CVR Energy (CVI) 31 Oct 232023 Q3 Earnings call transcript

Greetings, and welcome to the CVR Energy, Inc.

Third Quarter 2023 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Vice President of FP&A and IR. Thank you, Mr. Roberts, you may begin.

Camilla. you, Thank everyone. Good afternoon, much our appreciate this very joining you Energy Third for CVR Call. afternoon Quarter We us XXXX Earnings

today discussing forward-looking that under you our that our statements Lamp, third quarter our as and are conference me Officer; securities XXXX members federal me remind let other to Neumann, Officer; Chief defined call Chief management. Prior term of this is results, Dane laws. Financial With Executive Dave may contain

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

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

results and period non-GAAP to discussed said, that are measures, XX-Q the to most to the comparable directly XXXX the no related reconciliation turn the required to new I'll the be call discussed We call undertake As call. With result update as or measures, financial publicly statements. otherwise, in except the financial disclosures measures. may in with a SEC result, filed Dave. the quarter actual the for or earnings GAAP our we and third forward-looking release obligation operations to forward-looking future will The events of included results also a including non-GAAP extent statements, any information, includes whether that various law. This from differ Form by during such materially over

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

price diesel strength driven RINs results the of decline crack the at for in gas and Our were by quarter the along with significant end. spreads solid continued quarter and

dividend -- addition the at Directors market XX on regular both third November authorized which of share, paid We announce of $X.XX on to dividend is share. This in to the a are XX. dividend $X.XX to shareholders per per has of special November of pleased of Board be close the that of will quarter record

Our totaled approximately for to dividends return special share regular year-to-date $X cash total of XX%. a shareholders declared and per

total our Petroleum our XX% third during barrels refineries approximately the well combined day with segment, product was crude XXXX throughput and quarter operated for oil In minimal XXX,XXX of light Overall, processed. on the downtime. per yield unplanned quarter was

of a the the which We at gasoline by in impacted also was fire repairs quarter. completed the Wynnewood, hydrotreater second

the X quarter Benchmark per X-X-X barrel. Group $XX.XX remained third crack with during the elevated averaging spreads

RIN high The price second quarter third per quarter average but declined barrel. $X over stubbornly from the at remained

refinery we Circuit Fifth previous received As for we for small 'XX. we the Court a And have denial in exemptions to of discussed stay lawsuits XXXX Wynnewood of we and as calls, XXXX and recently have in stay -- related a Appeals filed the received well.

presented EPA's we early October, to small related denial have we pleased the of of refinery In Circuit Fifth day court arguments oral as in in to our front exemptions. were

written was rights to. specifically protect Wynnewood believe we caused Wynnewood and that disproportionate to harm have from to entitled economic continue stated, regulation the RFS, for continuously refineries we we RFS fight was small As the like by

higher cost other disproportionate Our poster is as of than refineries. economic relative believe Wynnewood we all for the our with refinery almost compliance in industry child harm is the RFS

oil in oil prices. rates XXXX, quarter HOBO processing record we of the throughput gallons of with spread unit, widened the or the at renewable increased vegetable achieved quarter feedstock third diesel XX,XXX from The quarter. XX million the second barrels For nearly Wynnewood soybean

in due the from -- price California the volumes another -- improvement the and quarter to positive we unit improved contribution in increased However, of positive generated quarter. diesel another RD throughput

driven order fourth outages combination well reported XX%. strong and of quarter believe currently fertilizer result rate is good during reduced As of Other segment, by the a book firmed we as -- summer, for and utilization a prices prices facilities In with Fertilizers and in conditions industry. supply segment. on our the ammonia as the the planned and Corporate diesel across both demand a have market Nitrogen of after reminder, a consolidated a well rose through renewable will business We reset fall. in ran unplanned our July, quarter steadily the have which good in book

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

Thank you, Dave, and good everyone. afternoon,

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

Our expense $XXX impact million, third unrealized losses valuation of outstanding RINs mark-to-market a quarter estimated obligation $XX a to on of results include million. quarterly inventory and due derivative million RFS $XX a impact favorable of reduction our to

for the Excluding the share was per the the strong driven quarter, the EBITDA earnings Adjusted adjusted was in in product above-mentioned million items, and was million Petroleum segment adjusted for quarter third Mid-Con. cracks $XXX by EBITDA $XXX $X.XX.

