CVR Energy (CVI) 29 Oct 242024 Q3 Earnings call transcript

Greetings, and welcome to the CVR Energy Third Quarter 2024 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Richard Roberts, Financial Planning and Analysis and Investor Relations. Thank you, sir.

You may begin.

Christine. you, Thank everyone. Good afternoon much our appreciate this very joining you Energy Third for CVR Call. afternoon Quarter We us XXXX Earnings today our Lamp, our and are Officer; members me other Neumann, Officer; Chief Chief management. of Dane Financial With Executive Dave

XXXX contain to may securities let me conference statements laws. under federal as that quarter remind Prior Xrd results, that you our this defined discussing forward-looking call term is

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

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

As results result, materially operations the differ may from discussed a the or forward-looking actual results in statements.

any of to a We statements, forward-looking law. undertake required no new future except otherwise, whether result obligation the or extent events by update publicly information, as to

various This in and release such reconciliation filed SEC measures, Form including to call be measures. financial with and discussed the that also XX-Q are will related most GAAP includes the The quarter during period disclosures the earnings non-GAAP XXXX comparable Xrd call. measures the non-GAAP of we financial for directly our included

over turn I'll that With said, to Dave. the call

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

price. negative an both mark-to-market inventory and by due at power partially unplanned facilities impacted outstanding outages, to were crude the downtime our declining impacts validation RFS impact supply unfavorable the results with oil to during external Our readout due on along obligation quarter,

a on balance market. to dividend adequate sheet at year, light preserve maintaining elected cash strong look a refining of as focus challenging the sheet. navigate the suspend turnaround the Coffeyville With primary Directors In the the of has we liquidity major we to planned as balance this, Board upcoming currently is next and quarterly

While needs action an decision, believe cash XXXX. for we is this difficult the it course forward and into appropriate strip was near-term spreads of our current a given crack

interruptions, throughput In XXX,XXX our a of of result utilization barrels were processed. related oil plant operational was supply past We external quarter for Crude combined yield XX% XX% of third Petroleum light quarter crude were segment, the on over some XXXX for the compared with very and rate was was had the per total oil quarter product which third day to difficult our the or approximately X outages. to crude years. of multiple utilization XX% quarter power

per to RVO period quarter an approximately the third profit for lost XXXX the for total We power in prices million year benchmark barrel averaged ended RIN estimate approximately at last prior third also million $XX opportunity XXXX compared third $X.XX of basis. profit related from of external was opportunity Year-to-date, of for barrel per $XX.XX was approximately the X approximately $XX the lost cracks was to the $XX million. Group quarter Average declined quarter quarter, third weighted X-X-X on which issues. of $XX.XX the and year. quarter

X% a quarter. increase was this Although from last

and and EPA's arbitrary the terms the them denial small disproportionate DC RFS, most back Supreme to suffer exemptions petitions the capricious, circuit States EPA Court and Both of United hardship have No situation called the economic including reminding vacating courts, hardship less no the in EPA. denials to those protect Regarding than exist X remains federal the uncertain told who refiners small harm. incomprehensible. Circuit that refinery Fifth

financial in EPA has refineries has limbo level conduct though EPA's small done petitioners the the Incredibly, within like their ours. pending ingregious almost of impact despite on actions has this existence petitions expressed year even a threaten loss. and the Fifth statutory very of obligation hardship rule since hanging days, passed to Circuit for nothing, years XX

repeatedly is without flagrantly federal including be to allowed the the violate EPA. government. can law one above No a recourse agency law, foundation shakes That U.S. and of the our very

out violated very the RFS, now. Regan. So you persistently EPA from has stop I direction courts. broken Administrator clear must call the ignores This the law,

to RIN law parties relief part, harm. and the hoard not market. produce, our to exemptions RINs, continue small buy, in to refinery cause the the sell, of Wynnewood For in we only to deserves, remedy EPA's refinery to to that violate secure root allowing seek through court, non-obligated of small RFS EPA trade resulting manipulation but decision force

processed unit a at we although from positive of vegetable for higher prices, spread for and helped the XXXX XXXX, The weakened HOBO of result oil gallons third credits, quarter. of which the feedstocks this the quarter through For diesel second by Wynnewood. prices offset drive approximately XX was with million RINs LCFS diesel DX quarter lower renewable the slightly

and corporate reminder, renewable a business As currently other reported is our in segments. our diesel

quarter third strong segment, the fertilizer a XXXX, over UAN the and and of third XX%. ammonia the for demand of fertilizer increased with for XXXX saw quarter utilization to during ran well relative ammonia we facilities the both of Nitrogen summer. In the prices consolidated quarter a

