SUGAR LAND, Texas, Aug. 3, 2011 /PRNewswire/ -- CVR Energy, Inc.
(NYSE: CVI), a refiner and marketer of petroleum fuels and the
majority owner of a nitrogen fertilizer products
manufacturer, today reported second quarter 2011 net income
attributable to CVR Energy stockholders of $124.9 million, or $1.42 per fully diluted share, on net sales of
$1,447.7 million. The 2011 results
compared to net income of $1.2
million, or 1 cent per fully
diluted share, on sales of $1,005.9
million for the second quarter in 2010.
(Logo:
http://photos.prnewswire.com/prnh/20071203/CVRLOGO)
For the first six months of 2011, the company reported net
income attributable to CVR Energy stockholders of $170.7 million, or $1.94 per fully diluted share, on net sales of
$2,615.0 million compared to an
$11.2 million loss, or a loss of
13 cents per share, on net sales of
$1,900.4 million, for the first six
months of 2010.
"Increased margins for petroleum products and improving prices
for nitrogen fertilizers lifted us to record quarterly results,"
said Chief Executive Officer Jack
Lipinski. "Other than a reduction in crude run rates
because of an issue with the continuous catalytic reformer (CCR)
midway through the quarter, both plants ran well, allowing us to
capture these high margins.
"In addition, early in the quarter we completed an initial
public offering (IPO) of the CVR Partners, LP, nitrogen fertilizer
master limited partnership, unlocking the value of that business
and providing liquidity to grow the MLP," Lipinski said. "CVR
Energy retains 69.8 percent of the common units in this master
limited partnership and will receive proportional distributions
from CVR Partners."
Consolidated adjusted net income for the second quarter 2011 was
$130.3 million, or $1.48 per diluted share. Major items
impacting the 2011 second quarter adjusted net income were an
unfavorable impact from First In-First Out (FIFO) accounting, net
of taxes, of $2.5 million;
share-based compensation, net of taxes, of $1.3 million; and several other one-time
adjustments totaling $1.6 million,
after tax.
For comparison, adjusted net income was $19.2 million in the second quarter of 2010.
Major items impacting the 2010 second quarter adjusted net income
were an unfavorable impact from FIFO, net of taxes, of $10.6 million; a reversal of share-based
compensation, net of taxes, of $2.2
million; and several other adjustments totaling $9.6 million.
As of June 30, 2011, CVR Energy
had cash and cash equivalents of $748.0
million compared to cash and cash equivalents at year end
2010 of $200 million. In addition,
the company carried excess crude oil and product inventories of
$48 million at the end of the second
quarter 2011, compared to excess inventories of $14 million at the end of the year 2010.
On July 26, 2011, the board of
directors of the general partner of CVR Partners declared a
distribution of 40.7 cents per common
unit, payable on Aug. 12, 2011, to
unit holders of record on Aug. 5,
2011. This announced distribution will reduce by
$9.0 million CVR Energy's cash and
cash equivalents held on the payment date.
Petroleum Business
The petroleum business reported second quarter 2011 operating
income of $183.5 million on net sales
of $1,376.7 million compared to
operating income of $4.6 million on
net sales of $951.3 million in the
second quarter of 2010. The results for the second quarter
2011 reflected an unfavorable impact from FIFO accounting of
$4.1 million, compared to an
unfavorable impact of $17.5 million
in the same period of 2010. For the first six months of 2011,
the petroleum segment had an operating income of $289.2 million compared to an operating loss of
$2.4 million for the first six months
in 2010.
Adjusted EBITDA for the petroleum segment for the second quarter
of 2011 was $208.4 million compared
to adjusted EBITDA of $46.5 million
in the second quarter of 2010.
For the second quarter, the refinery had total crude oil
throughput of 109,486 barrels per day, compared with 113,431
barrels per day of crude during the second quarter of 2010.
Including all other feed and blend stocks, the refinery had
total throughput of 116,459 barrels per day in the second quarter
of 2011 compared to total throughput of 121,867 in the second
quarter of 2010. Maintenance issues with the refinery's CCR
unit midway in the second quarter 2011 accounted for most of the
drop in throughput.
Refining margin per crude oil throughput barrel was $25.49 in the second quarter of 2011 compared to
$6.70 during the same period in 2010.
Gross profit per crude oil throughput barrel was $19.36 in the second quarter of 2011 compared to
$1.13 per crude oil throughput barrel
during the same period in 2010.
Direct operating expense, exclusive of depreciation and
amortization, for the second quarter 2011 was $4.09 per barrel sold, as compared to
$3.63 per barrel sold in the second
quarter of 2010. This increase was primarily attributable to
higher prices in 2011 as well as unplanned maintenance costs
related to the outage at the CCR during the quarter.
Nitrogen Fertilizers Business
The fertilizer business reported second quarter 2011 operating
income of $39.3 million on net sales
of $80.7 million, compared to
operating income of $16.5 million on
net sales of $56.3 million during the
equivalent period in 2010. For the first six months of 2011,
operating income was $56.1 million
compared to operating income of $19.5
million in the first six months in 2010.
