CVR Energy Reports Record 2012 Third Quarter Earnings Company Posts Best-Ever Quarterly Net Income Since 2007 IPO

SUGAR LAND, Texas, Nov. 5, 2012 /PRNewswire/ -- CVR Energy, Inc. (NYSE: CVI), a refiner and marketer of petroleum fuels and the majority owner in nitrogen fertilizer manufacturer CVR Partners, LP (NYSE: UAN), today reported record net income in the 2012 third quarter of $208.9 million, or $2.41 per fully diluted share, on net sales of $2,409.6 million, compared to third quarter 2011 net income of $109.3 million, or $1.25 per fully diluted share, on net sales of $1,352.0 million.

(Logo: http://photos.prnewswire.com/prnh/20071203/CVRLOGO)

Third quarter 2012 adjusted net income, a non-GAAP financial measure, was $260.2 million, or $3.00 per diluted share, compared to $137.4 million, or $1.57 per diluted share, for the third quarter of 2011. Major items impacting the 2012 third quarter adjusted net income, all net of taxes, were a favorable impact from first-in, first-out (FIFO) accounting of $30.9 million and an unrealized loss on derivatives of $70.1 million.

Year-to-date, the company reported net income of $338.4 million, or $3.86 per diluted share, on net sales of $6,686.5 million, compared to net income of $279.9 million, or $3.19 per diluted share, on net sales of $3,966.9 million for the same period in 2011. Operating results for the nine month period of 2012 were impacted by an unrealized loss on derivatives of $119.4 million; an unfavorable impact from FIFO accounting of $32.9 million; major turnaround expenses of $21.1 million; and expenses associated with proxy matters of $26.8 million, all net of taxes.

"Strong operating performance from our refineries in the third quarter allowed us to take advantage of wide Group 3 crack spreads driven by favorable differentials between Brent and WTI crudes and local market conditions," said Jack Lipinski, CVR Energy's chief executive officer. "This quarter CVR Energy posted its best-ever net income for any quarter since the company went public in October 2007. Our petroleum segment also set new records with third quarter operating income of $507.5 million and a new crude gathering milestone of an average 47,513 barrels gathered during the quarter. 

"Our nitrogen fertilizer segment continues to be supported by strong operating performance and solid industry fundamentals, as well," he said.  "CVR Partners recently announced a third quarter cash distribution of 49.6 cents per common unit."   

Petroleum Business
The petroleum business, which includes the Coffeyville and Wynnewood refineries, reported record third quarter 2012 operating income of $507.5 million, and adjusted EBITDA, a non-GAAP financial measure, of $444.2 million, on net sales of $2,337.3 million, compared to operating income in the same quarter a year earlier of $179.8 million, and adjusted EBITDA of $232.0 million, on net sales of $1,284.4 million

Third quarter 2012 throughput of crude oil and all other feedstocks and blendstocks totaled 203,038 barrels per day (bpd), compared to 116,091 bpd for the same period in 2011. Crude oil throughput for the third quarter 2012 averaged 192,563 bpd per day compared with 112,885 bpd for the same period in 2011. The year-over-year increase in throughput was mostly driven by the addition of the Wynnewood refinery.

Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $33.44 in the third quarter 2012 compared to $27.55 during the same period in 2011. Gross profit per crude oil throughput barrel was $29.75 in the third quarter 2012, as compared to $18.14 during the same period in 2011.

Direct operating expenses, including major scheduled turnaround expenses, per barrel sold, exclusive of depreciation and amortization, for the third quarter 2012 was $4.81, down from $5.19 in the third quarter 2011.

Coffeyville Refinery
The Coffeyville refinery reported third quarter 2012 operating income of $353.6 million, compared to $180.3 million of operating income for the third quarter of 2011. Third quarter 2012 crude oil throughput totaled 124,643 bpd, compared to 112,885 bpd in the third quarter of 2011. Refining margin adjusted for FIFO impact per crude oil throughput barrel for the third quarter of 2012 was $33.56 compared to $27.54 for the same period in 2011. Gross profit per crude oil throughput barrel was $31.76 in the third quarter of 2012, compared to $18.19 for the 2011 third quarter. Direct operating expenses, including major scheduled turnaround expenses, per barrel sold for the 2012 third quarter was $3.83, compared to $5.19 for the 2011 third quarter.

Wynnewood Refinery
CVR Energy acquired the Wynnewood refinery in December 2011. The 2012 third quarter represents the refinery's third full quarter as a CVR Energy subsidiary. 

For the third quarter of 2012, the refinery's crude oil throughput totaled 67,920 bpd. The refinery's third quarter 2012 operating income was $154.4 million. Refining margin adjusted for FIFO impact per crude oil throughput barrel for the third quarter of 2012 was $33.07. Direct operating expenses, including major scheduled turnaround expenses, per barrel sold for the third quarter was $6.54.

