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CVR Energy Reports Third Quarter 2018 Results and Announces Cash Dividend of 75 Cents

CVR Energy Reports Third Quarter 2018 Results and Announces Cash Dividend of 75 Cents

SUGAR LAND, Texas, Oct. 24, 2018 (GLOBE NEWSWIRE) -- CVR Energy, Inc. (CVI) today announced net income of $90 million, or 94 cents per diluted share, on net sales of $1,935 million for the third quarter of 2018, compared to net income of $22 million, or 26 cents per diluted share, on net sales of $1,454 million for the 2017 third quarter. Third quarter 2018 adjusted EBITDA was $172 million, compared to third quarter 2017 adjusted EBITDA of $91 million.

For the first nine months of 2018, net income was $207 million, or $2.31 per diluted share, on net sales of $5,386 million, compared to net income of $34 million, or 39 cents per diluted share, on net sales of $4,395 million for the same period a year earlier. Adjusted EBITDA for the first nine months of 2018 was $361 million, compared to adjusted EBITDA of $209 million for the first nine months of 2017.

“CVR Refining reported solid results for the 2018 third quarter, attributable to stronger crack spreads, reduced Renewable Identification Number (RIN) costs and increased internal RIN generation, wide crude oil differentials and reliable operations,” said Dave Lamp, CVR Energy’s Chief Executive Officer. “Looking forward, CVR Refining will remain focused on safe and reliable operations while taking advantage of favorable product margins and crude oil spreads.

“CVR Partners posted strong operating performance and improved fertilizer netbacks at both its Coffeyville, Kansas, and East Dubuque, Illinois, fertilizer facilities during the 2018 third quarter,” Lamp said. “Market conditions have continued to improve since summer and global demand for nitrogen fertilizer is strong. In addition, product pricing for the late fall of 2018 has increased by approximately 25 percent from the summer fill season and we’re seeing continued pricing strength into the first quarter of 2019.”

Petroleum Business

The petroleum business, which is operated by CVR Refining and includes the Coffeyville and Wynnewood refineries, reported third quarter 2018 operating income of $176 million on net sales of $1,857 million, compared to operating income of $99 million on net sales of $1,386 million in the third quarter of 2017.

Refining margin adjusted for FIFO impact per combined total throughput, a non-GAAP financial measure, was $15.41 in the 2018 third quarter, compared to $13.05 during the same period in 2017. Direct operating expenses (exclusive of depreciation and amortization), excluding major scheduled turnaround expenses, per combined total throughput, for the 2018 third quarter were $4.17, compared to $5.02 in the third quarter of 2017.

Third quarter 2018 combined total throughput was approximately 219,000 barrels per day (bpd), compared to approximately 214,000 bpd of combined total throughput for the third quarter of 2017.

Nitrogen Fertilizers Business

The fertilizer business, which is operated by CVR Partners and includes the Coffeyville and East Dubuque fertilizer facilities, reported operating income of $3 million on net sales of $80 million for the third quarter of 2018, compared to an operating loss of $16 million on net sales of $69 million for the third quarter of 2017.

CVR Partners’ fertilizer facilities produced a combined 212,000 tons of ammonia during the third quarter of 2018, of which 63,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 338,000 tons of UAN. In the 2017 third quarter, the fertilizer facilities produced 181,000 tons of ammonia, of which 46,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 307,000 tons of UAN.

Cash, Debt and Dividend

Consolidated cash and cash equivalents was $702 million at Sept. 30, 2018. Consolidated total debt was $1,168 million at Sept. 30, 2018. The company had no debt exclusive of CVR Refining’s and CVR Partners’ debt.

CVR Energy also announced a third quarter 2018 cash dividend of 75 cents per share. The dividend, as declared by CVR Energy’s Board of Directors, will be paid on Nov. 12, 2018, to stockholders of record on Nov. 5, 2018. CVR Energy’s third quarter cash dividend brings the cumulative cash dividends paid or declared for the first nine months of 2018 to $2.00 per share.

Today, CVR Refining announced a 2018 third quarter cash distribution of 90 cents per common unit. CVR Partners announced that it will not pay a cash distribution for the 2018 third quarter.

Third Quarter 2018 Earnings Conference Call

CVR Energy previously announced that it will host its third quarter 2018 Earnings Conference Call on Thursday, Oct. 25, 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 third quarter 2018 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 through Nov. 8 at https://edge.media-server.com/m6/p/m5j97b6c. A repeat of the call can be accessed through Nov. 8 by dialing (877) 660-6853, conference ID 13683849.

