CVR Energy Reports 2015 Second Quarter Results And Announces Cash Dividend of 50 Cents per Share

Jul 30, 2015, 08:30 ET from CVR Energy, Inc.

SUGAR LAND, Texas, July 30, 2015 /PRNewswire/ -- CVR Energy, Inc. (NYSE: CVI) today announced second quarter 2015 net income of $101.9 million, or $1.17 per diluted share, on net sales of $1,624.2 million, compared to net income of $83.7 million, or 96 cents per diluted share, on net sales of $2,540.3 million for the 2014 second quarter. Second quarter 2015 adjusted EBITDA, a non-GAAP financial measure, was $145.7 million, compared to second quarter 2014 adjusted EBITDA of $147.2 million.

For the first six months of 2015, net income was $156.7 million, or $1.80 per diluted share, on net sales of $3,013.1 million, compared to net income of $210.4 million, or $2.42 per diluted share, on net sales of $4,987.8 million for the same period a year earlier. Adjusted EBITDA for the first six months of 2015 was $309.4 million, compared to adjusted EBITDA of $301.4 million for the first six months of 2014.

"Our petroleum and fertilizer subsidiaries performed well during the second quarter," said Jack Lipinski, CVR Energy's chief executive officer. "CVR Refining's Coffeyville and Wynnewood refineries posted a combined crude throughput of 210,727 barrels per day (bpd). CVR Partners also had a strong quarter with on-stream rates ranging from nearly 97 percent to 100 percent for all facility operating units."

The company also announced a second quarter 2015 cash dividend of 50 cents per share. The dividend, as declared by CVR Energy's Board of Directors, will be paid on Aug. 17, 2015, to stockholders of record on Aug. 10, 2015.

CVR Energy's second quarter cash dividend brings the cumulative cash dividends paid or declared for the first six months of 2015 to $1.00 per share.

Today, CVR Refining announced a 2015 second quarter cash distribution of 98 cents per common unit, and CVR Partners announced a 2015 second quarter cash distribution of 39 cents per common unit.    

Petroleum Business

The petroleum business, which is operated by CVR Refining and includes the Coffeyville and Wynnewood refineries, reported second quarter 2015 operating income of $250.8 million on net sales of $1,547.5 million, compared to operating income of $151.9 million on net sales of $2,466.3 million in the second quarter of 2014.

Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $17.22 in the 2015 second quarter, compared to $13.96 for the same period in 2014.

Direct operating expenses, excluding major scheduled turnaround expenses, per crude oil throughput barrel, exclusive of depreciation and amortization, for the 2015 second quarter was $4.62, compared to $4.83 in the second quarter of 2014.

Second quarter 2015 throughputs of crude oil and all other feedstocks and blendstocks for the Coffeyville and Wynnewood refineries totaled 221,095 bpd. Throughputs of crude oil and all other feedstocks and blendstocks for both refineries totaled 221,469 bpd for the same period in 2014.

Nitrogen Fertilizers Business

The fertilizer business, which is operated by CVR Partners, reported second quarter 2015 operating income of $28.7 million on net sales of $80.8 million, compared to operating income of $18.8 million on net sales of $77.2 million for the second quarter of 2014.

For the second quarter of 2015, average realized gate prices for UAN and ammonia were $269 per ton and $546 per ton, respectively, compared to $283 per ton and $521 per ton, respectively, for the same period in 2014.

CVR Partners produced 107,100 tons of ammonia and purchased an additional 600 tons of ammonia during the second quarter of 2015, of which 4,400 net tons were available for sale while the rest was upgraded to 253,500 tons of UAN. In the 2014 second quarter, the plant produced 92,200 tons of ammonia and purchased an additional 2,700 tons of ammonia, of which 3,200 net tons were available for sale while the remainder was upgraded to 223,400 tons of UAN.

Cash and Debt

Consolidated cash and cash equivalents, which included $433.2 million for CVR Refining and $67.0 million for CVR Partners, was $937.7 million at June 30, 2015. Consolidated total debt was $674.2 million at June 30, 2015. The company had no debt exclusive of CVR Refining's and CVR Partners' debt.

