CVR Energy (CVI) 1 Nov 222022 Q3 Earnings call transcript

Greetings, and welcome to the CVR Energy, Inc.

Third Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure FP&A your and my Vice Richard now of President IR. is to host, introduce Roberts, It Thank you, Mr. Roberts, you may begin.

Thank afternoon Energy everyone. joining call. Neumann, you, We very Officer; Chief are our today much afternoon, Camilla. Dave Dane appreciate With Lamp, me us for quarter third this CVR our XXXX earnings Executive Good our you call statements me Chief XXXX third our that Prior to remind that defined securities Financial you discussing under Officer; forward-looking and laws. other members may this is term conference results, as management. let contain of federal quarter

statements during of to any purpose this not be forward-looking are be call statements For facts deemed may made this that statements. historical

with You these Commission by may Exchange factors earnings the and are in affected our filings be Securities statements that latest and set cautioned important release. our forth in

result, the from except new undertake any extent As by result as differ or statements. results required to obligation a discussed operations forward-looking to a may We or the law. otherwise, publicly future update events forward-looking whether no results materially the actual statements, information, in of

also made remind Dave. included in call. are XX-Q a I'll will the third one and November such of including the with various that for includes during GAAP XXXX non-GAAP split-adjusted measures most The related XXXX. Partners over our the to discussed This call measures. on disclosures the period reconciliation are earnings completed unit common comparable that be XX the call to measures, Form to turn we reverse said, Let me release split the for directly its quarter per and Any SEC also filed call XX, With that on units financial you this references CVR a basis. on non-GAAP financial

and the was of consolidated earnings for EBITDA $XXX everyone, $XX for Yesterday, reported call. we income you our Thank quarter net $X.XX. and per third thank afternoon, share quarter joining earnings Good of you, Richard. million million.

and for distillate due results somewhat by the fertilizer by driven refining offset strong our during best-in-class quarter the were both primarily the cracks yield, plants at quarter. segment Our distillate high to turnarounds

$XX.XX process. mismanagement we operate XXX,XXX averaging and fuel in Group our pump continued to throughput the day Year-to-date, quarter special share quarter of during the X close $X barrels a dividend of over the Petroleum MAX of product $X.XX paid crack authorized has both X-X-X and regulation. per approximately regular on a The gallon be the adding per close our regular on and to of spreads above the at to XX% gas of at $X which distillate high barrel, share RIN We Board Board crack November of third special authorized announce per dividend $X.XX costs third elevated yesterday's on $X.XX thereby total continued of yield barrel. prices In will on Benchmark XX. was distillate shareholders to due also quarter, XX% are stubbornly remained mode. significantly per crude with and pleased Directors of November XX record was to approximately the the quarter dividends remained at share, XXXX light the has oil market price. representing the per remained RFS for a per based crack refineries per totaling EPA's combined segment, yield of in

years exemptions petitions for ridiculous of Wynnewood's the in seeking the filed XXXX small refinery misguided EPA's judicial and have We XXXX. through denial Circuit of review Fifth our

the when the law passed RFS continue to We and for land. by fight will rights the entitled was we became the intended of as believe to Wynnewood is regulation Congress,

for to exemption soon. an expect XXXX We file for

of gallons approximately the the from in at improvement to gallon second a throughput of XX increase The quarter, per vegetable per third the spread oil HOBO the quarter for feedstock. Wynnewood renewable unit continue diesel $X.XX processing gallon an rates negative million We averaged approximately $X.XX quarter.

past which For include also currently quarter, the we turnaround included seen which currently Fertilizer - are 'XX. business, the drive fall fall and a - completed schedule segment, prices have for the steady our into and over we any facilities of turnarounds which improved other until in at segment. carried which do quarter. we increase planned XXXX. into fall and is through and we third the renewable we are remain to currently diesel carry is to tight, financial the planned other our in results through corporate for fertilizer few We both markets months, In in third the fertilizer expect

to call over Now financial the turn let to highlights. Dane discuss our me

Dave, good afternoon, you, everyone. Thank and

For the was consolidated our $XX per share earnings XXXX, was third million. and quarter net $X.XX $XXX million, was of EBITDA income

rate include inventory unfavorable million, our gains outstanding derivative unrealized million quarter of Our million. results a obligation third of $XX on of an valuation estimated impact $XX mark-to-market and negative $XXX

above EBITDA petroleum driven $X.XX. million the the $XXX Excluding third share high utilization refineries by mentioned rates for and was the in EBITDA earnings Adjusted in the of segment cracks the quarter $XXX adjusted per quarter, strong product adjusted was at items, for our and million Mid-Con.

