CVR Energy, Inc. (NYSE: CVI) today announced net income of $119
million, or $1.18 per diluted share, on net sales of $1,622 million
for the third quarter of 2019, compared to net income of $81
million, or 85 cents per diluted share, on net sales of $1,935
million for the third quarter of 2018. Third quarter 2019 EBITDA
was $235 million, compared to third quarter 2018 EBITDA of $235
million.
“CVR Energy reported solid results for the third quarter 2019,
driven by safe and reliable operations, improved capture rates,
higher throughput volumes and increased fertilizer sales volumes
and pricing,” said Dave Lamp, CVR Energy’s Chief Executive Officer.
“We’re pleased to report that our Board of Directors has approved a
7 percent increase in our dividend, raising it to 80 cents per
quarter, or $3.20 on an annualized basis. In addition, it
authorized a four-year, $300 million stock repurchase program,
giving us another potential way to return excess cash to
stockholders. We also have concluded the formal bank process that
we announced in May 2019 for the potential sale of the Company,
though we continue to evaluate various revenue diversification and
value creation opportunities.
“CVR Partners had strong production for the 2019 third quarter
and announced a 7 cents per unit cash distribution,” Lamp said. “In
addition, the East Dubuque plant completed its planned turnaround
in October and is now coming back up to full production.”
Petroleum
The petroleum segment reported third quarter 2019 operating
income of $173 million on net sales of $1,535 million, compared to
operating income of $167 million on net sales of $1,857 million in
the third quarter of 2018.
Refining margin per total throughput barrel was $16.34 in the
third quarter of 2019, compared to $15.70 during the same period in
2018. Crude oil pricing during the quarter led to an inventory
valuation impact of $1 million, or 3 cents per total throughout
barrel, compared to $3 million, or $0.12 per total throughput
barrel, in the third quarter of 2018. Impacting refining margin was
a reduction to the 2018 renewable volume obligation, which led, in
part, to a $22 million decrease in RINs expense for the third
quarter of 2019 relative to the same period in 2018. The petroleum
segment also recognized a third quarter 2019 derivative gain of $18
million, or 90 cents per total throughput barrel, compared to a
gain of $5 million, or 28 cents per total throughput barrel, for
the third quarter of 2018. Included in the total derivative gain
for the third quarter of 2019 was an unrealized gain of $14
million, compared to an unrealized loss of $4 million for the third
quarter of 2018.
Third quarter 2019 combined total throughput was approximately
222,000 barrels per day (bpd), compared to approximately 221,000
bpd of combined total throughput for the third quarter of 2018.
Fertilizer
The nitrogen fertilizer segment reported an operating loss of $8
million on net sales of $89 million for the third quarter of 2019,
compared to operating income of $3 million on net sales of $80
million for the third quarter of 2018.
For the third quarter of 2019, CVR Partners’ consolidated
average realized gate prices for urea ammonia nitrate (UAN)
improved over the prior year, up 7 percent to $182 per ton, while
ammonia was up 13 percent over the prior year to $337 per
ton. Average realized gate prices for UAN and ammonia were
$170 per ton and $297 per ton, respectively, for the third quarter
of 2018.
CVR Partners’ fertilizer facilities produced a combined 196,000
tons of ammonia during the third quarter 2019, of which 56,000 net
tons were available for sale while the rest was upgraded to other
fertilizer products, including 318,000 tons of UAN. During the
third quarter 2018, the fertilizer facilities produced 212,000 tons
of ammonia, of which 63,000 net tons were available for sale while
the remainder was upgraded to other fertilizer products, including
338,000 tons of UAN.
Cash, Debt and Dividend
Consolidated cash and cash equivalents was $692 million at
Sep. 30, 2019. Consolidated total debt and finance lease
obligations was $1,195 million at Sep. 30, 2019, with no debt
other than the Petroleum and Fertilizer segments’ debt.
CVR Energy also announced a third quarter 2019 cash dividend of
80 cents per share, which represents a 7 percent increase from the
prior quarter. The dividend, as declared by CVR Energy’s Board of
Directors, will be paid on Nov. 12, 2019, to stockholders of
record as of the close of market on Nov. 4, 2019. The
annualized dividend of $3.20 per share represents an industry
leading dividend yield of 7 percent based on the Oct. 22,
2019, closing stock price.