Adjusted EBITDA for the fertilizer segment was $45.0 million in the second quarter of 2011
compared to adjusted EBITDA of $20.6
million for the same period in 2010.
On-stream factors for the nitrogen fertilizer plant were 99.3
percent for the gasifier, 98.5 percent for the ammonia synthesis
loop, and 97.6 percent for the UAN facility.
For the second quarter 2011, average realized plant gate prices
for ammonia and UAN were $574
per ton and $300 per ton
respectively, compared to $312 per
ton and $205 per ton respectively for
the equivalent period in 2010.
The nitrogen fertilizer business produced 102,300 tons of
ammonia during the second quarter of 2011, of which 28,200 net tons
were available for sale while the rest was upgraded to 179,400 tons
of more highly valued UAN. In the 2010 second quarter, the
plant produced 105,200 tons of ammonia with 38,700 net tons
available for sale and the remainder upgraded to 162,900 tons of
UAN.
This news release contains 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.
You can generally identify forward-looking statements by our use of
forward-looking terminology such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "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. For a discussion of risk
factors which may affect our results, please see the risk factors
and other disclosures included in our Annual Report on Form 10-K
for the year ended Dec. 31, 2010, and
any subsequently filed quarterly reports on Form 10-Q. These
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 press release are made
only as of the date hereof. The Company undertakes no duty to
update its forward-looking statements.
About CVR Energy, Inc.
Headquartered in Sugar Land,
Texas, CVR Energy, Inc.'s subsidiary and affiliated
businesses include an independent refiner that operates a 115,000
barrel per day refinery in Coffeyville,
Kan., and markets high value transportation fuels supplied
to customers through tanker trucks and pipeline terminals, and a
crude oil gathering system serving central Kansas, Oklahoma, western Missouri and southwest Nebraska. In addition, CVR Energy
subsidiaries own a majority interest in and serve as the general
partner of CVR Partners, LP, a producer of ammonia and urea
ammonium nitrate, or UAN, fertilizers.
|
For further information, please
contact:
|
|
|
|
|
|
Investor
Relations:
|
Media Relations:
|
|
|
Jay Finks
|
Steve Eames
|
|
|
CVR Energy, Inc.
|
CVR Energy, Inc.
|
|
|
281-207-3588
|
281-207-3550
|
|
|
InvestorRelations@CVREnergy.com
|
MediaRelations@CVREnergy.com
|
|
|
|
CVR Energy, Inc.
The following tables summarize the financial data and key
operating statistics for CVR Energy and our two operating segments
for the three and six months ended June 30, 2011 and 2010.
Select balance sheet data is as of June 30, 2011 and December 31,
2010.
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions, except share data)
|
|
|
(unaudited)
|
|
|
Consolidated Statement of
Operations Data:
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,447.7
|
|
$
1,005.9
|
|
$
2,615.0
|
|
$
1,900.4
|
|
|
Cost of product sold*
|
1,123.4
|
|
891.7
|
|
2,060.2
|
|
1,694.5
|
|
|
Direct operating
expenses*
|
66.2
|
|
62.5
|
|
134.5
|
|
123.1
|
|
|
Insurance recovery — business
interruption
|
—
|
|
—
|
|
(2.9)
|
|
—
|
|
|
Selling, general and
administrative expenses*
|
18.2
|
|
10.8
|
|
51.5
|
|
32.2
|
|
|
Net costs associated with
flood
|
—
|
|
—
|
|
0.1
|
|
—
|
|
|
Depreciation and
amortization
|
22.0
|
|
21.5
|
|
44.1
|
|
42.8
|
|
|
Operating
income
|
$
217.9
|
|
$
19.4
|
|
$
327.5
|
|
$
7.8
|
|
|
Interest expense and other
financing costs
|
(14.2)
|
|
(12.8)
|
|
(27.4)
|
|
(22.7)
|
|
|
