CVR Energy Reports 2017 Fourth Quarter and Full Year Results And Announces Cash Dividend of 50 Cents
SUGAR LAND, Texas, Feb. 22, 2018 /PRNewswire/ -- CVR Energy, Inc. (NYSE: CVI) today announced full year 2017 net income of $234.4 million, or $2.70 per diluted share, on net sales of $5,988.4 million, compared to net income for full year 2016 of $24.7 million, or 28 cents per diluted share, on net sales of $4,782.4 million. Full year 2017 adjusted EBITDA, a non-GAAP financial measure, was $258.4 million compared to full year 2016 adjusted EBITDA of $181.6 million.
For the fourth quarter of 2017, the company reported net income of $200.5 million, or $2.31 per diluted share, on net sales of $1,593.1 million, compared to net income of $7.1 million, or 8 cents per diluted share, on net sales of $1,353.4 million for the fourth quarter 2016. Fourth quarter 2017 adjusted EBITDA was $49.4 million compared to adjusted EBITDA of $22.8 million for the same period a year earlier.
"CVR Refining delivered solid 2017 full year and fourth quarter results led by stronger crack spreads and record operating rates," said Dave Lamp, CVR Energy's chief executive officer. "The Coffeyville, Kansas, refinery processed more than 131,000 barrels per day (bpd) of crude oil during the year and the Wynnewood, Oklahoma, refinery successfully completed its major scheduled plant turnaround in the fourth quarter.
"Low nitrogen fertilizer pricing continued to dampen CVR Partners' 2017 full year and fourth quarter results," Lamp said. "Fertilizer pricing has improved in the 2018 first quarter mostly due to continued steady demand for product and lower imports into the U.S. market.
"Looking forward, we will continue to focus on safe and reliable operations while increasing shareholder value by implementing self-help initiatives and developing capital improvements that will meaningfully improve our return on capital employed," he concluded.
Petroleum Business
The petroleum business, which is operated by CVR Refining and includes the Coffeyville and Wynnewood refineries, reported fourth quarter 2017 operating income of $46.5 million on net sales of $1,516.7 million, compared to operating income of $15.3 million on net sales of $1,269.4 million in the fourth quarter of 2016.
Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $11.87 in the 2017 fourth quarter, compared to $7.32 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 fourth quarter were $7.78, compared to $4.96 in the fourth quarter of 2016.
Fourth quarter 2017 throughputs of crude oil and all other feedstocks and blendstocks totaled 203,263 bpd, compared to fourth quarter 2016 throughputs of crude oil and all other feedstocks and blendstocks of 223,266 bpd.
Nitrogen Fertilizers Business
The fertilizer business, which is operated by CVR Partners and includes the Coffeyville and East Dubuque fertilizer facilities, reported a fourth quarter 2017 operating loss of $10.8 million on net sales of $78.2 million, compared to operating income of $1.0 million on net sales of $84.9 million for the fourth quarter of 2016.
For the fourth quarter of 2017, consolidated average realized gate prices for UAN and ammonia were $132 per ton and $264 per ton, respectively. Consolidated average realized gate prices for UAN and ammonia were $147 per ton and $352 per ton, respectively, for the same period in 2016.
CVR Partners' fertilizer facilities produced a combined 199,500 tons of ammonia during the fourth quarter of 2017, of which 64,100 net tons were available for sale while the rest was upgraded to other fertilizer products, including 306,100 tons of UAN. In the 2016 fourth quarter, the fertilizer facilities produced 207,600 tons of ammonia, of which 62,600 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 330,700 tons of UAN.
Cash, Debt and Dividend
Consolidated cash and cash equivalents was $481.8 million at Dec. 31, 2017. Consolidated total debt was $1,166.5 million at Dec. 31, 2017. The company had no debt exclusive of CVR Refining's and CVR Partners' debt.
CVR Energy also announced a fourth quarter 2017 cash dividend of 50 cents per share. The dividend, as declared by CVR Energy's Board of Directors, will be paid on March 12, 2018, to stockholders of record on March 5, 2018. CVR Energy's fourth quarter cash dividend brings the cumulative cash dividends paid or declared for the 2017 full year to $2.00 per share.
Today, CVR Refining announced a 2017 fourth quarter cash distribution of 45 cents per common unit. CVR Partners announced that it will not pay a cash distribution for the 2017 fourth quarter.
Fourth Quarter 2017 Earnings Conference Call
CVR Energy previously announced that it will host its fourth quarter 2017 Earnings Conference Call for analysts and investors on Thursday, Feb. 22, 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/1003/24489. 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/1003/24489. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13676234.
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 statements of operations and cash flow data for the year ended December 31, 2016 and the balance sheet data as of December 31, 2016).
