SUGAR LAND, Texas, Oct. 31, 2022 (GLOBE NEWSWIRE) -- CVR Energy, Inc. (“CVR Energy” or the “Company”) (NYSE: CVI) today announced net income of $93 million, or 92 cents per diluted share, on net sales of $2.7 billion for the third quarter of 2022, compared to net income of $84 million, or 83 cents per diluted share, on net sales of $1.9 billion for the third quarter of 2021. Adjusted earnings for the third quarter of 2022 was $1.90 per diluted share compared to an adjusted loss of 24 cents per diluted share in the third quarter of 2021, primarily driven by improved crack spreads. Third quarter 2022 EBITDA was $181 million, compared to third quarter 2021 EBITDA of $243 million. On an adjusted basis, Adjusted EBITDA for the third quarter of 2022 was $313 million, up from $99 million in the third quarter of 2021.

“CVR Energy’s industry-leading distillate yield drove our strong results for the quarter and enabled us to continue our commitment of returning value to our stockholders, many of whom have remained loyal to CVR Energy during more difficult times in our industry. In addition to our regular third quarter 2022 dividend of 40 cents, our Board of Directors was pleased to approve a special dividend of $1.00 per share, bringing our year-to-date declared dividends to $4.80 per share,” said Dave Lamp, CVR Energy’s Chief Executive Officer.

“Our results would have been even higher, but were negatively affected by crude oil backwardation and high Renewable Identification Number costs due to EPA’s continued mismanagement of the Renewable Fuel Standard program,” Lamp continued. “However, we continue to progress our renewable initiatives, and the corporate transformation to segregate our renewables business we previously disclosed remains on track to close in the first quarter of 2023.”

Petroleum

The Petroleum Segment reported third quarter 2022 operating income of $137 million on net sales of $2.5 billion, compared to operating income of $135 million on net sales of $1.7 billion in the third quarter of 2021.

Refining margin per total throughput barrel was $16.56 in the third quarter of 2022, compared to $15.03 during the same period in 2021. The increase in refining margin of $15 million was primarily due to an increase in product crack spreads. The Group 3 2-1-1 crack spread increased by $23.79 per barrel relative to the third quarter of 2021, 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 $98 million, or $5.28 per throughput barrel, which excludes the RINs revaluation expense impact of $38 million, or $2.06 per total throughput barrel, for the third quarter of 2022. This is compared to RFS compliance costs of $100 million, or $5.14 per throughput barrel, which excludes the RINs revaluation benefit impact of $115 million, or $5.94 per total throughput barrel, for the third quarter of 2021. The decrease in RFS compliance costs in 2022 was primarily related to a lower renewable volume obligation (“RVO”) for the third quarter of 2022 compared to the 2021 period. The increase in RINs revaluation in 2022 was a result of increased RIN prices for the current period and increased commercial activity.

The Petroleum Segment also recognized a third quarter 2022 derivative net gain of $13 million, or 71 cents per total throughput barrel, compared to a derivative net loss of $12 million, or 62 cents per total throughput barrel, for the third quarter of 2021. Included in this derivative net gain for the third quarter of 2022 was a $25 million unrealized gain due to Group 3 diesel crack swaps, compared to a $22 million unrealized gain for the third quarter of 2021. Offsetting these impacts, crude oil prices decreased during the quarter, which led to an unfavorable inventory valuation impact of $107 million, or $5.78 per total throughput barrel, compared to a favorable inventory valuation impact of $8 million, or 41 cents per total throughput barrel, during the third quarter of 2021. Further, for the third quarter of 2022, throughput volumes declined by 9,286 barrels per day (“bpd”) due to minor plant outages during the period.

Third quarter 2022 combined total throughput was approximately 202,000 bpd, compared to approximately 211,000 bpd of combined total throughput for the third quarter of 2021. This decrease was due to minor plant outages during the period.

Nitrogen Fertilizer

The Nitrogen Fertilizer Segment reported an operating loss of $12 million on net sales of $156 million for the third quarter of 2022, compared to operating income of $46 million on net sales of $145 million for the third quarter of 2021.

