UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
___________________________________
Date of Report (Date of earliest event reported): July 28, 2016
CVR ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) | 001-33492 (Commission File Number) | 61-1512186 (I.R.S. Employer Identification Number) |
2277 Plaza Drive, Suite 500 Sugar Land, Texas 77479 (Address of principal executive offices, including zip code) | ||
Registrant’s telephone number, including area code: (281) 207-3200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On July 28, 2016, CVR Energy, Inc. (the "Company") posted a presentation to its website at www.cvrenergy.com under the tab “Investor Relations” providing information regarding its results of operations and financial condition for the quarter and six months ended June 30, 2016. The presentation is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being furnished pursuant to Item 2.02 and Item 7.01 of Form 8-K and will not, except to the extent required by applicable law or regulation, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure.
The information set forth under Item 2.02 is incorporated by reference as if fully set forth herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is being "furnished" as part of this Current Report on Form 8-K:
99.1 Slides from presentation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 28, 2016
CVR Energy, Inc. | |
By: | /s/ Susan M. Ball |
Susan M. Ball, | |
Chief Financial Officer and Treasurer | |
2nd Quarter 2016 Earnings Report
July 28, 2016
Forward Looking Statements
This presentation should be reviewed in conjunction with CVR Energy, Inc.’s Second Quarter earnings
conference call held on July 28, 2016. The following information contains forward-looking statements
based on management’s current expectations and beliefs, as well as a number of assumptions concerning
future events. These statements are subject to risks, uncertainties, assumptions and other important
factors. You are cautioned not to put undue reliance on such forward-looking statements (including
forecasts and projections regarding our future performance) because actual results may vary materially
from those expressed or implied as a result of various factors, including, but not limited to (i) those set
forth under “Risk Factors” in CVR Energy, Inc.’s Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and any other filings CVR Energy, Inc. makes with the Securities and Exchange Commission,
(ii) those set forth under “Risk Factors” in CVR Refining, LP’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and any other filings CVR Refining, LP makes with the Securities and Exchange
Commission, and (iii) those set forth under “Risk Factors” in the CVR Partners, LP Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and any other filings CVR Partners, LP makes with the
Securities and Exchange Commission. CVR Energy, Inc. assumes no obligation to, and expressly
disclaims any obligation to, update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except to the extent required by law.
2
Consolidated Results
Second Quarter Year to Date
(In millions, except for EPS/EPU/Distributions)
6/30/2016 6/30/2015
Percent
Change 6/30/2016 6/30/2015
Percent
Change
Net income attributable to CVR Energy stockholders $ 28.4 $ 101.9 -72% $ 12.2 $ 156.7 -92%
Diluted earnings per share $ 0.33 $ 1.17 -72% $ 0.14 $ 1.80 -92%
Adjusted net income per diluted share(1) $ 0.20 $ 0.83 -76% $ 0.29 $ 1.81 -84%
EBITDA(2) $ 83.1 $ 194.9 -57% $ 78.6 $ 308.8 -75%
Adjusted EBITDA(2) $ 64.4 $ 145.7 -56% $ 100.6 $ 309.4 -67%
Adjusted Petroleum EBITDA(3) $ 84.7 $ 194.3 -56% $ 119.8 $ 356.0 -66%
CVR Refining Distributions $ — $ 0.98 -100% $ — $ 1.74 -100%
Adjusted Nitrogen Fertilizer EBITDA(4) $ 29.1 $ 36.1 -19% $ 57.0 $ 74.5 -23%
CVR Partners Distributions(5) $ 0.17 $ 0.39 -56% $ 0.44 $ 0.84 -48%
(1) Non-GAAP reconciliation on slide 10
(2) Non-GAAP reconciliation on slide 11
(3) Non-GAAP reconciliation on slide 12
(4) Non-GAAP reconciliation on slide 13
(5) On April 1, 2016, the Nitrogen Fertilizer Partnership completed the previously announced transactions (the "mergers"), whereby the the Nitrogen Fertilizer Partnership acquired CVR Nitrogen, LP
(“CVR Nitrogen”) (formerly known as East Dubuque Nitrogen Partners, L.P. and also formerly known as Rentech Nitrogen Partners L.P.) and CVR Nitrogen GP, LLC (formerly known as East
Dubuque Nitrogen GP, LLC and also formerly known as Rentech Nitrogen GP, LLC), a Delaware limited liability company ("CVR Nitrogen GP"). Prior to the merger, CVR Partners had 73.1 million
units outstanding, and post-merger it has 113.3 million units outstanding. Available cash for distribution per common unit for the three and six months ended June 30, 2016 is calculated on the post-
merger common units outstanding.
