CVR Energy Reports 2017 Third Quarter Results And Announces Cash Dividend of 50 Cents
SUGAR LAND, Texas, Nov. 1, 2017 /PRNewswire/ -- CVR Energy, Inc. (NYSE: CVI) today announced third quarter 2017 net income of $22.2 million, or 26 cents per diluted share, on net sales of $1,453.8 million, compared to net income of $5.4 million, or 6 cents per diluted share, on net sales of $1,240.3 million for the 2016 third quarter. Third quarter 2017 adjusted EBITDA, a non-GAAP financial measure, was $90.9 million, compared to third quarter 2016 adjusted EBITDA of $58.2 million.
For the first nine months of 2017, net income was $33.9 million, or 39 cents per diluted share, on net sales of $4,395.3 million, compared to net income of $17.6 million, or 20 cents per diluted share, on net sales of $3,429.0 million for the same period a year earlier. Adjusted EBITDA for the first nine months of 2017 was $209.0 million, compared to adjusted EBITDA of $158.8 million for the first nine months of 2016.
"CVR Refining had a solid third quarter led by strong crack spreads and improved market conditions," said Jack Lipinski, CVR Energy's chief executive officer. "CVR Refining announced a 2017 third quarter cash distribution of 94 cents due to the exceptional performance of its Coffeyville, Kansas, refinery. CVR Refining's Wynnewood, Oklahoma, refinery began planned fall maintenance at the end of September and is on schedule to complete its turnaround in early November. The large scale and cost of the Wynnewood turnaround will negatively impact its results for the year.
"CVR Partners successfully completed the scheduled turnaround at its East Dubuque, Illinois, fertilizer facility on time and within budget during the 2017 third quarter," Lipinski said. "However, CVR Partners' results were negatively impacted by continued low U.S. nitrogen fertilizer pricing and unplanned downtime at both the East Dubuque and Coffeyville fertilizer facilities related to maintenance issues. As a result, CVR Partners announced that it will not pay a cash distribution for the quarter."
Petroleum Business
The petroleum business, which is operated by CVR Refining and includes the Coffeyville and Wynnewood refineries, reported third quarter 2017 operating income of $98.7 million on net sales of $1,385.8 million, compared to operating income of $28.4 million on net sales of $1,163.5 million in the third quarter of 2016.
Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $13.72 in the 2017 third quarter, compared to $10.09 during the same period in 2016. Direct operating expenses (exclusive of depreciation and amortization), including major scheduled turnaround expenses, per crude oil throughput barrel, for the 2017 third quarter were $6.47, compared to $5.33 in the third quarter of 2016.
Third quarter 2017 throughputs of crude oil and all other feedstocks and blendstocks totaled 213,606 barrels per day (bpd), compared to third quarter 2016 throughputs of crude oil and all other feedstocks and blendstocks of 206,733 bpd.
Nitrogen Fertilizers Business
The fertilizer business, which is operated by CVR Partners and includes the Coffeyville and East Dubuque fertilizer facilities, reported a third quarter 2017 operating loss of $15.9 million on net sales of $69.4 million, compared to operating income of $2.4 million on net sales of $78.5 million for the third quarter of 2016.
For the third quarter of 2017, consolidated average realized gate prices for UAN and ammonia were $138 per ton and $214 per ton, respectively. Consolidated average realized gate prices for UAN and ammonia were $154 per ton and $345 per ton, respectively, for the same period in 2016.
CVR Partners' fertilizer facilities produced a combined 180,700 tons of ammonia during the third quarter of 2017, of which 46,200 net tons were available for sale while the rest was upgraded to other fertilizer products, including 306,600 tons of UAN. In the 2016 third quarter, the fertilizer facilities produced 200,800 tons of ammonia, of which 60,300 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 317,200 tons of UAN.
Cash, Debt and Dividend
Consolidated cash and cash equivalents was $849.1 million at Sept. 30, 2017. Consolidated total debt was $1,166.1 million at Sept. 30, 2017. The company had no debt exclusive of CVR Refining's and CVR Partners' debt.
CVR Energy also announced a third quarter 2017 cash dividend of 50 cents per share. The dividend, as declared by CVR Energy's Board of Directors, will be paid on Nov. 17, 2017, to stockholders of record on Nov. 10, 2017. CVR Energy's third quarter cash dividend brings the cumulative cash dividends paid or declared for the first nine months of 2017 to $1.50 per share.
Today, CVR Refining announced a 2017 third quarter cash distribution of 94 cents per common unit. CVR Partners announced that it will not pay a cash distribution for the 2017 third quarter.
Third Quarter 2017 Earnings Conference Call
CVR Energy previously announced that it will host its third quarter 2017 Earnings Conference Call for analysts and investors on Wednesday, Nov. 1, 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/1003/23020. 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/1003/23020. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13672109.
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 66 percent of the common units of CVR Refining and 34 percent of the common units of CVR Partners.
For further information, please contact:
Investor Contact:
Jay Finks
CVR Energy, Inc.
(281) 207-3588
InvestorRelations@CVREnergy.com
Media Relations:
Brandee Stephens
CVR Energy, Inc.
(281) 207-3516
MediaRelations@CVREnergy.com
CVR Energy, Inc.
Financial and Operational Data (all information in this release is unaudited other than the balance sheet data as of December 31, 2016).