RIN per X impact inventory the the The $XX.XX quarter, was $X.XX the obligation mark-to-market on for benchmark. unrealized capture XX% negatively Group approximately September an at million our unit by approximately for adjusted or and was the barrel, XX, capture price $XX margin, $XX third this sheet renewable X-X-X $X.XX. at realized for quarter barrel, quarter of was a the rent impacts which expense rate quarter. the RINs million average excludes generated derivative per and balance impacted was million RINs valuation $XXX RFS mark-to-market third the And note, accrued representing excluding on rate of diesel Our worth the estimated gains XX%. in by mark-to-market

the third natural quarter costs. electricity to of expenses segment The per $X.XX our the plant. was volumes lower days of excludes XXXX. for was in expenses third as for XXXX. quarter for operating as common XX Adjusted and impact elevated a downtime increase quarter $X.XX expenses the separation the million approximately reminder, at of by the $XX the repair the completed per a partnership EBITDA impacted RIN at outages a expenses production X operating direct were exemptions. in results unit in As turnarounds declared Petroleum outstanding refinery third due third of in the $X.XX small and in higher compared primarily barrel result quarter air as to gas the per any quarter barrel Coffeyville with Direct estimated due Fertilizer to facility third-party and obligation segment of and distribution maintenance operating the increased The planned well the of

$XX million, the Partners was spending of $XX was we $XXX common and of segment the will As Total million consolidated owns receive XXXX third approximately on cash the million. million, provided Petroleum Cash million the distribution Energy of and for flow proportionate cash $XX free unit $XX approximately million pretreatment a which is CVR for CVR million. capital quarter in included the Fertilizer by $XX segment, in $X units XX% RDU. operations

million year XXXX, and be to to total we For $XXX $XXX the spending to $XX million million approximately full $XX be consolidated million. approximately turnaround capital spending to estimate

facility September the $XXX CVR includes segment. in $XXX Total of was $XXX the excluding of the the which to under consolidated the cash of availability ABL million We million which of approximately availability quarter balance fertilizer ended million, sheet. and primarily with of as liquidity XX, a $XXX was balance $XXX a cash Turning comprised Partners, cash under of million million.

to Looking capital $XX million ahead quarter XXXX spending fourth Petroleum XXX,XXX to total between approximately direct total million per between to operating and $XXX to million be throughput expenses $XXX $XX our for we the barrels be estimate of to day, and million. and range XXX segment,

the operating million between $XX XXXX excluding our segment, $X total between estimate For to to be and capital $XX impacts, expenses approximately million, be to $XX XX%, rate million. fourth XX% million spending utilization Fertilizer to direct inventory and be and we ammonia quarter

be estimate With Dave, due between catalyst to for operating throughput I'll XX the quarter over renewables, quarter Direct a it $X turn XXXX million. million fourth million change. for to quarter the total back XX be to million expected For we and gallons to are you. that, to $X fourth approximately expenses

and significantly Thanks, production to place. well Starting our refineries changes dividends strong inventories We States. driven quarter refined segment. another pleased levels. been by businesses, operating refining taking by share very Between had benefit see we this are we for outside in well result the Market costs refining, driving capacity, per supply by the we with are structural we were the from a year of In the conditions driven of driven $X.XX shareholders. product average currently and has lost summary, to cracks positioned the closures all Dane. believe refined tight returning our across refinery another largely of as conditions X-year the many below increased strength United strong

are the record of flat. gasoline have and while diesel currently of We U.S. out exports seeing mostly stayed imports

diesel tighten Despite gasoline at move caused across higher. has are cracks the and and refineries and In planned supplies unplanned product in U.S. downtime demand. further addition, refined we to experiencing the to declines

but cracks backward for are XXXX. $XX all distillate per of heavily dated currently are Forward over barrel