Forward-Looking Statements
This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws.  These forward-looking statements include, but are not limited to, statements regarding future: crude oil differentials or spreads; RINs, crude oil, feedstock and product prices; distributions and operating performance of CVR Refining and CVR Partners; reserves; improved market conditions; global demand; ammonia and UAN pricing; fourth quarter performance including throughput, production, direct operating expenses, capital spending and depreciation; safe and reliable operations; favorable product margins; 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 nitrogen fertilizer manufacturing industries through its holdings in two limited partnerships, CVR Refining, LP and CVR Partners, LP. CVR Energy and its subsidiaries serve as the general partner and own 81 percent of the common units of CVR Refining. 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:
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, 2017).

  Three Months Ended September 30,   Nine Months Ended September 30,
(In millions, except per share data)
2018   2017   2018   2017
Consolidated Statement of Operations Data:              
Net sales $ 1,935     $ 1,454     $ 5,386     $ 4,395  
Operating costs and expenses:              
Cost of materials and other 1,561     1,133     4,370     3,582  
Direct operating expenses (1) 121     160     394     422  
Depreciation and amortization 49     51     151     152  
Cost of sales 1,731     1,344     4,915     4,156  
Selling, general and administrative expenses (1) 28     27     83     82  
Depreciation and amortization 2     3     8     7  
Loss on asset disposals     1     5     2  
Operating income 174     79     375     148  
Interest expense, net (26 )   (28 )   (79 )   (81 )
Gain (loss) on derivatives, net 5     (17 )   75     (5 )
Other income, net 3         6      
Income before income tax expense 156     34     377     62  
Income tax expense 35     9     73     18  
Net income 121     25     304     44  
Less: Net income attributable to noncontrolling interest 31     3     97     10  
Net income attributable to CVR Energy stockholders $ 90     $ 22     $ 207     $ 34  
               
Basic and diluted earnings per share $ 0.94     $ 0.26     $ 2.31     $ 0.39  
Dividends declared per share $ 0.75     $ 0.50     $ 2.00     $ 1.50  
               
Adjusted EBITDA* $ 172     $ 91     $ 361     $ 209  
Adjusted net income (loss) * 91     32     170     52  
Adjusted net income (loss) per diluted share * 0.95     0.37     1.89     0.60  
               
Weighted-average common shares outstanding - basic and diluted
95.8     86.8     89.8     86.8  
                       

______________________________
* See “Use of Non-GAAP Financial Measures” below.

(1) Direct operating expenses and selling, general and administrative expenses for the three and nine months ended September 30, 2018 and 2017 are shown exclusive of depreciation and amortization.

(In millions)  As of September 30, 2018   As of December 31, 2017
Balance Sheet Data:      
Cash and cash equivalents $ 702     $ 482  
Working capital 786     550  
Total assets 4,002     3,807  
Total debt, including current portion 1,168     1,166  
Total CVR stockholders’ equity 1,239     919  
           


  Three Months Ended September 30,   Nine Months Ended September 30,
(In millions)
2018   2017   2018   2017
Cash Flow Data:              
Net cash flow provided by (used in):              
Operating activities $ 290     $ 85     $ 519     $ 327  
Investing activities (26 )   (22 )   (67 )   (81 )
Financing activities (96 )   (44 )   (232 )   (133 )
Net increase in cash and cash equivalents $ 168     $ 19     $ 220     $ 113  
                               

Segment Information

Our operations are organized into two reportable segments, Petroleum and Nitrogen Fertilizer. Our operations that are not included in the Petroleum and Nitrogen Fertilizer segments are included in the Corporate and Other segment (along with elimination of intersegment transactions). The Petroleum segment is operated by CVR Refining, LP (“CVR Refining”), in which we own a majority interest as well as serve as the general partner. The Petroleum segment includes the operations of the Coffeyville, Kansas and Wynnewood, Oklahoma refineries along with the crude oil gathering and pipeline systems. Detailed operating results for the Petroleum segment for the three and nine months ended September 30, 2018 are included in CVR Refining’s press release dated October 24, 2018. The Nitrogen Fertilizer segment is operated by CVR Partners, LP (“CVR Partners”), in which we own approximately 34% of the common units as of September 30, 2018 and serve as the general partner. The Nitrogen Fertilizer segment consists of nitrogen fertilizer manufacturing facilities located in Coffeyville, Kansas and East Dubuque, Illinois. Detailed operating results for the Nitrogen Fertilizer segment for the three and nine months ended September 30, 2018 are included in CVR Partners’ press release dated October 24, 2018.