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except per share data)
Consolidated Statement of
Operations Data:
Net sales $1,453.8 $1,240.3 $4,395.3 $3,429.0
Operating costs and expenses:
Cost of materials and other 1,132.4 1,005.7 3,582.2 2,719.3
Direct operating expenses(1) 161.1 129.5 423.4 409.2
Depreciation and amortization 51.3 48.1 151.7 134.5
---- ---- ----- -----
Cost of sales 1,344.8 1,183.3 4,157.3 3,263.0
Selling, general and
administrative expenses(1) 27.3 27.8 82.7 81.7
Depreciation and amortization 2.8 2.0 7.5 6.3
--- --- --- ---
Operating income 78.9 27.2 147.8 78.0
Interest expense and other
financing costs (27.6) (26.2) (82.3) (56.8)
Interest income 0.2 0.2 0.8 0.5
Loss on derivatives, net (17.0) (1.7) (4.8) (4.8)
Loss on extinguishment of
debt - - - (5.1)
Other income, net - 5.0 0.1 5.5
--- --- --- ---
Income before income tax
expense 34.5 4.5 61.6 17.3
Income tax expense 9.2 2.5 17.4 2.3
--- --- ---- ---
Net income 25.3 2.0 44.2 15.0
Less: Net income (loss)
attributable to
noncontrolling interest 3.1 (3.4) 10.3 (2.6)
--- ----
Net income attributable to
CVR Energy stockholders $22.2 $5.4 $33.9 $17.6
===== ==== ===== =====
Basic and diluted earnings
per share $0.26 $0.06 $0.39 $0.20
Dividends declared per share $0.50 $0.50 $1.50 $1.50
Adjusted EBITDA* $90.9 $58.2 $209.0 $158.8
Adjusted net income* $32.0 $11.5 $51.8 $37.0
Adjusted net income per
diluted share* $0.37 $0.13 $0.60 $0.43
Weighted-average common
shares outstanding - basic
and diluted 86.8 86.8 86.8 86.8
______________________________
* See "Use of Non-GAAP Financial Measures" below.
(1) Direct operating expenses and selling, general and administrative
expenses for the three and nine months ended September 30, 2017 and
2016 are shown exclusive of depreciation and amortization, which
amounts are presented separately below direct operating expenses and
selling, general and administrative expenses.
As of September 30, As of December 31,
2016
2017
----
(audited)
(in millions)
Balance
Sheet
Data:
Cash and
cash
equivalents $849.1 $735.8
Working
capital 765.0 749.6
Total
assets 4,032.8 4,050.2
Total debt,
including
current
portion 1,166.1 1,164.6
Total CVR
stockholders'
equity 761.8 858.1
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Cash Flow Data:
Net cash flow
provided by
(used in):
Operating
activities $84.7 $149.0 $326.8 $218.9
Investing
activities (21.6) (16.9) (80.4) (172.0)
Financing
activities (43.9) (60.1) (133.1) (49.4)
----- -----
Net cash flow $19.2 $72.0 $113.3 $(2.5)
===== ===== ====== =====
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 serve 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 three and nine months ended September 30, 2017 are included in CVR Refining's press release dated November 1, 2017. The Nitrogen Fertilizer segment is operated by CVR Partners, LP ("CVR Partners"), in which we own approximately 34% of the common units as of September 30, 2017 and serve as the general partner. On April 1, 2016, CVR Partners completed the merger (the "East Dubuque Merger") whereby CVR Partners acquired a nitrogen fertilizer manufacturing facility located in East Dubuque, Illinois (the "East Dubuque Facility"). The Nitrogen Fertilizer segment consists of a nitrogen fertilizer manufacturing facility located in Coffeyville, Kansas, and the East Dubuque Facility beginning on April 1, 2016, the date of the closing of the acquisition. Detailed operating results for the Nitrogen Fertilizer segment for the three and nine months ended September 30, 2017 are included in CVR Partners' press release dated November 1, 2017.
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) Fertilizer and Other
(CVR Partners)
-------------
(in millions)
Three Months Ended
September 30, 2017
Net sales $1,385.8 $69.4 $(1.4) $1,453.8
Cost of materials
and other 1,114.4 19.4 (1.4) 1,132.4
Direct operating
expenses (1) 99.2 37.8 (0.1) 136.9
Major scheduled
turnaround expenses 21.7 2.5 - 24.2
Selling, general and
administrative 18.8 6.1 2.4 27.3
Depreciation and
amortization 33.0 19.5 1.6 54.1
Operating income
(loss) $98.7 $(15.9) $(3.9) $78.9
===== ====== ===== =====
Capital expenditures $18.7 $2.8 $1.0 $22.5
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) Fertilizer and Other
(CVR Partners)
-------------
(in millions)
Nine Months Ended
September 30, 2017
Net sales $4,147.5 $252.6 $(4.8) $4,395.3
Cost of materials
and other 3,523.7 63.3 (4.8) 3,582.2
Direct operating
expenses (1) 271.9 111.4 0.1 383.4
Major scheduled
turnaround expenses 37.4 2.6 - 40.0
Selling, general and
administrative 57.7 18.8 6.2 82.7
Depreciation and
amortization 99.5 54.9 4.8 159.2
Operating income
(loss) $157.3 $1.6 $(11.1) $147.8
====== ==== ====== ======
Capital expenditures $66.1 $11.4 $2.4 $79.9
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) Fertilizer and Other
(CVR Partners)
-------------
(in millions)
Three Months Ended
September 30, 2016
Net sales $1,163.5 $78.5 $(1.7) $1,240.3
Cost of materials
and other 987.5 19.9 (1.7) 1,005.7
Direct operating
expenses (1) 97.0 32.5 - 129.5
Major scheduled
turnaround expenses - - - -
Selling, general and
administrative 18.1 7.3 2.4 27.8
Depreciation and
amortization 32.5 16.4 1.2 50.1
---- ---- --- ----
Operating income
(loss) $28.4 $2.4 $(3.6) $27.2
===== ==== ===== =====
Capital expenditures $15.4 $6.4 $1.0 $22.8
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) and Other
Fertilizer
(CVR Partners)
-------------
(in millions)
Nine Months Ended
September 30, 2016
Net sales $3,161.9 $271.4 $(4.3) $3,429.0
Cost of materials
and other 2,651.7 72.2 (4.6) 2,719.3
Direct operating
expenses (1) 267.2 103.8 0.1 371.1
Major scheduled
turnaround expenses 31.5 6.6 - 38.1
Selling, general and
administrative 53.4 22.0 6.3 81.7
Depreciation and
amortization 95.6 41.0 4.2 140.8
---- ---- --- -----
Operating income
(loss) $62.5 $25.8 $(10.3) $78.0
===== ===== ====== =====
Capital expenditures $83.4 $18.3 $3.9 $105.6
(1) Excluding turnaround
expenses.