Gain (loss) on derivatives,
net
|
6.9
|
|
7.3
|
|
(15.2)
|
|
8.8
|
|
|
Loss on extinguishment of
debt
|
(0.2)
|
|
(14.6)
|
|
(2.1)
|
|
(15.1)
|
|
|
Other income, net
|
0.5
|
|
1.5
|
|
1.1
|
|
1.9
|
|
|
Income (loss)
before income tax expense (benefit)
|
$
210.9
|
|
$
0.8
|
|
$
283.9
|
|
$
(19.3)
|
|
|
Income tax expense
(benefit)
|
76.7
|
|
(0.4)
|
|
103.9
|
|
(8.1)
|
|
|
Net income
(loss)
|
$
134.2
|
|
$
1.2
|
|
$
180.0
|
|
$
(11.2)
|
|
|
Net income (loss)
attributable to noncontrolling interest
|
9.3
|
|
—
|
|
9.3
|
|
—
|
|
|
Net income (loss)
attributable to CVR Energy stockholders
|
$
124.9
|
|
$
1.2
|
|
$
170.7
|
|
$
(11.2)
|
|
|
_______________
|
|
|
|
|
|
|
|
|
|
* Amounts shown are exclusive of
depreciation and amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share
|
$
1.44
|
|
$
0.01
|
|
$
1.97
|
|
$
(0.13)
|
|
|
Diluted earnings
(loss) per share
|
$
1.42
|
|
$
0.01
|
|
$
1.94
|
|
$
(0.13)
|
|
|
Weighted average common shares
outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
86,422,881
|
|
86,336,125
|
|
86,418,356
|
|
86,332,700
|
|
|
Diluted
|
87,789,351
|
|
86,506,590
|
|
87,786,288
|
|
86,332,700
|
|
|
|
|
|
|
|
|
|
|
|
As of June
30,
|
|
As of
December 31,
|
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
Balance Sheet
Data:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
748.0
|
|
$
200.0
|
|
|
Working capital
|
951.4
|
|
333.6
|
|
|
Total assets
|
2,349.9
|
|
1,740.2
|
|
|
Total debt, including current
portion
|
591.7
|
|
477.0
|
|
|
Total CVR stockholders'
equity
|
973.4
|
|
689.6
|
|
|
Noncontrolling
interest
|
146.5
|
|
10.6
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Data:
|
|
|
|
|
|
|
|
|
|
Cash flows provided by operating
activities
|
$ 178.6
|
|
$ 2.2
|
|
$ 162.6
|
|
$ 45.7
|
|
|
Cash flows used in investing
activities
|
(13.6)
|
|
(5.4)
|
|
(20.7)
|
|
(16.8)
|
|
|
Cash flows provided by (used in)
financing activities
|
417.1
|
|
28.9
|
|
406.0
|
|
(2.5)
|
|
|
Net cash flow
|
$ 582.1
|
|
$ 25.7
|
|
$ 547.9
|
|
$ 26.4
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in millions
except per share data)
|
|
|
(unaudited)
|
|
|
Non-GAAP
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income
(loss) to Adjusted Net Income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) attributable
to CVR Energy stockholders
|
$ 124.9
|
|
$
1.2
|
|
$
170.7
|
|
$
(11.2)
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
FIFO impact
(favorable) unfavorable, net of taxes (1)
|
2.5
|
|
10.6
|
|
(12.9)
|
|
3.1
|
|
|
Share-based
compensation, net of taxes (2)
|
1.3
|
|
(2.2)
|
|
15.0
|
|
3.6
|
|
|
Loss on
extinguishment of debt, net of taxes (3)
|
0.1
|
|
8.7
|
|
1.3
|
|
9.1
|
|
|
Major
scheduled turnaround expense, net of taxes (4)
|
0.6
|
|
0.1
|
|
2.5
|
|
0.1
|
|
|
Loss on
disposition of fixed assets, net of taxes (5)
|
0.9
|
|
0.8
|
|
0.9
|
|
0.8
|
|
|
Adjusted net income (6)
|
$ 130.3
|
|
$
19.2
|
|
$
177.5
|
|
$
5.5
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per
diluted share
|
$
1.48
|
|
$
0.22
|
|
$
2.02
|
|
$
0.06
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions, except operating statistics)
|
|
|
(unaudited)
|
|
|
Petroleum Business Financial
Results:
|
|
|
|
|
|
|
|
|
|
Net sales
|
$ 1,376.7
|
|
$ 951.3
|
|
$ 2,487.9
|
|
$ 1,808.0
|
|
|
Cost of product
sold*
|
1,122.8
|
|
882.1
|
|
2,053.0
|
|
1,681.1
|
|
|
Direct operating
expenses* (7)(8)
|
44.0
|
|
41.2
|
|
89.4
|
|
79.5
|
|
|
Net costs associated with
flood
|
—
|
|
—
|
|
0.1
|
|
—
|
|
|
Depreciation and
amortization
|
17.0
|
|
16.4
|
|
33.9
|
|
32.6
|
|
|
Gross profit
(9)
|
$ 192.9
|
|
$ 11.6
|
|
$ 311.5
|
|
$
14.8
|
|
|
Plus direct operating
expenses*
|
44.0
|
|
41.2
|
|
89.4
|
|
79.5
|
|
|
Plus net costs associated with