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except per share data)
Consolidated Statement of Operations Data:
Net sales $1,593.1 $1,353.4 $5,988.4 $4,782.4
Operating costs and expenses:
Cost of materials and other 1,300.7 1,128.1 4,882.9 3,847.5
Direct operating expenses(1) 176.1 132.6 599.5 541.8
Depreciation and
amortization 51.7 49.9 203.3 184.5
---- ---- ----- -----
Cost of sales 1,528.5 1,310.6 5,685.7 4,573.8
Selling, general and
administrative expenses(1) 31.5 27.5 114.2 109.1
Depreciation and
amortization 3.1 2.4 10.7 8.6
--- --- ---- ---
Operating income 30.0 12.9 177.8 90.9
Interest expense and other
financing costs (27.9) (27.1) (110.1) (83.9)
Interest income 0.4 0.2 1.1 0.7
Loss on derivatives, net (65.0) (14.6) (69.8) (19.4)
Gain (loss) on
extinguishment of debt - 0.2 - (4.9)
Other income, net 0.9 0.3 1.0 5.7
--- --- --- ---
Income (loss) before income
tax benefit (61.6) (28.1) - (10.9)
Income tax benefit(2) (234.3) (22.1) (216.9) (19.8)
------ ----- ------ -----
Net income (loss) 172.7 (6.0) 216.9 8.9
Less: Net loss attributable
to noncontrolling interest (27.8) (13.1) (17.5) (15.8)
----- ----- ----- -----
Net income attributable to
CVR Energy stockholders $200.5 $7.1 $234.4 $24.7
====== ==== ====== =====
Basic and diluted earnings
per share $2.31 $0.08 $2.70 $0.28
Dividends declared per share $0.50 $0.50 $2.00 $2.00
Adjusted EBITDA* $49.4 $22.8 $258.4 $181.6
Adjusted net income* $24.1 $4.4 $75.9 $41.5
Adjusted net income per
diluted share* $0.28 $0.05 $0.87 $0.48
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 months and years ended December 31,
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.
(2) The income tax benefit for the three months
and year ended December 31, 2017 was
favorably impacted as a result of the Tax
Cuts and Jobs Act ("TCJA") legislation that
was signed into law in December 2017 with
the reduction of the federal income tax rate
from 35% to 21% beginning in 2018. The
Company is required to reflect the impact of
tax law changes in its consolidated
financial statements in the period of
enactment. As a result, our net deferred tax
liabilities at December 31, 2017 were
remeasured to reflect the lower tax rate
that will be in effect for the years in
which the deferred tax assets and
liabilities will be realized. A benefit of
approximately $200.5 million was recognized
as a result of the remeasurement.
As of December 31,
2017 2016
---- ----
(audited)
(in millions)
Balance Sheet Data:
Cash and cash equivalents $481.8 $735.8
Working capital 550.5 749.6
Total assets 3,806.7 4,050.2
Total debt, including
current portion 1,166.5 1,164.6
Total CVR stockholders'
equity 918.8 858.1
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Cash Flow Data:
Net cash flow
provided by
(used in):
Operating
activities $(159.9) $48.6 $166.9 $267.5
Investing
activities (114.6) (29.4) (195.0) (201.4)
Financing
activities (92.8) (46.0) (225.9) (95.4)
----- ----- ------ -----
Net cash flow $(367.3) $(26.8) $(254.0) $(29.3)
======= ====== ======= ======
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 quarter and year ended December 31, 2017 are included in CVR Refining's press release dated February 22, 2018. The Nitrogen Fertilizer segment is operated by CVR Partners, LP ("CVR Partners"), in which we own approximately 34% of the common units as of December 31, 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 quarter and year ended December 31, 2017 are included in CVR Partners' press release dated February 22, 2018.
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) Fertilizer and Other
(CVR Partners)
-------------
(in millions)
Three Months Ended
December 31, 2017
Net sales $1,516.7 $78.2 $(1.8) $1,593.1
Cost of materials
and other 1,281.0 21.6 (1.9) 1,300.7
Direct operating
expenses(1) 91.5 41.5 0.1 133.1
Major scheduled
turnaround
expenses 43.0 - - 43.0
Selling, general
and administrative 21.1 6.8 3.6 31.5
Depreciation and
amortization 33.6 19.1 2.1 54.8
---- ---- --- ----
Operating income
(loss) $46.5 $(10.8) $(5.7) $30.0
===== ====== ===== =====
Capital
expenditures $33.6 $3.1 $2.0 $38.7
Year Ended December
31, 2017
Net sales $5,664.2 $330.8 $(6.6) $5,988.4
Cost of materials
and other 4,804.7 84.9 (6.7) 4,882.9
Direct operating
expenses(1) 363.4 152.9 0.2 516.5
Major scheduled
turnaround
expenses 80.4 2.6 - 83.0
Selling, general
and administrative 78.8 25.6 9.8 114.2
Depreciation and
amortization 133.1 74.0 6.9 214.0
----- ---- --- -----
Operating income
(loss) $203.8 $(9.2) $(16.8) $177.8
====== ===== ====== ======
Capital
expenditures $99.7 $14.5 $4.4 $118.6
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) Fertilizer and Other
(CVR Partners)
-------------
(in millions)
Three Months Ended
December 31, 2016
Net sales $1,269.4 $84.9 $(0.9) $1,353.4
Cost of materials
and other 1,107.5 21.5 (0.9) 1,128.1
Direct operating
expenses(1) 94.7 37.9 - 132.6
Major scheduled
turnaround
expenses - - - -
Selling, general
and administrative 18.5 7.3 1.7 27.5
Depreciation and
amortization 33.4 17.2 1.7 52.3
---- ---- --- ----
Operating income
(loss) $15.3 $1.0 $(3.4) $12.9
===== ==== ===== =====
Capital
expenditures $18.9 $5.9 $3.2 $28.0
Year Ended December
31, 2016
Net sales $4,431.3 $356.3 $(5.2) $4,782.4
Cost of materials
and other 3,759.2 93.7 (5.4) 3,847.5
Direct operating
expenses(1) 361.9 141.7 0.1 503.7
Major scheduled
turnaround
expenses 31.5 6.6 - 38.1
Selling, general
and administrative 71.9 29.3 7.9 109.1
Depreciation and
amortization 129.0 58.2 5.9 193.1
----- ---- --- -----
Operating income
(loss) $77.8 $26.8 $(13.7) $90.9
===== ===== ====== =====
Capital
expenditures $102.3 $23.2 $7.2 $132.7
____________________
(1) Excluding turnaround expenses.