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) Fertilizer and Other
(CVR
Partners)
----------
(in millions)
September 30,
2017
Cash and cash
equivalents $560.4 $70.0 $218.7 $849.1
Total assets 2,500.7 1,275.8 256.3 4,032.8
Total debt,
including
current
portion 540.9 625.2 - 1,166.1
December 31,
2016
Cash and cash
equivalents $314.1 $55.6 $366.1 $735.8
Total assets 2,331.9 1,312.2 406.1 4,050.2
Total debt,
including
current
portion 541.5 623.1 - 1,164.6
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 three and nine months ended September 30, 2017 are included in CVR Refining's press release dated November 1, 2017.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Petroleum Segment
Summary Financial
Results:
Net sales $1,385.8 $1,163.5 $4,147.5 $3,161.9
Operating costs and
expenses:
Cost of materials
and other 1,114.4 987.5 3,523.7 2,651.7
Direct operating
expenses(1) 99.2 97.0 271.9 267.2
Major scheduled
turnaround expenses 21.7 - 37.4 31.5
Depreciation and
amortization 31.8 31.9 96.8 93.7
---- ---- ---- ----
Cost of sales 1,267.1 1,116.4 3,929.8 3,044.1
Selling, general and
administrative
expenses(1) 18.8 18.1 57.7 53.4
Depreciation and
amortization 1.2 0.6 2.7 1.9
--- --- --- ---
Operating income 98.7 28.4 157.3 62.5
Interest expense and
other financing
costs (12.0) (10.8) (35.2) (31.7)
Interest income 0.2 - 0.4 -
Loss on derivatives,
net (17.0) (1.7) (4.8) (4.8)
Other income, net 0.1 - 0.1 -
--- ---
Income before income
tax expense 70.0 15.9 117.8 26.0
Income tax expense - - - -
Net income $70.0 $15.9 $117.8 $26.0
===== ===== ====== =====
Gross profit $118.7 $47.1 $217.7 $117.8
Refining margin* $271.4 $176.0 $623.8 $510.2
Refining margin
adjusted for FIFO
impact* $256.5 $183.7 $624.6 $480.5
Adjusted Petroleum
EBITDA* $138.6 $75.3 $296.2 $195.1
______________________________
* See "Use of Non-GAAP Financial Measures" below.
(1) Direct operating expense and selling, general and administrative
expenses for the three and nine months ended September 30, 2017 and
2016 are shown exclusive of depreciation and amortization and major
scheduled turnaround expenses, which amounts are presented separately
below direct operating expenses and selling, general and
administrative expenses.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(dollars per barrel)
Petroleum Segment
Key Operating
Statistics:
Per crude oil
throughput barrel:
Gross profit $6.35 $2.59 $3.79 $2.21
Refining margin* 14.52 9.66 10.86 9.55
FIFO impact,
(favorable)
unfavorable (0.80) 0.43 0.01 (0.56)
----- ---- ---- -----
Refining margin
adjusted for FIFO
impact* 13.72 10.09 10.87 8.99
Direct operating
expenses and major
scheduled
turnaround expenses 6.47 5.33 5.38 5.59
Direct operating
expenses excluding
major scheduled
turnaround expenses 5.31 5.33 4.73 5.00
Direct operating
expenses and major
scheduled
turnaround expenses
per barrel sold 6.26 5.04 5.08 5.24
Direct operating
expenses excluding
major scheduled
turnaround expenses
per barrel sold $5.13 $5.04 $4.47 $4.68
Barrels sold
(barrels per day) 210,002 209,228 222,889 208,192
______________________________
* See "Use of Non-GAAP Financial Measures" below.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Petroleum Segment
Summary % % % %
--- --- --- ---
Refining Throughput
and Production Data
(bpd):
Throughput:
Sweet 196,342 91.9 176,404 85.3 198,750 89.8 174,594 85.4
Medium - - 1,983 1.0 - - 2,321 1.1
Heavy sour 6,751 3.2 19,568 9.5 11,643 5.3 17,978 8.9
----- --- ------ --- ------ --- ------ ---
Total crude oil
throughput 203,093 95.1 197,955 95.8 210,393 95.1 194,893 95.4
All other feedstocks
and blendstocks 10,513 4.9 8,778 4.2 10,943 4.9 9,476 4.6
Total throughput 213,606 100.0 206,733 100.0 221,336 100.0 204,369 100.0
======= ===== ======= ===== ======= ===== ======= =====
Production:
Gasoline 105,712 49.5 106,120 51.2 112,268 50.6 106,774 52.2
Distillate 89,655 42.0 84,669 40.9 92,046 41.5 83,101 40.6
Other (excluding
internally produced
fuel) 18,107 8.5 16,390 7.9 17,385 7.9 14,738 7.2
Total refining
production (excluding
internally produced
fuel) 213,474 100.0 207,179 100.0 221,699 100.0 204,613 100.0
======= ===== ======= ===== ======= ===== ======= =====
Product price (dollars
per gallon):
Gasoline $1.63 $1.45 $1.56 $1.31
Distillate 1.67 1.45 1.58 1.30
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Market Indicators
(dollars per barrel):
West Texas Intermediate
(WTI) NYMEX $48.20 $44.94 $49.36 $41.53
Crude Oil Differentials:
WTI less WTS (light/
medium sour) 0.97 1.47 1.15 0.82
WTI less WCS (heavy
sour) 10.48 14.23 11.42 13.59
NYMEX Crack Spreads:
Gasoline 20.42 13.73 17.74 16.24
Heating Oil 21.05 14.34 17.24 13.04
NYMEX 2-1-1 Crack Spread 20.73 14.03 17.49 14.64
PADD II Group 3 Basis:
Gasoline (1.18) 0.48 (2.37) (3.59)
Ultra Low Sulfur Diesel 0.85 1.01 (0.44) (0.38)
PADD II Group 3 Product
Crack Spread:
Gasoline 19.23 14.21 15.37 12.65
Ultra Low Sulfur Diesel 21.90 15.35 16.80 12.65
PADD II Group 3 2-1-1 20.57 14.78 16.09 12.65
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except operating statistics)
Coffeyville Refinery
Financial Results:
Net sales $939.3 $788.1 $2,750.5 $2,094.1
Cost of materials
and other 767.7 669.9 2,349.7 1,763.3
Direct operating
expenses(1) 56.7 50.7 154.9 144.5
Major scheduled
turnaround expenses - - - 31.5
Depreciation and
amortization 17.4 17.7 53.8 51.2
---- ---- ---- ----
Gross profit 97.5 49.8 192.1 103.6
Add:
Direct operating
expenses(1) 56.7 50.7 154.9 144.5
Major scheduled
turnaround expenses - - - 31.5
Depreciation and
amortization 17.4 17.7 53.8 51.2
---- ---- ---- ----
Refining margin* 171.6 118.2 400.8 330.8
FIFO impact,
(favorable)
unfavorable (10.1) 4.0 1.5 (22.4)
----- --- --- -----
Refining margin
adjusted for FIFO
impact* $161.5 $122.2 $402.3 $308.4
====== ====== ====== ======
Coffeyville Refinery
Key Operating
Statistics:
Per crude oil
throughput barrel:
Gross profit $8.26 $4.15 $5.37 $3.12
Refining margin* 14.52 9.86 11.21 9.94
FIFO impact,
(favorable)
unfavorable (0.86) 0.33 0.04 (0.67)
----- ---- ---- -----
Refining margin
adjusted for FIFO
impact* 13.66 10.19 11.25 9.27
Direct operating
expenses and major
scheduled
turnaround expenses 4.80 4.23 4.33 5.29
Direct operating
expenses excluding
major scheduled
turnaround expenses 4.80 4.23 4.33 4.34
Direct operating
expenses and major
scheduled
turnaround expenses
per barrel sold 4.50 3.93 3.99 4.80
Direct operating
expenses excluding
major scheduled
turnaround expenses
per barrel sold $4.50 $3.93 $3.99 $3.94
Barrels sold
(barrels per day) 136,776 140,256 142,238 133,729
_____________________________
* See "Use of Non-GAAP Financial Measures" below.