flood
|
—
|
|
—
|
|
0.1
|
|
—
|
|
|
Plus depreciation and
amortization
|
17.0
|
|
16.4
|
|
33.9
|
|
32.6
|
|
|
Refining margin (10)
|
$ 253.9
|
|
$ 69.2
|
|
$ 434.9
|
|
$ 126.9
|
|
|
FIFO impact (favorable)
unfavorable (1)
|
4.1
|
|
17.5
|
|
(21.3)
|
|
5.2
|
|
|
Refining margin adjusted for
FIFO impact (11)
|
$ 258.0
|
|
$ 86.7
|
|
$ 413.6
|
|
$ 132.1
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$ 183.5
|
|
$
4.6
|
|
$ 289.2
|
|
$
(2.4)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Petroleum EBITDA
(12)
|
$ 208.4
|
|
$ 46.5
|
|
$ 296.6
|
|
$
45.5
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum Key Operating
Statistics:
|
|
|
|
|
|
|
|
|
|
Per crude oil throughput
barrel:
|
|
|
|
|
|
|
|
|
|
Refining margin
(10)
|
$ 25.49
|
|
$ 6.70
|
|
$ 23.08
|
|
$
6.41
|
|
|
FIFO impact
(favorable) unfavorable (1)
|
0.41
|
|
1.70
|
|
(1.13)
|
|
0.26
|
|
|
Refining margin
adjusted for FIFO impact (11)
|
25.90
|
|
8.40
|
|
21.95
|
|
6.67
|
|
|
Gross profit
(9)
|
19.36
|
|
1.13
|
|
16.53
|
|
0.75
|
|
|
Direct operating
expenses* (7)
|
4.42
|
|
3.99
|
|
4.74
|
|
4.02
|
|
|
Direct operating expenses per
barrel sold* (8)
|
4.09
|
|
3.63
|
|
4.45
|
|
3.63
|
|
|
Barrels sold (barrels per day)
(8)
|
118,435
|
|
124,486
|
|
110,860
|
|
121,016
|
|
|
|
|
|
|
|
|
|
|
|
_______________
|
|
|
* Amounts shown are exclusive of
depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
Refining Throughput and
Production Data:
|
(unaudited)
|
|
(unaudited)
|
|
|
(barrels per
day)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Throughput:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sweet
|
84,654
|
|
72.6%
|
|
90,829
|
|
74.5%
|
|
82,302
|
|
74.1%
|
|
87,864
|
|
74.8%
|
|
|
Light/medium
sour
|
198
|
|
0.2%
|
|
8,505
|
|
7.0%
|
|
397
|
|
0.4%
|
|
8,019
|
|
6.8%
|
|
|
Heavy sour
|
24,634
|
|
21.2%
|
|
14,097
|
|
11.6%
|
|
21,416
|
|
19.3%
|
|
13,425
|
|
11.4%
|
|
|
Total crude
oil throughput
|
109,486
|
|
94.0%
|
|
113,431
|
|
93.1%
|
|
104,115
|
|
93.8%
|
|
109,308
|
|
93.0%
|
|
|
All other feedstocks and
blendstocks
|
6,973
|
|
6.0%
|
|
8,436
|
|
6.9%
|
|
6,923
|
|
6.2%
|
|
8,209
|
|
7.0%
|
|
|
Total
throughput
|
116,459
|
|
100.0%
|
|
121,867
|
|
100.0%
|
|
111,038
|
|
100.0%
|
|
117,517
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
53,495
|
|
45.5%
|
|
55,998
|
|
45.7%
|
|
51,564
|
|
46.2%
|
|
57,508
|
|
48.5%
|
|
|
Distillate
|
48,959
|
|
41.6%
|
|
51,008
|
|
41.6%
|
|
45,934
|
|
41.1%
|
|
48,137
|
|
40.6%
|
|
|
Other (excluding
internally produced fuel)
|
15,106
|
|
12.9%
|
|
15,607
|
|
12.7%
|
|
14,158
|
|
12.7%
|
|
12,911
|
|
10.9%
|
|
|
Total
refining production (excluding
internally produced fuel)
|
117,560
|
|
100.0%
|
|
122,613
|
|
100.0%
|
|
111,656
|
|
100.0%
|
|
118,556
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product price (dollars per
gallon):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
$ 3.07
|
|
|
|
$ 2.12
|
|
|
|
$ 2.86
|
|
|
|
$ 2.08
|
|
|
|
|
Distillate
|
$ 3.14
|
|
|
|
$ 2.17
|
|
|
|
$ 3.03
|
|
|
|
$ 2.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Indicators (dollars per
barrel):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Texas Intermediate (WTI)
NYMEX
|
$ 102.34
|
|
|
|
$ 78.05
|
|
|
|
$ 98.50
|
|
|
|
$ 78.46
|
|
|
|
|
Crude Oil
Differentials:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WTI less WTS (light/medium
sour)
|
2.51
|
|
|
|
1.84
|
|
|
|
3.30
|
|
|
|
1.86
|
|
|
|
|
WTI less WCS (heavy
sour)
|
17.61
|
|
|
|
13.92
|
|
|
|
19.76
|
|
|
|
12.19
|
|
|
|
|
NYMEX Crack Spreads:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
27.85
|
|
|
|
13.00
|
|
|
|
22.98
|
|
|
|
11.39
|
|
|
|
|
Heating Oil
|
25.56
|
|
|
|
10.50
|
|
|
|
24.76
|
|
|
|
8.89
|
|