Nitrogen Fertilizers Business
The fertilizer business operated by CVR Partners, LP reported third quarter 2012 operating income of $32.3 million, and adjusted EBITDA, a non-GAAP financial measure, of $39.0 million, on net sales of $75.0 million, compared to operating income of $37.5 million, and adjusted EBITDA of $43.3 million, on net sales of $77.2 million for the 2011 third quarter. 

CVR Partners produced 104,200 tons of ammonia during the third quarter of 2012, of which 29,400 net tons were available for sale while the rest was upgraded to 181,900 tons of more profitable urea ammonium nitrate (UAN).  In the 2011 third quarter, the plant produced 102,700 tons of ammonia with 25,900 net tons available for sale with the remainder upgraded to 185,800 tons of UAN.

Third quarter 2012 average realized plant gate prices for ammonia and UAN were $578 per ton and $290 per ton, respectively, as compared to $568 per ton and $294 per ton, respectively, for the same period in 2011.

Cash and Debt
Consolidated cash and cash equivalents, which included $180.3 million for CVR Partners, increased to $988.2 million at the end of the 2012 third quarter, compared to $692.6 million at the end of the second quarter of 2012, primarily due to increased cash flows in the petroleum business.  Consolidated long-term debt at the end of the 2012 third quarter, which included $125.0 million for CVR Partners, remained nearly unchanged at $850.9 million.  

CVR Energy Third Quarter 2012 Earnings Conference Call Information
CVR Energy previously announced that it will host its third quarter 2012 Earnings Conference Call for analysts and investors on Tuesday, Nov. 6, at 2 p.m. Eastern.

The call will be broadcast live over the Internet at http://www.videonewswire.com/event.asp?id=89676. 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 28 days at http://www.videonewswire.com/event.asp?id=89676. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 400979.

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 Annual Report on Form 10-K for the year ended Dec. 31, 2011, and any subsequently filed quarterly reports on Form 10-Q.  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, Inc.'s subsidiary and affiliated businesses operate independent refining assets in Coffeyville, Kan., and Wynnewood, Okla., with more than 185,000 barrels per day of processing capacity, a marketing network for supplying high value transportation fuels to customers through tanker trucks and pipeline terminals, and a crude oil gathering system serving Kansas, Missouri, Oklahoma, Nebraska and Texas.  In addition, CVR Energy subsidiaries own a majority interest in and serve as the general partner of CVR Partners, LP, a producer of ammonia and urea ammonium nitrate, or UAN, fertilizers.

For further information, please contact:

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

Media Relations:
Angie Dasbach
CVR Energy, Inc.
913-982-0482
MediaRelations@CVREnergy.com


 

 

 

CVR Energy, Inc.


Financial and Operational Data (all information in this release is unaudited unless noted otherwise).



Three Months Ended

September 30,

Change from 2011


2012

2011

Change

Percent


(in millions, except per share data)

Consolidated Statement of Operations Data:





Net sales

$    2,409.6

$    1,352.0

$     1,057.6

78.2%

Cost of product sold

1,702.5

1,026.0

676.5

65.9

Direct operating expenses

109.9

74.6

35.3

47.3

Insurance recovery — business interruption

(0.5)

0.5

(100.0)

Selling, general and administrative expenses

30.4

17.7

12.7

71.8

Depreciation and amortization

33.1

22.0

11.1

50.5

Operating income

533.7

212.2

321.5

151.5

Interest expense and other financing costs

(18.9)

(13.8)

(5.1)

37.0

Gain (loss) on derivatives, net





Realized

(53.2)

0.1

(53.3)

(53,300.0)

Unrealized

(115.7)

(10.0)

(105.7)

1,057.0

Other income, net

0.2

0.4

(0.2)

(50.0)

Income before income tax expense

346.1

188.9

157.2

83.2

Income tax expense

127.6

68.6

59.0

86.0

Net income

218.5

120.3

98.2

81.6

Net income attributable to noncontrolling interest

9.6

11.0

(1.4)

(12.7)

Net income attributable to CVR Energy stockholders

$       208.9

$       109.3

$         99.6

91.1%

_______________










Basic earnings per share

$          2.41

$          1.26

$        1.15

91.3%

Diluted earnings per share

$          2.41

$          1.25

$        1.16

92.8%






Adjusted net income

$       260.2

$       137.4

$        122.8

89.4%

Adjusted net income, per diluted share

$         3.00

$         1.57

$         1.43

91.1%






Weighted-average common shares outstanding:





   Basic

86,831,050

86,549,846

281,204

0.3%

   Diluted

86,831,050

87,743,600

(912,550)