(1) Direct operating expenses for the three and nine months ended
September 30, 2017 and 2016 are shown exclusive of depreciation and
amortization and major scheduled turnaround expenses, which amounts
are presented separately below direct operating expenses.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
% % % %
--- --- --- ---
Coffeyville Refinery
Throughput and
Production Data
(bpd):
Throughput:
Sweet 121,710 89.6 110,825 81.0 119,361 85.8 101,803 79.2
Medium - - - - - - 1,641 1.3
Heavy sour 6,751 5.0 19,568 14.3 11,643 8.4 17,978 13.9
----- --- ------ ---- ------ --- ------ ----
Total crude oil
throughput 128,461 94.6 130,393 95.3 131,004 94.2 121,422 94.4
All other feedstocks
and blendstocks 7,415 5.4 6,399 4.7 8,124 5.8 7,193 5.6
--- --- --- ---
Total throughput 135,876 100.0 136,792 100.0 139,128 100.0 128,615 100.0
======= ===== ======= ===== ======= ===== ======= =====
Production:
Gasoline 67,598 49.1 70,013 50.3 70,697 50.1 67,298 51.5
Distillate 57,654 41.9 57,839 41.6 58,927 41.7 54,192 41.5
Other (excluding
internally produced
fuel) 12,355 9.0 11,286 8.1 11,619 8.2 9,191 7.0
--- --- --- ---
Total refining
production (excluding
internally produced
fuel) 137,607 100.0 139,138 100.0 141,243 100.0 130,681 100.0
======= ===== ======= ===== ======= ===== ======= =====
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except operating statistics)
Wynnewood Refinery
Financial Results:
Net sales $445.3 $374.3 $1,393.7 $1,064.4
Cost of materials
and other 346.9 317.7 1,174.6 888.5
Direct operating
expenses(1) 42.5 46.3 117.0 122.7
Major scheduled
turnaround expenses 21.7 - 37.4 -
Depreciation and
amortization 12.9 12.7 38.5 37.9
---- ---- ---- ----
Gross profit (loss) 21.3 (2.4) 26.2 15.3
Add:
Direct operating
expenses(1) 42.5 46.3 117.0 122.7
Major scheduled
turnaround expenses 21.7 - 37.4 -
Depreciation and
amortization 12.9 12.7 38.5 37.9
---- ---- ---- ----
Refining margin* 98.4 56.6 219.1 175.9
FIFO impact,
(favorable)
unfavorable (4.8) 3.8 (0.7) (7.3)
---- --- ---- ----
Refining margin
adjusted for FIFO
impact* $93.6 $60.4 $218.4 $168.6
===== ===== ====== ======
Wynnewood Refinery
Key Operating
Statistics:
Per crude oil
throughput barrel:
Gross profit (loss) $3.10 $(0.39) $1.21 $0.76
Refining margin* 14.33 9.10 10.11 8.74
FIFO impact,
(favorable)
unfavorable (0.70) 0.61 (0.03) (0.36)
----- ---- ----- -----
Refining margin
adjusted for FIFO
impact* 13.63 9.71 10.08 8.38
Direct operating
expenses and major
scheduled
turnaround expenses 9.35 7.45 7.13 6.10
Direct operating
expenses excluding
major scheduled
turnaround expenses 6.18 7.45 5.40 6.10
Direct operating
expenses and major
scheduled
turnaround expenses 9.53 7.29 7.01 6.01
per barrel sold
Direct operating
expenses excluding
major scheduled
turnaround expenses
per barrel sold $6.30 $7.29 $5.32 $6.01
Barrels sold
(barrels per day) 73,226 68,971 80,651 74,463
______________________________
* See "Use of Non-GAAP Financial Measures" below.
(1) Direct operating expenses for the three and nine months ended September
30, 2017 and 2016 are shown exclusive of depreciation and amortization
and major scheduled turnaround expenses, which amounts are presented
separately below direct operating expenses.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
% % % %
--- --- --- ---
Wynnewood Refinery
Throughput and
Production Data
(bpd):
Throughput:
Sweet 74,632 96.0 65,579 93.8 79,389 96.6 72,791 96.1
Medium - - 1,983 2.8 - - 680 0.9
Heavy sour - - - - - - - -
--- --- --- --- --- --- --- ---
Total crude oil
throughput 74,632 96.0 67,562 96.6 79,389 96.6 73,471 97.0
All other feedstocks
and blendstocks 3,098 4.0 2,379 3.4 2,819 3.4 2,283 3.0
--- --- --- ---
Total throughput 77,730 100.0 69,941 100.0 82,208 100.0 75,754 100.0
====== ===== ====== ===== ====== ===== ====== =====
Production:
Gasoline 38,114 50.2 36,107 53.1 41,571 51.6 39,476 53.4
Distillate 32,001 42.2 26,830 39.4 33,119 41.2 28,909 39.1
Other (excluding
internally produced
fuel) 5,752 7.6 5,104 7.5 5,766 7.2 5,547 7.5
--- --- --- ---
Total refining
production (excluding
internally produced
fuel) 75,867 100.0 68,041 100.0 80,456 100.0 73,932 100.0
====== ===== ====== ===== ====== ===== ====== =====
Nitrogen Fertilizer Segment Operating Data
The following tables set forth information about the Nitrogen Fertilizer segment operated by CVR Partners, of which we own approximately 34% of the common units as of September 30, 2017 and serve as the general partner. The financial and operational data include the results of the East Dubuque Facility beginning on April 1, 2016, the date of the closing of the acquisition. 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 three and nine months ended September 30, 2017 are included in CVR Partners' press release dated November 1, 2017.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Nitrogen Fertilizer
Segment Business
Financial Results:
Net sales $69.4 $78.5 $252.6 $271.4
Cost of materials and
other 19.4 19.9 63.3 72.2
Direct operating
expenses(1) 37.8 32.5 111.4 103.8
Major scheduled
turnaround expenses 2.5 - 2.6 6.6
Depreciation and
amortization 19.5 16.4 54.9 41.0
---- ---- ---- ----
Cost of sales 79.2 68.8 232.2 223.6
Selling, general and
administrative
expenses 6.1 7.3 18.8 22.0
--- --- ---- ----
Operating income
(loss) (15.9) 2.4 1.6 25.8
Interest expense and
other financing costs (15.7) (15.6) (47.1) (32.8)
Loss on extinguishment
of debt - - - (5.1)
Other income, net - - 0.1 -
Loss before income tax
expense (31.6) (13.2) (45.4) (12.1)
Income tax expense - 0.2 - 0.3
--- --- --- ---
Net loss $(31.6) $(13.4) $(45.4) $(12.4)
====== ====== ====== ======
Adjusted Nitrogen
Fertilizer EBITDA* $5.0 $17.4 $58.1 $74.4
_______________________________
* See "Use of Non-GAAP Financial Measures" below.