|
|
|
NYMEX 2-1-1 Crack
Spread
|
26.71
|
|
|
|
11.75
|
|
|
|
23.87
|
|
|
|
10.14
|
|
|
|
|
PADD II Group 3
Basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
(1.59)
|
|
|
|
(2.88)
|
|
|
|
(1.82)
|
|
|
|
(2.80)
|
|
|
|
|
Ultra Low Sulfur
Diesel
|
3.24
|
|
|
|
2.58
|
|
|
|
2.21
|
|
|
|
1.13
|
|
|
|
|
PADD II Group 3 Product
Crack:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
26.26
|
|
|
|
10.12
|
|
|
|
21.16
|
|
|
|
8.58
|
|
|
|
|
Ultra Low Sulfur
Diesel
|
28.81
|
|
|
|
13.08
|
|
|
|
26.97
|
|
|
|
10.03
|
|
|
|
|
PADD II Group 3 2-1-1
|
27.53
|
|
|
|
11.60
|
|
|
|
24.06
|
|
|
|
9.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions, except as noted)
|
|
|
(unaudited)
|
|
|
Nitrogen Fertilizer Business
Financial Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$ 80.7
|
|
$ 56.3
|
|
$ 138.1
|
|
$ 94.6
|
|
|
Cost of product sold*
|
9.7
|
|
11.9
|
|
17.2
|
|
16.9
|
|
|
Direct operating
expenses*
|
22.3
|
|
21.3
|
|
45.3
|
|
43.5
|
|
|
Insurance recovery — business
interruption
|
—
|
|
—
|
|
(2.9)
|
|
—
|
|
|
Net cost associated with
flood
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Depreciation and
amortization
|
4.7
|
|
4.7
|
|
9.3
|
|
9.3
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
$ 39.3
|
|
$ 16.5
|
|
$ 56.1
|
|
$ 19.5
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Nitrogen Fertilizer
EBITDA (12)
|
$ 45.0
|
|
$ 20.6
|
|
$ 70.9
|
|
$ 29.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nitrogen Fertilizer Key
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production (thousand
tons):
|
|
|
|
|
|
|
|
|
|
Ammonia (gross produced)
(13)
|
102.3
|
|
105.2
|
|
207.6
|
|
210.3
|
|
|
Ammonia (net available
for sale) (13)
|
28.2
|
|
38.7
|
|
63.4
|
|
76.9
|
|
|
UAN
|
179.4
|
|
162.9
|
|
350.0
|
|
326.7
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum coke consumed
(thousand tons)
|
135.8
|
|
115.5
|
|
259.9
|
|
233.1
|
|
|
Petroleum coke (cost per
ton)
|
$ 30
|
|
$ 17
|
|
$
23
|
|
$ 15
|
|
|
|
|
|
|
|
|
|
|
|
Sales (thousand
tons):
|
|
|
|
|
|
|
|
|
|
Ammonia
|
33.6
|
|
50.6
|
|
60.9
|
|
81.8
|
|
|
UAN
|
166.1
|
|
172.2
|
|
345.4
|
|
327.9
|
|
|
Total
sales
|
199.7
|
|
222.8
|
|
406.3
|
|
409.7
|
|
|
|
|
|
|
|
|
|
|
|
Product pricing (plant gate)
(dollars per ton) (14):
|
|
|
|
|
|
|
|
|
|
Ammonia
|
$ 574
|
|
$ 312
|
|
$ 570
|
|
$ 300
|
|
|
UAN
|
$ 300
|
|
$ 205
|
|
$ 252
|
|
$ 187
|
|
|
|
|
|
|
|
|
|
|
|
On-stream factors
(15):
|
|
|
|
|
|
|
|
|
|
Gasification
|
99.3%
|
|
92.2%
|
|
99.6%
|
|
94.0%
|
|
|
Ammonia
|
98.5%
|
|
90.4%
|
|
97.6%
|
|
92.3%
|
|
|
UAN
|
97.6%
|
|
89.1%
|
|
95.4%
|
|
89.8%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to net sales
(dollars in millions):
|
|
|
|
|
|
|
|
|
|
Freight in
revenue
|
$ 5.4
|
|
$ 5.2
|
|
$ 10.2
|
|
$ 8.8
|
|
|
Hydrogen
revenue
|
6.1
|
|
—
|
|
6.1
|
|
—
|
|
|
Sales net plant
gate
|
69.2
|
|
51.1
|
|
121.8
|
|
85.8
|
|
|
Total net
sales
|
$ 80.7
|
|
$ 56.3
|
|
$ 138.1
|
|
$ 94.6
|
|
|
|
|
|
|
|
|
|
|
|
Market
Indicators:
|
|
|
|
|
|
|
|
|
|
Natural gas NYMEX (dollars per
MMBtu)
|
$ 4.38
|
|
$ 4.35
|
|
$ 4.29
|
|
$ 4.67
|
|
|
Ammonia — Southern Plains
(dollars per ton)
|
$ 604
|
|
$ 359
|
|
$ 605
|
|
$ 345
|
|
|
UAN — Mid Cornbelt (dollars per
ton)
|
$ 366
|
|
$ 249
|
|
$ 358
|
|
$ 246
|
|
|
_______________
|
|
|
|
|
|
|
|
|
|
* Amounts shown are exclusive of
depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
(1)
|
First-in, first-out ("FIFO") is
the Company's basis for determining inventory value on a Generally
Accepted Accounting Principles ("GAAP") basis. 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 favorable FIFO impacts when crude oil prices increase
and unfavorable FIFO impacts when crude oil prices decrease.