3
Capital Structure
$600
$400
$200
$0
-$200
2013 2014 2015 Q2 2016
$(165.9) $(78.8) $(91.6)
$506.3
Note: Refer to slide 8 for metrics used in calculation
(1) Amounts presented are gross debt not net of unamortized debt issuance costs
Financial Metrics 2013 2014 2015 Q2 2016
LTM
w Debt to Capital 36% 41% 41% 56%
w Debt to Adj. EBITDA 1.0 1.4 1.4 4.1
As of 06/30/2016
Consolidated Cash and cash equivalents $ 690.6
CVR Refining
$400mm ABL —
$250mm Revolver 31.5
Capital Lease Obligations 47.7
6.5% Unsecured Notes due 2022 500.0
Total CVR Refining Debt(1) $ 579.2
CVR Partners
9.25% Secured Notes due 2023 645.0
6.5% Unsecured Notes due 2021 4.2
Total CVR Partners Debt(1) $ 649.2
CVR Energy Loan to CVR Refining (31.5)
Total Debt $ 1,196.9
Stockholders Equity 932.7
Total Capitalization $ 2,129.6
Capitalization
($ in millions)
4
Consolidated Net Debt (Cash)
($ in millions)
Appendix
Non-GAAP Financial Measures
To supplement the actual results in accordance with GAAP for the applicable periods, the Company also uses non-GAAP financial measures
as discussed below, which are reconciled to GAAP-based results. These non-GAAP financial measures should not be considered an alternative
for GAAP results. The adjustments are provided to enhance an overall understanding of the Company’s financial performance for the
applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods.
6
Non-GAAP Financial Measures (cont'd)
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 (loss) divided by weighted-average diluted shares
outstanding.
EBITDA and Adjusted EBITDA. EBITDA represents net income before (i) interest expense and other financing costs, net of interest income, (ii) income
tax expense and (iii) depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for FIFO impact (favorable) unfavorable, major
scheduled turnaround expenses, loss on extinguishment of debt, (gain) loss on derivatives, net, current period settlements on derivative contracts, flood
insurance recovery and expenses associated with the East Dubuque mergers. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and
should not be substituted for net income (loss) or cash flow from operations. Management believes that EBITDA and Adjusted EBITDA enable investors
to better understand and evaluate our ongoing operating results and allow for greater transparency in reviewing our overall financial, operational and
economic performance. EBTIDA and Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company
may define these terms differently. Prior to 2016, EBITDA was also adjusted for share-based compensation expense in calculating Adjusted EBITDA.
Beginning in 2016, share-based compensation expense is no longer utilized as an adjustment to derive Adjusted EBITDA as no equity-settled awards
remain outstanding for CVR Energy or any of its subsidiaries, and CVR Partners and CVR Refining are responsible for reimbursing CVR Energy for their
allocated portion of all outstanding awards. Management believes, based on the nature, classification and cash settlement feature of the currently
outstanding awards, that it is no longer necessary to adjust EBITDA for share-based compensation expense to derive Adjusted EBITDA.