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

Thank good Dave, you, and afternoon, everyone.

losses consolidated $X.XX loss of loss our XXXX, were EBITDA of quarter third a share was and million, net per the was million. $XX For $XXX

of negative impact of losses a on outstanding mark-to-market million. $X million $XX million results unrealized inventory $XX our include of obligation derivative RFS quarter unfavorable third and and Our valuation impact

third million prior for and items, adjusted both $X.XX. the due cracks Petroleum for to lower by X reduced and period with primarily million year at was share per EBITDA quarter Excluding was Adjusted the driven above-mentioned the from was product the the $XX Group volumes loss throughput EBITDA the in quarter adjusted the in downtime decline facilities. segment $XX

to margin quarter in Group valuation XX% derivative and rate refined inventory products, We in by of purchase capture backwardation barrel, third per benchmark. unrealized and impacted estimate the additional the X% downtime unplanned market $X.XX representing negatively X Our was realized crude on impacts, for gains mark-to-market RIN adjusted an impact. a drove the capture X-X-X while our capture the related oil quarter of the the the approximately unfavorable gathered X% rate resale

quarter, RINs impacted $X.XX. expense rate September of RFS XX%. million capture negatively an the RINs accrued on representing ] our per balance average excluding by sheet XX, for $X.XX The or for estimated $XX the mark-to-market the $XXX [ at obligation approximately was impact quarter barrel, mark-to-market at million the $XXX million price was which

As exemptions. impact a our any estimated small refinery RIN the obligation reminder, excludes of outstanding

per expense Petroleum primarily per Direct costs. expenses driven XXXX. repair by maintenance of and was were for direct barrel the in in $X.XX to increase by operating electricity throughput in barrel expenses partially lower operating offset quarter natural gas the and the compared quarter per $X.XX barrel third volumes, segment and third lower The

in to third per driving and Fertilizer lower CVR year $XX The common the XX% the Adjusted higher relative operating million of Partners The CVR segment XXXX. period. the ammonia quarter, of for increase unit declared with feedstock third market prices quarter of expenses, EBITDA the was UAN and approximately for and the common partnership for units. Energy prior $X.XX distribution a owns

million. distribution of a will $X cash proportionate receive approximately We

CVI for $XX Significant quarter flow for $XX of uses third primarily driven from quarter provided quarter operations in second flow million, the quarter cash and primarily non-controlling included distribution. million interest, spending $XX cash of cash $XX interest to of turnaround paid $XX capital XXXX the was XXXX Free for quarter $XX also CVR dividend, for million portion second $XX was of million cash by million, of million the Cash million Fertilizer for fertilizer segment. attributable segment. XXXX the by the the the and the Partners'

consolidated than the on Total an the Turnaround $X accrual million million for segment capital $XX RDU. quarter approximately $XX spending which segment, the in less basis was included in $XX Petroleum Fertilizer third was and million $X the in million. spending million,

$XXX total to full to year $XX $XX our capital a to be million the consolidated million. represents approximately million is which approximately estimate $XX reduction spending XXXX, of from million $XXX approximately previous For expected to estimates. million spending Turnaround we be

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

to quarter the of fourth ahead XXXX. Looking

For day. Direct per our XXX,XXX Petroleum expenses total segment, operating capital we between estimate to total throughput $XXX range barrels to approximately million spending be be $XX $XX between million. million. to XXX,XXX And million and to $XXX and

excluding million to rate inventory our at in between Coffeyville quarter million. fourth direct separation operating capital estimate utilization XX% the ammonia and million and be be third-party total XXXX $XX be potential segment, $XX downtime $XX with between expected the spending estimate to to million, at expenses unit some air $XX XX% to approximately For impacts We the and quarter. Fertilizer we

to Dave, With I that, you. over will it turn back

Dane. Thanks,

slight Group a quarter saw we improvement the second spreads from levels, refining remain markets Although challenging. Overall, the X in crack