The FIFO 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 FIFO impact per
crude oil throughput barrel, we utilize the total dollar figures
for the FIFO impact and divide by the number of crude oil
throughput barrels for the period. Below is the gross and tax
affected FIFO impact for the applicable periods:
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
|
Petroleum:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIFO impact
(favorable) unfavorable
|
|
$4.1
|
|
|
$17.5
|
|
|
$(21.3)
|
|
|
$5.2
|
|
|
Income tax expense
(benefit) of FIFO
|
|
(1.6)
|
|
|
(6.9)
|
|
|
8.4
|
|
|
(2.1)
|
|
|
|
|
|
|
|
|
|
|
|
FIFO impact
(favorable) unfavorable,
net of taxes
|
|
$2.5
|
|
|
$10.6
|
|
|
$(12.9)
|
|
|
$3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
The Company has two
classifications for share-based compensation awards. Phantom Unit
Plan awards are accounted for as liability based awards. In
accordance with Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 718,
Compensation – Stock
Compensation ("ASC 718"), the expense
associated with these awards is based on the current fair value of
the awards. These awards are remeasured at each reporting date
until the awards are settled in their entirety. Override unit
awards are accounted for as equity-classified awards using the
guidance for non-employee awards prescribed by FASB Topic ASC 323
("ASC 323"). ASC 323 includes guidance for the proper
accounting by an investor for stock-based
compensation granted to employees of an equity method investee.
In addition, guidance set forth in FASB Topic
ASC 505, provides the treatment related to accounting
for equity investments that are issued other than to employees for
acquiring, or in conjunction with selling goods or
services. In accordance with that
guidance, the expense associated with these awards is based on the
current fair value of the awards. These awards are remeasured at
each reporting date until the awards are vested (when the
performance commitment is reached). The value of all of these
awards can fluctuate significantly between periods. Subsequent to
the second quarter of 2011, there will be no further compensation
expense recorded associated with the Phantom Unit Plan awards and
the override unit awards as both types of awards were settled in
their entirety in the second quarter of 2011.
|
|
|
|
|
|
Non-vested common stock awards
are accounted for as equity-classified awards using the guidance
provided by ASC 718. Non-vested common stock awards upon
issuance typically vest over a three year period. Non-vested
shares, when granted, are valued at the closing market price of
CVR's common stock on the date of issuance and amortized to
compensation expense on a straight-line basis over the vesting
period of the award. In connection with the initial public offering
of CVR Partners, LP (the "Partnership") in April 2011, the board of
directors of the general partner of the Partnership adopted a
Long-Term Incentive Plan. Compensation expense associated with the
fair value of these awards is amortized over the vesting period of
the award.
|
|
|
|
|
|
The compensation expense
associated with our Phantom Unit Plan, override units, non-vested
common stock awards, and CVR Partners' LTIP awards is recorded in
direct operating expenses, selling, general and administration
expenses and other income. Below is a breakdown of the
expense by Statement of Operations caption and by business
segment.
|
|
|
|
|
Three Months
Ended
June 30,
|
Six Months
Ended
June 30,
|
|
|
2011
|
|
2010
|
2011
|
|
2010
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
recorded
in direct operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum
|
|
$ 0.1
|
|
|
$ (0.1)
|
|
$ 0.8
|
|
|
$ 0.1
|
|
|
Nitrogen
|
|
-
|
|
|
(0.1)
|
|
0.4
|
|
|
0.1
|
|
|
Corporate
|
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
|
|
$ 0.1
|
|
|
$ (0.2)
|
|
$ 1.2
|
|
|
$ 0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
recorded
in selling, general and
administrative
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum
|
|
$ 0.4
|
|
|
$ (0.9)
|
|
$ 6.3
|
|
|
$ 1.1
|
|
|
Nitrogen
|
|
0.9
|
|
|
(0.4)
|
|
5.1
|
|
|
0.5
|
|
|
Corporate
|
|
0.8
|
|
|
(1.3)
|
|
8.7
|
|
|
2.6
|
|
|
|
$ 2.1
|
|
|
$ (2.6)
|
|
$ 20.1
|
|
|
$ 4.2
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
recorded
in other income
|
|
(0.1)
|
|
|
-
|
|
(0.1)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total share-based
compensation
|
|
$ 2.1
|
|
|
$ (2.8)
|
|
$ 21.2
|
|
|
$ 4.4
|
|
|
Income tax expense (benefit) of
share-
based
compensation
|
|
(0.8)
|
|
|
0.6
|
|
(6.2)
|
|
|
(0.8)
|
|
|
Share-based
compensation, net of taxes
|
|
$ 1.3
|
|
|
$ (2.2)
|
|
$ 15.0
|
|
|
$ 3.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
In February 2011, the Company
entered into an asset-backed revolving credit facility ("ABL credit
facility") and concurrently terminated its first priority credit
facility. In connection with the terminated first priority
credit facility, the Company recorded a loss on extinguishment of
debt of approximately $1.9 million of previously deferred financing
costs. In May 2011, the Company repurchased $2.7 million of its
Senior Notes ("Notes") at 103% of the aggregate principal balance.