Third quarter 2022 average realized gate prices for urea ammonia nitrate (“UAN”) showed an improvement over the prior year, up 42 percent to $433 per ton, and ammonia was up 65 percent over the prior year to $837 per ton. Average realized gate prices for UAN and ammonia were $305 and $507 per ton, respectively, for the third quarter of 2021.

CVR Partners, LP’s (“CVR Partners”) fertilizer facilities produced a combined 114,000 tons of ammonia during the third quarter of 2022, of which 36,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 184,000 tons of UAN. During the third quarter 2021, the fertilizer facilities produced 205,000 tons of ammonia, of which 65,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 314,000 tons of UAN. These decreases were due to the planned turnarounds at both fertilizer facilities during the third quarter of 2022.

Corporate and Other

The Company reported an income tax expense of $7 million, or 8.3 percent of income before income taxes, for the three months ended September 30, 2022, as compared to an income tax expense of $47 million, or 30.8 percent of income before income taxes, for the three months ended September 30, 2021. The fluctuations in both income tax expense and effective income tax rate were due primarily to changes in pretax earnings and earnings attributable to noncontrolling interest.

The renewable diesel unit at the Wynnewood refinery continued to increase production, with total vegetable oil throughputs for the third quarter of 2022 of approximately 17.7 million gallons, up from 12.0 million gallons in the second quarter of 2022.

Cash, Debt and Dividend

Consolidated cash and cash equivalents were $618 million at September 30, 2022, an increase of $108 million from December 31, 2021. Consolidated total debt and finance lease obligations were $1.6 billion at September 30, 2022, including $547 million held by the Nitrogen Fertilizer Segment.

CVR Energy announced a third quarter 2022 cash dividend of 40 cents per share. In addition, the Company announced a special dividend of $1.00 per share. The quarterly and special dividends, as declared by CVR Energy’s Board of Directors, will be paid on November 21, 2022, to stockholders of record as of November 14, 2022.

Today, CVR Partners announced that the Board of Directors of its general partner declared a third quarter 2022 cash distribution of $1.77 per common unit, which will be paid on November 21, 2022, to common unitholders of record as of November 14, 2022.

Third Quarter 2022 Earnings Conference Call

CVR Energy previously announced that it will host its third quarter 2022 Earnings Conference Call on Tuesday, November 1, 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 third quarter 2022 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/bbxgdpdi. A repeat of the call also can be accessed for 14 days by dialing (877) 660-6853, conference ID 13733765.

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: distillate crack spreads; distillate yield, including our performance against the industry; return of value to stockholders including our commitment thereto; RIN costs; crude oil backwardation; nitrogen-based fertilizer production; regular and special dividends and distributions, including the timing, payment and amount (if any) thereof; operating income; net sales; refining margin; product crack spreads; inventory and supply, including the impact of the Russia-Ukraine conflict thereon; cost to comply with the Renewable Fuel Standard, RIN prices and RVO; levels of commercial activity; derivative activities and gains or losses associated therewith; crude oil pricing, including the inventory valuation impact thereof; impacts of the conversion of the Wynnewood hydrocracker to renewable diesel service on throughput volume; renewables initiatives; conversion of hydrocrackers at Wynnewood and Coffeyville and/or feed pre-treaters, including the completion, operation, capacities, timing, costs, optionality and benefits thereof; our ability to progress or complete our renewables initiatives including the corporate transformation to segregate our renewables business and the cost, scope and timing thereof; decarbonization initiatives; turnaround and plant outages, including the timing and impacts thereof on results; throughput volumes and impacts thereon; refined product demand; UAN, ammonia and fertilizer demand, pricing and sales volumes; ammonia production and upgrades to other fertilizer products; utilization rates; crop and industry conditions; tax rates and expense; production rates of our renewable diesel unit; vegetable oil throughputs; cash levels, use of cash and reserves; debt and finance lease obligations; total throughput, direct operating expenses, capital expenditures, depreciation and amortization and turnaround expense; EBITDA; continued safe and reliable operations; 45Q credits (if any) including the amount, timing and receipt thereof; natural gas and global energy costs; exports; 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 health and economic effects of the COVID-19 pandemic and any variant thereof, 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; general economic and business conditions, including increasing interest rates and inflation or a potential recession; political disturbances, geopolitical instability and tensions, and associated changes in global trade policies and economic sanctions, including, but not limited to, in connection with the Russia-Ukraine conflict; and other risks.

