Delaware (State or other jurisdiction of incorporation) |
001-33492 (Commission File Number) |
61-1512186 (I.R.S. Employer Identification Number) |
Item 2.02. Results of Operations and Financial Condition | ||||||||
Item 9.01. Financial Statements and Exhibits | ||||||||
SIGNATURES | ||||||||
EXHIBIT INDEX | ||||||||
EX-99.1: PRESS RELEASE |
99.1 | Press release, dated August 13, 2008, issued by CVR Energy, Inc. pertaining to its results of operations and financial condition for the quarter ended June 30, 2008. |
CVR ENERGY, INC. |
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By: | /s/ James T. Rens | |||
James T. Rens | ||||
Chief Financial Officer and Treasurer | ||||
Exhibit No. | Title | |
99.1
|
Press release, dated August 13, 2008, issued by CVR Energy, Inc. pertaining to its results of operations and financial condition for the quarter ended June 30, 2008. |
Investor Relations:
|
Media Relations: | |||
Stirling Pack, Jr.
|
Steve Eames | |||
CVR Energy, Inc.
|
CVR Energy, Inc. | |||
281-207-3464
|
281-207-3550 | |||
InvestorRelations@CVREnergy.com
|
MediaRelations@CVREnergy.com |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Consolidated Statement of Operations Data: |
||||||||||||||||
Net Sales |
$ | 1,512.5 | $ | 843.4 | $ | 2,735.5 | $ | 1,233.9 | ||||||||
Cost of product sold |
1,287.4 | 569.6 | 2,323.6 | 873.3 | ||||||||||||
Direct operating expenses |
62.3 | 61.0 | 122.9 | 174.4 | ||||||||||||
Selling, general and administrative expenses |
14.8 | 14.9 | 28.3 | 28.1 | ||||||||||||
Net costs associated with flood |
3.9 | 2.1 | 9.7 | 2.1 | ||||||||||||
Depreciation and amortization |
21.1 | 18.0 | 40.7 | 32.2 | ||||||||||||
Operating income |
$ | 123.0 | $ | 177.8 | $ | 210.3 | $ | 123.8 | ||||||||
Other income, net |
0.9 | 0.3 | 1.8 | 0.7 | ||||||||||||
Interest expense and other financing costs |
(9.5 | ) | (15.8 | ) | (20.8 | ) | (27.6 | ) | ||||||||
Loss on derivatives, net |
(79.3 | ) | (155.5 | ) | (127.2 | ) | (292.4 | ) | ||||||||
Income (loss) before income taxes and
minority interest in (income) loss of subsidiaries |
$ | 35.1 | $ | 6.8 | $ | 64.1 | $ | (195.5 | ) | |||||||
Income tax (expense) benefit |
(4.1 | ) | 93.7 | (10.9 | ) | 141.0 | ||||||||||
Minority interest in (income) loss of subsidiaries |
| (0.4 | ) | | 0.2 | |||||||||||
Net income (loss) |
$ | 31.0 | $ | 100.1 | $ | 53.2 | $ | (54.3 | ) | |||||||
|
||||||||||||||||
amounts shown are exclusive of depreciation and amortization |
||||||||||||||||
Net earnings per share |
||||||||||||||||
Basic |
$ | 0.36 | $ | 0.62 | ||||||||||||
Diluted |
$ | 0.36 | $ | 0.62 | ||||||||||||
Weighted average share |
||||||||||||||||
Basic |
86,141,291 | 86,141,291 | ||||||||||||||
Diluted |
86,158,791 | 86,158,791 | ||||||||||||||
Pro forma Information |
||||||||||||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | 1.16 | $ | (0.63 | ) | |||||||||||
Diluted |
$ | 1.16 | $ | (0.63 | ) | |||||||||||
Weighted average share |
||||||||||||||||
Basic |
86,141,291 | 86,141,291 | ||||||||||||||
Diluted |
86,158,791 | 86,141,291 |
As of June 30, | As of December 31, | |||||||
2008 | 2007 | |||||||
(in millions, except as otherwise indicated) | ||||||||
(unaudited) | ||||||||
Balance Sheet Data: |
||||||||
Cash and cash equivalents |
$ | 20.6 | $ | 30.5 | ||||
Working capital |
(35.5 | ) | 10.7 | |||||
Total assets |
1,979.2 | 1,868.4 | ||||||
Total debt, including current portion |
522.9 | 500.8 | ||||||
Minority interest in subsidiaries |
10.6 | 10.6 | ||||||
Stockholders equity |
478.1 | 432.7 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Other Financial Data: |
||||||||||||||||
Depreciation and amortization |
$ | 21.1 | $ | 18.0 | $ | 40.7 | $ | 32.2 | ||||||||
Net Income (loss) adjusted for unrealized gain
or loss from Cash Flow Swap (1) |
40.6 | 141.5 | 71.2 | 59.0 | ||||||||||||
Cash flows provided (used in) by operating activities |
(0.8 | ) | 116.6 | 23.3 | 160.7 | |||||||||||
Cash flows (used in) investing activities |
(23.5 | ) | (106.7 | ) | (49.6 | ) | (214.1 | ) | ||||||||