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 FIFO impact (favorable) unfavorable; share-based compensation, non-cash; major scheduled
turnaround expenses; loss on extinguishment of debt; (gain) loss on derivatives, net; current period settlements on derivative contracts, flood insurance
recovery and expenses associated with the East Dubuque mergers. We present Adjusted EBITDA by operating segment because it is the starting point for
CVR Refining’s and CVR Partners' calculation of available cash for distribution. EBITDA and Adjusted EBITDA by operating segment are not recognized
terms under GAAP and should not be substituted for net income (loss) as a measure of performance. Management believes that EBITDA and Adjusted
EBITDA by operating segment enable investors to better understand CVR Refining’s and CVR Partners' ability to make distributions to their common
unitholders, help investors evaluate our ongoing operating results and allow for greater transparency in reviewing our overall financial, operational and
economic performance. EBITDA and Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company
may define these terms differently.
7
Capital Structure
Financials Full Year LTM
($ in millions) 2013 2014 2015 Q2 2016
n Cash $ 842.1 $ 753.7 $ 765.1 $ 690.6
n Total Debt, including current portion(1) 676.2 674.9 673.5 1,196.9
n Net Debt (Cash) (165.9) (78.8) (91.6) 506.3
n CVR Stockholder's Equity 1,188.6 988.1 984.1 932.7
n Adjusted EBITDA(2)(3) $ 659.7 $ 473.5 $ 498.8 $ 290.0
Note: Includes cash and debt of CVR Partners LP and CVR Refining LP
(1) Amounts presented are gross debt not net of unamortized debt issuance costs
(2) Definition on slide 7
(3) Non-GAAP reconciliation on slide 9
8
Consolidated Non-GAAP Financial Measures
Financials Full Year LTM
($ in millions) 2013 2014 2015 Q2 2016
Net income attributable to CVR Energy stockholders $ 370.7 $ 173.9 $ 169.6 $ 25.1
Interest expense and other financing costs, net of interest income 49.3 39.1 47.4 53.5
Income tax expense 183.7 97.7 84.5 2.2
Depreciation and amortization 142.8 154.4 164.1 170.3
FIFO impact (favorable) unfavorable (21.3) 160.8 60.3 34.8
Share-based compensation 18.4 12.3 12.8 6.9
Major scheduled turnaround expenses — 6.8 109.2 145.2
Loss on extinguishment of debt 26.1 — — 5.1
(Gain) loss on derivatives, net (57.1) (185.6) 28.6 (32.3)
Current period settlements on derivative contracts(1) 6.4 122.2 (26.0) 37.3
Flood insurance recovery(2) — — (27.3) —
Expenses associated with the East Dubuque mergers(3) — — 2.3 4.8
Adjusted EBITDA and EBITDA adjustments related to noncontrolling interest (59.3) (108.1) (126.7) (162.9)
Adjusted EBITDA(4) $ 659.7 $ 473.5 $ 498.8 $ 290.0
(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 an insurance recovery from Coffeyville Resources Refining & Marketing, LLC’s environmental insurance carriers as a result of the flood and crude oil discharge at the Coffeyville refinery on
June/July 2007.
(3) On April 1, 2016, CVR Partners completed the previously announced merger transactions with CVR Nitrogen. CVR Partners incurred legal and other professional fees and other merger related expenses
for the three and six months ended June 30, 2016 that are referred to herein as expenses associated with the CVR Nitrogen mergers, which are included in selling, general and administrative expenses.