(1.0)%









 


 


Nine Months Ended September 30,

Change from 2011



2012

2011

Change

Percent



(in millions, except per share data)


Consolidated Statement of Operations Data:






Net sales

$    6,686.5

$    3,966.9

$      2,719.6

68.6%


Cost of product sold

5,211.9

3,086.2

2,125.7

68.9


Direct operating expenses

319.5

209.3

110.2

52.7


Insurance recovery — business interruption

(3.4)

3.4

(100.0)


Selling, general and administrative expenses

147.7

69.0

78.7

114.1


Depreciation and amortization

97.4

66.1

31.3

47.4


Operating income

910.0

539.7

370.3

68.6


Interest expense and other financing costs

(57.1)

(41.2)

(15.9)

38.6


Gain (loss) on derivatives, net






Realized

(80.4)

(18.3)

(62.1)

339.3


Unrealized

(197.0)

(6.8)

(190.2)

2,797.1


Loss on extinguishment of debt

(2.1)

2.1

(100.0)


Other income, net

1.3

1.4

(0.1)

(7.1)


Income before income tax expense

576.8

472.7

104.1

22.0


Income tax expense

209.0

172.5

36.5

21.2


Net income

367.8

300.2

67.6

22.5


Net income attributable to noncontrolling interest

29.4

20.3

9.1

44.8


Net income attributable to CVR Energy stockholders

$       338.4

$       279.9

$           58.5

20.9%








_____________












Basic earnings per share

$ 3.90

$ 3.24

$ 0.66

20.4%


Diluted earnings per share

$ 3.86

$ 3.19

$ 0.67

21.0%








Adjusted net income

$ 562.1

$ 310.9

$ 251.2

80.8%


Adjusted net income, per diluted share

$ 6.42

$ 3.54

$ 2.88

81.4%








Weighted-average common shares outstanding:






    Basic

86,820,181

86,462,668

357,513

0.4%


    Diluted

87,580,588

87,772,169

(191,581)

(0.2)%












 

_______________

 













As of September 30,


As of December 31,


2012


2011




(audited)


(in millions)

Balance Sheet Data:





Cash and cash equivalents

$        988.2


$         388.3


Working capital

1,137.7


769.2


Total assets

3,652.4


3,119.3


Long-term debt

850.9


853.9


Total CVR stockholders' equity

1,485.1


1,151.6



















 



Three Months Ended

          September 30,          

Nine Months Ended

         September 30,          




2012

2011

2012

2011




(in millions)


Cash Flow Data






Net cash flow provided by (used in):






Operating activities

$347.9

$   183.3

$  783.8

$  345.9


Investing activities

(38.8)

(23.1)

(143.6)

(43.8)


Financing activities

(13.5)

(9.7)

(40.3)

396.3


Net cash flow

$  295.6

$   150.5

$  599.9

$  698.4









 

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 Corporate and Other segment (along with elimination of intersegment transactions). The Petroleum segment includes the operations of our Coffeyville, Kansas and Wynnewood, Oklahoma refineries along with our crude oil gathering and pipeline systems. The Nitrogen Fertilizer segment is operated by CVR Partners, LP, ("CVR Partners") of which we own a majority interest and serve as general partner. It consists of a nitrogen fertilizer manufacturing facility that utilizes a pet coke gasification process in producing nitrogen fertilizer.  Detailed operating results for the Nitrogen Fertilizer segment for the quarter ended September 30, 2012 are included in CVR Partners' press release dated November 5, 2012.

 


 

 

Petroleum

Nitrogen Fertilizer

(CVR Partners)

 

Corporate

and Other

 

 

Consolidated


(in millions)

Three months ended September 30, 2012





Net sales

$        2,337.3

$             75.0

$              (2.7)

$        2,409.6

Cost of product sold

1,694.0

11.3

(2.8)

1,702.5

Direct operating expenses (1)

77.7

20.9

98.6

Major scheduled turnaround expense

11.1

0.2

11.3

Selling, general & administrative

19.5

5.1

5.8

30.4

Depreciation and amortization

27.5

5.2

0.4

33.1

Operating income (loss)

$           507.5

$             32.3

$              (6.1)

$           533.7






Capital expenditures

$             20.2

$             18.2

$               1.5

$             39.9






Nine months ended September 30, 2012





Net sales

$        6,465.3

$           234.7

$            (13.5)

$        6,686.5

Cost of product sold

5,190.8

34.6

(13.5)

5,211.9

Direct operating expenses (1)

218.5

66.2

284.7

Major scheduled turnaround expense

34.6

0.2

34.8

Selling, general & administrative

49.8

18.1

79.8

147.7

Depreciation and amortization

80.4

15.8

1.2

97.4

Operating income (loss)