On Oct. 23, 2019, CVR Partners announced that the Board of
Directors of its general partner declared a third quarter 2019 cash
distribution of 7 cents per common unit, which will be paid on
Nov. 12, 2019, to common unitholders of record as of the close
of market on Nov. 4, 2019.
Also on Oct. 23, 2019, CVR Energy’s Board of Directors approved
a four-year, $300 million stock repurchase program (the “Stock
Repurchase Program”), and the Company announced its conclusion of
the formal bank process it announced in May 2019 relating to the
evaluation of potential strategic alternatives, including a
potential sale.
The Stock Repurchase Program would enable the Company to
repurchase up to $300 million of its common stock, giving the
Company another potential mechanism for returning cash to
stockholders. Stock repurchases may be made from time-to-time
through open market transactions, block trades, privately
negotiated transactions or otherwise, and are subject to market
conditions, as well as corporate, regulatory and other
considerations. The Stock Repurchase Program currently has a
duration of four years; however, it does not obligate the Company
to acquire any stock and may be terminated by the Board of
Directors at any time.
Third Quarter 2019 Earnings Conference Call
CVR Energy previously announced that it will host its third
quarter 2019 Earnings Conference Call on Thursday, Oct. 24, 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 2019 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/cxp42k6f. A repeat of
the call also can be accessed for 14 days by dialing (877)
660-6853, conference ID 13695154.
Forward-Looking StatementsThis 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: dividends and distributions including
the timing, payment and amount (if any) thereof; excess cash and
return thereof to stockholders; restart and production at the East
Dubuque plant; derivative gains or losses; ability to increase
stockholder value; stock repurchases of $300 million or at all;
strategic alternatives; revenue diversification and value creation
opportunities; refinery throughput, direct operating expenses,
capital spending, depreciation and amortization and turnaround
expense; continued safe and reliable operations; ammonia
utilization rates including impact of turnarounds; inventory
adjustments; and other matters. 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. Investors are cautioned that
various factors may affect these forward-looking statements,
including (among others) price volatility of crude oil, other
feedstocks and refined products; the ability of 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; 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 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 petroleum refining and marketing business through
its interest in CVR Refining and the nitrogen fertilizer
manufacturing business through its interest in CVR Partners, LP.
CVR Energy subsidiaries serve as the general partner and own 34
percent of the common units of CVR Partners.
For further information, please contact:
Investor Contact:Richard RobertsCVR Energy,
Inc.(281) 207-3205InvestorRelations@CVREnergy.com
Media Relations:Brandee StephensCVR Energy,
Inc.(281) 207-3516MediaRelations@CVREnergy.com
Non-GAAP Measures
Our management uses certain non-GAAP performance
measures to evaluate current and past performance and prospects for
the future to supplement our GAAP financial information presented
in accordance with U.S. 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.
Effective January 1, 2019, the Company revised
its accounting policy method for the costs of planned major
maintenance activities (turnarounds) specific to the Petroleum
Segment from being expensed as incurred (the direct expensing
method) to the deferral method. See Note 3 (“Recent Accounting
Pronouncements and Accounting Changes”) in the notes to our
condensed consolidated quarterly financial statements for a further
discussion of the impacts of this change in accounting policy. As a
result of this change in accounting policy, the non-GAAP measures
of Adjusted EBITDA, Petroleum Adjusted EBITDA, Nitrogen Fertilizer
Adjusted EBITDA, Adjusted Net Income (Loss) and Direct Operating
Expenses per Total Throughput Barrel net of Turnaround Expense are
no longer being presented.
The following are non-GAAP measures that
continue to be presented for the period ended September 30,
2019:
EBITDA - Consolidated net income (loss) before
(i) interest expense, net, (ii) income tax expense 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
Impact - Refining Margin adjusted to exclude the impact of current
period market price and volume fluctuations on crude oil and
refined product inventories recognized in prior periods. 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. The inventory valuation impact is calculated based upon
inventory values at the beginning of the accounting period and at
the end of the accounting period.
Refining Margin and Refining Margin adjusted for
Inventory Valuation Impact, per Throughput Barrel - Refining Margin
adjusted to exclude the impact of current period market price and
volume fluctuations on crude oil and refined product inventories
recognized in prior periods, 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.
