CVI - CVR Energy Reports First Quarter 2023 Results and Announces a Cash Dividend of 50 Cents

SUGAR LAND, Texas, May 01, 2023 (GLOBE NEWSWIRE) -- CVR Energy, Inc. (“CVR Energy” or the “Company”) (NYSE: CVI) today announced net income of $195 million, or $1.94 per diluted share, on net sales of $2.3 billion for the first quarter of 2023, compared to net income of $94 million, or 93 cents per diluted share, on net sales of $2.4 billion for the first quarter of 2022. Adjusted earnings for the first quarter of 2023 was $1.44 per diluted share compared to adjusted earnings of 2 cents per diluted share in the first quarter of 2022, primarily driven by improved crack spreads. First quarter 2023 EBITDA was $401 million, compared to first quarter 2022 EBITDA of $278 million. Adjusted EBITDA for the first quarter of 2023 was $334 million, up from $155 million in the first quarter of 2022.

“CVR Energy reported solid results for the first quarter 2023 including the impacts of scheduled downtime related to the Coffeyville refinery’s coker turnaround,” said Dave Lamp, CVR Energy’s Chief Executive Officer. “The Petroleum Segment’s results were driven by continued strong diesel cracks and improved gasoline cracks. The Wynnewood Renewable Diesel Unit processed approximately 23 million gallons of bean oil during the quarter. In addition, the Company continued progress on Wynnewood’s Pre-Treatment Unit, currently expected to be in service in the third quarter 2023. CVR Energy also announced a 2023 first quarter cash dividend of 50 cents per share.

“CVR Partners achieved strong results for the first quarter 2023 driven by record production offset somewhat by lower fertilizer pricing during the quarter,” Lamp said. “CVR Partners declared a 2023 first quarter cash distribution of $10.43 per common unit.”

Petroleum

The Petroleum Segment reported first quarter 2023 operating income of $237 million on net sales of $2.0 billion, compared to operating income of $130 million on net sales of $2.2 billion in the first quarter of 2022.

Refining margin per total throughput barrel was $23.24 in the first quarter of 2023, compared to $16.75 during the same period in 2022. The increase in refining margin of $114 million was primarily due to an increase in product crack spreads. The Group 3 2-1-1 crack spread increased by $11.96 per barrel relative to the first quarter of 2022, driven by tight inventory levels and supply concerns due to the ongoing Russia-Ukraine conflict.

The Petroleum Segment recognized costs to comply with the Renewable Fuel Standard (“RFS”) of $95 million, or $5.36 per throughput barrel, which excludes the RINs’ revaluation benefit impact of $56 million, or $3.17 per total throughput barrel, for the first quarter of 2023. This is compared to RFS compliance costs of $88 million, or $4.93 per throughput barrel, which excludes the RINs’ revaluation expense impact of $19 million, or $1.08 per total throughput barrel, for the first quarter of 2022. The increase in RFS compliance costs in 2023 was primarily related to a higher renewable volume obligation (“RVO”) for the first quarter of 2023 compared to the 2022 period. The favorable RINs’ revaluation in 2023 was a result of a mark-to-market benefit in the current quarter due to a decline in RIN prices and a lower outstanding obligation in the current period compared to the 2022 period.

The Petroleum Segment also recognized a first quarter 2023 derivative net gain of $39 million, or $2.20 per total throughput barrel, compared to a derivative net gain of $8 million, or 47 cents per total throughput barrel, for the first quarter of 2022. Included in this derivative net gain for the first quarter of 2023 was a $31 million unrealized gain primarily a result of inventory hedging activity, Canadian crude oil forwards and sales, and crack spread swaps, compared to a $5 million unrealized gain for the first quarter of 2022. Offsetting these impacts, crude oil prices decreased during the quarter, which led to an unfavorable inventory valuation impact of $12 million, or 67 cents per total throughput barrel, compared to a favorable inventory valuation impact of $133 million, or $7.51 per total throughput barrel, during the first quarter of 2022.

First quarter 2023 combined total throughput was approximately 196,000 bpd, compared to approximately 197,000 bpd of combined total throughput for the first quarter of 2022.

Nitrogen Fertilizer

The Nitrogen Fertilizer Segment reported an operating income of $109 million on net sales of $226 million for the first quarter of 2023, compared to operating income of $104 million on net sales of $223 million for the first quarter of 2022.

First quarter 2023 average realized gate prices for urea ammonia nitrate (“UAN”) showed a reduction over the prior year, down 8 percent to $457 per ton, and ammonia was down 16 percent over the prior year to $888 per ton. Average realized gate prices for UAN and ammonia were $496 and $1,055 per ton, respectively, for the first quarter of 2022.