(1) Direct operating expenses for the three and nine months ended September
30, 2017 and 2016 are shown exclusive of depreciation and amortization
and major scheduled turnaround expenses, which amounts are presented
separately below direct operating expenses.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Nitrogen Fertilizer
Segment Key
Operating
Statistics:
Consolidated sales
(thousand tons):
Ammonia 65.3 47.7 201.8 145.7
UAN 299.1 296.0 951.6 902.4
Consolidated product
pricing at gate
(dollars per ton)
(1):
Ammonia $214 $345 $287 $385
UAN $138 $154 $158 $187
Consolidated
production volume
(thousand tons):
Ammonia (gross
produced) (2) 180.7 200.8 615.2 485.9
Ammonia (net
available for sale)
(2) 46.2 60.3 203.7 121.0
UAN 306.6 317.2 962.3 861.9
Feedstock:
Petroleum coke used
in production
(thousand tons) 114.3 126.8 371.0 384.4
Petroleum coke used
in production
(dollars per ton) $18 $13 $18 $14
Natural gas used in
production
(thousands of
MMBtus) 1,555.4 2,075.5 5,780.7 3,471.6
Natural gas used in
production (dollars
per MMBtu)(3) $3.12 $2.97 $3.25 $2.75
Natural gas in cost
of materials and
other (thousands of
MMBtus) 1,934.9 1,679.5 5,898.3 2,742.5
Natural gas in cost
of materials and
other (dollars per
MMBtu)(3) $3.15 $2.92 $3.30 $2.68
Coffeyville Facility
on-stream factor
(4):
Gasification 96.3% 95.9% 98.0% 97.2%
Ammonia 93.5% 94.7% 96.7% 96.2%
UAN 93.9% 94.1% 92.6% 93.1%
East Dubuque
Facility on-stream
factors (4):
Ammonia 76.3% 94.4% 91.9% 81.7%
UAN 77.1% 92.9% 91.5% 81.1%
Market Indicators:
Ammonia -Southern
Plains (dollars per
ton) $238 $315 $314 $368
Ammonia -Corn belt
(dollars per ton) $303 $372 $364 $432
UAN -Corn belt
(dollars per ton) $165 $188 $192 $218
Natural gas NYMEX
(dollars per MMBtu) $2.95 $2.79 $3.05 $2.35
________________________________
(1) Product pricing at gate 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.
(2) Gross tons produced for ammonia represent total ammonia produced, including
ammonia produced that was upgraded into other fertilizer products. Net tons
available for sale represent the ammonia available for sale that was not
upgraded into other fertilizer products.
(3) The cost per MMBtu excludes derivative activity, when applicable. The
impact of natural gas derivative activity during the periods presented was
not material.
(4) On-stream factor is the total number of hours operated divided by the total
number of hours in the reporting period and is included as a measure of
operating efficiency.
Coffeyville Facility
The Linde air separation unit experienced a shut down during the second
quarter of 2017. Following the Linde outage, the Coffeyville Facility UAN
unit experienced a number of operational challenges, resulting in
approximately 11 days of UAN downtime during the second quarter of 2017.
Excluding the impact of the Linde air separation unit outage at the
Coffeyville Facility, the UAN unit on-stream factors at the Coffeyville
Facility would have been 96.7% for the nine months ended September 30,
2017.
East Dubuque Facility
Excluding the impact of approximately 14 days of downtime associated with
the 2017 full facility turnaround at the East Dubuque Facility, the on-
stream factors at the East Dubuque Facility would have been 91.3% for
ammonia and 91.8% for UAN for the three months ended September 30, 2017 and
96.9% for ammonia and 96.4% for UAN for the nine months ended September 30,
2017.
Excluding the impact of approximately 28 days of downtime associated with
the 2016 full facility turnaround at the East Dubuque Facility, the on-
stream factors at the East Dubuque Facility would have been 97.2% for
ammonia and 96.2% for UAN for the six months ended September 30, 2016.
Use of Non-GAAP Financial Measures
To supplement our actual results in accordance with GAAP for the applicable periods, we also use the non-GAAP financial measures 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 our financial performance for the applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods.
Adjusted net income (loss) is not a recognized term under GAAP and should not be substituted for net income (loss) 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 (loss) 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 (loss) per diluted share represents adjusted net income (loss) divided by weighted-average diluted shares outstanding. Adjusted net income (loss) represents net income (loss), as adjusted, that is attributable to CVR Energy stockholders.
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except per share data)
Reconciliation of Income before
income tax expense to Adjusted
Net Income:
Income before income tax expense $34.5 $4.5 $61.6 $17.3
Adjustments:
FIFO impact, (favorable)
unfavorable (14.9) 7.7 0.8 (29.7)
Major scheduled turnaround
expenses 24.2 - 40.0 38.1
Loss on derivatives, net 17.0 1.7 4.8 4.8
Current period settlement on
derivative contracts (1) - 6.7 1.1 35.2
Loss on extinguishment of debt - - - 5.1
Expenses associated with the
East Dubuque Merger (2) - 0.7 - 3.1
Insurance recovery -business
interruption (3) (1.1) (2.1) (1.1) (2.1)
Adjusted net income before
income tax expense and
noncontrolling interest 59.7 19.2 107.2 71.8
Adjusted net income attributed
to noncontrolling interest (12.1) (1.1) (26.3) (19.7)
Income tax expense, as adjusted (15.6) (6.6) (29.1) (15.1)
Adjusted net income $32.0 $11.5 $51.8 $37.0
===== ===== ===== =====
Adjusted net income per diluted
share $0.37 $0.13 $0.60 $0.43
Refining margin per crude oil throughput barrel is a measurement calculated as the difference between the Petroleum segment's net sales and cost of materials and other. 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 materials and other at which they are able to sell refined products. Each of the components used in this calculation (net sales and cost of materials and other) 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 materials and other adjusted for FIFO impact. 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 materials and other (taking into account the impact of the utilization of FIFO) at which 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 a favorable FIFO impact when crude oil prices increase and an unfavorable FIFO impact when crude oil prices decrease.