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

stock-based decrease and somewhat to compensation to related third small due higher estimated prices exemptions. the barrel gas reminder, in for per personnel $X.XX of Petroleum was refinery excludes operating natural direct compared increased the expenses quarter the barrel in any costs, in expense. obligation to were segment expenses offset operating impact $X.XX and XXXX. throughput quarter The partially RIN As Direct third the of lower our outstanding electricity primarily per volumes, by a

the the decline the Adjusted segment third $XX common The $X.XX EBITDA in production operating of prices of third per XXXX. third distribution the nitrogen the unit for declared was fertilizer quarter, the offsetting million strong for with of quarter, quarter Fertilizer expenses relative quarter XXXX. partnership to and reduced in a for

Energy operations owns of was cash million. turnaround approximately common dividends million quarter noncontrolling uses XXXX paid million, received in As CVR million. paid the taxes second million distribution. of quarter Partners cash $XXX interest interest, capital the distribution and for CVR Significant for free the XX% quarter was million cash $XX CVR Cash and $X flow cash million units, $XXX and of spending of for portion by we $XX of third the approximately the of provided proportionate included a second $XXX special and and quarter and regular CVR Partners' $XX for

and Petroleum the Total in in the third segment consolidated $XX capital $X the million. $XX included spending approximately Fertilizer the segment, $X million the was million spending for pretreatment million million, quarter unit on was $XX which in Turnaround RDU.

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

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

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

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

Dave, it total renewables, and XX turn between throughput to we quarter XXXX capital that, With gallons, I'll direct over to be total $XX spending be million. and to estimate approximately $X between For and million XX million million back $XX to operating to $X expenses be million you. million fourth

Refining well diesel Fertilizer Thanks, from Dane. solid had summary, in by renewable quarter contribution we business. along as positive the strong our segment results In segment as another driven with

As crack to and spreads refining, XXXX, given cautious geopolitical are we the in significant near-term the Starting about quarter. elevated market. diesel to ahead relative the outlook, third and with look with the remained both fourth quarter gas quarter the second increasing risk we XXXX the currently facing of cracks,

in in gasoline below general, refining are distillate roughly with and is inventories over XX% Although inventories X-year product are average. the averages line X-year down U.S. demand

significant this diesel the near and in the change. per lower. as X keep the for winter to Container capacity also averaging although in of a upside cold third shipments XXXX. term quickly XXXX increases of some string a recently turnaround geopolitical inventories have but potential increase in present which Exports gasoline check. ongoing the Gas refining for cracks off an gas the this typical diesel in and and recently sold strong and first to increased the United of far over barrels shipments we're to during addition rail continued have consistently The after -- currently continue natural outages risk in RVP for the year, unplanned helped Europe Distillate with the in States experiencing. demand time cracks declined, time supply activity prices early in rebounded quarter cracks summer slows as product and million refined in for the in year remain approaches. all Reduced be so fourth have have day is winter truck

projects start-up many discussed to world, As calls, delayed. new continue of the the around we refining previous earnings in of we capacity have these although watch are

Turning And day. months have volumes per to the at day delays the has in out gathering third the quarterly widened first pipeline oil increase $X Cushing XXXX. barrels price relatively out differentials of WCS crude takeaway Canada while a of U.S., range-bounded barrels new have to capacity crude of X we WCS X at over in new U.S. Brent-TI reached to approximately $X.XX million XXX,XXX oil differentials production barrel. Export the have WTI remained the for record and quarter recently. for with continues the of to in per tightened averaged per of crude oil. Shale

of in products discussed the some to call. refined on continue that make previous have we progress We

As equipment our at ordered -- XXXX. in refinery, for an Project Wynnewood target Alkylation completion the we on long have update for the in lead

of catalyst production. this increase premium alkylation by result should the to capacity HF In increased eliminating gasoline X,XXX in which addition the expected acid benefits day, project use barrels per is our to of at Wynnewood,

yield We during our turnaround. confirmed complete the diesel and project, at Wynnewood spring estimates. our work completed tie-ins initial engineering to improvement turnaround, Regarding Wynnewood's we have plan XXXX