This repurchase was in conjunction with a tender offer in
accordance with the terms of the Notes due to the initial public
offering of CVR Partners. The premium and previously deferred
financing costs associated with the Notes repurchased, approximated
$0.2 million and was recognized as a loss on extinguishment of debt
in our Consolidated Statement of Operations for the three months
ended June 30, 2011. In January 2010, we made a
voluntary unscheduled principal payment of $20.0 million on our
tranche D term loans. In addition, we made a second voluntary
unscheduled principal payment of $5.0 million in February 2010.
In connection with these voluntary prepayments, we paid a
2.0% premium totaling $0.5 million to the lenders of our first
priority credit facility. The premiums paid are reflected as
a loss on extinguishment of debt in our Consolidated Statements of
Operations. In April 2010, we paid off the remaining $453.0
million tranche D term loans. This payoff was made possible by the
issuance of $275.0 million aggregate principal amount of 9.0% First
Lien Senior Secured Notes due 2015 (the "First Lien Notes") and
$225.0 million aggregate principal amount of 10.875% Second Lien
Senior Secured Notes due 2017 (the "Second Lien Notes" and together
with the First Lien Notes, the "Notes"). In connection with
the payoff, we paid a 2.0% premium totaling approximately $9.1
million. In addition, previously deferred borrowing costs
totaling approximately $5.4 million associated with the first
priority credit facility term debt were also written off at that
time. The Company also recognized approximately $0.1 million
of third party costs at the time the Notes were issued. Other
third party costs incurred at the time were deferred and will be
amortized over the respective terms of the Notes. The
premiums paid, previously deferred borrowing costs subject to
write-off and immediately recognized third party expenses are
reflected as a loss on extinguishment of debt in our Condensed
Consolidated Statements of Operations. Below is the gross and
tax affected loss on extinguishment of debt for the applicable
periods:
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of
debt
|
$
0.2
|
|
$
14.6
|
|
$
2.1
|
|
$
15.1
|
|
|
Income tax benefit of loss on
extinguishment of debt
|
(0.1)
|
|
(5.9)
|
|
(0.8)
|
|
(6.0)
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt,
net of taxes
|
$
0.1
|
|
$
8.7
|
|
$
1.3
|
|
$
9.1
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Represents expenses associated
with a major scheduled turnaround for the refinery.
|
|
|
|
|
Three Months
Ended
June 30,
|
Six Months
Ended
June 30,
|
|
|
2011
|
|
2010
|
2011
|
|
2010
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major schedule turnaround
expense
|
|
$1.1
|
|
|
$0.2
|
|
$4.3
|
|
|
$0.2
|
|
|
Income tax benefit of turnaround
expense
|
|
(0.5)
|
|
|
(0.1)
|
|
(1.8)
|
|
|
(0.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Major scheduled turnaround
expense,
net of taxes
|
|
$0.6
|
|
|
$0.1
|
|
$2.5
|
|
|
$0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
During the second quarter of
2011, the Company wrote-off amounts associated with certain
Petroleum fixed assets. During the second quarter of 2010, the
Company wrote-off an amount associated with a capital project.
Below is the gross and tax effected impacts for the applicable
periods:
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposition of
assets
|
$ 1.5
|
|
$ 1.3
|
|
$ 1.5
|
|
$ 1.3
|
|
|
Income tax (benefit) of loss on
disposition of assets
|
(0.6)
|
|
(0.5)
|
|
(0.6)
|
|
(0.5)
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposition of assets,
net of taxes
|
$ 0.9
|
|
$ 0.8
|
|
$ 0.9
|
|
$ 0.8
|
|
|
|
|
|
|
|
|
|
|
(6)
|
Adjusted net income results from
adjusting net income for items that the Company believes are needed
in order to evaluate results in a more comparative analysis from
period to period. For the three and six months ended June 30, 2011
and 2010, these items included, on an after tax basis, the
Company's impact of the accounting for its inventory under FIFO,
share-based compensation, loss on extinguishment of debt, major
scheduled turnaround expenses and loss on disposition of fixed
assets. 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 investors 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.
|
|
|
|
|
|
(7)
|
Direct operating expense is
presented on a per crude oil throughput basis. We utilize the
total direct operating expenses, which does not include
depreciation or amortization expense, and divide by the applicable
number of crude oil throughput barrels for the period to derive the
metric.
|
|
|
|
|
|
(8)
|
Direct operating expense is
presented on a per barrel sold basis. Barrels sold are
derived from the barrels produced and shipped from the refinery.