About CVR Energy, Inc.
Headquartered in Sugar Land, Texas, CVR Energy, Inc. is a diversified holding company primarily engaged in the renewable fuels, petroleum refining and marketing business as well as in the nitrogen fertilizer manufacturing business through its interest in CVR Partners, LP. 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 September 30, 2022:

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.

Factors Affecting Comparability of Our Financial Results

Our historical results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future for the reasons discussed below.

Petroleum Segment

Coffeyville Refinery - During the three and nine months ended September 30, 2022, we capitalized $4 million and $5 million, respectively, related to the pre-planning phase of a major planned turnaround that is currently expected to commence in the spring of 2023.

Wynnewood Refinery - The Petroleum Segment’s Wynnewood Refinery’s major planned turnaround began in late February 2022 and was completed in early April 2022. The pre-planning phase began during the first quarter of 2021. We did not capitalize turnaround expenditures for the three months ended September 30, 2022 and capitalized turnaround expenditures of $68 million for nine months ended September 30, 2022. During the three and nine months ended September 30, 2021, we capitalized $1 million and $2 million, respectively, related to the pre-planning activities.

Nitrogen Fertilizer Segment

Major Scheduled Turnaround Activities

Coffeyville Fertilizer Facility - A planned turnaround at the Coffeyville Fertilizer Facility commenced in July 2022 and was completed in mid-August 2022. For the three and nine months ended September 30, 2022, we incurred turnaround expense of $12 million for both periods related to this turnaround. For the three and nine months ended September 30, 2021, we incurred turnaround expense of less than $1 million for both periods related to planning for the Coffeyville Fertilizer Facility’s 2022 turnaround.

East Dubuque Fertilizer Facility - A planned turnaround at the East Dubuque Fertilizer Facility commenced in August 2022 and was completed in mid-September 2022. For the three and nine months ended September 30, 2022, we incurred turnaround expense of approximately $20 million and $21 million, respectively, related to this turnaround. For the three and nine months ended September 30, 2021, we incurred turnaround expense of less than $1 million for both periods related to planning for the East Dubuque Fertilizer Facility’s 2022 turnaround.

CVR Energy, Inc. 
(all information in this release is unaudited)

Consolidated Statement of Operations Data

Selected Balance Sheet Data

Selected Cash Flow Data

Selected Segment Data

Selected Balance Sheet Data

Petroleum Segment

Key Operating Metrics per Total Throughput Barrel

Throughput Data by Refinery

Production Data by Refinery

Key Market Indicators

Nitrogen Fertilizer Segment:

Ammonia Utilization Rates ⁽¹⁾

Sales and Production Data

Key Market Indicators

Q4 2022 Outlook

The table below summarizes our outlook for certain operational statistics and financial information for the fourth quarter of 2022. See “Forward-Looking Statements” above.

Non-GAAP Reconciliations:

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Reconciliation of Basic and Diluted Earnings per Share to Adjusted Earnings (Loss) per Share

Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow

Reconciliation of Petroleum Segment Net Income to EBITDA and Adjusted EBITDA

Reconciliation of Petroleum Segment Gross Profit to Refining Margin and Refining Margin Adjusted for Inventory Valuation Impacts

Reconciliation of Petroleum Segment Total Throughput Barrels

Reconciliation of Petroleum Segment Refining Margin per Total Throughput Barrel

Reconciliation of Petroleum Segment Refining Margin Adjusted for Inventory Valuation Impacts per Total Throughput Barrel

Reconciliation of Petroleum Segment Direct Operating Expenses per Total Throughput Barrel

Reconciliation of Nitrogen Fertilizer Segment Net (Loss) Income to EBITDA and Adjusted EBITDA

Reconciliation of Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer

Source: CVR Energy, Inc.