The calculation of refining margin and refining margin adjusted for FIFO impact (each a non-GAAP financial measure), including a reconciliation to the most directly comparable GAAP financial measure for the three and nine months ended September 30, 2017 and 2016 is as follows:
Petroleum Segment
Operating Data
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Net sales $1,385.8 $1,163.5 $4,147.5 $3,161.9
Operating costs and
expenses:
Cost of materials
and other 1,114.4 987.5 3,523.7 2,651.7
Direct operating
expenses
(exclusive of
depreciation and
amortization and
major scheduled
turnaround
expenses as
reflected below) 99.2 97.0 271.9 267.2
Major scheduled
turnaround
expenses 21.7 - 37.4 31.5
Depreciation and
amortization 31.8 31.9 96.8 93.7
---- ---- ---- ----
Gross profit 118.7 47.1 217.7 117.8
Add:
Direct operating
expenses
(exclusive of
depreciation and
amortization and
major scheduled
turnaround
expenses as
reflected below) 99.2 97.0 271.9 267.2
Major scheduled
turnaround
expenses 21.7 - 37.4 31.5
Depreciation and
amortization 31.8 31.9 96.8 93.7
---- ---- ---- ----
Refining margin 271.4 176.0 623.8 510.2
FIFO impact,
(favorable)
unfavorable (14.9) 7.7 0.8 (29.7)
-----
Refining margin
adjusted for FIFO
impact $256.5 $183.7 $624.6 $480.5
====== ====== ====== ======
The calculation of refining margin per crude oil throughput barrel and refining margin adjusted for FIFO impact per crude oil throughput barrel for the three and nine months ended September 30, 2017 and 2016 is as follows:
Petroleum Segment
Operating Data
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Total crude oil
throughput barrels per
day 203,093 197,955 210,393 194,893
Days in the period 92 92 273 274
Total crude oil
throughput barrels 18,684,556 18,211,860 57,437,289 53,400,682
========== ========== ========== ==========
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin $271.4 $176.0 $623.8 $510.2
Divided by: crude oil
throughput barrels 18.7 18.2 57.4 53.4
Refining margin per
crude oil throughput
barrel $14.52 $9.66 $10.86 $9.55
====== ===== ====== =====
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin
adjusted for FIFO
impact $256.5 $183.7 $624.6 $480.5
Divided by: crude oil
throughput barrels 18.7 18.2 57.4 53.4
Refining margin
adjusted for FIFO
impact per crude oil
throughput barrel $13.72 $10.09 $10.87 $8.99
====== ====== ====== =====
Coffeyville Refinery
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Total crude oil
throughput barrels per
day 128,461 130,393 131,004 121,422
Days in the period 92 92 273 274
--- --- --- ---
Total crude oil
throughput barrels 11,818,412 11,996,156 35,764,092 33,269,628
========== ========== ========== ==========
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin $171.6 $118.2 $400.8 $330.8
Divided by: crude oil
throughput barrels 11.8 12.0 35.8 33.3
---- ---- ---- ----
Refining margin per
crude oil throughput
barrel $14.52 $9.86 $11.21 $9.94
====== ===== ====== =====
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin
adjusted for FIFO
impact $161.5 $122.2 $402.3 $308.4
Divided by: crude oil
throughput barrels 11.8 12.0 35.8 33.3
---- ---- ---- ----
Refining margin
adjusted for FIFO
impact per crude oil
throughput barrel $13.66 $10.19 $11.25 $9.27
====== ====== ====== =====
Wynnewood Refinery
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Total crude oil
throughput barrels per
day 74,632 67,562 79,389 73,471
Days in the period 92 92 273 274
--- --- --- ---
Total crude oil
throughput barrels 6,866,144 6,215,704 21,673,197 20,131,054
========= ========= ========== ==========
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin $98.4 $56.6 $219.1 $175.9
Divided by: crude oil
throughput barrels 6.9 6.2 21.7 20.1
--- --- ---- ----
Refining margin per
crude oil throughput
barrel $14.33 $9.10 $10.11 $8.74
====== ===== ====== =====
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin
adjusted for FIFO
impact $93.6 $60.4 $218.4 $168.6
Divided by: crude oil
throughput barrels 6.9 6.2 21.7 20.1
--- --- ---- ----
Refining margin
adjusted for FIFO
impact per crude oil
throughput barrel $13.63 $9.71 $10.08 $8.38
====== ===== ====== =====
EBITDA and Adjusted EBITDA. EBITDA represents net income (loss) attributable to CVR Energy stockholders before consolidated (i) interest expense and other financing costs, net of interest income, (ii) income tax expense (benefit), and (iii) depreciation and amortization, less the portion of these adjustments attributable to non-controlling interest. Adjusted EBITDA represents EBITDA adjusted for, as applicable, consolidated (i) FIFO impact (favorable) unfavorable; (ii) loss on extinguishment of debt; (iii) major scheduled turnaround expenses (that many of our competitors capitalize and thereby exclude from their measures of EBITDA and adjusted EBITDA); (iv) (gain) loss on derivatives, net; (v) current period settlements on derivative contracts; (vi) business interruption insurance recovery and (vii) expenses associated with the East Dubuque Merger, less the portion of these adjustments attributable to non-controlling interest. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be substituted for net income (loss) 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. EBITDA and Adjusted EBITDA represent EBITDA and Adjusted EBITDA that is attributable to CVR Energy stockholders.