we oil petroleum believe the the differentials. the low also reserves on TI production releases X-year supportive to of Brent strategic differential. of inventories exports, are the side and most incremental crude are impacting continued barrels up going On wider which end volumes a averages of the Shale is and equation, low from are are

gathering and areas seeing gathering are have XXX,XXX stabilized system per barrels projects We could offer new potential. volumes on in at additional around been announced our that upside day our

as of in year, export Turning production for producers Nitrogen Europe. to the energy to significantly an opportunity result this over an created fertilizer has been past prices Europe and U.S. to reduced gas the natural increase fertilizers fertilizer and has in segment. a

we've increase result, steady fertilizer and seen is prices tighter, As a a domestic summer. since supply in

that year the with the for much product prices We spring market looking years of greenfield end of fundamentals to could believe in the have be we into the through of our cost that at could part for XXXX. lower first strong the the which several spring plants think both capacity. we similar than and brownfield be at in fertilizer complete, potential the are done expansion now a We could saw and turnarounds capacity we 'XX of persist highs believe the a currently sold

Finally, expecting before currently diesel stream XXX,XXX expect in ramp life catalyst XX% per unit early PTU by in we down business, October renewable day for increase above to in-service capacity which Yields a design continue a early feedstock unit production catalyst quarter up catalyst to recently progressing, production in of reached change. XXXX. ramp as should the and been months. feed and we add is diesel vegetable our have have renewable additional taking are renewable on of process, we gallons of currently the on with few percentage the the production change isomerization catalysts Construction date mid-third to for of

to WTI. metrics With are $X,XXX follows: of the at over $X a $XX.XX have differential increase the $XX differential renewable barrel over barrel prices $X.XX under averaged $XX.XX addition $X.XX TI between ammonia in the X-X-X per PTU, a TI WCS fourth and over as averaged prices ton. we per XXXX, well quarter prices quarter-to-date and Brent expect see per per Fertilizer spread -- diesel ton of has barrel UAN at WTI. $X.XX gallon the remained margins./ at has $X.XX cracks over strong $X.XX averaged and with Looking differential per our the as Midland Group per with WTL and

year we believe for barrel. are yesterday, factors and and X-X-X market WTI under of in TI I three, the $XX.XX business as are spread rest our The and RINs barrel. were refining about $X.XX mention per XXXX. barrel. the many cracks the per the was I WCS Brent mentioned, approximately were group driving per As structural conditions optimistic $X.XX $XX.XX fertilizer of strong we outlook and was

continue operate continue our unchanged. focus on We Our and business. to environmentally and growing grow to to remains manner and plants in reliable our renewables focus strive responsible a safe,

remains business completion on first to XXXX. transformation and in we the expect half of great track, segregate renewables Our the the

business. opportunities to where projects refining also invest our explore to earn in continue and an attractive believe return, We we we in both can renewables in

have questions. these I on forward crude XX% [Operator that projects we're believe, Blair We details increase some additional question processed. first With is to you. providing our diesel yield they develop. distillate with from Instructions] that, as close we could Matthew TPH. identified for to look ready operator, projects on recovery to Our industry-leading Thank

stayed share despite a your Good of low, attractive at fairly feedstock WCS Coffeyville. WCS like around shareholders. morning returns X% your discounts. Dave. the some on It Congrats looks slate strong total on it capital I just I to had question think,

is going will that out, spreads you'll WCS even resell then going the the forward some, cushing? So WCS some to be if the but case refinery widen process that - at

Well, first part be it. off WCS non narrow, run I was think quarter, the you we're out. we'll quarter, sell fairly the mentioned, we In we it were maximizing did to actually spreads the because, of this as better widen the

a up sulfur the the our coker that XX us to of I have on we expect do that had WCS work slate within and in runs, to as adjusted we had We of have the took some some turnaround process we can run - next affect that's do WCS So plant year limits but coker then and a equipment. will our while. a on sulfur that the for a we to maximum

you RVO. have thought EPA things expectations that for pretty you Dave, Sounds good. requirement XXXX And EPA. forward. away flexibility the is look RVO And Do thoughts to There's there's to requirements. any that? actually a any talk going have XXXX have also blending on this that a different this The might how the then, the might some reduce $XX EPA issue upcoming more and do going rate billion might about ethanol from ethanol