Cash flows provided by financing activities |
19.8 | 5.6 | 16.4 | 34.5 | ||||||||||||
Capital expenditures for property, plant and equipment |
23.5 | 106.7 | 49.6 | 214.1 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Net income (loss) adjusted for unrealized loss from
Cash Flow Swap |
$ | 40.6 | $ | 141.5 | $ | 71.2 | $ | 59.0 | ||||||||
Plus: |
||||||||||||||||
Unrealized (loss) from Cash Flow Swap, net of taxes |
(9.6 | ) | (41.4 | ) | (18.0 | ) | (113.3 | ) | ||||||||
Net income (loss) |
$ | 31.0 | $ | 100.1 | $ | 53.2 | $ | (54.3 | ) |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions, except as otherwise indicated) | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Petroleum Business: |
||||||||||||||||
Net Sales |
$ | 1,459.1 | $ | 809.0 | $ | 2,627.6 | $ | 1,161.4 | ||||||||
Cost of product sold |
1,285.6 | 570.6 | 2,320.6 | 869.1 | ||||||||||||
Direct operating expenses |
42.7 | 44.5 | 83.0 | 141.1 | ||||||||||||
Net costs associated with flood |
3.4 | 2.0 | 8.9 | 2.0 | ||||||||||||
Depreciation and amortization |
16.3 | 13.3 | 31.2 | 23.1 | ||||||||||||
Gross profit |
$ | 111.1 | $ | 178.6 | $ | 183.9 | $ | 126.1 | ||||||||
Plus direct operating expenses |
42.7 | 44.5 | 83.0 | 141.1 | ||||||||||||
Plus net costs associated with flood |
3.4 | 2.0 | 8.9 | 2.0 | ||||||||||||
Plus depreciation and amortization |
16.3 | 13.3 | 31.2 | 23.1 | ||||||||||||
Refining margin (2) |
$ | 173.5 | $ | 238.4 | $ | 307.0 | $ | 292.3 | ||||||||
FIFO (gain) loss |
(74.0 | ) | (12.3 | ) | (100.1 | ) | (17.5 | ) | ||||||||
Refining margin adjusted for FIFO impact (3) |
$ | 99.5 | $ | 226.1 | $ | 206.9 | $ | 274.8 | ||||||||
Operating income |
101.9 | 166.3 | 165.5 | 102.9 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Petroleum Operating Statistics: |
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Per barrel profit, margin and expense of
crude oil throughput: |
||||||||||||||||
Refining margin (2) |
$ | 18.23 | $ | 27.67 | $ | 15.98 | $ | 22.71 | ||||||||
FIFO impact |
(7.77 | ) | (1.42 | ) | (5.21 | ) | (1.36 | ) | ||||||||
Refining margin adjusted for FIFO impact (3) |
10.46 | 26.25 | 10.77 | 21.35 | ||||||||||||
Gross profit |
11.68 | 20.73 | 9.57 | 9.80 | ||||||||||||
Direct operating expenses |
4.49 | 5.17 | 4.32 | 10.96 | ||||||||||||
Per gallon sales price: |
||||||||||||||||
Gasoline |
3.12 | 2.42 | 2.77 | 2.09 | ||||||||||||
Distillate |
3.66 | 2.15 | 3.26 | 2.03 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||
Barrels | Barrels | Barrels | Barrels | |||||||||||||||||||||||||||||
Volumetric Data | Per Day | % | Per Day | % | Per Day | % | Per Day | % | ||||||||||||||||||||||||
Production: |
||||||||||||||||||||||||||||||||
Total gasoline |
52,028 | 43.5 | % | 40,350 | 39.5 | % | 55,845 | 45.6 | % | 31,971 | 41.0 | % | ||||||||||||||||||||
Total distillate |
48,168 | 40.3 | % | 43,091 | 42.1 | % | 48,379 | 39.4 | % | 32,592 | 41.7 | % | ||||||||||||||||||||
Total other |
19,336 | 16.2 | % | 18,796 | 18.4 | % | 18,349 | 15.0 | % | 13,535 | 17.3 | % | ||||||||||||||||||||
Total all production |
119,532 | 100.0 | % | 102,237 | 100.0 | 122,573 | 100.0 | % | 78,098 | 100.0 | % | |||||||||||||||||||||
Crude oil throughput |
104,558 | 91.7 | % | 94,667 | 96.1 | % | 105,544 | 90.3 | % | 71,098 | 95.0 | % | ||||||||||||||||||||
All other inputs |
9,404 | 8.3 | % | 3,811 | 3.9 | % | 11,300 | 9.7 | % | 3,763 | 5.0 | % | ||||||||||||||||||||
Total feedstocks |
113,962 | 100.0 | % | 98,478 | 100.0 | % | 116,844 | 100.0 | % | 74,861 | 100.0 | % |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Market Indicators: |
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West Texas Intermediate (WTI) crude oil |
$ | 123.80 | $ | 65.02 | $ | 111.12 | $ | 61.67 | ||||||||
NYMEX 2-1-1 Crack Spread |
17.02 | 22.00 | 14.48 | 17.13 | ||||||||||||
Crude Oil Differentials: |
||||||||||||||||
WTI less WTS (sour) |
4.62 | 4.70 | 4.63 | 4.43 | ||||||||||||
WTI less WCS (heavy sour) |
22.94 | 17.99 | 21.52 | 16.39 | ||||||||||||
