cost of materials and other (taking into account the impact of the utilization of FIFO) at which they are able to sell refined products. Our calculation of refining margin adjusted for FIFO impact may differ from calculations of other companies in the industry, thereby limiting its usefulness as a comparative measure. Under the FIFO accounting method, 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 FIFO impact when crude oil prices increase and an unfavorable FIFO impact when crude oil prices decrease.

The calculation of refining margin and refining margin adjusted for FIFO impact (each a non-GAAP financial measure), including a reconciliation to the most directly comparable GAAP financial measure for the three months ended March 31, 2017 and 2016 is as follows:










Petroleum Segment Operating Data





Three Months Ended 

 March 31,


2017


2016


(in millions)

Net Sales

$

1,423.5



$

834.0


Operating costs and expenses:




Cost of materials and other

1,201.3



722.3


Direct operating expenses (exclusive of depreciation and amortization as reflected below)

89.2



88.3


Major schedule turnaround expenses

12.9



29.4


Depreciation and amortization

33.3



30.9


Gross profit (loss)

86.8



(36.9)


Add:




Direct operating expenses (exclusive of depreciation and amortization as reflected below)

89.2



88.3


Major schedule turnaround expenses

12.9



29.4


Depreciation and amortization

33.3



30.9


Refining Margin

222.2



111.7


FIFO impact, unfavorable

0.3



8.8


Refining Margin adjusted for FIFO impact

$

222.5



$

120.5


The calculation of refining margin per crude oil throughput barrel and refining margin adjusted for FIFO impact per crude oil throughput barrel for the three months ended March 31, 2017 and 2016 is as follows:








Petroleum Segment Operating Data





Three Months Ended 

 March 31,


2017


2016

Total crude oil throughput barrels per day

214,369



184,155


Days in the period

90



91


Total crude oil throughput barrels

19,293,210



16,758,105


 











Three Months Ended 

 March 31,


2017


2016


(in millions, except for $ per barrel data)

Refining Margin

$

222.2



$

111.7


Divided by: crude oil throughput barrels

19.3



16.8


Refining Margin per crude oil throughput barrel

$

11.52



$

6.67


 











Three Months Ended 

 March 31,


2017


2016


(in millions, except for $ per barrel data)

Refining Margin adjusted for FIFO impact

$

222.5



$

120.5


Divided by: crude oil throughput barrels

19.3



16.8


Refining Margin adjusted for FIFO impact per crude oil throughput barrel

$

11.54



$

7.19


 








Coffeyville Refinery





Three Months Ended 

 March 31,


2017


2016

Total crude oil throughput barrels per day

130,759



106,365


Days in the period

90



91


Total crude oil throughput barrels

11,768,310



9,679,215


 











Three Months Ended 

 March 31,


2017


2016


(in millions, except for $ per barrel data)

Refining Margin

$

142.9



$

65.3


Divided by: crude oil throughput barrels

11.8



9.7


Refining Margin per crude oil throughput barrel

$

12.15



$

6.75


 











Three Months Ended 

 March 31,


2017


2016


(in millions, except for $ per barrel data)

Refining Margin adjusted for FIFO impact

$

144.4



$

69.2


Divided by: crude oil throughput barrels

11.8



9.7


Refining Margin adjusted for FIFO impact per crude oil throughput barrel

$

12.28



$

7.15


 








Wynnewood Refinery





Three Months Ended 

 March 31,


2017


2016

Total crude oil throughput barrels per day

83,610



77,790


Days in the period

90



91


Total crude oil throughput barrels

7,524,900



7,078,890


 











Three Months Ended 

 March 31,


2017


2016


(in millions, except for $ per barrel data)

Refining Margin

$

78.0



$

45.4


Divided by: crude oil throughput barrels

7.5



7.1


Refining Margin per crude oil throughput barrel

$

10.36



$

6.41


 











Three Months Ended 

 March 31,


2017


2016


(in millions, except for $ per barrel data)

Refining Margin adjusted for FIFO impact

$

76.9



$

50.2


Divided by: crude oil throughput barrels

7.5



7.1


Refining Margin adjusted for FIFO impact per crude oil throughput barrel

$

10.21



$

7.09


EBITDA and Adjusted EBITDA. EBITDA represents net income (loss) attributable to CVR Energy stockholders before consolidated (i) interest expense and other financing costs, net of interest income, (ii) income tax expense (benefit), and (iii) depreciation and amortization, less the portion of these adjustments attributable to non-controlling interest. Adjusted EBITDA represents EBITDA adjusted for, as applicable, consolidated (i) FIFO impact (favorable) unfavorable; (ii) loss on extinguishment of debt; (iii) major scheduled turnaround expenses (that many of our competitors capitalize and thereby exclude from their measures of EBITDA and adjusted EBITDA); (iv) (gain) loss on derivatives, net; (v) current period settlements on derivative contracts; (vi) business interruption insurance recovery and (vii) transaction expenses associated with the East Dubuque Merger, less the portion of these adjustments attributable to non-controlling interest. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be substituted for net income (loss) or cash flow from operations. Management believes that EBITDA and Adjusted EBITDA enable investors to better understand and evaluate our ongoing operating results and allow for greater transparency in reviewing our overall financial, operational and economic performance. EBITDA and Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently. EBITDA and Adjusted EBITDA represent EBITDA and Adjusted EBITDA that is attributable to CVR Energy stockholders.