Petroleum Nitrogen Corporate Consolidated
(CVR Refining) Fertilizer and Other
(CVR Partners)
-------------
(in millions)
December 31,
2017
Cash and cash
equivalents $173.8 $49.2 $258.8 $481.8
Total assets 2,269.9 1,234.3 302.5 3,806.7
Total debt,
including
current
portion 540.6 625.9 - 1,166.5
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 quarter and year ended December 31, 2017 are included in CVR Refining's press release dated February 22, 2018.
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Petroleum Segment
Summary Financial
Results:
Net sales $1,516.7 $1,269.4 $5,664.2 $4,431.3
Operating costs and
expenses:
Cost of materials
and other 1,281.0 1,107.5 4,804.7 3,759.2
Direct operating
expenses(1) 91.5 94.7 363.4 361.9
Major scheduled
turnaround
expenses 43.0 - 80.4 31.5
Depreciation and
amortization 32.5 32.6 129.3 126.3
---- ---- ----- -----
Cost of sales 1,448.0 1,234.8 5,377.8 4,278.9
Selling, general
and administrative
expenses(1) 21.1 18.5 78.8 71.9
Depreciation and
amortization 1.1 0.8 3.8 2.7
--- --- --- ---
Operating income 46.5 15.3 203.8 77.8
Interest expense
and other
financing costs (12.0) (11.7) (47.2) (43.4)
Interest income 0.1 0.1 0.5 0.1
Loss on
derivatives, net (65.0) (14.6) (69.8) (19.4)
Other income, net 1.4 0.2 1.5 0.2
--- --- --- ---
Income (loss)
before income tax
expense (29.0) (10.7) 88.8 15.3
Income tax expense - - - -
Net income (loss) $(29.0) $(10.7) $88.8 $15.3
====== ====== ===== =====
Gross profit $68.7 $34.6 $286.4 $152.4
Refining margin* $235.7 $161.9 $859.5 $672.1
Refining margin
adjusted for FIFO
impact* $205.3 $139.5 $829.9 $620.0
Adjusted Petroleum
EBITDA* $76.4 $27.7 $372.6 $222.8
____________________
* See "Use of Non-GAAP
Financial Measures" below.
(1) Direct operating expenses for the three
months and years ended December 31, 2017 and
2016 are shown exclusive of depreciation and
amortization and major scheduled turnaround
expenses, which amounts are presented
separately below direct operating expenses.
Selling, general and administrative expense
for the three months and years ended
December 31, 2017 and 2016 are shown
exclusive of depreciation and amortization,
which amounts are presented separately below
selling, general and administrative
expenses.
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(dollars per barrel)
Petroleum Segment
Key Operating
Statistics:
Per crude oil
throughput
barrel:
Gross profit $3.97 $1.81 $3.83 $2.10
Refining margin* 13.63 8.49 11.50 9.27
FIFO impact,
favorable (1.76) (1.17) (0.40) (0.72)
----- ----- ----- -----
Refining margin
adjusted for FIFO
impact* 11.87 7.32 11.10 8.55
Direct operating
expenses and
major scheduled
turnaround
expenses 7.78 4.96 5.94 5.43
Direct operating
expenses
excluding major
scheduled
turnaround
expenses 5.29 4.96 4.86 4.99
Direct operating
expenses and
major scheduled
turnaround
expenses per
barrel sold 7.06 4.64 5.55 5.08
Direct operating
expenses
excluding major
scheduled
turnaround
expenses per
barrel sold $4.80 $4.64 $4.55 $4.67
Barrels sold
(barrels per day) 207,112 221,921 218,912 211,643
____________________
* See "Use of Non-GAAP Financial Measures" below.