the Board's balance suspend safe, on the the . costs While focus these and sheet, control, decision operations the dividend liquidity reliable to reducing the in and capital we was while maintaining refinery is believe downturns spend. key difficult, to surviving areas protecting we adequate while we

post-turnaround challenging our possible navigate on confident are improvements any for we We be cash our potential in environment between margins. our increase the well access revolver, these currently capital undrawn to in liquidity through availability prepared on exploring in and to hand, markets, efforts, refining this are ability

in fundamentals and exports million X-year are above for and have essentially both while XXXX demand the gasoline refined have second diesel currently in half refined product diesel barrels per averages. Line day. X-year Gasoline of inventories with products averages, below demand with line improved remained X

XXXX higher levels X-year the key of X the One U.S. the more for utilization of issues that course percentage over the has been year. have than points averaged in average refining than the

the mid-XXs to So the the utilization refining seen during from quarter, fall season. low decline turnaround for U.S. to mid-XXs fourth far the fleet in the rates we've down

refining encouraging, to crack a is rationalization and higher. capacity we believe globally additional for both ultimately, -- to see need sustained order U.S. in the this we move spreads in make While to

more quarter segment, fall over mid-cycle XXXX. the fertilizer the ammonia per encouraged year. harvest prices the see the past type relative we for for to last few Nitrogen increased quarter currently and and the ahead third UAN peaks of is saw third of ammonia to quarter compared after in application. ton fertilizer for completion we $XX we ton environment approximately for are fourth per In favorable are the we a years, a of believe quarter the prices are and fourth and conditions fall of for UAN up nearing look ammonia schedule, $XX The

results quarter a full of being first in renewable operations diesel unit, the are the the pretreater. we from unit this the Wynnewood quarter with with pleased with Finally, third renewables, RD with

conversion potential the diesel unit ongoing. the discussions with Wynnewood to of interested -- Our SAF party are counter-parties related to XXX% renewable

on before, protection provide with we minimize move not would without offtake structure to we credits. us As developing that and said our for downside reliance expect government an forward the would SAF conversion

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

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

on opportunity at for this term. way the next is below well our us and mid-cycle may remain the focus an This The year. levels through business to for long crack creates positioning these

advantage So equipped believe favorable when market of to take we I return, conditions will. as are they best they

our here plan. So is

we access navigate Focus to support shows in hiring. to the initiatives ability quarter. critical those and will balance strengthen which reliable One, include stockholders. the to our of markets, market can increasing our capital when our of cost-cutting on and we our also these non-core our This exploring to the capital And that sheet finally, operations. are is to internal spend dividend future safe, decisions this continue make each part goal and reduced includes includes conditions. projects could and focusing flight look but improve Suspending our value company's sales. think this, necessary What it every we tough to is asset also to Board at are

on on and focusing turnaround executing our on upcoming Two, safely budget. time

looks well very, timing Given our is planned. turnaround be it to conditions, very market

itself. track for things record project exceptional Our execution for

successfully we've execute we year, are demonstrated business. the to past. ways a to to our operator great Although optimize some had in this our continue exploring ability hiccups have turnarounds Three,

opportunities We liquidity not us measures will help this. yesterday with accretive ignore we before and announced should

This manner. stakeholders. on safe, continue four, environmentally result costs, should better ultimately, an And and superior in performance rates to our reliable financial shareholders focus always, operations for capture in as responsible operating lower and

In summary, in we fleet the high to natural continue complexity its gas. refining is most market, world crude the believe access the current to and weakness oil given despite advantage U.S. the in the low-cost

are this among refineries Our fleet. competitive very

We the future, path intended we CVR our have in the of best tremendous confidence and positioning announced to take we in advantage forward see actions it. as

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

Our Neil Mehta Instructions] line of question from the [Operator Sachs. Goldman first comes with

maybe dividend. how thinking guess just first the around the question Dave, I you're about

always have in more You variable times the some weaker a times. distribution previously to had it in the and of approach of little raising bit a suspending strong it

framework about we the your dividend? it? So think for turnaround just be forward we back margin how you then should normalizing, think And And on the if and about would just environment how go of end helpful. the resuming get the do

many think pretty method think of cash structure, of if strong. look Neil, via more we've cash said returning that via we're to I is really as Yes, at dividend, record our Yes, to the preferred that. returning on dividend. past such, don't shareholders now. you it's a to And anything's our ourselves changed times bit our variable I little And shareholders lends

mid-cycle We necessary inflation forward a with the want if in least think at to type 'XX don't we're but from it's at And the been in curve 'XX, $X. we $X this barrel, take happening not the -- numbers. action, that's to you everything increased if marketplace, light -- the of really I and in printing look has view in