WTI less Dated Brent (foreign) |
2.61 | (3.73 | ) | 2.07 | (1.54 | ) | ||||||||||
PADD II Group 3 Basis: |
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Gasoline |
(3.61 | ) | 5.45 | (2.56 | ) | 2.59 | ||||||||||
Heating Oil |
4.17 | 10.20 | 3.91 | 9.54 | ||||||||||||
PADD II Group 3 Crack: |
||||||||||||||||
Gasoline |
5.84 | 34.21 | 5.43 | 23.42 | ||||||||||||
Heating Oil |
28.76 | 25.45 | 24.88 | 22.97 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions except as otherwise indicated) | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Nitrogen Fertilizer Business: |
||||||||||||||||
Net sales |
$ | 58.8 | $ | 35.8 | $ | 121.4 | $ | 74.3 | ||||||||
Cost of product sold |
6.8 | 0.1 | 15.8 | 6.2 | ||||||||||||
Direct operating expenses |
19.7 | 16.5 | 39.9 | 33.2 | ||||||||||||
Net cost associated with flood |
| 0.1 | | 0.1 | ||||||||||||
Depreciation and amortization |
4.5 | 4.4 | 9.0 | 8.8 | ||||||||||||
Operating Income |
23.1 | 11.7 | 49.2 | 21.0 |
amounts shown are exclusive of depreciation and amortization |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Nitrogen Fertilizer Operating Statistics |
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Production (thousand tons): |
||||||||||||||||
Ammonia |
79.5 | 82.8 | 163.2 | 169.0 | ||||||||||||
UAN |
139.1 | 138.9 | 289.2 | 304.6 | ||||||||||||
Total |
218.6 | 221.7 | 452.4 | 473.6 | ||||||||||||
Sales (thousand tons): |
||||||||||||||||
Ammonia |
19.1 | 13.4 | 43.3 | 34.1 | ||||||||||||
UAN |
138.6 | 126.8 | 296.6 | 293.5 | ||||||||||||
Total |
157.7 | 140.2 | 339.9 | 327.6 | ||||||||||||
Product
pricing (plant gate) (dollars per ton) (4): |
||||||||||||||||
Ammonia |
$ | 528 | $ | 366 | $ | 509 | $ | 354 | ||||||||
UAN |
303 | 218 | 281 | 190 | ||||||||||||
On-stream factor (5): |
||||||||||||||||
Gasification |
82.8 | % | 89.3 | % | 87.3 | % | 90.6 | % | ||||||||
Ammonia |
80.0 | % | 87.4 | % | 85.4 | % | 86.8 | % | ||||||||
UAN |
78.3 | % | 74.4 | % | 82.1 | % | 81.9 | % |
(1) | Net income (loss) adjusted for net unrealized loss from Cash Flow Swap results from adjusting for the derivative transaction that was executed in conjunction with the acquisition of Coffeyville Group Holdings, LLC by Coffeyville Acquisition LLC on June 24, 2005. On June 16, 2005, Coffeyville Acquisition LLC entered into the Cash Flow Swap with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc., and a related party of ours. The Cash Flow Swap was subsequently assigned from Coffeyville Acquisition LLC to Coffeyville Resources, LLC on June 24, 2005. The derivative took the form of three NYMEX swap agreements whereby if crack spreads fall below the fixed level, J. Aron agreed to pay the difference to us, and if crack spreads rise above the fixed level, we agreed to pay the difference to J. Aron. Assuming crude oil capacity of 115,000 bpd, the Cash Flow Swap represents approximately 58% and 14% of crude oil capacity for the periods January 1, 2008 through June 30, 2009 and July 1, 2009 through June 30, 2010, respectively. Under the terms of our Credit Facility and upon meeting specific requirements related to our leverage ratio and our credit ratings, we may reduce the Cash Flow Swap to 35,000 bpd, or approximately 30% of executed crude oil capacity, for the period from April 1, 2008 through December 31, 2008 and terminate the Cash Flow Swap in 2009 and 2010. | |
We have determined that the Cash Flow Swap does not qualify as a hedge for hedge accounting purposes under current GAAP. As a result, our periodic statements of operations reflect in each period material amounts of unrealized gains and losses based on the increases or decreases in market value of the unsettled position under the swap agreements which is accounted for as a liability on our balance sheet. As the crack spreads increase we are required to record an increase in this liability account with a corresponding expense entry to be made to our statement of operations. Conversely, as crack spreads decline we are required to record a decrease