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
% % % %
--- --- --- ---
Petroleum Segment Summary
Refining Throughput and
Production Data (bpd):
Throughput:
Sweet 182,339 89.7 185,154 82.9 194,613 89.8 177,256 84.8
Medium - - 3,160 1.4 - - 2,525 1.2
Heavy sour 5,657 2.8 19,108 8.6 10,135 4.7 18,261 8.7
----- --- ------ --- ------ --- ---
Total crude oil
throughput 187,996 92.5 207,422 92.9 204,748 94.5 198,042 94.7
All other feedstocks and
blendstocks 15,267 7.5 15,844 7.1 12,032 5.5 11,077 5.3
------ ------
Total throughput 203,263 100.0 223,266 100.0 216,780 100.0 209,119 100.0
======= ===== ======= ===== ======= ===== ======= =====
Production:
Gasoline 104,169 50.8 114,682 51.1 110,226 50.7 108,762 51.9
Distillate 85,550 41.8 91,021 40.5 90,409 41.6 85,092 40.6
Other (excluding
internally produced
fuel) 15,128 7.4 18,782 8.4 16,818 7.7 15,751 7.5
Total refining production
(excluding internally
produced fuel) 204,847 100.0 224,485 100.0 217,453 100.0 209,605 100.0
======= ===== ======= ===== ======= ===== ======= =====
Product price (dollars
per gallon):
Gasoline $1.69 $1.42 $1.59 $1.34
Distillate 1.89 1.52 1.66 1.36
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Market Indicators
(dollars per barrel):
West Texas Intermediate
(WTI) NYMEX $55.30 $49.29 $50.85 $43.47
Crude Oil Differentials:
WTI less WTS (light/
medium sour) 0.42 0.92 0.97 0.85
WTI less WCS (heavy
sour) 16.61 15.04 12.69 13.95
NYMEX Crack Spreads:
Gasoline 16.63 12.96 17.46 15.42
Heating Oil 23.96 16.45 18.93 13.89
NYMEX 2-1-1 Crack Spread 20.29 14.70 18.19 14.66
PADD II Group 3 Product
Basis:
Gasoline (0.14) (3.70) (1.83) (3.62)
Ultra Low Sulfur Diesel (0.53) (2.55) (0.50) (0.92)
PADD II Group 3 Product
Crack Spread:
Gasoline 16.49 9.28 15.63 11.82
Ultra Low Sulfur Diesel 23.42 13.91 18.42 12.96
PADD II Group 3 2-1-1 19.96 11.60 17.03 12.39
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except operating statistics)
Coffeyville
Refinery
Financial
Results:
Net sales $1,117.3 $854.7 $3,867.8 $2,948.9
Cost of materials
and other 936.2 750.6 3,285.8 2,513.9
Direct operating
expenses(1) 54.6 52.0 209.5 196.4
Major scheduled
turnaround
expenses - - - 31.5
Depreciation and
amortization 17.7 18.4 71.5 69.7
---- ---- ---- ----
Gross profit 108.8 33.7 301.0 137.4
Add:
Direct operating
expenses(1) 54.6 52.0 209.5 196.4
Major scheduled
turnaround
expenses - - - 31.5
Depreciation and
amortization 17.7 18.4 71.5 69.7
---- ---- ---- ----
Refining margin* 181.1 104.1 582.0 435.0
FIFO impact,
favorable (21.7) (15.4) (20.2) (37.8)
----- ----- ----- -----
Refining margin
adjusted for FIFO
impact* $159.4 $88.7 $561.8 $397.2
====== ===== ====== ======
Coffeyville
Refinery Key
Operating
Statistics:
Per crude oil
throughput
barrel:
Gross profit $8.87 $2.76 $6.27 $3.03
Refining margin* 14.77 8.55 12.12 9.57
FIFO impact,
favorable (1.77) (1.26) (0.42) (0.83)
----- ----- ----- -----
Refining margin
adjusted for FIFO
impact* 13.00 7.29 11.70 8.74
Direct operating
expenses and
major scheduled
turnaround
expenses 4.46 4.27 4.36 5.02
Direct operating
expenses
excluding major
scheduled
turnaround
expenses 4.46 4.27 4.36 4.32
Direct operating
expenses and
major scheduled
turnaround
expenses per
barrel sold 4.02 3.84 4.00 4.54
Direct operating
expenses
excluding major
scheduled
turnaround
expenses per
barrel sold $4.02 $3.84 $4.00 $3.92
Barrels sold
(barrels per day) 147,633 146,930 143,598 137,047
____________________
* See "Use of Non-GAAP
Financial Measures" below.