Second Quarter 2015 Earnings Conference Call

CVR Energy previously announced that it will host its second quarter 2015 Earnings Conference Call for analysts and investors on Thursday, July 30, 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/1003/9506. 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/1003/9506. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13614227.

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 a majority of the common units representing limited partner interests of CVR Refining and CVR Partners.

For further information, please contact:

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

Media Relations: Angie Dasbach CVR Energy, Inc. (281) 207-3550 MediaRelations@CVREnergy.com

 

CVR Energy, Inc.

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

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions, except per share data)

Consolidated Statement of Operations Data:

Net sales

$

1,624.2

$

2,540.3

$

3,013.1

$

4,987.8

Cost of product sold

1,192.2

2,189.0

2,265.8

4,265.9

Direct operating expenses

115.4

120.1

226.9

243.5

Flood insurance recovery

(27.3)

(27.3)

Selling, general and administrative expenses

27.2

28.0

52.4

54.4

Depreciation and amortization

42.5

38.6

84.5

75.9

Operating income

274.2

164.6

410.8

348.1

Interest expense and other financing costs

(11.9)

(9.3)

(24.6)

(19.4)

Interest income

0.3

0.2

0.4

0.4

Gain (loss) on derivatives, net

(12.6)

35.9

(64.0)

145.3

Other income (expense), net

0.2

(2.2)

36.3

(2.1)

Income before income tax expense

250.2

189.2

358.9

472.3

Income tax expense

58.1

45.2

82.1

114.6

Net income

192.1

144.0

276.8

357.7

Less: Net income attributable to noncontrolling interest

90.2

60.3

120.1

147.3

Net income attributable to CVR Energy stockholders

$

101.9

$

83.7

$

156.7

$

210.4

Basic earnings per share

$

1.17

$

0.96

$

1.80

$

2.42

Diluted earnings per share

$

1.17

$

0.96

$

1.80

$

2.42

Dividends declared per share

$

0.50

$

0.75

$

1.00

$

1.50

Adjusted EBITDA*

$

145.7

$

147.2

$

309.4

$

301.4

Adjusted net income*

$

72.1

$

75.1

$

157.0

$

157.0

Adjusted net income, per diluted share*

$

0.83

$

0.87

$

1.81

$

1.81

Weighted-average common shares outstanding:

Basic

86.8

86.8

86.8

86.8

Diluted

86.8

86.8

86.8

86.8

As of June 30, 2015

As of December 31, 2014

(audited)

(in millions)

Balance Sheet Data:

Cash and cash equivalents

$

937.7

$

753.7

Working capital

1,008.2

1,033.0

Total assets

3,547.6

3,462.5

Total debt, including current portion

674.2

674.9

Total CVR stockholders' equity

1,058.0

988.1

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions)

Cash Flow Data:

Net cash flow provided by (used in):

Operating activities

$

198.2

$

124.2

$

376.4

$

405.5

Investing activities

(15.3)

(131.1)

(18.7)

(193.0)

Financing activities

(97.4)

43.5

(173.7)

(55.9)

Net cash flow

$

85.5

$

36.6

$

184.0

$

156.6

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 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 quarter and six months ended June 30, 2015 are included in CVR Refining's press release dated July 30, 2015. The Nitrogen Fertilizer segment is operated by CVR Partners, LP, ("CVR Partners") in which we own a majority interest as well as the 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 and six months ended June 30, 2015 are included in CVR Partners' press release dated July 30, 2015.

Petroleum (CVR Refining)

Nitrogen Fertilizer (CVR Partners)

Corporate and Other

Consolidated

(in millions)

Three Months Ended June 30, 2015

Net sales

$

1,547.5

$

80.8

$

(4.1)

$

1,624.2

Cost of product sold

1,180.9

15.4

(4.1)

1,192.2

Direct operating expenses (1)

88.6

24.7

113.3

Major scheduled turnaround expenses

1.7

0.4

2.1

Flood insurance recovery

(27.3)

(27.3)

Selling, general and administrative

18.6

4.6

4.0

27.2

Depreciation and amortization

34.2

7.0

1.3

42.5

Operating income (loss)