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 industry, 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” section 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.
CVR Energy, Inc.(all information
in this release is unaudited)
Financial and Operational Data
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions, except share
data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Consolidated Statement
of Operations Data |
|
|
|
|
|
|
|
Net sales |
$ |
1,622 |
|
|
$ |
1,935 |
|
|
$ |
4,794 |
|
|
$ |
5,386 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
Cost of materials and other |
1,221 |
|
|
1,556 |
|
|
3,589 |
|
|
4,295 |
|
Direct operating expenses (exclusive of depreciation and
amortization as reflected below) |
139 |
|
|
119 |
|
|
397 |
|
|
390 |
|
Depreciation and amortization |
69 |
|
|
63 |
|
|
210 |
|
|
196 |
|
Cost of sales |
1,429 |
|
|
1,738 |
|
|
4,196 |
|
|
4,881 |
|
Selling, general and administrative expenses (exclusive of
depreciation and amortization as reflected below) |
29 |
|
|
27 |
|
|
85 |
|
|
83 |
|
Depreciation and amortization |
2 |
|
|
3 |
|
|
7 |
|
|
8 |
|
Loss (gain) on asset disposals |
3 |
|
|
1 |
|
|
(5 |
) |
|
5 |
|
Operating income |
159 |
|
|
166 |
|
|
511 |
|
|
409 |
|
Other (expense) income: |
|
|
|
|
|
|
|
Interest expense, net |
(26 |
) |
|
(26 |
) |
|
(77 |
) |
|
(79 |
) |
Other income, net |
5 |
|
|
3 |
|
|
10 |
|
|
6 |
|
Income before income tax expense |
138 |
|
|
143 |
|
|
444 |
|
|
336 |
|
Income tax expense |
34 |
|
|
33 |
|
|
110 |
|
|
65 |
|
Net income |
104 |
|
|
110 |
|
|
334 |
|
|
271 |
|
Less: Net income (loss) attributable to noncontrolling
interest |
(15 |
) |
|
29 |
|
|
(2 |
) |
|
86 |
|
Net income attributable to CVR Energy stockholders |
$ |
119 |
|
|
$ |
81 |
|
|
$ |
336 |
|
|
$ |
185 |
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share |
$ |
1.18 |
|
|
$ |
0.85 |
|
|
$ |
3.34 |
|
|
$ |
2.05 |
|
Dividends declared per share |
$ |
0.75 |
|
|
$ |
0.75 |
|
|
$ |
2.25 |
|
|
$ |
2.00 |
|
|
|
|
|
|
|
|
|
EBITDA* |
$ |
235 |
|
|
$ |
235 |
|
|
$ |
738 |
|
|
$ |
619 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding - basic and diluted |
100.5 |
|
|
95.8 |
|
|
100.5 |
|
|
89.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________* See “Non-GAAP Reconciliations” section
below.
Selected Balance Sheet Data
(in millions) |
September 30, 2019 |
|
December 31, 2018 |
Cash and cash equivalents |
$ |
692 |
|
|
$ |
668 |
|
Working capital |
737 |
|
|
797 |
|
Total assets |
3,962 |
|
|
4,000 |
|
Total debt and finance lease
obligations |
1,195 |
|
|
1,170 |
|
Total liabilities |
2,237 |
|
|
2,057 |
|
Total CVR stockholders’
equity |
1,429 |
|
|
1,286 |
|
|
|
|
|
|
|
Selected Cash Flow Data
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Net cash flow provided by
(used in): |
|
|
|
|
|
|
|
Operating activities |
$ |
269 |
|
|
$ |
288 |
|
|
$ |
653 |
|
|
$ |
526 |
|
Investing activities |
(30 |
) |
|
(24 |
) |
|
(73 |
) |
|
(74 |
) |
Financing activities |
(87 |
) |
|
(96 |
) |
|
(556 |
) |
|
(232 |
) |
Net increase in cash and cash equivalents |
$ |
152 |
|
|
$ |
168 |
|
|
$ |
24 |
|
|
$ |
220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Segment Data