(1) Direct operating expenses for the three
months and years ended December 31, 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 Year Ended
December 31, December 31,
2017 2016 2017 2016
% % % %
--- --- --- ---
Coffeyville Refinery
Throughput and
Production Data (bpd):
Throughput:
Sweet 127,586 87.9 113,243 78.4 121,434 86.4 104,679 78.9
Medium - - - - - - 1,229 0.9
Heavy sour 5,657 3.9 19,108 13.2 10,135 7.2 18,261 13.8
----- --- ------ ---- ------ --- ------ ----
Total crude oil
throughput 133,243 91.8 132,351 91.6 131,569 93.6 124,169 93.6
All other feedstocks and
blendstocks 11,834 8.2 12,206 8.4 9,058 6.4 8,453 6.4
--- --- --- ---
Total throughput 145,077 100.0 144,557 100.0 140,627 100.0 132,622 100.0
======= ===== ======= ===== ======= ===== ======= =====
Production:
Gasoline 75,531 51.2 75,273 51.1 71,915 50.4 69,303 51.4
Distillate 61,568 41.7 60,550 41.1 59,593 41.7 55,790 41.4
Other (excluding
internally produced
fuel) 10,490 7.1 11,446 7.8 11,335 7.9 9,756 7.2
--- --- --- ---
Total refining production
(excluding internally
produced fuel) 147,589 100.0 147,269 100.0 142,843 100.0 134,849 100.0
======= ===== ======= ===== ======= ===== ======= =====
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except operating statistics)
Wynnewood Refinery
Financial
Results:
Net sales $398.3 $413.6 $1,792.1 $1,478.0
Cost of materials
and other 345.0 356.9 1,519.7 1,245.4
Direct operating
expenses(1) 36.9 42.7 153.9 165.5
Major scheduled
turnaround
expenses 43.0 - 80.4 -
Depreciation and
amortization 13.2 12.8 51.7 50.7
---- ---- ---- ----
Gross profit
(loss) (39.8) 1.2 (13.6) 16.4
Add:
Direct operating
expenses(1) 36.9 42.7 153.9 165.5
Major scheduled
turnaround
expenses 43.0 - 80.4 -
Depreciation and
amortization 13.2 12.8 51.7 50.7
---- ---- ---- ----
Refining margin* 53.3 56.7 272.4 232.6
FIFO impact,
favorable (8.7) (7.0) (9.4) (14.2)
---- ---- ---- -----
Refining margin
adjusted for FIFO
impact* $44.6 $49.7 $263.0 $218.4
===== ===== ====== ======
Wynnewood Refinery
Key Operating
Statistics:
Per crude oil
throughput
barrel:
Gross profit
(loss) $(7.90) $0.16 $(0.51) $0.61
Refining margin* 10.58 8.20 10.20 8.60
FIFO impact,
favorable (1.73) (1.01) (0.35) (0.53)
----- ----- ----- -----
Refining margin
adjusted for FIFO
impact* 8.85 7.19 9.85 8.07
Direct operating
expenses and
major scheduled
turnaround
expenses 15.86 6.19 8.77 6.12
Direct operating
expenses
excluding major
scheduled
turnaround
expenses 7.32 6.19 5.76 6.12
Direct operating
expenses and
major scheduled
turnaround
expenses per
barrel sold 14.60 6.20 8.52 6.06
Direct operating
expenses
excluding major
scheduled
turnaround
expenses per
barrel sold $6.74 $6.20 $5.60 $6.06
Barrels sold
(barrels per day) 59,479 74,991 75,314 74,596
____________________
* See "Use of Non-GAAP
Financial Measures" below.
(1) Direct operating expenses for the three
months and years ended December 31, 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 Year Ended
December 31, December 31,
2017 2016 2017 2016
% % % %
--- --- --- ---
Wynnewood Refinery
Throughput and
Production Data (bpd):
Throughput:
Sweet 54,753 94.1 71,911 91.4 73,179 96.1 72,577 94.9
Medium - - 3,160 4.0 - - 1,296 1.7
Heavy sour - - - - - - - -
--- --- --- --- --- --- --- ---
Total crude oil
throughput 54,753 94.1 75,071 95.4 73,179 96.1 73,873 96.6
All other feedstocks and
blendstocks 3,433 5.9 3,638 4.6 2,974 3.9 2,624 3.4
--- --- --- ---
Total throughput 58,186 100.0 78,709 100.0 76,153 100.0 76,497 100.0
====== ===== ====== ===== ====== ===== ====== =====
Production:
Gasoline 28,638 50.0 39,409 51.0 38,311 51.3 39,459 52.8
Distillate 23,982 41.9 30,471 39.5 30,816 41.3 29,302 39.2
Other (excluding
internally produced
fuel) 4,638 8.1 7,336 9.5 5,483 7.4 5,995 8.0
--- --- --- ---
Total refining production
(excluding internally
produced fuel) 57,258 100.0 77,216 100.0 74,610 100.0 74,756 100.0
====== ===== ====== ===== ====== ===== ====== =====
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 December 31, 2017 and serve as the general partner. The financial and operational data include 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 quarter and year ended December 31, 2017 are included in CVR Partners' press release dated February 22, 2018.