(In millions)
Petroleum (CVR Refining)   Nitrogen Fertilizer (CVR Partners)   Corporate and Other   Consolidated
Three Months Ended September 30, 2018              
Net sales $ 1,857     $ 80     $ (2 )   $ 1,935  
Cost of materials and other 1,544     19     (2 )   1,561  
Direct operating expenses 85     35     1     121  
Selling, general and administrative 18     7     3     28  
Depreciation and amortization 34     16     1     51  
Loss on asset disposals              
Operating income (loss) $ 176     $ 3     $ (5 )   $ 174  
               
Capital expenditures $ 18     $ 6     $ 2     $ 26  
                               


(In millions)
Petroleum (CVR Refining)   Nitrogen Fertilizer (CVR Partners)   Corporate and Other   Consolidated
Nine Months Ended September 30, 2018              
Net sales $ 5,139     $ 253     $ (6 )   $ 5,386  
Cost of materials and other 4,315     61     (6 )   4,370  
Direct operating expenses 272     121     1     394  
Selling, general and administrative 56     19     8     83  
Depreciation and amortization 101     53     5     159  
Loss on asset disposals 5             5  
Operating income (loss) $ 390     $ (1 )   $ (14 )   $ 375  
               
Capital expenditures $ 50     $ 15     $ 3     $ 68  
                               


(In millions)
Petroleum (CVR Refining)   Nitrogen Fertilizer (CVR Partners)   Corporate and Other   Consolidated
Three Months Ended September 30, 2017              
Net sales $ 1,386     $ 69     $ (1 )   $ 1,454  
Cost of materials and other 1,114     20     (1 )   1,133  
Direct operating expenses 120     40         160  
Selling, general and administrative 19     5     3     27  
Depreciation and amortization 33     20     1     54  
Loss on asset disposals 1             1  
Operating income (loss) $ 99     $ (16 )   $ (4 )   $ 79  
               
Capital expenditures $ 19     $ 3     $ 1     $ 23  
                               


(In millions)
Petroleum (CVR Refining)   Nitrogen Fertilizer (CVR Partners)   Corporate and Other   Consolidated
Nine Months Ended September 30, 2017              
Net sales $ 4,148     $ 253     $ (6 )   $ 4,395  
Cost of materials and other 3,524     63     (5 )   3,582  
Direct operating expenses 308     114         422  
Selling, general and administrative 58     19     5     82  
Depreciation and amortization 100     55     4     159  
Loss on asset disposals 1         1     2  
Operating income (loss) $ 157     $ 2     $ (11 )   $ 148  
               
Capital expenditures $ 66     $ 11     $ 3     $ 80  
                               


(In millions) Petroleum (CVR Refining)   Nitrogen Fertilizer (CVR Partners)   Corporate and Other   Consolidated
September 30, 2018              
Cash and cash equivalents $ 398     $ 61     $ 243     $ 702  
Total assets 2,505     1,219     278     4,002  
Total debt, including current portion 539     628     1     1,168  
               
December 31, 2017              
Cash and cash equivalents $ 174     $ 49     $ 259     $ 482  
Total assets 2,270     1,234     303     3,807  
Total debt, including current portion 541     626         1,166  
                       

Petroleum Segment Operating Data

The following tables set forth information about our consolidated Petroleum segment operated by CVR Refining, of which we own a majority interest and serve as the general partner. Reconciliations of certain non-GAAP financial measures are provided under “Use of Non-GAAP Financial Measures” below. Additional discussion of operating results for the Petroleum segment for the three and nine months ended September 30, 2018 are included in CVR Refining’s press release dated October 24, 2018.

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
(In millions)
2018   2017   2018   2017
Petroleum Segment Summary Financial Results:              
Net sales $ 1,857     $ 1,386     $ 5,139     $ 4,148  
Operating costs and expenses:              
Cost of materials and other 1,544     1,114     4,315     3,524  
Direct operating expenses (1) 85     120     272     308  
Depreciation and amortization 33     32     98     97  
Cost of sales 1,662     1,266     4,685     3,929  
Selling, general and administrative expenses (1) 18     19     56     58  
Depreciation and amortization 1     1     3     3  
Loss on asset disposals     1     5     1  
Operating income 176     99     390     157  
Interest expense, net (10 )   (12 )   (32 )   (34 )
Gain (loss) on derivatives, net 5     (17 )   75     (5 )
Other income, net 3         6      
Net income $ 174     $ 70     $ 439     $ 118  
               
Refining margin* $ 313     $ 272     $ 824     $ 624  
Refining margin adjusted for FIFO impact* 310     257     779     625  
Adjusted Petroleum EBITDA* 221     139     494     296  
                       

______________________________
* See “Use of Non-GAAP Financial Measures” below.

(1) Direct operating expense and selling, general and administrative expenses for the three and nine months ended September 30, 2018 and 2017 are shown exclusive of depreciation and amortization.