$

250.8

$

28.7

$

(5.3)

$

274.2

Capital expenditures

$

36.4

$

3.4

$

1.4

$

41.2

Six Months Ended June 30, 2015

Net sales

$

2,852.0

$

173.9

$

(12.8)

$

3,013.1

Cost of product sold

2,237.1

41.2

(12.5)

2,265.8

Direct operating expenses (1)

175.6

49.2

224.8

Major scheduled turnaround expenses

1.7

0.4

2.1

Flood insurance recovery

(27.3)

(27.3)

Selling, general and administrative

36.7

9.1

6.6

52.4

Depreciation and amortization

68.2

13.8

2.5

84.5

Operating income (loss)

$

360.0

$

60.2

$

(9.4)

$

410.8

Capital expenditures

$

78.1

$

6.0

$

2.6

$

86.7

Petroleum (CVR Refining)

Nitrogen Fertilizer (CVR Partners)

Corporate and Other

Consolidated

(in millions)

Three Months Ended June 30, 2014

Net sales

$

2,466.3

$

77.2

$

(3.2)

$

2,540.3

Cost of product sold

2,172.6

19.4

(3.0)

2,189.0

Direct operating expenses (1)

93.2

26.9

120.1

Major scheduled turnaround expenses

Selling, general and administrative

17.9

5.3

4.8

28.0

Depreciation and amortization

30.7

6.8

1.1

38.6

Operating income (loss)

$

151.9

$

18.8

$

(6.1)

$

164.6

Capital expenditures

$

47.4

$

4.1

$

1.5

$

53.0

Six Months Ended June 30, 2014

Net sales

$

4,841.7

$

157.5

$

(11.4)

$

4,987.8

Cost of product sold

4,236.0

41.1

(11.2)

4,265.9

Direct operating expenses (1)

192.4

51.1

243.5

Major scheduled turnaround expenses

Selling, general and administrative

36.6

9.9

7.9

54.4

Depreciation and amortization

60.2

13.5

2.2

75.9

Operating income (loss)

$

316.5

$

41.9

$

(10.3)

$

348.1

Capital expenditures

$

105.3

$

7.5

$

2.1

$

114.9

(1) Excluding turnaround expenses

Petroleum (CVR Refining)

Nitrogen Fertilizer (CVR Partners)

Corporate and Other

Consolidated

(in millions)

June 30, 2015

Cash and cash equivalents

$

433.2

$

67.0

$

437.5

$

937.7

Total assets

2,516.3

560.0

471.3

3,547.6

Total debt, including current portion

580.7

125.0

(31.5)

674.2

December 31, 2014

Cash and cash equivalents

$

370.2

$

79.9

$

303.6

$

753.7

Total assets

2,417.8

578.8

465.9

3,462.5

Total debt, including current portion

581.4

125.0

(31.5)

674.9

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 the quarter and six months ended June 30, 2015 are included in CVR Refining's press release dated July 30, 2015.

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions)

Petroleum Segment Summary Financial Results:

Net sales

$

1,547.5

$

2,466.3

$

2,852.0

$

4,841.7

Cost of product sold

1,180.9

2,172.6

2,237.1

4,236.0

Direct operating expenses

88.6

93.2

175.6

192.4

Major scheduled turnaround expenses

1.7

1.7

Flood insurance recovery

(27.3)

(27.3)

Selling, general and administrative expenses

18.6

17.9

36.7

36.6

Depreciation and amortization

34.2

30.7

68.2

60.2

Operating income

250.8

151.9

360.0

316.5

Interest expense and other financing costs

(10.4)

(7.9)

(21.7)

(16.6)

Interest income

0.1

0.1

0.2

0.2

Gain (loss) on derivatives, net

(12.6)

35.9

(64.0)

145.3

Other expense, net

(0.1)

Income before income tax expense

227.8

180.0

274.5

445.4

Income tax expense

Net income

$

227.8

$

180.0

$

274.5

$

445.4

Refining margin*

$

366.6

$

293.7

$

614.9

$

605.7

Gross profit*

$

269.4

$

169.8

$

396.7

$

353.1

Refining margin adjusted for FIFO impact*

$

330.2

$

269.4

$

603.0

$

559.8

Adjusted Petroleum EBITDA*

$

194.3

$

192.9

$

356.0

$

387.0

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(dollars per barrel)