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Nitrogen Fertilizer
Segment Business
Financial Results:
Net sales $78.2 $84.9 $330.8 $356.3
Cost of materials and
other 21.6 21.5 84.9 93.7
Direct operating
expenses(1) 41.5 37.9 152.9 141.7
Major scheduled
turnaround expenses - - 2.6 6.6
Depreciation and
amortization 19.1 17.2 74.0 58.2
---- ---- ---- ----
Cost of sales 82.2 76.6 314.4 300.2
Selling, general and
administrative
expenses 6.8 7.3 25.6 29.3
--- --- ---- ----
Operating income
(loss) (10.8) 1.0 (9.2) 26.8
Interest expense and
other financing costs (15.8) (15.8) (62.9) (48.6)
Gain (loss) on
extinguishment of
debt - 0.2 - (4.9)
Other income (loss),
net (0.6) 0.1 (0.5) 0.1
---- --- ---- ---
Loss before income tax
expense (27.2) (14.5) (72.6) (26.6)
Income tax expense 0.2 - 0.2 0.3
Net loss $(27.4) $(14.5) $(72.8) $(26.9)
====== ====== ====== ======
Adjusted Nitrogen
Fertilizer EBITDA* $7.7 $18.3 $65.8 $92.7
____________________
* See Use of Non-GAAP Financial
Measures below.
(1) Direct operating expenses for the three
months and years ended December 31, 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 Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Nitrogen Fertilizer
Segment Key
Operating
Statistics:
Consolidated sales
(thousand tons):
Ammonia 84.3 55.7 286.1 201.4
UAN 302.9 335.1 1,254.5 1,237.5
Consolidated product
pricing at gate
(dollars per
ton)(1):
Ammonia $264 $352 $280 $376
UAN $132 $147 $152 $177
Consolidated
production volume
(thousand tons):
Ammonia (gross
produced)(2) 199.5 207.6 814.7 693.5
Ammonia (net
available for
sale)(2) 64.1 62.6 267.8 183.6
UAN 306.1 330.7 1,268.4 1,192.6
Feedstock:
Petroleum coke used
in production
(thousand tons) 116.5 129.4 487.5 513.7
Petroleum coke used
in production
(dollars per ton) $13 $18 $17 $15
Natural gas used in
production
(thousands of
MMBtus)(3) 1,838.8 2,124.3 7,619.5 5,596.0
Natural gas used in
production (dollars
per MMBtu)(3) (4) $3.24 $3.30 $3.24 $2.96
Natural gas in cost
of materials and
other (thousands of
MMBtus)(3) 2,153.2 1,876.2 8,051.5 4,618.7
Natural gas in cost
of materials and
other (dollars per
MMBtus)(3) (4) $3.17 $3.15 $3.26 $2.87
Coffeyville Facility
on-stream
factor(5):
Gasification 100.0% 96.1% 98.5% 96.9%
Ammonia 99.5% 91.1% 97.4% 94.9%
UAN 88.8% 93.1% 91.7% 93.1%
East Dubuque
Facility on-stream
factors(5):
Ammonia 86.3% 99.7% 90.4% 87.7%
UAN 86.8% 99.8% 90.3% 87.3%
Market Indicators:
Ammonia -Southern
Plains (dollars per
ton) $315 $313 $314 $356
Ammonia -Corn belt
(dollars per ton) $340 $360 $358 $416
UAN -Corn belt
(dollars per ton) $190 $175 $192 $208
Natural gas NYMEX
(dollars per MMBtu) $2.92 $3.18 $3.02 $2.55
____________________
(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 feedstock natural gas shown above does
not include natural gas used for fuel. The
cost of fuel natural gas is included in
direct operating expense.
(4) The cost per MMBtu excludes derivative
activity, when applicable. The impact of
natural gas derivative activity during the
periods presented was not material.
(5) 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 94.7% for the year
ended December 31, 2017.
East Dubuque Facility
Excluding the impact of approximately 14 days
of downtime associated with the 2017 full
facility turnaround at the East Dubuque
Nitrogen Fertilizer Facility, the on-stream
factors would have been 94.2% for ammonia
and 94.0% for UAN for the year ended
December 31, 2017.
Excluding the impact of approximately 28 days
of downtime associated with the 2016 full
facility turnaround at the East Dubuque
Nitrogen Fertilizer Facility, the on-stream
factors would have been 97.8% for ammonia
and 97.1% for UAN for the post-acquisition
period ended December 31, 2016.
Use of Non-GAAP Financial Measures
To supplement our actual results in accordance with accounting principles generally accepted in the United States of America ("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 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 provides relevant and useful information that enables external users of our financial statements, such as industry analysts, investors, lenders and rating agencies, to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance. Adjusted net income per diluted share represents adjusted net income divided by weighted-average diluted shares outstanding. Adjusted net income represents net income (loss), as adjusted, that is attributable to CVR Energy stockholders.