this of of a the Matt. of waivers. you change those, that is do, entire good. completely the denial RVO this them any can small up Most I'm know. noticed, with ridiculous program, RIN mismanaged but None the since know you've starting they'll my is has all demand don't I drifted I or view how lot as ever know gasoline have Well, RFS is. And go when prices world years been demand EPA It are refinery sure distillate and factors of time, know, ethanol the well the 'XX -- I it's market you of they what that done can basically 'XX, fact confidence an you the that and even for -- nothing $XX announced X the and issue in say RVO that no much. and for anything me don't they that was gives just maintained -- in it's but next don't do up reflected blend can't billion has

makes them sense. the ethanol for blending do DX very But anything $X.XX frankly, for on It's blending to particularly with of RIN. are gasoline about Now $X.XX the level They in of its economics now, right own. it doesn't are RIN strong now, confidence that and on my any cost $X.XX, price really and built yet a have ethanol probably they worried need subsidy. do profitable to

for Thanks sense. Makes all the color.

welcome. You're

you. Thank

Our next with proceed with JPMorgan. question. from John your Please is question Royall

get talking fertilizer, Hi, in or for any what good the detail you could further potential potential into on question., anything Thanks my we're potentially size If brownfield expansions about taking expectations? there, afternoon. return cost

big turnarounds early Well, throes X we're plants. turnarounds, completed the we in for of -- just both

tonnes start modest number, close expenses done XX% I exact But these. estimate than good less capacity after tonnes walking are $XXX in more because so really think between just there Coffeyville them But day. Dubuque expansion, the think at is we looking feasibility yet. won't about which that X,XXX if that. So East a any you're that. from would a But I pretty increase the do less I around and X,XXX or there that, XX% each yet something out per a than somewhere we'll is the are is than million I probably to, get like or on day. we don't lined know all we're all work we numbers on haven't studies

you work numbers gives with. that to So some

about excess special net helpful. balance little? of ties And of dividend kind you Or think the you. debt. of with draw level it this and kind think the and how it's cash down your I then $X dividend billion the into a how just now? special thinking business? the feel for some That's about in that's flows sheet, lever you right you Yes. could do up Do cash under net actually Thank really of leverage just right

probably it's going XX. little what tranche of be one the bonds going interest with concern -- -- more have to but forward. We do are of EBITDA, at current afford the think of we some are that a due probably our Well, bit debt, we could rates to

at we're what we'll XX if high. always refinancing rates in and always it we shown what we're this is early open be looking it, we we had truly pay shareholders in and some somewhere to quarters know the but two to that are machine, be if point, It's So too and that think pay And out earn on million going -- that, to too buy we're a at the we've interest option down last they'll cash the that we opinion the march those. keeping -- I of to. that to

Thank you.

welcome. are Your

Thank you.

Carly is question Sachs. from next with Our Davenport Goldman

for good potential flywheel about the Is capital near Can wanted of to the where special grow continue optimal as a this that taking term? Hey, the a the a afternoon. dividend utilize preference medium to over in in dividend of just on robust more Or start to little level is bit side. talk kind question. to return Thanks you time? regular to environment? margin of there a there you kind view I the

of little I'm turn as logic point. refining. know will the some And because for We're and I Well, fertilizer as the we've first the And the same think fertilizer history fertilizer at special at cycle a finding on time is don't the refining. the is time Carly, that bit at I hitting in think businesses both stride. fact that time interesting had same is I this full

quarter. -- we and $X.XX, used time. think structurally for around regular dividend short regular increase of it long we number, if But have hidden tell at the to at a a decrease would last looks forever. doesn't But that I and specials. see right every makes that the to to think to board dividend now it's to would and love get back time, sense a both I history us the the same it the with quite

remain on we cautious So that.