Petroleum Segment Key Operating Statistics:

Per crude oil throughput barrel:

Refining margin*

$

19.12

$

15.22

$

16.47

$

16.17

FIFO impact (favorable) unfavorable

(1.90)

(1.26)

(0.32)

(1.22)

Refining margin adjusted for FIFO impact*

17.22

13.96

16.15

14.95

Gross profit*

14.05

8.80

10.63

9.42

Gross profit excluding flood insurance recovery*

12.63

8.80

9.90

9.42

Direct operating expenses and major scheduled turnaround expenses

4.71

4.83

4.75

5.14

Direct operating expenses excluding major scheduled turnaround expenses

4.62

4.83

4.71

5.14

Direct operating expenses and major scheduled turnaround expenses   per barrel sold

$

4.43

$

4.57

$

4.43

$

4.82

Barrels sold (barrels per day)

224,031

224,295

220,876

220,760

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

Petroleum Segment Summary Refining Throughput and Production Data (bpd):

Throughput:

Sweet

192,691

87.1%

193,032

87.2%

184,082

84.4%

185,412

85.2%

Medium

1,082

0.5%

1

—%

3,841

1.8%

1,789

0.8%

Heavy sour

16,954

7.7%

19,014

8.6%

18,298

8.4%

19,803

9.1%

Total crude oil throughput

210,727

95.3%

212,047

95.8%

206,221

94.6%

207,004

95.1%

All other feedstocks and blendstocks

10,368

4.7%

9,422

4.2%

11,855

5.4%

10,780

4.9%

Total throughput

221,095

100.0%

221,469

100.0%

218,076

100.0%

217,784

100.0%

Production:

Gasoline

107,439

48.3%

108,977

48.8%

108,263

49.3%

106,727

48.7%

Distillate

95,881

43.1%

94,931

42.6%

92,675

42.1%

91,933

41.9%

Other (excluding internally produced fuel)

19,160

8.6%

19,255

8.6%

19,011

8.6%

20,665

9.4%

Total refining production (excluding internally produced fuel)

222,480

100.0%

223,163

100.0%

219,949

100.0%

219,325

100.0%

Product price (dollars per gallon):

Gasoline

$

1.87

$

2.87

$

1.67

$

2.77

Distillate

1.81

2.97

1.75

2.98

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

Market Indicators (dollars per barrel):

West Texas Intermediate (WTI) NYMEX

$

57.95

$

102.99

$

53.34

$

100.84

Crude Oil Differentials:

WTI less WTS (light/medium sour)

(0.71)

7.15

0.12

6.38

WTI less WCS (heavy sour)

9.57

19.22

11.60

20.05

NYMEX Crack Spreads:

Gasoline

26.02

23.20

22.34

20.70

Heating Oil

21.69

20.90

24.33

24.37

NYMEX 2-1-1 Crack Spread

23.85

22.05

23.33

22.53

PADD II Group 3 Basis:

Gasoline

(6.19)

(7.06)

(4.87)

(5.98)

Ultra Low Sulfur Diesel

(3.69)

0.23

(4.10)

(0.84)

PADD II Group 3 Product Crack Spread:

Gasoline

19.83

16.14

17.47

14.72

Ultra Low Sulfur Diesel

18.00

21.13

20.23

23.53

PADD II Group 3 2-1-1

18.91

18.64

18.85

19.13

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions, except operating statistics)

Coffeyville Refinery Financial Results:

Net sales

$

1,006.3

$

1,585.5

$

1,858.0

$

3,157.8

Cost of product sold

764.8

1,398.5

1,465.7

2,757.2

Refining margin*

241.5

187.0

392.3

400.6

Direct operating expenses

51.2

53.7

101.5

107.1

Major scheduled turnaround expenses

1.7

1.7

Flood insurance recovery

(27.3)

(27.3)