We utilize the total direct operating expenses, which does
not include depreciation or amortization expense, and divide by the
applicable number of barrels sold for the period to derive the
metric.
|
|
|
|
|
|
(9)
|
In order to derive the gross
profit per crude oil throughput barrel, we utilize the total dollar
figures for gross profit as derived above and divide by the
applicable number of crude oil throughput barrels for the
period.
|
|
|
|
|
|
(10)
|
Refining margin per crude oil
throughput barrel 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
refinery's 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. We believe that refining
margin is important to enable investors 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.
|
|
|
|
|
|
(11)
|
Refining margin per crude oil
throughput barrel 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
impacts. 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
favorable FIFO impacts when crude oil prices increase and
unfavorable FIFO impacts 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 refinery's
performance as a general indication of the amount above our cost of
product sold (taking into account the impact of our utilization of
FIFO) 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.
|
|
|
|
|
|
(12)
|
Adjusted Petroleum and Nitrogen
Fertilizer EBITDA represents operating income adjusted for FIFO
impacts (favorable) unfavorable, share-based compensation, major
scheduled turnaround expenses, realized gain (loss) on derivatives,
net, loss on disposition of fixed assets, depreciation and
amortization and other income (expense). Adjusted EBITDA by
operating segment results from operating income by segment adjusted
for items that we believe are needed in order to evaluate results
in a more comparative analysis from period to period.
Adjusted EBITDA by operating segment is not a recognized term
under GAAP and should not be substituted for operating income as a
measure of performance but should be utilized as a supplemental
measure of performance in evaluating our business. Management
believes that adjusted EBITDA by operating segment provides
relevant and useful information that enables investors to better
understand and evaluate our ongoing operating results and allows
for greater transparency in the reviewing of our overall financial,
operational and economic performance. Below is a
reconciliation of operating income to adjusted EBITDA for the
petroleum and nitrogen fertilizer segments for the three and six
months ended June 30, 2011 and 2010:
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
|
2010
|
|
2011
|
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum:
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum operating income
(loss)
|
$ 183.5
|
|
|
$ 4.6
|
|
$ 289.2
|
|
|
$ (2.4)
|
|
|
FIFO impacts
(favorable), unfavorable
|
4.1
|
|
|
17.5
|
|
(21.3)
|
|
|
5.2
|
|
|
Share-based
compensation
|
0.5
|
|
|
(1.0)
|
|
7.1
|
|
|
1.2
|
|
|
Major scheduled
turnaround expenses
|
1.1
|
|
|
0.2
|
|
4.3
|
|
|
0.2
|
|
|
Realized gain
(loss) on derivatives, net
|
0.5
|
|
|
6.9
|
|
(18.4)
|
|
|
6.9
|
|
|
Loss on disposition
of fixed assets
|
1.5
|
|
|
1.3
|
|
1.5
|
|
|
1.3
|
|
|
Depreciation and
amortization
|
17.0
|
|
|
16.4
|
|
33.9
|
|
|
32.6
|
|
|
Other income
(expense)
|
0.2
|
|
|
0.6
|
|
0.3
|
|
|
0.5
|
|
|
Adjusted Petroleum
EBITDA
|
$ 208.4
|
|
|
$ 46.5
|
|
$ 296.6
|
|
|
$ 45.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
|
2010
|
|
2011
|
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nitrogen
Fertilizer:
|
|
|
|
|
|
|
|
|
|
|
|
Nitrogen Fertilizer operating
income
|
$ 39.3
|
|
|
$ 16.5
|
|
$ 56.1
|
|
|
$ 19.5
|
|
|
Share-based
compensation
|
0.9
|
|
|
(0.5)
|
|
5.5
|
|
|
0.6
|
|
|
Major scheduled
turnaround expenses
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Depreciation and
amortization
|
4.7
|
|
|
4.7
|
|
9.3
|
|
|
9.3
|
|
|
Other income
(expense)
|
0.1
|
|
|
(0.1)
|
|
—
|
|
|
(0.1)
|
|
|
Adjusted Nitrogen Fertilizer
EBITDA
|
$ 45.0
|
|
|
$ 20.6
|
|
$ 70.9
|
|
|
$ 29.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
The gross tons produced for
ammonia represent the total ammonia produced, including ammonia
produced that was upgraded into UAN. The net tons available
for sale represent the ammonia available for sale that was not
upgraded into UAN.
|
|
|
|
|
|
(14)
|
Plant gate sales per ton
represent net sales less freight and hydrogen revenue divided by
product sales volume in tons in the reporting period. Plant gate
pricing per ton is shown in order to provide a pricing measure that
is comparable across the fertilizer industry.
|
|
|
|
|
|
(15)
|
On-stream factor is the total
number of hours operated divided by the total number of hours in
the reporting period.
|
|
|
|
|
|
Use of Non-GAAP Financial Measures
To supplement the actual results in accordance with GAAP for the
applicable periods, the Company also uses non-GAAP measures as
discussed above, which are adjusted for GAAP-based results.
The use of non-GAAP adjustments are not in accordance with or
an alternative for GAAP. 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.
SOURCE CVR Energy, Inc.