Fertilizer the application refineries increased harvest prices two strong X our per the we have With In approximately from yield approximately the years, book reset next segment, would throughput distillate which orders. X,XXX fall, summer and over increase year on X July. barrels crude have to the yield by since distillate in expect X%. or is nitrogen plan of good overall Our day by increase ammonia nearly a a fertilizer complete, this total

ahead to fertilizer prices grade the capacity the believe we business spring present steady Africa. meaningful market in residing well well ] nitrogen nitrogen countries and production preprice remain Looking East fertilizer for for conditions Middle and with to bode should wildcard Geopolitical risk North [ and across for be XXXX, continued favorable. the season as demand a fertilizer

the PTU is of unit fourth the construction and progressing, Finally, expect to be on in quarter mechanically we in XXXX. complete renewables,

Over have up that the fallen capacity face next of RVO has way prices dramatically few online primarily RINs due couple renewable months, years. all ramping of over an and low too EPA to the diesel RIN DX should coming be setting in been past the for the

With diesel prompt margins breakeven. these are prices at levels, DX renewable

at our in sustainable unit we fuel, of fuel. modify various to diesel securing We of a portion and to offtake parties shift to Wynnewood to from to opportunities sustainable have interested an aviation continue production continue explore renewable renewable aviation with diesel discussions

fuel partners. location. aviation develop detailed at potential The renewable us production definition also project to Board with to more for have for which and recently enables spending We with scoped continue our option estimate, a authorized the sustainable Coffeyville cost in-depth potential a discussions

of for we Although and in diesel the place diesel renewable not the fuel we aviation a heart is market continue sustainable market believe Coffeyville there location belt. strategically our be is ag favorable, prompt will in believe for renewable advantaged the and to the

WTI differential quarter-to-date Looking and per barrel and the Prompt metrics with at at ton per XXXX, X-X-X of averaged $X.XX $XX.XX per approximately over Brent-TI $X.XX UAN. fourth spread for the are per cracks Midland are follows: as quarter barrel, $XXX per have fertilizer of Group $X.XX a ammonia ton barrel prices

of $XX.XX under barrel, barrel, $X.XX $XXX the per approximately Group and was per RINs As was barrel. X X-X-X Brent-TI cracks were were $XX.XX per WTI. yesterday, WCS

to opportunities to business. plants explore reliable continue environmentally and We to in strive -- our our responsible grow to to safe, explore manner a continue and grow operate continue renewables our to

continue to on dividend also free our We flow, cash underpins leading yield. focus which maximizing peer

ready With questions. for that, operator, we're

first question of Manav Gupta Our the with UBS. Instructions] [Operator line comes from

question on My Right first benefiting actually you now, EPA are is side. positioned, RIN has more is the what the way you. done

is that in dragging seen have DX DX We down. RFS the revaluation,

way, very EPA what well in are So the term. you has for a near in positioned done

you for levels, obligation. terms and in renewable If a look then countering way, the expand and try of you EPA from meaningfully RFS capacity done these you're what your in has diesel

these is your forces value understand you, want to a you in franchise diesel RIN of for renewable balancing to would the but higher good you like to margin. two trying lower just actually I'm where grow for scenario which RIN see a do So higher

So if help can us understand dynamics? those you

Well, that was important said from to disconnect Manav, DXs always for DXs. it EPA we've

at look something really if is diesel change, attempting about that really climate you're makes a -- the molecule do renewable the you to If difference.

really does anything gasoline of to blend carbon ethanol reduce to The little do emissions.

position So the to that there EPA try these with come building should more two. what to to But have industry are planning what have the our they happen. is DX make several in also that and to And moves that legislation still the are line to online. is it's increased disconnected in works should

a has to it's it. it's program So to misguided break I still, just think and something fix

set at which be right? $XX.X scenario, or $X would for, you that hoping And versus $X an be you like ideal ideal allowed. billion, like in So set world, $XX would Dave, be DX a billion, and billion DX to -- obligation SREs the billion, are to

frankly, EXX allowed should And be too.

million it's the which So it's something that. billion], forward, is $XX.X blend higher, demand $XX wall. -- And going the you is on [ isn't has of billion ], ] up $XX to and like with certainly it's gasoline whether in above or question [ can be the it EPA argue but [ DX is flexible

My as follow-up is, is mentioned seasonally comment that down Perfect. the has quick the in you gasoline this RVP increased. and

you correct could understand you weaker in gasoline signs your now you real to seen some of believe what sir, going and trying overproduction as months. Or just is system we move have of impact or X are ahead? seeing any I'm along we seasonal an next So and which have itself concern should right demand, just basically X

markets demand I've X -- in really into hasn't. this about move really it's -- it and still didn't and our our our months demand since Manav, Well, much, said the pandemic, is

liftings prepandemic. spot out you system, If even seasonal the right at of on been, look almost always Magellan where the they're they've to