Depreciation and amortization

19.5

18.8

38.9

36.8

Gross profit*

$

196.4

$

114.5

$

277.5

$

256.7

Refining margin adjusted for FIFO impact*

$

212.4

$

167.7

$

381.7

$

364.7

Coffeyville Refinery Key Operating Statistics:

Per crude oil throughput barrel:

Refining margin*

$

20.27

$

15.61

$

16.82

$

17.31

FIFO impact (favorable) unfavorable

(2.44)

(1.61)

(0.46)

(1.55)

Refining margin adjusted for FIFO impact*

17.83

14.00

16.36

15.76

Gross profit*

16.49

9.55

11.89

11.09

Gross profit excluding flood insurance recovery*

14.20

9.55

10.72

11.09

Direct operating expenses and major scheduled turnaround expenses

4.43

4.48

4.43

4.63

Direct operating expenses excluding major scheduled turnaround expenses

4.29

4.48

4.35

4.63

Direct operating expenses and major scheduled turnaround expenses per barrel sold

$

4.03

$

4.12

$

4.00

$

4.19

Barrels sold (barrels per day)

144,183

143,412

142,587

141,226

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

Coffeyville Refinery Throughput and Production Data (bpd):

Throughput:

Sweet

112,867

81.2%

112,670

80.6%

106,734

77.3%

107,294

78.5%

Medium

1,082

0.8%

1

—%

3,841

2.8%

744

0.5%

Heavy sour

16,954

12.2%

19,014

13.6%

18,298

13.3%

19,803

14.5%

Total crude oil throughput

130,903

94.2%

131,685

94.2%

128,873

93.4%

127,841

93.5%

All other feedstocks and blendstocks

8,122

5.8%

8,133

5.8%

9,168

6.6%

8,897

6.5%

Total throughput

139,025

100.0%

139,818

100.0%

138,041

100.0%

136,738

100.0%

Production:

Gasoline

66,374

46.6%

68,348

47.9%

67,110

47.5%

67,338

48.2%

Distillate

62,257

43.7%

61,403

43.0%

60,843

43.0%

59,624

42.6%

Other (excluding internally produced fuel)

13,722

9.7%

13,023

9.1%

13,477

9.5%

12,899

9.2%

Total refining production (excluding internally produced fuel)

142,353

100.0%

142,774

100.0%

141,430

100.0%

139,861

100.0%

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions, except operating statistics)

Wynnewood Refinery Financial Results:

Net sales

$

540.1

$

879.7

$

991.8

$

1,681.7

Cost of product sold

415.9

774.2

771.4

1,478.7

Refining margin*

124.2

105.5

220.4

203.0

Direct operating expenses

37.5

39.8

74.1

85.4

Major scheduled turnaround expenses

Depreciation and amortization

12.5

10.1

25.1

20.1

Gross profit*

$

74.2

$

55.6

$

121.2

$

97.5

Refining margin adjusted for FIFO impact*

$

116.9

$

100.6

$

219.1

$

193.0

Wynnewood Refinery Key Operating Statistics:

Per crude oil throughput barrel:

Refining margin*

$

17.10

$

14.42

$

15.74

$

14.16

FIFO impact (favorable) unfavorable

(1.01)

(0.68)

(0.09)

(0.70)

Refining margin adjusted for FIFO impact*

16.09

13.74

15.65

13.46

Gross profit*

10.21

7.60

8.66

6.80

Direct operating expenses and major scheduled turnaround expenses

5.16

5.44

5.29

5.96

Direct operating expenses excluding major scheduled turnaround expenses

5.16

5.44

5.29

5.96

Direct operating expenses and major scheduled  turnaround expenses per barrel sold

$

5.16

$

5.41

$

5.23

$

5.93

Barrels sold (barrels per day)

79,848

80,883

78,289

79,534

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

Wynnewood Refinery Throughput and Production Data (bpd):

Throughput:

Sweet

79,824

97.3%

80,362

98.4%

77,348

96.6%

78,118

96.4%

Medium

—%

—%

—%

1,045

1.3%

Heavy sour

—%

—%

—%

—%

Total crude oil throughput

79,824

97.3%

80,362

98.4%

77,348

96.6%

79,163

97.7%

All other feedstocks and blendstocks

2,246

2.7%

1,289

1.6%

2,687

3.4%

1,883

2.3%

Total throughput

82,070

100.0%

81,651

100.0%

80,035

100.0%

81,046

100.0%

Production:

Gasoline

41,065

51.2%

40,629

50.5%

41,153

52.4%

39,389

49.6%

Distillate

33,624

42.0%

33,528

41.7%

31,832

40.5%

32,309

40.6%

Other (excluding internally produced fuel)

5,438

6.8%

6,232

7.8%

5,534

7.1%

7,766

9.8%

Total refining production (excluding internally produced fuel)

80,127

100.0%

80,389

100.0%

78,519

100.0%

79,464

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 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 Nitrogen Fertilizer segment for the quarter and six months ended June 30, 2015 are included in CVR Partners' press release dated July 30, 2015.

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions)

Nitrogen Fertilizer Segment Business Financial Results:

Net sales

$

80.8

$

77.2

$

173.9

$

157.5

Cost of product sold

15.4

19.4

41.2

41.1

Direct operating expenses

24.7

26.9

49.2

51.1

Major scheduled turnaround expenses

0.4

0.4

Selling, general and administrative expenses

4.6

5.3

9.1

9.9

Depreciation and amortization

7.0

6.8

13.8

13.5

Operating income

28.7

18.8

60.2

41.9

Interest expense and other financing costs

(1.7)

(1.7)

(3.4)

(3.3)

Income before income tax expense

27.0

17.1

56.8

38.6

Income tax expense

Net income

$

27.0

$

17.1

$

56.8

$

38.6

Adjusted Nitrogen Fertilizer EBITDA*

$

36.1

$

25.7

$

74.5

$

55.7

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

Nitrogen Fertilizer Segment Key Operating Statistics:

Production (thousand tons):

Ammonia (gross produced)(1)

107.1

92.2

203.0

183.3

Ammonia (net available for sale)(1)(2)

4.4

3.2

19.1

12.1

UAN

253.5

223.4

505.6

480.6

Pet coke consumed (thousand tons)

128.2

117.3

253.1

242.1

Pet coke consumed (cost per ton)

$

25

$

27

$

27

$

28

Sales (thousand tons):

Ammonia

6.3

2.9

19.1

8.3

UAN

249.8

239.2

524.3

493.9

Product pricing at gate (dollars per ton)(3):

Ammonia

$

546

$

521

$

551

$

493

UAN

$

269

$

283

$

265

$

267

On-stream factors(4):

Gasification

100.0%

94.2%

99.7%

96.5%

Ammonia

99.3%

88.1%

96.9%

90.1%

UAN

96.6%

85.9%

97.2%

91.4%

Market Indicators:

Ammonia — Southern Plains (dollars per ton)

$

546

$

561

$

550

$

501

UAN — Corn belt (dollars per ton)

$

305

$

333

$

309

$

332

Cost of product sold, direct operating expenses and selling, general and administrative expenses are all reflected exclusive of depreciation and amortization.

* See Use of Non-GAAP Financial Measures below.

(1)

Gross tons produced for ammonia represent total ammonia produced, including ammonia produced that was upgraded into UAN. Net tons available for sale represent the ammonia available for sale that was not upgraded into UAN.

(2)

In addition to the produced ammonia, the Nitrogen Fertilizer segment acquired approximately 600 tons and 2,700 tons of ammonia during the three months ended June 30, 2015 and 2014, respectively. The Nitrogen Fertilizer segment acquired approximately 21,800 and 25,600 tons of ammonia during the six months ended June 30, 2015 and 2014, respectively.

(3)

Product pricing at gate per ton 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.

(4)

On-stream factor is the total number of hours operated divided by the total number of hours in the reporting period and is a measure of operating efficiency. Excluding the impact of the shutdown for installation of the waste heat boiler, pressure swing adsorption unit upgrade and the Linde air separation unit maintenance, the on-stream factors for the three months ended June 30, 2014 would have been 100.0% for gasifier, 94.9% for ammonia and 92.9% for UAN, and the on-stream factors for the six months ended June 30, 2014 would have been 99.4% for gasifier, 93.5% for ammonia and 95.0% for UAN.