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
Three Months Ended
September 30, 2019 |
|
|
|
|
|
Net sales |
$ |
1,535 |
|
|
$ |
89 |
|
|
$ |
1,622 |
|
Operating income (loss) |
173 |
|
|
(8 |
) |
|
159 |
|
Net income (loss) |
170 |
|
|
(23 |
) |
|
104 |
|
EBITDA* |
228 |
|
|
11 |
|
|
235 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
25 |
|
|
$ |
6 |
|
|
$ |
31 |
|
Growth capital
expenditures |
2 |
|
|
1 |
|
|
3 |
|
Total capital expenditures |
$ |
27 |
|
|
$ |
7 |
|
|
$ |
34 |
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2019 |
|
|
|
|
|
Net sales |
$ |
4,484 |
|
|
$ |
318 |
|
|
$ |
4,794 |
|
Operating income |
492 |
|
|
36 |
|
|
511 |
|
Net income (loss) |
478 |
|
|
(10 |
) |
|
334 |
|
EBITDA* |
653 |
|
|
97 |
|
|
738 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
58 |
|
|
$ |
11 |
|
|
$ |
73 |
|
Growth capital
expenditures |
7 |
|
|
1 |
|
|
8 |
|
Total capital expenditures |
$ |
65 |
|
|
$ |
12 |
|
|
$ |
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
Three Months Ended
September 30, 2018 |
|
|
|
|
|
Net sales |
$ |
1,857 |
|
|
$ |
80 |
|
|
$ |
1,935 |
|
Operating income |
167 |
|
|
3 |
|
|
166 |
|
Net income (loss) |
160 |
|
|
(13 |
) |
|
110 |
|
EBITDA* |
219 |
|
|
19 |
|
|
235 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
17 |
|
|
$ |
4 |
|
|
$ |
22 |
|
Growth capital
expenditures |
5 |
|
|
1 |
|
|
6 |
|
Total capital expenditures |
$ |
22 |
|
|
$ |
5 |
|
|
$ |
28 |
|
|
|
|
|
|
|
Nine months ended
September 30, 2018 |
|
|
|
|
|
Net sales |
$ |
5,139 |
|
|
$ |
253 |
|
|
$ |
5,386 |
|
Operating income (loss) |
424 |
|
|
(2 |
) |
|
409 |
|
Net income (loss) |
398 |
|
|
(49 |
) |
|
271 |
|
EBITDA* |
576 |
|
|
51 |
|
|
619 |
|
|
|
|
|
|
|
Capital expenditures
(1) |
|
|
|
|
|
Maintenance capital
expenditures |
$ |
39 |
|
|
$ |
13 |
|
|
$ |
55 |
|
Growth capital
expenditures |
12 |
|
|
3 |
|
|
15 |
|
Total capital expenditures |
$ |
51 |
|
|
$ |
16 |
|
|
$ |
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________* See “Non-GAAP Reconciliations” section
below.
(1) Capital expenditures are shown exclusive of turnaround
costs.
Selected Balance Sheet Data
(in millions) |
Petroleum |
|
Nitrogen Fertilizer |
|
Consolidated |
September 30,
2019 |
|
|
|
|
|
Cash and cash equivalents |
$ |
553 |
|
|
$ |
84 |
|
|
$ |
692 |
|
Total assets |
3,076 |
|
|
1,180 |
|
|
3,962 |
|
Total debt and finance lease
obligations |
564 |
|
|
632 |
|
|
1,195 |
|
|
|
|
|
|
|
December 31,
2018 |
|
|
|
|
|
Cash and cash equivalents |
$ |
353 |
|
|
$ |
62 |
|
|
$ |
668 |
|
Total assets |
2,453 |
|
|
1,254 |
|
|
4,000 |
|
Total debt and finance lease
obligations |
541 |
|
|
629 |
|
|
1,170 |
|
|
|
|
|
|
|
|
|
|
Petroleum Segment
Key Operating Metrics per Total Throughput
Barrel
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Refining margin* |
$ |
16.34 |
|
|
$ |
15.70 |
|
|
$ |
16.18 |
|
|
$ |
15.71 |
|
Refining margin adjusted for
inventory valuation impact * |
16.37 |
|
|
15.57 |
|
|
15.65 |
|
|
14.93 |
|
Direct operating expenses
* |
4.46 |
|
|
4.13 |
|
|
4.53 |
|
|
4.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________* See “Non-GAAP Reconciliations” section
below.
