CVR Energy Inc (CVI) 2016 Q1 法說會逐字稿

Greetings and welcome to the CVR Energy first quarter 2016 earnings conference call.

At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (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. Please go ahead, Jay.

Thank you, Kevin and good afternoon, everyone.

We very much appreciate you joining us this afternoon for CVR Energy's first quarter 2016 earnings call. With me are Jack Lipinski, our Chief Executive Officer; and Susan Ball, our Chief Financial Officer.

Prior to discussing our 2016 first 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 reconciliation to the most directly comparable GAAP financial measures are included in our 2016 first quarter earnings release that we filed with the SEC this morning, prior to the opening of the market.

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

Thanks, Jay. Good afternoon, everyone and thanks for joining our call.

Hopefully, you had the opportunity to listen to the CVR Partners and CVR Refining earnings calls earlier today. This morning, we reported CVR Energy's first quarter consolidated adjusted net income of $8.4 million or $0.10 per diluted share. And that compares to $84.9 million or $0.98 per diluted share in the first quarter of 2015. Susan will provide you more details on the financials reported this morning. We also announced today a quarterly cash distribution of $0.50 per share, which will be paid on May 16 to stockholders of record on May 9. Let me speak a little to our individual business units.

CVR Refining's first quarter adjusted EBTDA was $35.1 million, which compared to $161.7 million a year ago. CVR Refining's total crude throughput for the first quarter was approximately 184,000 barrels a day. Coffeyville processed 106,000 barrels a day, while Wynnewood ran at about 78,000 barrels a day. Impacting CVR Refining results for the first quarter were lower realized refining margins and the completion of the second phase of Coffeyville's bifurcated major scheduled turnaround. As a result of these factors, CVR Refining did not declare a first quarter distribution.

In our fertilizer segment, CVR Partners announced first quarter adjusted EBTDA of $27.9 million which compares to $38.4 million in the first quarter of 2015. CVR Partners also declared a 2016 first quarter cash distribution of $0.27 per common unit. I would note that the $0.27 distribution includes approximately $0.06 per unit to reflect Rentech Nitrogen Partners' available cash for distribution for the first quarter. The $0.27 distribution also includes a larger number of units, [113.3 million], as a result of the acquisition that closed on April 1. CVR Energy owns approximately 34% of the common units of CVR Partners and therefore will result proportional amount of the distribution.

Now, I'll turn the call over to Susan to discuss the financials. Susan?

Thank you, Jack. Good afternoon, everyone.

Net loss attributable to CVR Energy's stockholders was $16.2 million in the first quarter 2016 as compared to net income of $54.9 million in the first quarter of last year. Adjusted net income for the 2016 first quarter was $8.4 million or $0.10 per diluted share as compared to $84.9 million or $0.98 per diluted share in the first quarter of 2015. This decrease was primarily the result of lower realized refining margins and turnaround activities during the 2016 first quarter in our petroleum segment. We believe adjusted net loss or income is a meaningful metric for analyzing our performance as it eliminates the impact of non-cash and other unusual items inherent in our business and provides a more transparent view as to market expectations.

The adjustments to net loss during the 2016 first quarter to derive adjusted net loss were major scheduled turnaround expenses of $29.4 million, loss on derivatives not settled during the period of $22.6 million, unfavorable impacts as a result of our accounting under first-in first-out or FIFO inventory accounting method of $8.8 million, and expenses associated with the Rentech Nitrogen Partners acquisition of $1.2 million. The adjustments for the 2015 first quarter were losses on derivatives not settled during the period of $45.1 million and unfavorable FIFO impact of $24.5 million and share-based compensation of $4 million. These gross adjustments to net loss or net income are reduced for the portion that's attributable to the non-controlling interest and are then further reduced for the [net packed] impact associated with the adjustments.

The first quarter of 2016 effective tax rate was a benefit of approximately 41% as compared to 22% in the first quarter of 2015. The effective tax rate for the first quarter of 2016 is higher than the first quarter of 2015 due to the correlation between the amount credits projected to be generated in each year and in relative comparison with a projected pre-tax loss in the first quarter of 2016 -- pre-tax income in the first quarter of 2015.

I will now turn to speak to the specific performance of our two business segments.

As Jack mentioned earlier, CVR Refining's adjusted EBITDA for the 2016 first quarter was $35.1 million as compared to $161.7 million in the same period in 2015. Decrease in adjusted EBITDA over the period was primarily driven by the lower realized refining margins and the turnaround activities at Coffeyville during the 2016 first quarter. In the first quarter 2016, CVR Refining's realized refining margin adjusted for FIFO was $7.19 per barrel as compared to $15.03 in the same quarter of 2015. The NYMEX 2-1-1 crack spread averaged $13.88 per barrel in the first quarter of 2016 as compared to $22.80 per barrel in the same period of 2015. The PADD II Group 3 2-1-1 crack spread averaged $10.43 per barrel in the first quarter of 2016 as compared to $18.79 in the first quarter of 2015.

Now, turning to our fertilizer segment. As mentioned earlier, CVR Partners' first quarter adjusted EBITDA was $27.9 million as compared to $38.4 million in the same period last year. The decrease in adjusted EBITDA over the periods was primarily driven by lower pricing for UAN and ammonia and lower sales volume of UAN. Partially offsetting the overall decrease for the period were higher ammonia sales volume and lower pet coke expenses. The partnership announced a 2016 first quarter cash distribution of $0.27 per common unit with approximately $20 million to be paid to the public unit holders and approximately $11 million to be paid to CVR Energy.

Our financial position remained strong as we ended the quarter with cash and cash equivalents of approximately $682 million on a consolidated basis. This included $52 million held at CVR Partners and $145.9 million at CVR Refining. As such, CVR Energy held cash of approximately $484 million as of March 31, 2016. CVR Energy has no debt, exclusive of the debt that resides at CVR Refining and CVR Partners. Total consolidated debt as of March 31 was approximately $673 million.

With that, Jack, I will turn the call back to you.

Thank you, Susan.

We're very pleased to have completed the acquisition of Rentech Nitrogen Partners which we have renamed East Dubuque Nitrogen Partners. This acquisition expands CVR Partners' footprint into new geographic markets broadening customer relationship and has diversified our feedstock. And I'd like to take the opportunity to welcome the 150 employees at East Dubuque to the CVR Energy family.

At this point, I'd like to thank you for joining us, and I'll turn the call over for questions. Operator?

Thank you. We'll now be conducting a question-and-answer session.

(Operator Instructions)

We've reached the end of our question-and-answer session. I turn the floor back over to management for any further closing comments, Jay.

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, cvrenergy.com or contact Investor Relations for additional information. Thank you.

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