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 non-GAAP financial measures as 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 is not a recognized term under GAAP and should not be substituted for net income 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 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 per diluted share represents adjusted net income divided by weighted-average diluted shares outstanding.

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions, except per share data)

Reconciliation of Net Income to Adjusted Net Income:

Income before income tax expense

$

250.2

$

189.2

$

358.9

$

472.3

Adjustments:

FIFO impact (favorable) unfavorable

(36.4)

(24.3)

(11.9)

(45.9)

Share-based compensation

1.9

4.7

5.9

8.9

Major scheduled turnaround expenses

2.1

2.1

(Gain) loss on derivatives, net

12.6

(35.9)

64.0

(145.3)

Current period settlement on derivative contracts (1)

(28.5)

33.9

(34.8)

55.0

Flood insurance recovery

(27.3)

(27.3)

Adjusted net income before income tax expense and noncontrolling interest

174.6

167.6

356.9

345.0

Adjusted net income attributed to noncontrolling interest

(63.8)

(53.0)

(117.5)

(108.3)

Income tax expense, as adjusted

(38.7)

(39.5)

(82.4)

(79.7)

Adjusted net income attributable to CVR Energy  stockholders

$

72.1

$

75.1

$

157.0

$

157.0

Adjusted net income per diluted share

$

0.83

$

0.87

$

1.81

$

1.81

Refining margin per crude oil throughput barrel is a measurement calculated as the difference between the Petroleum segment's net sales and cost of product sold (exclusive of depreciation and amortization). 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 product sold at which they are able to sell refined products. Each of the components used in this calculation (net sales and cost of product sold exclusive of depreciation and amortization) 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 product sold (exclusive of depreciation and amortization) adjusted for FIFO impacts. 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 product sold (taking into account the impact of the utilization of FIFO) that 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 favorable FIFO impacts when crude oil prices increase and unfavorable FIFO impacts when crude oil prices decrease.

Gross profit is calculated as the difference between the Petroleum segment's net sales, cost of product sold (exclusive of depreciation and amortization), direct operating expenses (exclusive of depreciation and amortization), major scheduled turnaround expenses, flood insurance recovery and depreciation and amortization. Gross profit per crude throughput barrel is calculated as gross profit as derived above divided by the refineries' crude oil throughput volumes for the respective periods presented. Gross profit is a non-GAAP measure that should not be substituted for operating income. Management believes it is important to investors in evaluating the refineries' performance and the Petroleum segment's ongoing operating results. Our calculation of gross profit may differ from similar calculations of other companies in the industry, thereby limiting its usefulness as a comparative measure.

EBITDA and Adjusted EBITDA. EBITDA represents net income before (i) interest expense and other financing costs, net of interest income, (ii) income tax expense and (iii) depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for (i) FIFO impacts (favorable) unfavorable, (ii) share-based compensation, (iii) loss on extinguishment of debt, (iv) major scheduled turnaround expenses, (v) (gain) loss on derivatives, net, (vi) current period settlements on derivative contracts and (vii) flood insurance recovery. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be substituted for net income 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. Below is a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the three and six months ended June 30, 2015 and 2014:

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions)

Net income attributable to CVR Energy stockholders

$

101.9

$

83.7

$

156.7

$

210.4

Add:

Interest expense and other financing costs, net of  interest income

11.6

9.1

24.2

19.0

Income tax expense

58.1

45.2

82.1

114.6

Depreciation and amortization

42.5

38.6

84.5

75.9

EBITDA adjustments included in noncontrolling interest

(19.2)

(15.1)

(38.7)

(30.2)

EBITDA

194.9

161.5

308.8

389.7

Add:

FIFO impacts, (favorable) unfavorable

(36.4)

(24.3)

(11.9)

(45.9)

Share-based compensation

1.9

4.7

5.9

8.9

Major scheduled turnaround expenses

2.1

2.1

(Gain) loss on derivatives, net

12.6

(35.9)