Throughput Data by Refinery
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in bpd) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Coffeyville |
|
|
|
|
|
|
|
Regional crude |
41,150 |
|
|
31,244 |
|
|
44,238 |
|
|
29,832 |
|
WTI |
80,717 |
|
|
68,659 |
|
|
74,325 |
|
|
65,093 |
|
Midland WTI |
1,436 |
|
|
27,889 |
|
|
4,959 |
|
|
15,012 |
|
Condensate |
2,378 |
|
|
273 |
|
|
3,588 |
|
|
6,448 |
|
Heavy Canadian |
4,555 |
|
|
6,746 |
|
|
5,199 |
|
|
4,518 |
|
Other feedstocks and blendstocks |
8,455 |
|
|
7,707 |
|
|
8,608 |
|
|
7,134 |
|
Wynnewood |
|
|
|
|
|
|
|
Regional crude |
61,345 |
|
|
61,618 |
|
|
52,750 |
|
|
55,684 |
|
WTI |
13 |
|
|
459 |
|
|
4 |
|
|
3,148 |
|
Midland WTI |
11,313 |
|
|
3,858 |
|
|
12,406 |
|
|
11,194 |
|
Condensate |
7,435 |
|
|
8,152 |
|
|
7,408 |
|
|
6,708 |
|
Other feedstocks and blendstocks |
3,203 |
|
|
4,150 |
|
|
3,579 |
|
|
4,829 |
|
Total
throughput |
222,000 |
|
|
220,755 |
|
|
217,064 |
|
|
209,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Data by Refinery
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in bpd) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Coffeyville |
|
|
|
|
|
|
|
Gasoline |
69,122 |
|
|
72,337 |
|
|
71,144 |
|
|
62,543 |
|
Distillate |
58,457 |
|
|
60,521 |
|
|
59,008 |
|
|
54,914 |
|
Other liquid products |
7,157 |
|
|
4,352 |
|
|
6,808 |
|
|
6,041 |
|
Solids |
4,580 |
|
|
5,548 |
|
|
4,886 |
|
|
5,025 |
|
Wynnewood |
|
|
|
|
|
|
|
Gasoline |
42,464 |
|
|
38,750 |
|
|
38,673 |
|
|
40,715 |
|
Distillate |
36,555 |
|
|
33,635 |
|
|
32,003 |
|
|
34,410 |
|
Other liquid products |
1,756 |
|
|
3,562 |
|
|
3,064 |
|
|
4,374 |
|
Solids |
33 |
|
|
35 |
|
|
31 |
|
|
46 |
|
Total
production |
220,124 |
|
|
218,740 |
|
|
215,617 |
|
|
208,068 |
|
Liquid volume yield (as % of
total throughput) |
97.1 |
% |
|
96.6 |
% |
|
97.1 |
% |
|
96.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Market Indicators
(dollars per barrel) |
|
|
|
|
|
|
|
West Texas Intermediate (WTI) NYMEX |
$ |
56.44 |
|
|
$ |
69.43 |
|
|
$ |
57.10 |
|
|
$ |
66.79 |
|
Crude Oil Differentials: |
|
|
|
|
|
|
|
WTI less WTS (light/medium sour) |
0.49 |
|
|
14.26 |
|
|
1.12 |
|
|
8.14 |
|
WTI less WCS (heavy sour) |
12.59 |
|
|
27.76 |
|
|
11.93 |
|
|
23.77 |
|
WTI less condensate |
0.55 |
|
|
0.37 |
|
|
0.99 |
|
|
0.40 |
|
Midland Cushing Differential |
0.26 |
|
|
14.33 |
|
|
1.23 |
|
|
7.69 |
|
NYMEX Crack Spreads: |
|
|
|
|
|
|
|
Gasoline |
16.37 |
|
|
16.96 |
|
|
16.55 |
|
|
17.69 |
|
Heating Oil |
23.14 |
|
|
22.03 |
|
|
24.30 |
|
|
21.59 |
|
NYMEX 2-1-1 Crack Spread |
19.76 |
|
|
19.50 |
|
|
20.42 |
|
|
19.64 |
|
PADD II Group 3 Basis: |
|
|
|
|
|
|
|
Gasoline |
(1.07 |
) |
|
(0.13 |
) |
|
(1.89 |
) |
|
(2.16 |
) |
Ultra Low Sulfur Diesel |
(1.84 |
) |
|
0.89 |
|
|
(1.45 |
) |
|
0.08 |
|
PADD II Group 3 Product Crack
Spread: |
|
|
|
|
|
|
|
Gasoline |
15.30 |
|
|
16.83 |
|
|
14.66 |
|
|
15.53 |
|
Ultra Low Sulfur Diesel |
21.30 |
|
|
22.92 |
|
|
22.85 |
|
|
21.67 |
|
PADD II Group 3 2-1-1 |
18.30 |
|
|
19.88 |
|
|
18.76 |
|
|
18.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2019 Petroleum Segment Outlook
The table below summarizes our outlook for
certain operational statistics and financial information for the
fourth quarter of 2019. See “forward looking statements.”