in the swap related liability and post a corresponding income entry to our statement of operations. Because of this inverse relationship between the economic outlook for our underlying business (as represented by crack spread levels) and the income impact of the unrecognized gains and losses, and given the significant periodic fluctuations in the amounts of unrealized gains and losses, management utilizes Net income (loss) adjusted for unrealized loss from Cash Flow Swap as a key indicator of our business performance. In managing our business and assessing its growth and profitability from a strategic and financial planning perspective, management and our board of directors considers our U.S. GAAP net income results as well as Net income (loss) adjusted for unrealized loss from Cash Flow Swap. We believe that Net income (loss) adjusted for unrealized loss from Cash Flow Swap enhances the understanding of our results of operations by highlighting income attributable to our ongoing operating performance exclusive of charges and income resulting from mark to market adjustments that are not necessarily indicative of the performance of our underlying business and our industry. The adjustment has been made for the unrealized loss from Cash Flow Swap net of its related tax benefit. | ||
Net income (loss) adjusted for unrealized loss from Cash Flow Swap is not a recognized term under GAAP and should not be substituted for net income as a measure of our performance but instead should be utilized as a supplemental measure of financial performance or liquidity in evaluating our business. Because Net income (loss) adjusted for unrealized loss from Cash Flow Swap excludes mark to market adjustments, the measure does not reflect the fair market value of our Cash Flow Swap in our net income. As a result, the measure does not include potential cash payments that may be required to be made on the Cash Flow Swap in the future. Also, our presentation of this non-GAAP measure may not be comparable to similarly titled measures of other companies. |
(2) | Refining margin is a measurement calculated as the difference between net sales and cost of product sold (exclusive of depreciation and amortization). Refining margin is a non-GAAP measure that we believe is important to investors in evaluating our refinerys performance as a general indication of the amount above our cost of product sold that we are able to sell refined products. Each of the components used in this calculation (net sales and cost of product sold exclusive of depreciation and amortization) can be taken directly from our statement of operations. Our calculation of refining margin may differ from similar calculations of other companies in our 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. | |
(3) | Refining margin adjusted for FIFO impact is a measurement calculated as the difference between net sales and cost of product sold (exclusive of depreciation and amortization) adjusted for FIFO inventory gains or losses. Under our FIFO accounting method, changes in crude oil prices can cause fluctuations in the inventory valuation of our crude oil, work in process and finished goods, thereby resulting in FIFO inventory gains when crude oil prices increase and FIFO inventory losses when crude oil prices decrease. Refining margin adjusted for FIFO impact is a non-GAAP measure that we believe is important to investors in evaluating our refinerys performance as a general indication of the amount above our cost of product sold that we are able to sell refined products. Our calculation of refining margin adjusted for FIFO impact may differ from calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. | |
(4) | Plant gate sales per ton represents net sales less freight and hydrogen revenue divided by sales tons. Plant gate pricing per ton is shown in order to provide industry comparability. | |
(5) | On-stream factor is the total number of hours operated divided by the total number of hours in the reporting period. |