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except per share data)
Reconciliation of Net Income
(Loss) to Adjusted Net Income:
Income (loss) before income tax
benefit $(61.6) $(28.1) $ - $(10.9)
Adjustments:
FIFO impact, favorable (30.4) (22.4) (29.6) (52.1)
Major scheduled turnaround
expenses 43.0 - 83.0 38.1
Loss on derivatives, net 65.0 14.6 69.8 19.4
Current period settlement on
derivative contracts(1) (17.7) 1.2 (16.6) 36.4
(Gain) loss on extinguishment of
debt(2) - (0.2) - 4.9
Expenses associated with the East
Dubuque Merger(3) - - - 3.1
Insurance recovery -Business
interruption(4) - - (1.1) (2.1)
--- --- ---- ----
Adjusted net income (loss) before
income tax benefit and
noncontrolling interest (1.7) (34.9) 105.5 36.8
Adjusted net income (loss)
attributed to noncontrolling
interest 7.5 15.5 (18.8) (4.1)
Income tax benefit, as adjusted 218.8 23.8 189.7 8.8
Net tax benefit related to the
TCJA(5) (200.5) - (200.5) -
------ --- ------
Adjusted net income $24.1 $4.4 $75.9 $41.5
===== ==== ===== =====
Adjusted net income per diluted
share $0.28 $0.05 $0.87 $0.48
Refining margin per crude oil throughput barrel is a measurement calculated as the difference between 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 and refining margin per crude oil throughput barrel are 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. In order to derive the refining margin per crude oil throughput barrel adjusted for FIFO impact, we utilize the total dollar figures for refining margin adjusted for FIFO impact as derived above and divide by the applicable number of crude oil throughput barrels for the period. We believe that refining margin adjusted for FIFO impact and refining margin per crude oil throughput barrel adjusted for FIFO impact are important to enable investors to better understand and evaluate the petroleum business' ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance.
The calculation of refining margin, refining margin adjusted for FIFO impact, refining margin per crude oil throughput barrel and refining margin adjusted for FIFO impact per crude oil throughput barrel (each a non-GAAP financial measure), including a reconciliation to the most directly comparable GAAP financial measure for the three months and years ended December 31, 2017 and 2016 is as follows:
Petroleum Segment
Operating Data
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Net sales $1,516.7 $1,269.4 $5,664.2 $4,431.3
Cost of materials
and other 1,281.0 1,107.5 4,804.7 3,759.2
Direct operating
expenses (exclusive
of depreciation and
amortization as
reflected below) 91.5 94.7 363.4 361.9
Major schedule
turnaround expenses 43.0 - 80.4 31.5
Depreciation and
amortization 32.5 32.6 129.3 126.3
---- ---- ----- -----
Gross profit 68.7 34.6 286.4 152.4
Add:
Direct operating
expenses (exclusive
of depreciation and
amortization as
reflected below) 91.5 94.7 363.4 361.9
Major schedule
turnaround expenses 43.0 - 80.4 31.5
Depreciation and
amortization 32.5 32.6 129.3 126.3
---- ---- ----- -----
Refining margin 235.7 161.9 859.5 672.1
FIFO impact,
favorable (30.4) (22.4) (29.6) (52.1)
----- ----- ----- -----
Refining margin
adjusted for FIFO
impact $205.3 $139.5 $829.9 $620.0
====== ====== ====== ======
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Total crude oil
throughput barrels
per day 187,996 207,422 204,748 198,042
Days in the period 92 92 365 366
Total crude oil
throughput barrels 17,295,632 19,082,824 74,733,020 72,483,372
========== ========== ========== ==========
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin $235.7 $161.9 $859.5 $672.1
Divided by: crude
oil throughput
barrels 17.3 19.1 74.7 72.5
---- ---- ---- ----
Refining margin per
crude oil
throughput barrel $13.63 $8.49 $11.50 $9.27
====== ===== ====== =====
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin
adjusted for FIFO
impact $205.3 $139.5 $829.9 $620.0
Divided by: crude
oil throughput
barrels 17.3 19.1 74.7 72.5
---- ---- ---- ----
Refining margin
adjusted for FIFO
impact per crude
oil throughput
barrel $11.87 $7.32 $11.10 $8.55
====== ===== ====== =====
Coffeyville Refinery
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Total crude oil
throughput barrels
per day 133,243 132,351 131,569 124,169
Days in the period 92 92 365 366
Total crude oil
throughput barrels 12,258,356 12,176,292 48,022,685 45,445,854
========== ========== ========== ==========
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin $181.1 $104.1 $582.0 $435.0
Divided by: crude
oil throughput
barrels 12.3 12.2 48.0 45.4
---- ---- ---- ----
Refining margin per
crude oil
throughput barrel $14.77 $8.55 $12.12 $9.57
====== ===== ====== =====
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin
adjusted for FIFO
impact $159.4 $88.7 $561.8 $397.2
Divided by: crude
oil throughput
barrels 12.3 12.2 48.0 45.4
---- ---- ---- ----
Refining margin
adjusted for FIFO
impact per crude
oil throughput
barrel $13.00 $7.29 $11.70 $8.74
====== ===== ====== =====
Wynnewood Refinery
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Total crude oil throughput
barrels per day 54,753 75,071 73,179 73,873
Days in the period 92 92 365 366
Total crude oil throughput
barrels 5,037,276 6,906,532 26,710,335 27,037,518
========= ========= ========== ==========
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin $53.3 $56.7 $272.4 $232.6
Divided by: crude oil