CVR Partners, LP’s (“CVR Partners”) fertilizer facilities produced a combined 224,000 tons of ammonia during the first quarter of 2023, of which 62,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 366,000 tons of UAN. During the first quarter 2022, the fertilizer facilities produced 187,000 tons of ammonia, of which 52,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 317,000 tons of UAN. These increases were due to operating reliability after completing the planned turnarounds during the third quarter of 2022.

In January 2023, CVR Partners and one of its subsidiaries entered into a series of agreements to allow CVR Partners to monetize certain tax credits available to joint ventures under Section 45Q of the Internal Revenue Code of 1986, as amended, expected to be generated from January 6, 2023, until March 31, 2030 (the “45Q Transaction”). In connection with these agreements, CVR Partners received an initial distribution, net of expenses, of approximately $18.1 million and could receive up to an additional $60 million in payments through March 31, 2030, if certain carbon oxide capture and sequestration milestones are met, subject to the terms of the applicable agreements. Among other items, the 45Q Transaction resulted in the creation of CVR-CapturePoint Parent LLC, a joint venture in which CVR Partners indirectly holds a 50 percent interest.

Corporate and Other

The Company reported an income tax expense of $56 million, or 17.8 percent of income before income taxes, for the three months ended March 31, 2023, as compared to an income tax expense of $34 million, or 18.0 percent of income before income taxes, for the three months ended March 31, 2022. The increase in income tax expense was due primarily to an increase in pretax earnings.

The renewable diesel unit at the Wynnewood refinery continued to increase production, with total vegetable oil throughputs for the first quarter of 2023 of approximately 22.4 million gallons, up from 12.8 million gallons in the fourth quarter of 2022.

Cash, Debt and Dividend

Consolidated cash and cash equivalents were $601 million at March 31, 2023, an increase of $91 million from December 31, 2022. Consolidated total debt and finance lease obligations were $1.6 billion at March 31, 2023, including $547 million held by the Nitrogen Fertilizer Segment.

CVR Energy announced a first quarter 2023 cash dividend of 50 cents per share. The dividend, as declared by CVR Energy’s Board of Directors, will be paid on May 22, 2023, to stockholders of record as of May 15, 2023.

Today, CVR Partners announced that the Board of Directors of its general partner declared a first quarter 2023 cash distribution of $10.43 per common unit, which will be paid on May 22, 2023, to common unitholders of record as of May 15, 2023.

First Quarter 2023 Earnings Conference Call

CVR Energy previously announced that it will host its first quarter 2023 Earnings Conference Call on Tuesday, May 2, at 1 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 first quarter 2023 Earnings Conference Call will be webcast live and can be accessed on the Investor Relations section of CVR Energy’s website at www.CVREnergy.com . For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8291. The webcast will be archived and available for 14 days at https://edge.media-server.com/mmc/p/iack3rjy . A repeat of the call also can be accessed for 14 days by dialing (877) 660-6853, conference ID 13737894.

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. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding future: impact of scheduled downtime on results; diesel and gasoline cracks, including the continued strength or improvement thereof; progress on Wynnewood’s Pre-Treatment Unit; crude oil and RIN pricing; crack spreads; operating income; net sales; refining margin; EBITDA and Adjusted EBITDA; refined product demand; inventory levels, including the tightness thereof and factors impacting same; throughput rates, including factors impacting same; impacts of plant outages and weather events on throughput volume; renewables initiatives; conversion of hydrocrackers at Coffeyville and/or feed pre-treaters, including the completion, operation, capacities, timing, costs, optionality and benefits thereof; margins, spreads and economics relating to renewables; carbon capture and decarbonization initiatives; utilization rates; global fertilizer industry conditions; crop and planting conditions; cost to comply with the Renewable Fuel Standard, RIN prices and valuation of our net RVO; derivative activities and gains or losses associated therewith; UAN, ammonia and fertilizer production, demand, pricing and sales volumes, including the factors impacting same; rates at which ammonia will be upgraded to other fertilizer products; operational reliability, including the factors impacting same; Section 45Q credits and future payments arising under the 45Q Transaction (if any), including the amount, timing and receipt thereof; tax rates and expense; dividends and distributions, including the timing, payment and amount (if any) thereof; total throughput, direct operating expenses, capital expenditures, depreciation and amortization and turnaround expense; continued safe and reliable operations; the expected timing and completion of turnaround projects; natural gas and global energy costs; exports; consideration of a potential spin-off of Company’s interests in its nitrogen fertilizer business; and other matters. You can generally identify forward-looking statements by our use of forward-looking terminology such as “outlook,” “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. Investors are cautioned that various factors may affect these forward-looking statements, including the rate of any economic improvement, demand for fossil fuels, price volatility of crude oil, other feedstocks and refined products (among others); the ability of the Company to pay cash dividends and CVR Partners to make cash distributions; potential operating hazards; costs of compliance with existing, or compliance with new, laws and regulations and potential liabilities arising therefrom; impacts of planting season on CVR Partners; the health and economic effects of the COVID-19 pandemic and any variant thereof; general economic and business conditions; political disturbances, geopolitical instability and tensions, and associated changes in global trade policies and economic sanctions, including, but not limited to, in connection with Russia’s invasion of Ukraine in February 2022; and other risks. For additional 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 Securities and Exchange Commission (“SEC”) filings. These and other 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 news 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 renewables, petroleum refining and marketing business as well as in the nitrogen fertilizer manufacturing business through its interest in CVR Partners. CVR Energy subsidiaries serve as the general partner and own 37 percent of the common units of CVR Partners.