  Three Months Ended September 30,   Nine Months Ended September 30,
(In dollars per total throughput barrel)
2018   2017   2018   2017
Petroleum Segment Key Operating Statistics:              
Gross profit $ 9.70     $ 6.07     $ 7.99     $ 3.61  
Refining margin* $ 15.54     $ 13.81     $ 14.50     $ 10.32  
FIFO impact, (favorable) unfavorable $ (0.13 )   $ (0.76 )   $ (0.79 )   $ 0.01  
Refining margin adjusted for FIFO impact* $ 15.41     $ 13.05     $ 13.71     $ 10.33  
Direct operating expenses and major turnaround expenses $ 4.23     $ 6.12     $ 4.79     $ 5.11  
Direct operating expenses excluding major turnaround expenses $ 4.17     $ 5.02     $ 4.77     $ 4.49  
                               

______________________________
* See “Use of Non-GAAP Financial Measures” below.

  Three Months Ended September 30,   Nine Months Ended September 30,
  2018   2017   2018   2017
Market Indicators (dollars per barrel):              
West Texas Intermediate (WTI) NYMEX $ 69.43     $ 48.20     $ 66.79     $ 49.36  
Crude Oil Differentials:              
WTI less WTS (light/medium sour) 14.26     0.97     8.14     1.15  
WTI less WCS (heavy sour) 27.76     10.48     23.77     11.42  
WTI less condensate 0.37     0.12     0.40     0.12  
Midland Cushing Differential 14.33     0.79     7.69     0.54  
NYMEX Crack Spreads:              
Gasoline 16.96     20.42     17.69     17.74  
Heating Oil 22.03     21.05     21.59     17.24  
NYMEX 2-1-1 Crack Spread 19.50     20.73     19.64     17.49  
PADD II Group 3 Basis:              
Gasoline (0.13 )   (1.18 )   (2.16 )   (2.37 )
Ultra Low Sulfur Diesel 0.89     0.85     0.08     (0.44 )
PADD II Group 3 Product Crack Spread:              
Gasoline 16.83     19.23     15.53     15.37  
Ultra Low Sulfur Diesel 22.92     21.90     21.67     16.80  
PADD II Group 3 2-1-1 19.88     20.57     18.60     16.09  
                       


  Three Months Ended September 30,   Nine Months Ended September 30,
  2018   2017   2018   2017
Petroleum Segment Summary     %       %       %       %
 Refining Throughput and Production Data (bpd):                              
Throughput:                              
Condensate 8,425     3.8     1         13,156     6.3     2,893     1.3  
Sweet 193,727     88.5     196,341     91.9     179,964     86.5     195,857     88.5  
Heavy sour 6,746     3.1     6,751     3.2     4,518     2.2     11,643     5.3  
Total crude oil throughput 208,898     95.4     203,093     95.1     197,638     95.0     210,393     95.1  
All other feedstocks and blendstocks 10,008     4.6     10,513     4.9     10,454     5.0     10,943     4.9  
Total throughput 218,906     100.0     213,606     100.0     208,092     100.0     221,336     100.0  
Production:                              
Gasoline 111,087     50.8     105,712     49.5     103,258     49.6     112,268     50.6  
Distillate 94,157     43.0     89,655     42.0     89,325     42.9     92,046     41.5  
Other (excluding internally produced fuel) 13,497     6.2     18,107     8.5     15,486     7.5     17,385     7.9  
Total refining production (excluding internally produced fuel) 218,741     100.0     213,474     100.0     208,069     100.0     221,699     100.0  
                                               


null
  Three Months Ended September 30,   Nine Months Ended September 30,
  2018   2017   2018   2017
      %       %       %       %
Coffeyville Refinery Throughput and Production Data (bpd):                              
Throughput:                              
Condensate 273     0.2     1         6,448     5.1     2,893     2.1  
Sweet 127,792     90.3     121,709     89.6     109,937     86.4     116,468     83.7  
Heavy sour 6,746     4.8     6,751     5.0     4,518     3.6     11,643     8.4  
Total crude oil throughput 134,811     95.3     128,461     94.6     120,903     95.1     131,004     94.2  
All other feedstocks and blendstocks 6,664     4.7     7,415     5.4     6,238     4.9     8,124     5.8  
Total throughput 141,475     100.0     135,876     100.0     127,141     100.0     139,128     100.0  
Production:                              
Gasoline 72,337     50.7     67,598     49.1     62,543     48.7     70,697     50.1  
Distillate 60,521     42.4     57,654     41.9     54,914     42.7     58,927     41.7  
Other (excluding internally produced fuel) 9,900