throughput barrels 5.0 6.9 26.7 27.0
--- --- ---- ----
Refining margin per crude
oil throughput barrel $10.58 $8.20 $10.20 $8.60
====== ===== ====== =====
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions, except for $ per barrel data)
Refining margin adjusted
for FIFO impact $44.6 $49.7 $263.0 $218.4
Divided by: crude oil
throughput barrels 5.0 6.9 26.7 27.0
--- --- ---- ----
Refining margin adjusted
for FIFO impact per crude
oil throughput barrel $8.85 $7.19 $9.85 $8.07
===== ===== ===== =====
EBITDA and Adjusted EBITDA. EBITDA represents net income 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) major scheduled turnaround expenses (that many of our competitors capitalize and thereby exclude from their measures of EBITDA and adjusted EBITDA); (iii) (gain) loss on derivatives, net; (iv) current period settlements on derivative contracts; (v) (gain) loss on extinguishment of debt; (vi) expenses associated with the East Dubuque Merger and (vii) business interruption insurance recovery, 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. We believe 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 months and year ended December 31, 2017 and 2016 is as follows:
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Net income attributable to
CVR Energy stockholders $200.5 $7.1 $234.4 $24.7
Add:
Interest expense and other
financing costs, net of
interest income 27.5 26.9 109.0 83.2
Income tax benefit (234.3) (22.1) (216.9) (19.8)
Depreciation and
amortization 54.8 52.3 214.0 193.1
Adjustments attributable to
noncontrolling interest (38.5) (37.0) (151.2) (127.3)
----- ----- ------ ------
EBITDA 10.0 27.2 189.3 153.9
Add:
FIFO impact, favorable (30.4) (22.4) (29.6) (52.1)
Major scheduled turnaround
expenses 43.0 - 83.0 38.1
Loss on derivatives, net 65.0 14.6 69.8 19.4
Current period settlements
on derivative contracts(1) (17.7) 1.2 (16.6) 36.4
(Gain) loss on
extinguishment of debt(2) - (0.2) - 4.9
Expenses associated with
the East Dubuque Merger(3) - - - 3.1
Insurance recovery -
business interruption(4) - - (1.1) (2.1)
Adjustments attributable to
noncontrolling interest (20.5) 2.4 (36.4) (20.0)
----- --- ----- -----
Adjusted EBITDA $49.4 $22.8 $258.4 $181.6
===== ===== ====== ======
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) major scheduled turnaround expenses (that many of our competitors capitalize and thereby exclude from their measures of EBITDA and adjusted EBITDA); (iii) (gain) loss on extinguishment of debt; (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.
We present Adjusted EBITDA by operating segment because it is the starting point for CVR Refining's and CVR Partners' determination 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. We believe 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 months and years ended December 31, 2017 and 2016 is as follows:
Three Months Ended Year Ended
December 31,
December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Petroleum:
Petroleum net income (loss) $(29.0) $(10.7) $88.8 $15.3
Add:
Interest expense and other
financing costs, net of
interest income 11.9 11.6 46.7 43.3
Income tax expense - - - -
Depreciation and
amortization 33.6 33.4 133.1 129.0
---- ---- ----- -----
Petroleum EBITDA 16.5 34.3 268.6 187.6
Add:
FIFO impact, favorable (30.4) (22.4) (29.6) (52.1)
Major scheduled turnaround
expenses 43.0 - 80.4 31.5
Loss on derivatives, net 65.0 14.6 69.8 19.4
Current period settlements
on derivative contracts(1) (17.7) 1.2 (16.6) 36.4
Adjusted Petroleum EBITDA $76.4 $27.7 $372.6 $222.8
===== ===== ====== ======
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Nitrogen Fertilizer:
Nitrogen Fertilizer net
loss $(27.4) $(14.5) $(72.8) $(26.9)
Add:
Interest expense and other
financing costs, net 15.8 15.8 62.9 48.6
Income tax expense 0.2 - 0.2 0.3
Depreciation and
amortization 19.1 17.2 74.0 58.2
---- ---- ---- ----
Nitrogen Fertilizer EBITDA 7.7 18.5 64.3 80.2
Add:
Major scheduled turnaround
expenses - - 2.6 6.6
(Gain) loss on
extinguishment of debt(2) - (0.2) - 4.9
Expenses associated with
the East Dubuque Merger(3) - - - 3.1
Less:
Insurance recovery -
business interruption - - (1.1) (2.1)
--- --- ---- ----
Adjusted Nitrogen
Fertilizer EBITDA $7.7 $18.3 $65.8 $92.7
==== ===== ===== =====
____________________
(1) Represents the portion of gain (loss) on
derivatives, net related to contracts that
matured during the respective periods and
settled with counterparties. There are no
premiums paid or received at inception of
the derivative contracts and upon
settlement, there is no cost recovery
associated with these contracts.
(2) Represents a loss on extinguishment of debt
incurred by CVR Partners in June 2016 in
connection with the repurchase of senior
notes assumed in the East Dubuque Merger,
which includes a prepayment premium and
write-off of the unamortized purchase
accounting adjustment.
(3) 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.
(4) CVR Partners received business interruption
insurance recoveries of $1.1 million and
$2.1 million in the third quarter of 2017
and 2016, respectively.
(5) Represents a one-time benefit related to the
remeasurement of our net deferred tax
liabilities associated with the TCJA. A
benefit of approximately $200.5 million was
recognized as a result of the remeasurement.
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SOURCE CVR Energy, Inc.