recognize and the is That to unit diesel. as has renewable is just And out business about XQ tracking? that that on it. then where build you process business margin the sense. out But can a I the at kind tracked think makes bit little from eventually ongoing. break of Got been thinking seeing and XQ about what about then perspective talk a you're how follow-up you

standards Sure. fuel they a QX, of September and and carbon I OVO, we don't I have low was we're many unit, a than but been at with still had number, wilder thought with have LCFS. optimistic. degree. you, the we for tell $XX, final some come good think offset the the million any still that always think month was -- a they business, $X.XX rent us. were printed almost And where by basis go I when of probably mentioned, But for There's up the increases. down and we some September, was wild positive the $XXX started in completed largely to renewables on as it. start I'll to that's pathway refining variables I pathway off so

assuming more be in a by We as got we've the can the getting demonstrated the pretty we mix. around some catalyst capacity. another up we're that. refinery, life full that that as have should challenges think the still to lengthen little we -- So then catalyst have to pick still some then I in get on some and at I the we'll and certified, provisional tranche mentioned, a we'll 'XX, good capacity. out adding work run we bit but towards successful We've

So PTU and on $X.XX it. bottom And to just and we're $X with very the uptick is PTU, that right the going to positive between be adds line.

Thank color. that you. Great

Welcome.

Thank you.

Paul is Scotiabank. question next from Our from Cheng

spending you yield, little the the the of distillate capacity, is also about a can CapEx mentioned like? timing? what the project which They facility are what the look And yield saying, may bit improvement the and talk you is

we just some $XX at to yield push need XX% in of over the studies this, today. available we're put our crude. all recover are pick we're but Paul, X to we debottleneck what and typically But of on vacuum We're to what at the there's X,XXX And figure trying pretty of to some the least that looking about towers pretty that on the to is confident we're molecules that phases of early get million. And in still this -to I'm of there. number top towards we barrels It's and matter It's done, the it's the up do a confident hydrotreaters distillate cost our out. to engineering distillate. hardware there. just

will you get complete? the And is sanctioned share/ Dave, that the line of what earliest that will project Any time can get kind

Well, X fully to to us take it's define it. another going months

do of, or do to to downtime I towers a these come most to it think turnarounds consign going more modifications do to to have to then we the we likely make it's to question then those with because up need the turnaround a make take it's to and -- But have if do vacuum will it. we the changes it. opportunities deem

world. still long, years I'll us the long structurally think So appears distillate factors for - a to that be I'm the to have going is gas some around on It we than guess million with is balance happened tell IMO for you, around of XXXX $X long Paul, time. the a and maybe X It other but just short to going minimum, nat time.

short division. for come a catalyst Right. surprise? to saying going the Sonoproject in And change fourth the a the diesel, Has very renewable that have only be as That's quarter. that seems you're EUR a David, to X you're for

our basis at full X was That was months rate. design No.

we'll we'll at X quicker -- I'm months least. -- now. because a handle gone it got on I but the a have think another I may that good just think we've stretch said, confident like start-up we little pretty And get first of out. load I

catalyst but budgeting we'll hopefully, next we'll -- year. one change hopefully, one. only have have for So We're only

change catalyst you expensive when how it And is each time/ the

it about $X Catalyst cost million, - change is million. about the to $X and out

million $X So of total..

Okay. that And sheet turnaround CapEx cost also then of any Thank And that liability. and think preliminary what currently we XXXX is I final that, balance are have on turnaround on for next you. you estimate year? question do the expense, in

typically don't as cover guidance provide as all Paul, next do do short, far will the plan - to RIN as we what for the disclose We we quarter, you the - far want that? on as to Dan,

Yes.

the the just of million So RINs $XXX the Paul, as end $XXX it RINs, $XXX quarter, short of the under - of was was month or end million million.

come the since feverishly RVO. has quarter Coffeyville are to out that second And we Paul, and down, coffee the refinery the close built because for buying

of out in component million, ... XXX what's the related And the

Of $XXX $X.X Wynnewood around million, XXX or billion just Yes. all.. RINs million under the or

you. Thank

There this are to over comments. to at no the I like floor questions further management would back turn time. closing for

Energy. we'd for you Again, CVR like your interest to in all thank

of work And their you. in our Thank hard reliable and Additionally, to commitment look of do, forward the fourth quarter environmentally I'd responsible the American need We're towards safe, life. call. modern fuels proud thank and for earnings the to enjoy reviewing providing our public proud employees we work the with we operations. to they next like results we're and

This concludes today's teleconference.

your your You participation. you time. may for lines Thank disconnect at this