|
Q4 2019 |
|
Low |
|
High |
Total throughput (bpd) |
205,000 |
|
|
220,000 |
|
|
|
|
|
Direct operating expenses (1) (in millions) |
$ |
90 |
|
|
$ |
100 |
|
|
|
|
|
Total capital spending (in
millions) |
$ |
50 |
|
|
$ |
60 |
|
|
|
|
|
|
|
|
|
__________(1) Direct operating expenses are shown exclusive of
depreciation and amortization and turnaround expenses.
Nitrogen Fertilizer Segment:
Key Operating Data:
Ammonia Utilization Rates (1) |
Two Years Ended September 30 |
(capacity utilization) |
2019 |
|
2018 |
Consolidated |
93 |
% |
|
95 |
% |
Coffeyville |
95 |
% |
|
94 |
% |
East Dubuque |
91 |
% |
|
96 |
% |
|
|
|
|
|
|
_______________(1) Reflects ammonia utilization
rates on a consolidated basis and at each of the Nitrogen
Fertilizer facilities. Utilization is an important measure used by
management to assess operational output at each of the facilities.
Utilization is calculated as actual tons produced divided by
capacity. The Nitrogen Fertilizer Segment presents utilization on a
two-year rolling average to take into account the impact of current
turnaround cycles on any specific period. The two-year rolling
average is a more useful presentation of the long-term utilization
performance of our plants. Additionally, we present utilization
solely on ammonia production rather than each nitrogen product as
it provides a comparative baseline against industry peers and
eliminates the disparity of plant configurations for upgrade of
ammonia into other nitrogen products. With the Nitrogen Fertilizer
Segments’ efforts being primarily focused on ammonia upgrade
capabilities, this measure provides a meaningful view of how well
the facilities operate.
Sales and Production Data
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Consolidated sales (thousand
tons): |
|
|
|
|
|
|
|
Ammonia |
33 |
|
|
38 |
|
|
179 |
|
|
156 |
|
UAN |
340 |
|
|
310 |
|
|
968 |
|
|
925 |
|
|
|
|
|
|
|
|
|
Consolidated product pricing
at gate (dollars per ton): |
|
|
|
|
|
|
|
Ammonia |
$ |
337 |
|
|
$ |
297 |
|
|
$ |
416 |
|
|
$ |
329 |
|
UAN |
$ |
182 |
|
|
$ |
170 |
|
|
$ |
206 |
|
|
$ |
169 |
|
|
|
|
|
|
|
|
|
Consolidated production volume
(thousand tons): |
|
|
|
|
|
|
|
Ammonia (gross produced) |
196 |
|
|
212 |
|
|
586 |
|
|
584 |
|
Ammonia (net available for sale) |
56 |
|
|
63 |
|
|
168 |
|
|
187 |
|
UAN |
318 |
|
|
338 |
|
|
969 |
|
|
919 |
|
|
|
|
|
|
|
|
|
Feedstock: |
|
|
|
|
|
|
|
Petroleum coke used in production (thousand tons) |
137 |
|
|
117 |
|
|
404 |
|
|
325 |
|
Petroleum coke (dollars per ton) |
$ |
37.75 |
|
|
$ |
25.65 |
|
|
$ |
36.68 |
|
|
$ |
22.89 |
|
Natural gas used in production (thousands of MMBtu) (2) |
1,700 |
|
|
2,118 |
|
|
5,210 |
|
|
5,933 |
|
Natural gas used in production (dollars per MMBtu) (2) |
$ |
2.40 |
|
|
$ |
3.03 |
|
|
$ |
2.88 |
|
|
$ |
3.01 |
|
Natural gas in cost of materials and other (thousands of MMBtus)
(2) |
1,294 |
|
|
1,439 |
|
|
5,487 |
|
|
5,268 |
|
Natural gas in cost of materials and other (dollars per MMBtu)
(2) |
$ |
2.46 |
|
|
$ |
2.98 |
|
|
$ |
3.22 |
|
|
$ |
3.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________(2) 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 (exclusive
of depreciation and amortization).