$           891.2

$             99.8

$            (81.0)

$           910.0






Capital expenditures

$             82.6

$             57.4

$               5.1

$           145.1







 


 

 

Petroleum

Nitrogen Fertilizer

(CVR Partners)

 

Corporate

and Other

 

 

Consolidated


(in millions)

Three months ended September 30, 2011





Net sales

$        1,284.4

$             77.2

$              (9.6)

$        1,352.0

Cost of product sold

1,024.5

10.9

(9.4)

1,026.0

Direct operating expenses (1)

46.5

20.1

66.6

Major scheduled turnaround expense

8.0

8.0

Insurance recovery – business interruption

(0.5)

(0.5)

Selling, general & administrative

8.6

4.5

4.6

17.7

Depreciation and amortization

17.0

4.7

0.3

22.0

Operating income (loss)

$           179.8

$             37.5

$              (5.1)

$           212.2






Capital expenditures

$             20.2

$               4.5

$               1.0

$             25.7






Nine months ended September 30, 2011





Net sales

$        3,772.3

$           215.3

$            (20.7)

$        3,966.9

Cost of product sold

3,077.5

28.2

(19.5)

3,086.2

Direct operating expenses (1)

131.8

65.4

(0.1)

197.1

Major scheduled turnaround expense

12.2

12.2

Insurance recovery – business interruption

(3.4)

(3.4)

Selling, general & administrative

30.9

17.6

20.5

69.0

Depreciation and amortization

50.9

13.9

1.3

66.1

Operating income (loss)

$           469.0

$             93.6

$            (22.9)

$           539.7






Capital expenditures

$             33.4

$             10.5

$               2.7

$             46.6

____________________

(1)     Excluding turnaround expenses.

 


 

 

Petroleum

Nitrogen Fertilizer

(CVR Partners)

 

Corporate

and Other

 

 

Consolidated


(in millions)

September 30, 2012





Cash and cash equivalents (1)

$           —

$            180.3

$          807.9

$          988.2

Total assets

2,189.0

653.2

810.2

3,652.4

Long-term debt (1)

125.0

725.9

850.9











December 31, 2011





Cash and cash equivalents (1)

$           —

$            237.0

$          151.3

$          388.3

Total assets

2,322.1

659.3

137.9

3,119.3

Long-term debt (1)

125.0

728.9

853.9

_________________

(1)     Corporate and Other is inclusive of the Petroleum segment's cash and cash equivalents and long-term debt.

Petroleum Segment Operating Data
The following tables set forth information about our consolidated Petroleum segment operations and our Coffeyville and Wynnewood refineries. Reconciliations of certain non-GAAP financial measures are provided under "Use of Non-GAAP Financial Measures" below.

 



Three Months Ended

September 30,

Nine Months Ended

September 30,




2012

2011

2012

2011




(in millions, except operating statistics)


Petroleum Segment Summary Financial Results:






Net sales

$       2,337.3

$       1,284.4

$       6,465.3

$       3,772.3


Cost of product sold

1,694.0

1,024.5

5,190.8

3,077.5


Refining margin*

643.3

259.9

1,274.5

694.8


Direct operating expenses

77.7

46.5

218.5

131.8


Major scheduled turnaround expense

11.1

8.0

34.6

12.2


Depreciation and amortization

27.5

17.0

80.4

50.9


Gross profit

527.0

188.4

941.0

499.9


Selling, general and administrative expenses

19.5

8.6

49.8

30.9


Operating income

$          507.5

$          179.8

$          891.2

$          469.0








Refining margin adjusted for FIFO impact*

$          592.4

$          286.1

$       1,328.8

$          696.3








Adjusted Petroleum EBITDA*

$          444.2

$          232.0

$          989.7

$          525.2








Petroleum Segment Key Operating Statistics:






Per crude oil throughput barrel:






Refining margin*

$         36.31

$         25.03

$         26.34

$         23.77


FIFO impact (favorable) unfavorable

(2.87)

2.52

1.12

0.05


Refining margin adjusted for FIFO impact*

33.44

27.55

27.46

23.82


Gross profit

29.75

18.14

19.45

17.10


Direct operating expenses and major scheduled turnaround expenses

 

5.02

 

5.25

 

5.23

 

4.93


Direct operating expenses and major scheduled turnaround expenses per barrel sold

 

$           4.81

 

$           5.19

 

$           4.75

 

$           4.71


Barrels sold (barrels per day)

200,683

114,061

194,638

111,939









 


 


Three Months Ended

September 30,

Nine Months Ended

September 30,


2012

2011

2012

2011

Petroleum Segment Summary Refining Throughput and Production Data:









(barrels per day)









Throughput:









Sweet

149,768

73.8%

91,498

78.8%

136,463

73.4%

85,401