Oklahoma in So -- I City. to -- don't of a attribute growth the that I lot Oklahoma

recently, main it Kansas we really up degree. When And some markets our I'm I'm at really so And compared demand, actually the U.S. talking to City that's Tulsa those there been whole liftings seeing as about where the is about also. place, are are the have main our of we're to the racks We serve, part a talking prepandemic. the decline. and U.S. growing

Holt. & line Our Tudor, of with the Blair next Pickering, from question Matthew comes

] will this? what what's WCS, Mountain that year think your differentials you on What widening [ Dave, next Trans is you do with do kind to outlook have you And impact the out on of that think that expansion. XXXX mentioned?

in Well, a softens seasonally, winter the think I Sure. WCS bit. usually

but Hardesty backed injected and system degree. the inventory built some of diluent they a was to lot in it into more up built just it, get You

thing delayed, something to going that. that Coast the to What's Mountain be is interesting going to me Coast but it been to the Gulf the cost close looks West be, of is Trans has or that going as what the same to to the to go and and tariff is the very tariff like

increase there more have some don't for other impact know capacity huge would than does in the up it spicket them. projects I and that invest open will the it So somebody a if takeaway does

The was? of your questions second part

hedges, cracks where it. based expect quarter kind touched future at on should expect think right, in of -- with probably are we point headwind that on cut I will rolling I the impact follow-up crack be I in capture that just we X percentage gasoline is if you on scripts was think less My the QX. it product lower fourth to just now, that, through? the Should

fair quarter would throughout market bulk it XX% holds it the open our behind but for assumption be if So about is impact XX% then of and a the are is the fourth the where XXXX, around positions us.

comes line John Our the Royall next from with of question JPMorgan.

answer you get anymore. court Dave, really was you the -- in final have to and Wynnewood out there could then Do So it's situation very helpful. you which to like you think close you if SREs, feel for it a when RIN timeline you the you on an gave Do the point update have for a fight can't where you short? start your mind

two Well, difficult court will predict case. always this exemption do. from is what it's And to case to no parts the that. There's the

Circuit. the court sure. or be never whether keep is think that which it it, in go has We optimistic to the that venue can stay you Fifth the we're First decide, -- the but they'll Circuit DC to

of try should they refinery on piece. because are we will EPA very look ruled The is can on times in they to them and the EPA's back deny second then what rule? long limits going to cases, merits to that case at question fix. to feel good EPA get fight small lot win more again denying if they we are And how it and you it argument how of just kind all take waivers, to rule. We of The back that to of it something that the definition to invent just part new we court. is the A these will history, really remand to do about in

So the ruling timing, other the we the of have one difficult latest. it's year, or end way very predict should next to at hopefully, quarter the a second before but

of question here those structured then anymore your that time. past your the we would of a from will part none settlement second Whatever or do we to RINs liquidate? by because be So are years is going available was, be

have it would won't. will optimistic what pretty to we be somehow, it And should that negotiated we be, lose,

case that So may come never be. to

You got on Brent, meaningfully I another specifically, to addressed narrowing differential WTI, quarter, which think really a lower WCS question ranges. diffs. had This just Brent Cushing you we and are X-year I a is one today a last think But seen little haven't below bit question. on inventories WTI. of I but significant

Brent think So is color how why about you helpful. any WTI going would forward it that where And on you be is? think

Yes.

to driving force I in this in to ] And the is it's its think barrel offshore. what's competitive I've for that always to to market. wherever really destination it maintain $X.XX up the oil shipping said mentioned. And to is in between It requires that position us. that's range we point Brent-TI that important the [ and $X shale kind world continued bound growth of the make differential and be for

for still capacity takeaway scenario, we that which the to oil bodes Brent-TI. is and there's best grow, probably shale plenty the continues that matures as of slowly well So think

end question-and-answer comments. over to floor the session turn closing reached our have and would management back for I of We to the like

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

our results next towards you. and to hard reliable responsible to earnings for I'd fourth quarter work XXXX We and operations. our thank forward look during Thank their Additionally, our call. environmentally like reviewing employees commitment safe,

today's lines this disconnect for teleconference, time. your This you your concludes may at Thank you participation. now