Key Market Indicators
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Ammonia — Southern Plains (dollars per ton) |
$ |
298 |
|
|
$ |
337 |
|
|
$ |
369 |
|
|
$ |
354 |
|
Ammonia — Corn belt (dollars
per ton) |
363 |
|
|
398 |
|
|
452 |
|
|
407 |
|
UAN — Corn belt (dollars per
ton) |
196 |
|
|
203 |
|
|
217 |
|
|
208 |
|
|
|
|
|
|
|
|
|
Natural gas NYMEX (dollars per
MMBtu) |
$ |
2.38 |
|
|
$ |
2.87 |
|
|
$ |
2.59 |
|
|
$ |
2.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2019 Nitrogen Fertilizer Segment Outlook
The table below summarizes our outlook for
certain operational statistics and financial information for the
fourth quarter of 2019. See “forward looking statements.”
|
Q4 2019 |
|
Low |
|
High |
Ammonia utilization
rates (1) |
|
|
|
Consolidated |
95 |
% |
|
100 |
% |
Coffeyville |
95 |
% |
|
100 |
% |
East Dubuque |
95 |
% |
|
100 |
% |
|
|
|
|
Direct operating expenses (2) (in millions) |
$ |
40 |
|
|
$ |
45 |
|
|
|
|
|
Total capital spending (in
millions) |
$ |
8 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
|
_______________
(1) Ammonia utilization rates exclude the impact
of Turnarounds.(2) Direct operating expenses are shown exclusive of
depreciation and amortization, turnaround expenses, and impacts of
inventory adjustments.
Non-GAAP Reconciliations:
Reconciliation of Net Income to EBITDA
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income |
$ |
104 |
|
|
$ |
110 |
|
|
$ |
334 |
|
|
$ |
271 |
|
Add: |
|
|
|
|
|
|
|
Interest expense, net |
26 |
|
|
26 |
|
|
77 |
|
|
79 |
|
Income tax expense |
34 |
|
|
33 |
|
|
110 |
|
|
65 |
|
Depreciation and amortization |
71 |
|
|
66 |
|
|
217 |
|
|
204 |
|
EBITDA |
$ |
235 |
|
|
$ |
235 |
|
|
$ |
738 |
|
|
$ |
619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Petroleum Segment Net Income to
EBITDA
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Petroleum net income |
$ |
170 |
|
|
$ |
160 |
|
|
$ |
478 |
|
|
$ |
398 |
|
Add: |
|
|
|
|
|
|
|
Interest expense, net |
7 |
|
|
10 |
|
|
23 |
|
|
32 |
|
Depreciation and amortization |
51 |
|
|
49 |
|
|
152 |
|
|
146 |
|
Petroleum EBITDA |
$ |
228 |
|
|
$ |
219 |
|
|
$ |
653 |
|
|
$ |
576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Petroleum Segment
Gross Profit to Refining Margin and Refining Margin Adjusted for
Inventory Valuation Impact (in millions and on per total throughput
barrel basis) and Direct Operating Expenses per total throughput
barrel
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Net sales |
$ |
1,535 |
|
|
$ |
1,857 |
|
|
$ |
4,484 |
|
|
$ |
5,139 |
|
Cost of materials and
other |
1,201 |
|
|
1,538 |
|
|
3,525 |
|
|
4,240 |
|
Direct operating expenses
(exclusive of depreciation and amortization as reflected
below) |
91 |
|
|
84 |
|
|
269 |
|
|
268 |
|
Depreciation and
amortization |
51 |
|
|
49 |
|
|
152 |
|
|
146 |
|
Gross profit |
192 |
|
|
186 |
|
|
538 |
|
|
485 |
|
Add: |
|
|
|
|
|
|
|
Direct operating expenses
(exclusive of depreciation and amortization as reflected
below) |
91 |
|
|
84 |
|
|
269 |
|
|
268 |
|
Depreciation and
amortization |
51 |
|
|
49 |
|
|
152 |
|
|
146 |
|
Refining margin |
334 |
|
|
319 |
|
|
959 |
|
|
899 |
|
Inventory valuation impact,
(favorable) unfavorable (1) |
1 |
|
|
(3 |
) |
|
(31 |
) |
|
(45 |
) |
Refining margin adjusted for inventory valuation impact |
$ |
335 |
|
|
$ |
316 |
|
|
$ |
928 |
|
|
$ |
854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________(1) The Petroleum Segment’s basis