So we're cautious. being just

very If a cycle. than just our half years, the budget, the for that turnaround, Every it's turnaround up, we're our at million, coming turnarounds you little And largest $XXX of X it have sequence. is about look around we in of of budget taking it's less our cautiously. half

mentioned as sales non-core an the -- you might up set brought of be? think the any what curious portfolio on capital and . then then asset past conversations on how UAN in just helpful. you -- that deep the could area table into just do And and markets, of that's as potential And the your But monetization. opportunity because perspective you the in accessing about talked be on sense you has you

$XX Well, and tankage we with million anything non-core pipelines, started assets, of you Jeff. EBITDA associated really have in worth assets, as But midstream earnest, others. have we including trucking know, about and

sure. would that of considered Some be for

no As UAN and new And XXX% new XX% really news as have goes, that far GP as we there non-economic in you area. of have really to nothing we own know, units but of report yet. the the ownership

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

an Is lost file that profit there the a effort claims opportunity? to insurance to downtime in of any on any potential recover

Yes.

neighborhood [ have our recovered was We from money that I some a basis anticipate from in cost PP&I somewhere the it. $XX ] million. of

get off comes a much don't yet we'll we of it out of we for it how that. answer exactly deductible, . an have have So But that.

to mean raise? And markets, Energy? interpret to on also sales, non-core on a that about the considering the system? that mentioned the And we for then What you back midstream access non-core should good. or the gathering potential assets. potential question to core then Would capital some be CVR asset that equity circling you're Sounds of the

could it absolutely that is system, think part choice. of Well, our the second be that. The to I don't be but system our integral to. needed we if first I'll gathering take monetized would

joint probably ventures our first. that go pipelines have feed and We refineries . that would

the liquidity, On Dane?

options, and to I'd the as say capital Matt, markets both pretty what thinking path Yes. we're assessing premature to discuss magnitude is market. exactly as all it's path far guy, we're And

more update more to plan. guys a you have So we'll be when of we sure

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

updated just was thoughts hoping I acquisitions. for your on

You've been pretty acquisitions. vocal about looking at

Citgo, big we knew to the was was assets another of that is sold party. publicly One there out now which

liquidity need today, So set to now . how hold with does now? off the preserve market? inorganic opportunity for that view you the growth do ambitions today any And asset but on the

we remarks, that in down the any to to we as the But have Right any really mentioned Well, to for opportunities with the don't we're now, it. continue come I such improve as our can pipeline not Citgo that situation. deals up. look at prepared diversify portfolio turn accretive the in going any market

it we . us problems refineries, tell current have hits that in at to at that's is anything from look precludes both, the And that. try You don't can we'll looking I when at X continue really know have But to around our quarter the we diversify hard. and future, our strategy really that. situation

What on my today? in then as positive XQ housekeeping And . any the it little of or is we just maybe hedging, terms program. hedge impact next a should expect in negative Okay. question looks

Yes.

crack closed second will other that, in and through this the unrealized. flip of do significant if So realized Those . plan in that through gain. between we predominantly at recall, quarter terms other material and off But no swap recognized our a to realized time. than you'll and the any quarter, out see hedging, you fourth hedging roll XXXX, the

of comes Our Gupta UBS. question from next Manav line with the

I a macro. just wanted on refining to focus the bit little

more of we You say you made number a kind comments, capacity will of need refining closures. did

could margins the said be also mid-cycle XXXX. below in You

what to just outside, back understand some some I'm to like capacity trying said, U.S. eventually, margins, happen, there? in, So to recovery to and as the also Mid-Con some you do maybe trying globally does path needs how needs capacity mean, take figure will mid-cycle will I'm get to to to you just much this think you do like, happen, shutdown? in come But out think it I

not a as in it's It's even such. was Well, least moved Mid-Con it is demand hasn't really been, I demand Manav, think much. it right COVID, ever the -- I'd now, strong market after problem characterize At oversupplied. as is as the

the As States fairly almost. back far to be level, in little a behind, bit not but Diesel normal is as general, as United much. X-year may demand go, a

demand think shut supposedly really don't a the the at It's in there's been yet. if during look question, down just announced LA happened but it's question. Lyondell refinery. some added COVID, end has and capacity of shutting I It at is this So of see down hasn't that year, And California, you a of the supply project refining an we'll happens. that shutdown back.

