CVR Energy Inc (CVI) 2014 Q4 法說會逐字稿

Greetings and welcome to the CVR Energy fourth-quarter 2014 conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Finks, Vice President of Finance for CVR Energy. Thank you, sir. You may begin.

Thank you, Kevin. Good afternoon. We very much appreciate you joining us this afternoon for our CVR Energy fourth-quarter 2014 earnings call. With me are Jack Lipinski, our Chief Executive Officer; and Susan Ball, our Chief Financial Officer. Prior to discussing our 2014 fourth-quarter results, let me remind you that this conference call may contain forward-looking statements, as that term is defined under Federal Securities laws.

For this purpose, any statements made during this call, that are not statements of historical facts, may be deemed to be forward-looking statements. Without limiting the foregoing, the words -- outlook, believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except to the extent required by law. This call also includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliations to the most directly comparable GAAP financial measures, are included in the 2014 fourth quarter earnings release that we filed with the SEC this morning, prior to the open of the market.

With that said, I'll turn the call over to Jack Lipinski, our Chief Executive Officer. Jack?

Thank you, Jay. Good afternoon, everyone, and thanks for joining our earnings call. Hopefully had the opportunity to listen to the CVR Partners and CVR Refining fourth-quarter earnings calls earlier today. Today, we reported CVR Energy's fourth quarter consolidated adjusted net income of $24.4 million or $0.28 per diluted share and that compares to $61.7 million or $0.71 per diluted share in the fourth quarter of 2013.

Our fourth quarter results were primarily impacted by FIFO inventory losses, increased rents expenses, and an unplanned outage on the FCC at the Wynnewood Refinery. We also announced today a quarterly cash dividend of $0.50 per share, which will be paid on March 9 to shareholders -- or sorry, stockholders of record on March 2. This brings our 2014 cumulative cash dividends paid or declared to $4.75 a share. I'll speak a little bit about our business segments and I'll start with petroleum.

This morning, CVR Refining released their fourth quarter results. The 2014 fourth quarter adjusted EBITDA was $104.6 million as compared to $117.5 million a year ago. CVR Refining also declared a fourth quarter distribution of $0.37 per accounting unit. CVR Energy owns approximately 66% of common units of CVR Refining and therefore, receives a proportional amount of distributions from CVR Refining.

CVR Refining's total crude throughputs for the fourth quarter of 2014 was approximately 196,200 barrels a day. Coffeyville processed approximately 126,900 barrels a day, while Wynnewood processed about 69,300 barrels a day. On the fertilizer business, this morning, CVR Partners announced a 2014 fourth-quarter adjusted EBITDA of $33.5 million as compared to $36.6 million of the fourth quarter of 2013.

CVR Partners declared a 2014 fourth quarter cash distribution of $0.41 per common unit. As CVR Energy owns approximately 53% of the common units of CVR Partners, we'll receive a proportional amount of CVR Partners distribution. I'll turn the call over to Susan, who will provide you more details on the financials we reported this morning. Susan?

Thank you, Jack. Good afternoon, everyone. Net loss attributable to CVR Energy stockholders was $44.4 million in the fourth quarter of 2014 as compared to $21.7 million in the fourth quarter of last year. The net loss attributable to the non-controlling interest was $25.3 million for the fourth quarter 2014 as compared to $18.9 million in the same period a year ago.

Adjusted net income for the 2014 fourth quarter was $24.4 million as compared to $61.7 million in the fourth quarter of 2013. We believe adjusted net income is a meaningful measure for analyzing our performance, as it does eliminate the impact of non-cash and other unusual items inherent in our business and it provides a more transparent view as to market expectations. The more significant adjustments to net income during the 2014 fourth quarter to derive our adjusted net income were adjustments related to the increase or decrease in our inventory values that are realized under the first in/first out, FIFO inventory accounting method. We realized an unfavorable FIFO inventory impact of $154.6 million and a loss on derivatives not settled during the period of $14.5 million, both in the fourth quarter of 2014.

The adjustments for the fourth-quarter 2013 were an unfavorable FIFO impact of $62 million and a loss on derivatives not settled during the period of $126.2 million. These growth adjustments to net income are reduced for the portion that's attributable to the non-controlling interest and are further reduced for the net tax impact associated with them. The fourth quarter of 2014 effective tax rate was approximately 23%, with the full year 2014 effective tax rate of approximately 24%. Our overall effective tax rate is lower than the expected statutory tax rate, primarily due to the reduction of income that's subject to tax as associated with the non-controlling ownership interest of CVR Refining and CVR Partners.

I will now turn to the specific performance of our two business segments impacting our overall quarterly results. CVR Refining's adjusted EBITDA for the 2014 fourth quarter was $104.6 million as compared to $117.5 million in the same period in 2013. In the fourth quarter, CVR Refining's realized refining margin adjusted for FIFO was $11.28 per barrel as compared to $11.48 in the same period of 2013. As discussed earlier, CVR Refining announced a 2014 fourth quarter distribution of $0.37 per common unit with $18.6 million to be paid to the public unit holders and $36 million to be paid to CVR Energy.

As mentioned earlier, CVR Partners, our fertilizer segment, fourth quarter adjusted EBITDA was $33.5 million as compared to $36.6 million in the same period last year. The partnership announced a cash distribution of $0.41 per common unit for the fourth quarter of 2014. Of the $30 million to be paid, $14 million will be paid to the public unit holders and CVR Energy will receive $16 million.

CVR Energy ended the cash and cash equivalents of approximately $753.7 million on a consolidated basis, which includes $79.9 million held at CVR Partners and $370.2 million held at CVR Refining. As such, CVR Energy held cash of approximately $303.6 million as of December 31, 2014. As of February 17, consolidated cash and cash equivalents was approximately $886.4 million, which included $101.3 million at CVR Partners and $485 million of cash at CVR Refining. Excluding the cash at both our underlying entities, we held cash of just over $300 million.

Total consolidated debt, including current portions as of December 31, was approximately $674.9 million. CVR Energy has no debt exclusive of the debt that resides at CVR Refining and CVR Partners. We have a strong balance sheet, consolidated balance sheet and both our business segments are positioned very well for continued growth. With that, Jack, I will turn the call back to you.

Okay. Thank you, Susan. Again, hopefully, everyone had an opportunity to listen to our earnings calls earlier today where we went through our operations and our business in a lot more detail. Operator, at this time, I'd like to turn it over for questions.

(Operator Instructions)

We've reached the end of our question and answer session. I'd like to turn the call back to Management for any further or closing comments.

Thank you, Kevin. I'd like to thank everyone for listening to our conference call today. As a reminder, our conference call, along with CVR Refining and CVR Partners, will be available for replay over the next 14 days. Please visit our website or contact us for additional information. Thank you.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.