for determining inventory value under GAAP is First-In, First-Out
(“FIFO”). 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 inventory valuation impact
when crude oil prices increase and an unfavorable inventory
valuation impact when crude oil prices decrease. The inventory
valuation impact is calculated based upon inventory values at the
beginning of the accounting period and at the end of the accounting
period. In order to derive the inventory valuation impact per total
throughput barrel, we utilize the total dollar figures for the
inventory valuation impact and divide by the number of total
throughput barrels for the period.
Reconciliation of Petroleum Segment total throughput
barrels
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Total throughput barrels per day |
222,000 |
|
|
220,755 |
|
|
217,064 |
|
|
209,600 |
|
Days in the period |
92 |
|
|
92 |
|
|
273 |
|
|
273 |
|
Total throughput barrels |
20,423,972 |
|
|
20,309,500 |
|
|
59,258,366 |
|
|
57,220,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Petroleum Segment Refining Margin (in
millions and on per total throughput barrel basis)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions, except for per
throughput barrel data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Refining margin |
$ |
334 |
|
|
$ |
319 |
|
|
$ |
959 |
|
|
$ |
899 |
|
Divided by: total throughput
barrels |
20 |
|
|
20 |
|
|
59 |
|
|
57 |
|
Refining margin per total throughput barrel |
$ |
16.34 |
|
|
$ |
15.70 |
|
|
$ |
16.18 |
|
|
$ |
15.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Petroleum Segment
Refining Margin Adjusted for Inventory Valuation Impact (in
millions and on per total throughput barrel basis)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions, except for
throughput barrel data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Refining margin adjusted for inventory valuation impact |
$ |
335 |
|
|
$ |
316 |
|
|
$ |
928 |
|
|
$ |
854 |
|
Divided by: total throughput
barrels |
20 |
|
|
20 |
|
|
59 |
|
|
57 |
|
Refining margin adjusted for inventory valuation impact per total
throughput barrel |
$ |
16.37 |
|
|
$ |
15.57 |
|
|
$ |
15.65 |
|
|
$ |
14.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Petroleum Segment Direct Operating
Expenses (in millions and on per total throughput barrel
basis)
|
Three Months
Ended September 30, |
|
Nine Months
Ended September 30, |
(in millions, except for
throughput barrel data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Direct operating expenses (exclusive of depreciation and
amortization) |
$ |
91 |
|
|
$ |
84 |
|
|
$ |
269 |
|
|
$ |
268 |
|
Divided by: total throughput
barrels |
20 |
|
|
20 |
|
|
59 |
|
|
57 |
|
Direct operating expenses per total throughput barrel |
$ |
4.46 |
|
|
$ |
4.13 |
|
|
$ |
4.53 |
|
|
$ |
4.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Nitrogen Fertilizer Segment Net Loss
to EBITDA
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Nitrogen fertilizer net loss |
$ |
(23 |
) |
|
$ |
(13 |
) |
|
$ |
(10 |
) |
|
$ |
(49 |
) |
Add: |
|
|
|
|
|
|
|
Interest expense, net |
16 |
|
|
16 |
|
|
47 |
|
|
47 |
|
Depreciation and amortization |
18 |
|
|
16 |
|
|
60 |
|
|
53 |
|
Nitrogen Fertilizer
EBITDA |
$ |
11 |
|
|
$ |
19 |
|
|
$ |
97 |
|
|
$ |
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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