(4) Definition on slide 7
9
Consolidated Non-GAAP Financial Measures
Financials Second Quarter Year to Date
($ in millions, except per share data) 6/30/2016 6/30/2015 6/30/2016 6/30/2015
Income before income tax expense $ 65.4 $ 250.2 $ 12.7 $ 358.9
FIFO impact, favorable (46.2) (36.4) (37.4) (11.9)
Share-based compensation(1) — 1.9 — 5.9
Major scheduled turnaround expenses 8.7 2.1 38.1 2.1
Loss on derivatives, net 1.9 12.6 3.1 64.0
Current period settlement on derivative contracts(2) 7.1 (28.5) 28.5 (34.8)
Flood insurance recovery(3) — (27.3) — (27.3)
Loss on extinguishment of debt 5.1 — 5.1 —
Expenses associated with the East Dubuque mergers(4) 1.2 — 2.5 —
Adjusted net income before income tax expense and noncontrolling interest $ 43.2 $ 174.6 $ 52.6 $ 356.9
Adjusted net loss attributed to noncontrolling interest (11.9) (63.8) (18.6) (117.5)
Income tax expense, as adjusted (14.2) (38.7) (8.5) (82.4)
Adjusted net income attributable to CVR Energy stockholders(5) $ 17.1 $ 72.1 $ 25.5 $ 157.0
Adjusted net income per diluted share $ 0.20 $ 0.83 $ 0.29 $ 1.81
(1) Beginning in 2016, share-based compensation expense is no longer utilized as an adjustment to derive Adjusted net income as no equity-settled awards remain outstanding for CVR Energy or any of its
subsidiaries, and CVR Partners and CVR Refining are responsible for reimbursing CVR Energy for their allocated portion of all outstanding awards. Management believes, based on the nature,
classification and cash settlement feature of the currently outstanding awards, that it is no longer necessary to adjust net income (loss) for share-based compensation expense to derive Adjusted net income.
Adjusted net income attributable to CVR Energy stockholders for the three and six months ended June 30, 2015 would have been $71.0 and $153.5 million, respectively, without adjusting for share-based
compensation expense of $1.9 and $5.9 million, respectively.
(2) Represents the portion of gain (loss) on derivatives, net related to contracts that matured during the respective periods and settled with counterparties. There are no premiums paid or received at inception
of the derivative contracts and upon settlement, there is no cost recovery associated with these contracts.
(3) Represents an insurance recovery from Coffeyville Resources Refining & Marketing, LLC’s environmental insurance carriers as a result of the flood and crude oil discharge at the Coffeyville refinery on
June/July 2007.
(4) On April 1, 2016, CVR Partners completed the previously announced merger transactions with CVR Nitrogen. CVR Partners incurred legal and other professional fees and other merger related expenses
for the three and six months ended June 30, 2016 that are referred to herein as expenses associated with the CVR Nitrogen mergers, which are included in selling, general and administrative expenses.
(5) Definition on slide 7
10
Consolidated Non-GAAP Financial Measures
Financials Second Quarter Year to Date
($ in millions) 6/30/2016 6/30/2015 6/30/2016 6/30/2015
Net income attributable to CVR Energy stockholders $ 28.4 $ 101.9 $ 12.2 $ 156.7
Interest expense and other financing costs, net of interest income 18.4 11.6 30.3 24.2
Income tax expense (benefit) 21.6 58.1 (0.2) 82.1
Depreciation and amortization 50.7 42.5 90.7 84.5
EBITDA adjustments included in noncontrolling interest (36.0) (19.2) (54.4) (38.7)
EBITDA(1) $ 83.1 $ 194.9 $ 78.6 $ 308.8
FIFO impact, favorable (46.2) (36.4) (37.4) (11.9)
Share-based compensation(2) — 1.9 — 5.9
Major scheduled turnaround expenses 8.7 2.1 38.1 2.1
Loss on derivatives, net 1.9 12.6 3.1 64.0
Current period settlements on derivative contracts(3) 7.1 (28.5) 28.5 (34.8)
Flood insurance recovery(4) — (27.3) — (27.3)
Loss on extinguishment of debt 5.1 — 5.1 —
Expenses associated with the East Dubuque mergers(5) 1.2 — 2.5 —
Adjustments included in noncontrolling interest 3.5 26.4 (17.9) 2.6
Adjusted EBITDA(1) $ 64.4 $ 145.7 $ 100.6 $ 309.4
(1) Definition on slide 7
(2) Beginning in 2016, share-based compensation expense is no longer utilized as an adjustment to derive Adjusted EBITDA as no equity-settled awards remain outstanding for CVR Energy or any of its
subsidiaries, and CVR Partners and CVR Refining are responsible for reimbursing CVR Energy for their allocated portion of all outstanding awards. Management believes, based on the nature,
classification and cash settlement feature of the currently outstanding awards, that it is no longer necessary to adjust EBITDA for share-based compensation expense to derive Adjusted EBITDA. Adjusted
EBITDA for the three and six months ended June 30, 2015 would have been $143.8 and $303.5 million, respectively without adjusting for share-based compensation expense of $1.9 and $5.9 million,
respectively.