A reconciliation of net income attributable to CVR Energy stockholders to EBITDA and EBITDA to Adjusted EBITDA for the three months ended March 31, 2017 and 2016 is as follows:











Three Months Ended 

 March 31,


2017


2016


(in millions)

Net income (loss) attributable to CVR Energy stockholders

$

22.2



$

(16.2)


Add:




Interest expense and other financing costs, net of interest income

26.8



11.9


Income tax expense (benefit)

14.8



(21.8)


Depreciation and amortization

51.1



40.0


Adjustments attributable to noncontrolling interest

(35.9)



(18.4)


EBITDA

79.0



(4.5)


Add:




FIFO impact, unfavorable

0.3



8.8


Major scheduled turnaround expenses

12.9



29.4


(Gain) loss on derivatives, net

(12.2)



1.2


Current period settlement on derivative contracts (1)

1.2



21.4


Expenses associated with the East Dubuque Merger (2)



1.2


Adjustments attributable to noncontrolling interest

(0.8)



(21.3)


Adjusted EBITDA

$

80.4



$

36.2


Petroleum and Nitrogen Fertilizer EBITDA and Adjusted EBITDA. EBITDA by operating segment represents net income (loss) before (i) interest expense and other financing costs, net of interest income, (ii) income tax expense and (iii) depreciation and amortization. Adjusted EBITDA by operating segment represents EBITDA by operating segment adjusted for, as applicable (i) FIFO impact (favorable) unfavorable; (ii) loss on extinguishment of debt; (iii) major scheduled turnaround expenses (that many of our competitors capitalize and thereby exclude from their measures of EBITDA and adjusted EBITDA); (iv) (gain) loss on derivatives, net; (v) current period settlements on derivative contracts; (vi) transaction expenses associated with the East Dubuque Merger and (vii) business interruption insurance recovery, less the portion of these adjustments attributable to noncontrolling interest. We present Adjusted EBITDA by operating segment because it is the starting point for CVR Refining's and CVR Partners' calculation of available cash for distribution. EBITDA and Adjusted EBITDA by operating segment are not recognized terms under GAAP and should not be substituted for net income (loss) as a measure of performance. Management believes that EBITDA and Adjusted EBITDA by operating segment enable investors to better understand CVR Refining's and CVR Partners' ability to make distributions to their common unitholders, help investors evaluate our ongoing operating results and allow for greater transparency in reviewing our overall financial, operational and economic performance. EBITDA and Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently.

A reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA for the Petroleum and Nitrogen Fertilizer segments for the three months ended March 31, 2017 and 2016 is as follows:











Three Months Ended 

 March 31,


2017


2016


(in millions)

Petroleum:




Petroleum net income (loss)

$

67.0



$

(68.0)


Add:




Interest expense and other financing costs, net of interest income

11.2



10.8


Income tax expense




Depreciation and amortization

34.1



31.5


Petroleum EBITDA

112.3



(25.7)


Add:




FIFO impact, unfavorable

0.3



8.8


Major scheduled turnaround expenses

12.9



29.4


(Gain) loss on derivatives, net

(12.2)



1.2


Current period settlements on derivative contracts (1)

1.2



21.4


Adjusted Petroleum EBITDA

$

114.5



$

35.1


 











Three Months Ended 

 March 31,


2017


2016


(in millions)

Nitrogen Fertilizer:




Nitrogen fertilizer net income (loss)

$

(10.3)



$

18.0


Add:




Interest expense and other financing costs, net

15.7



1.7


Income tax expense




Depreciation and amortization

15.4



7.0


Nitrogen Fertilizer EBITDA

20.8



26.7


Add:




Expenses associated with the East Dubuque Merger (2)



1.2


Adjusted Nitrogen Fertilizer EBITDA

$

20.8



$

27.9










(1)

Represents the portion of gain (loss) on derivatives, net related to contracts that matured during the respective periods and settled with counterparties. There are no premiums paid or received at inception of the derivative contracts and upon settlement, there is no cost recovery associated with these contracts.



(2)

On April 1, 2016, CVR Partners completed the East Dubuque Merger. CVR Partners incurred legal and other professional fees and other merger related expenses that are referred to herein as transaction expenses associated with the East Dubuque Merger, which are included in selling, general and administrative expenses.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cvr-energy-reports-2017-first-quarter-results-and-announces-cash-dividend-of-50-cents-300447114.html

SOURCE CVR Energy, Inc.


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