down there's the But of fleet, efficiency I frankly, it during added is we shut And The of improving. to as overall in general, continues back think EVs COVID. accelerate. we've as as almost therefore, much penetration

vehicle So up, like even it looks the demand at same efficiency though models are level. about still traveled at is keeping

I just where there such. crack as think as -- So those that by units are some And running it that new couple announced new in that And impact capacity evidenced going probably come that a still topping is Chinese that European today. then additions years diesel the assets in will are probably refineries are built there's be and of market. the or are X further X to have

don't news continue will various the huge. in guess things is there's The LNG that divide will would the engines that up worldwide. gap and other see to U.S. you to there's oil still the on fleet. between how pressure LNG, the among at And it's and of plenty to substitution if because know the but and incentive I in I look regions, industrial LNG phase crude from EVs the good growth market continued convert

way take or to it's either it of out going to occur. our So shutdowns grow additional

Cheng of the from line Our . with next Scotiabank. question Paul comes

plan be And that I major missed rough view in included be in to on the could estimate? give is in turnaround not, the That's to is all How going question. current days going first a whether us the quarter? did spill second If that XXXX the it, turnaround. it's and or going maybe many mentioned of . you will you CapEx? think I cost the be the the in quarter, first Dane, to what is

quarter, approximately But cross will Paul, days late slightly. start it second both of oil-to-oil. XX just quarters and it over will first it's We'll over February, in and slightly. into cross

condition? And . in Okay. currently that next you year given for the CapEx market what's mind the have

we Yes, until later disclose that don't Paul, the typically in year.

and and or refinery critical process in taking comments budgeting only our hard the look at the about growth in projects operations flight capital focusing real of on of through projects to in the Dave's going a are manner. reliable a spend safe and We on light focusing

So have prepared. we we it guidance and . exercise share are we now undergoing will that the when

the you I'm to Then spend? you that minimum. would just spend I what is minimum not that can ask the need saying

for the Just curious, minimum is what major expected the you next given year? turnaround that

prepared minimum. is don't the that. like we've that I What know something

We lot multiple of are that take projects that have complete. to flight years in a

just then you? them stop are it have because number, it. more don't them. We proposing to to restart do costs Dane, not But those that stop I

No.

I don't me. have accessible to it

it So you with we'll probably up, back . we look can get and Paul, it. to

question. A great. That would second be

the think, I even past, could [indiscernible] plant have the into Wynnewood crude in Dave, convert back in processing that the you idea you oil. thrown

down that they that peers your in have of Alabama One just that. done

a If find the into the and not to convert you line make you what's whether other that decision a you to want to way? time go . FAF, do allow thought you the partner for to process

Paul, the on to since discussion substantially that's Well, with relatively of with small we're in play how a I provide refinery are on think, the for a us And the to even What back short And rents. on diesel waiver continue still I Wynnewood, going rent. margin to think hydrocracker short we're the low-cost whether RINs goes renewable it a services out. does strategy sunk. we capital

in good with pretreater I money we now, and yields. renewable with diesel, the This quarter, make did have setup we experiencing the and think we're

we're now, Our margins R&D in barrel than is in do We'll money explore another make what really a on and really more throw. we year to repricing in we to full per that that. actually us take But issue we probably catalyst understand biggest refining. or two are continue life, basis right

on stay . that service. probably we'll So

turn comments. further time. like to this no . have for We closing I'd floor to back questions management at the over

in earnings all CVR. Thank our you and call for your interest joining

their responsible hard with work and and towards results we our forward to fourth our reliable for quarter employees And next safe, look you we'd operations. the to call. environmentally reviewing earnings on Additionally, like thank commitment

great Thank you, and day. have a

this Ladies conclude and does gentlemen, today's teleconference.

you your this You for may participation, Thank day. your lines a time. have and disconnect wonderful at