(3) Represents the portion of gain (loss) on derivatives, net related to contracts that matured during the respective periods and settled with counterparties. There are no premiums paid or received at inception
of the derivative contracts and upon settlement, there is no cost recovery associated with these contracts.
(4) Represents an insurance recovery from Coffeyville Resources Refining & Marketing, LLC’s environmental insurance carriers as a result of the flood and crude oil discharge at the Coffeyville refinery on
June/July 2007.
(5) On April 1, 2016, CVR Partners completed the previously announced merger transactions with CVR Nitrogen. CVR Partners incurred legal and other professional fees and other merger related expenses
for the three and six months ended June 30, 2016 that are referred to herein as expenses associated with the CVR Nitrogen mergers, which are included in selling, general and administrative expenses.
11
Petroleum Non-GAAP Financial Measures
Financials Second Quarter Year to Date
($ in millions) 6/30/2016 6/30/2015 6/30/2016 6/30/2015
Petroleum net income $ 78.1 $ 227.8 $ 10.1 $ 274.5
Interest expense and other financing cost, net of interest income 10.1 10.3 20.9 21.5
Income tax expense — — — —
Depreciation and amortization 31.6 34.2 63.1 68.2
Petroleum EBITDA(1) $ 119.8 $ 272.3 $ 94.1 $ 364.2
FIFO impact, favorable (46.2) (36.4) (37.4) (11.9)
Share-based compensation, non-cash — (0.1) — 0.1
Major scheduled turnaround expenses 2.1 1.7 31.5 1.7
Loss on derivatives, net 1.9 12.6 3.1 64.0
Current period settlements on derivative contracts(2) 7.1 (28.5) 28.5 (34.8)
Flood insurance recovery(3) — (27.3) — (27.3)
Adjusted Petroleum EBITDA(1) $ 84.7 $ 194.3 $ 119.8 $ 356.0
(1) Definition on slide 7
(2) 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.
(3) Represents an insurance recovery from Coffeyville Resources Refining & Marketing, LLC’s environmental insurance carriers as a result of the flood and crude oil discharge at the Coffeyville refinery on
June/July 2007.
12
Fertilizer Non-GAAP Financial Measures
Financials Second Quarter Year to Date
($ in millions)
6/30/2016 6/30/2015 6/30/2016 6/30/2015
Nitrogen fertilizer net income (loss) $ (17.0) $ 27.0 $ 1.0 $ 56.8
Interest expense and other financing costs, net 15.5 1.7 17.2 3.4
Income tax expense 0.1 — 0.1 —
Depreciation and amortization 17.6 7.0 24.5 13.8
Nitrogen Fertilizer EBITDA(1) $ 16.2 $ 35.7 $ 42.8 $ 74.0
Share-based compensation, non-cash — — — 0.1
Major scheduled turnaround expenses 6.6 0.4 6.6 0.4
Loss on extinguishment of debt 5.1 — 5.1 —
Expenses associated with the East Dubuque mergers(2) 1.2 — 2.5 —
Adjusted Nitrogen Fertilizer EBITDA(1) $ 29.1 $ 36.1 $ 57.0 $ 74.5
(1) Definition on slide 7
(2) On April 1, 2016, CVR Partners completed the previously announced merger transactions with CVR Nitrogen. CVR Partners incurred legal and other professional fees and other merger related expenses
for the three and six months ended June 30, 2016 that are referred to herein as expenses associated with the CVR Nitrogen mergers, which are included in selling, general and administrative expenses.
13