Investors and others should note that CVR Energy may announce material information using SEC filings, press releases, public conference calls, webcasts and the Investor Relations page of its website. CVR Energy may use these channels to distribute material information about the Company and to communicate important information about the Company, corporate initiatives and other matters. Information that CVR Energy posts on its website could be deemed material; therefore, CVR Energy encourages investors, the media, its customers, business partners and others interested in the Company to review the information posted on its website.

For further information, please contact:

Investor Relations
Richard Roberts
CVR Energy, Inc.
(281) 207-3205
InvestorRelations@CVREnergy.com

Media Relations
Brandee Stephens
CVR Energy, Inc.
(281) 207-3516
MediaRelations@CVREnergy.com

Non-GAAP Measures

Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our financial information presented in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures are important factors in assessing our operating results and profitability and include the performance and liquidity measures defined below.

The following are non-GAAP measures we present for the period ended March 31, 2023:

EBITDA - Consolidated net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.

Petroleum EBITDA and Nitrogen Fertilizer EBITDA - Segment net income (loss) before segment (i) interest expense, net, (ii) income tax expense (benefit), and (iii) depreciation and amortization.

Refining Margin - The difference between our Petroleum Segment net sales and cost of materials and other.

Refining Margin, adjusted for Inventory Valuation Impacts - Refining Margin adjusted to exclude the impact of current period market price and volume fluctuations on crude oil and refined product inventories purchased in prior periods and lower of cost or net realizable value adjustments, if applicable. We record our commodity inventories on the first-in-first-out basis. As a result, significant current period fluctuations in market prices and the volumes we hold in inventory can have favorable or unfavorable impacts on our refining margins as compared to similar metrics used by other publicly-traded companies in the refining industry.

Refining Margin and Refining Margin adjusted for Inventory Valuation Impacts, per Throughput Barrel - Refining Margin and Refining Margin adjusted for Inventory Valuation Impacts divided by the total throughput barrels during the period, which is calculated as total throughput barrels per day times the number of days in the period.

Direct Operating Expenses per Throughput Barrel - Direct operating expenses for our Petroleum Segment divided by total throughput barrels for the period, which is calculated as total throughput barrels per day times the number of days in the period.

Adjusted EBITDA, Adjusted Petroleum EBITDA and Adjusted Nitrogen Fertilizer EBITDA - EBITDA, Petroleum EBITDA and Nitrogen Fertilizer EBITDA adjusted for certain significant non-cash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.

Adjusted Earnings (Loss) per Share - Earnings (loss) per share adjusted for certain significant non-cash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.

Free Cash Flow - Net cash provided by (used in) operating activities less capital expenditures and capitalized turnaround expenditures.

Net Debt and Finance Lease Obligations - Net debt and finance lease obligations is total debt and finance lease obligations reduced for cash and cash equivalents.

Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer - Total debt and net debt and finance lease obligations is calculated as the consolidated debt and net debt and finance lease obligations less the Nitrogen Fertilizer Segment’s debt and net debt and finance lease obligations as of the most recent period ended divided by EBITDA exclusive of the Nitrogen Fertilizer Segment for the most recent twelve-month period.

We present these measures because we believe they may help investors, analysts, lenders and ratings agencies analyze our results of operations and liquidity in conjunction with our U.S. GAAP results, including but not limited to our operating performance as compared to other publicly-traded companies in the refining and fertilizer industries, without regard to historical cost basis or financing methods and our ability to incur and service debt and fund capital expenditures. Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. See “Non-GAAP Reconciliations” included herein for reconciliation of these amounts. Due to rounding, numbers presented within this section may not add or equal to numbers or totals presented elsewhere within this document.