64.0

(145.3)

Current period settlement on derivative contracts (1)

(28.5)

33.9

(34.8)

55.0

Flood insurance recovery

(27.3)

(27.3)

Adjustments included in noncontrolling interest

26.4

7.3

2.6

39.0

Adjusted EBITDA

$

145.7

$

147.2

$

309.4

$

301.4

Petroleum and Nitrogen Fertilizer EBITDA and Adjusted EBITDA. EBITDA by operating segment represents net income 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 (i) FIFO impacts (favorable) unfavorable; (ii) share-based compensation, non-cash; (iii) loss on extinguishment of debt; (iv) major scheduled turnaround expenses; (v) (gain) loss on derivatives, net; (vi) current period settlements on derivative contracts and (vii) flood insurance recovery. 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 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. Below is a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the Petroleum and Nitrogen Fertilizer segments for the three and six months ended June 30, 2015 and 2014:

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions)

Petroleum:

Petroleum net income

$

227.8

$

180.0

$

274.5

$

445.4

Add:

Interest expense and other financing costs, net of interest income

10.3

7.8

21.5

16.4

Income tax expense

Depreciation and amortization

34.2

30.7

68.2

60.2

Petroleum EBITDA

272.3

218.5

364.2

522.0

Add:

FIFO impacts (favorable), unfavorable

(36.4)

(24.3)

(11.9)

(45.9)

Share-based compensation, non-cash

(0.1)

0.7

0.1

1.2

Major scheduled turnaround expenses

1.7

1.7

(Gain) loss on derivatives, net

12.6

(35.9)

64.0

(145.3)

Current period settlements on derivative contracts (1)

(28.5)

33.9

(34.8)

55.0

Flood insurance recovery

(27.3)

(27.3)

Adjusted Petroleum EBITDA

$

194.3

$

192.9

$

356.0

$

387.0

Three Months Ended 

 June 30,

Six Months Ended 

 June 30,

2015

2014

2015

2014

(in millions)

Nitrogen Fertilizer:

Nitrogen Fertilizer net income

$

27.0

$

17.1

$

56.8

$

38.6

Add:

Interest expense and other financing costs, net

1.7

1.7

3.4

3.3

Income tax expense

Depreciation and amortization

7.0

6.8

13.8

13.5

Nitrogen Fertilizer EBITDA

35.7

25.6

74.0

55.4

Add:

Share-based compensation, non-cash

0.1

0.1

0.3

Major scheduled turnaround expenses

0.4

0.4

Adjusted Nitrogen Fertilizer EBITDA

$

36.1

$

25.7

$

74.5

$

55.7

(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.

Derivatives Summary. The Petroleum segment enters into commodity swap contracts through crack spread swap agreements with financial counterparties to fix the spread risk between the refineries' crude oil purchases and the refined products the refineries produce for sale. Through these swaps, the Petroleum segment will sell a fixed differential for the value between the selected refined product benchmark and the benchmark crude oil price, thereby locking in a margin for a portion of the refineries' production. The physical volumes are not exchanged and these contracts are net settled with cash. From time to time, the Petroleum segment holds various NYMEX positions through a third-party clearing house. 

The table below summarizes the Petroleum segment's open commodity swap positions as of June 30, 2015. The positions are primarily in the form of crack spread swap agreements with financial counterparties, wherein the Petroleum segment has locked in differentials at the fixed prices noted below. As of June 30, 2015, the open commodity swap positions for 2015 were comprised of approximately 59.5% for distillate crack swaps and 40.5% for gasoline crack swaps while 100.0% of the open commodity swap positions for 2016 were comprised of distillate crack swaps.

Commodity Swaps

Barrels

Fixed Price(1)

Third Quarter 2015

5,075,000

$

21.83

Fourth Quarter 2015

600,000

28.48

First Quarter 2016

615,000

29.01

Second Quarter 2016

615,000

29.01

Third Quarter 2016

615,000

29.01

Fourth Quarter 2016

615,000

29.01

Total

8,135,000

$

24.49

(1) Weighted-average price of all positions for period indicated.

 

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SOURCE CVR Energy, Inc.



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