A reconciliation of net income attributable to CVR Energy stockholders to EBITDA and EBITDA to Adjusted EBITDA for the three and nine months ended September 30, 2017 and 2016 is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Net income attributable to
CVR Energy stockholders $22.2 $5.4 $33.9 $17.6
Add:
Interest expense and other
financing costs, net of
interest income 27.4 26.0 81.5 56.3
Income tax expense 9.2 2.5 17.4 2.3
Depreciation and
amortization 54.1 50.1 159.2 140.8
Adjustments attributable to
noncontrolling interest (38.3) (35.9) (112.7) (90.3)
EBITDA 74.6 48.1 179.3 126.7
Add:
FIFO impact, (favorable)
unfavorable (14.9) 7.7 0.8 (29.7)
Major scheduled turnaround
expenses 24.2 - 40.0 38.1
Loss on derivatives, net 17.0 1.7 4.8 4.8
Current period settlement
on derivative contracts
(1) - 6.7 1.1 35.2
Loss on extinguishment of
debt - - - 5.1
Expenses associated with
the East Dubuque Merger
(2) - 0.7 - 3.1
Insurance recovery -
business interruption (3) (1.1) (2.1) (1.1) (2.1)
Adjustments attributable to
noncontrolling interest (8.9) (4.6) (15.9) (22.4)
Adjusted EBITDA $90.9 $58.2 $209.0 $158.8
===== ===== ====== ======
Petroleum and Nitrogen Fertilizer EBITDA and Adjusted EBITDA. EBITDA by operating segment represents net income (loss) 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, as applicable (i) FIFO impact (favorable) unfavorable; (ii) loss on extinguishment of debt; (iii) major scheduled turnaround expenses (that many of our competitors capitalize and thereby exclude from their measures of EBITDA and adjusted EBITDA); (iv) (gain) loss on derivatives, net; (v) current period settlements on derivative contracts; (vi) expenses associated with the East Dubuque Merger and (vii) business interruption insurance recovery, less the portion of these adjustments attributable to noncontrolling interest. 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 (loss) 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.
A reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA for the Petroleum and Nitrogen Fertilizer segments for the three and nine months ended September 30, 2017 and 2016 is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Petroleum:
Petroleum net income $70.0 $15.9 $117.8 $26.0
Add:
Interest expense and
other financing
costs, net of
interest income 11.8 10.8 34.8 31.7
Income tax expense - - - -
Depreciation and
amortization 33.0 32.5 99.5 95.6
---- ---- ---- ----
Petroleum EBITDA 114.8 59.2 252.1 153.3
Add:
FIFO impact,
(favorable)
unfavorable (14.9) 7.7 0.8 (29.7)
Major scheduled
turnaround expenses 21.7 - 37.4 31.5
Loss on derivatives,
net 17.0 1.7 4.8 4.8
Current period
settlements on
derivative contracts
(1) - 6.7 1.1 35.2
Adjusted Petroleum
EBITDA $138.6 $75.3 $296.2 $195.1
====== ===== ====== ======
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Nitrogen Fertilizer:
Nitrogen fertilizer net
loss $(31.6) $(13.4) $(45.4) $(12.4)
Add:
Interest expense and other
financing costs, net 15.7 15.6 47.1 32.8
Income tax expense - 0.2 - 0.3
Depreciation and
amortization 19.5 16.4 54.9 41.0
---- ---- ---- ----
Nitrogen Fertilizer EBITDA 3.6 18.8 56.6 61.7
Add:
Major scheduled turnaround
expenses 2.5 - 2.6 6.6
Loss on extinguishment of
debt - - - 5.1
Expenses associated with
the East Dubuque Merger
(2) - 0.7 - 3.1
Insurance recovery -
business interruption (3) (1.1) (2.1) (1.1) (2.1)
Adjusted Nitrogen
Fertilizer EBITDA $5.0 $17.4 $58.1 $74.4
==== ===== ===== =====
_________________________________
(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.
(2) On April 1, 2016, CVR Partners completed the East Dubuque Merger. CVR Partners
incurred legal and other professional fees and other merger related expenses
that are referred to herein as expenses associated with the East Dubuque
Merger, which are included in selling, general and administrative expenses.
(3) CVR Partners received business interruption insurance recoveries of $1.1
million and $2.1 million in the third quarter of 2017 and 2016, respectively.
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 September 30, 2017. 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 September 30, 2017, the open commodity swap positions for 2017 and 2018 were comprised of approximately 39.8% for 2-1-1 crack swaps, 30.1% for distillate crack swaps and 30.1% for gasoline crack swaps.
Commodity Swaps Barrels Fixed Price
(1)
--------------- ------- ------------
Fourth Quarter 2017 7,050,000 $17.80
First Quarter 2018 7,050,000 18.66
Second Quarter 2018 1,950,000 21.09
Third Quarter 2018 150,000 19.22
------- -----
Total 16,200,000 $18.59
========== ======
______________________________
(1) Weighted-average price of all positions for period indicated.
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SOURCE CVR Energy, Inc.
