• CVR Refining Reports 2018 Second Quarter Results And Announces Cash Distribution of 66 Cents

    Source: Nasdaq GlobeNewswire / 25 Jul 2018 16:30:38   America/New_York

    SUGAR LAND, Texas, July 25, 2018 (GLOBE NEWSWIRE) -- CVR Refining, LP (NYSE:CVRR), a refiner and marketer of petroleum fuels, today announced net income of $118 million on net sales of $1,824 million for the second quarter of 2018, compared to a net loss of $19 million on net sales of $1,338 million for the second quarter of 2017. Adjusted EBITDA, a non-GAAP financial measure, for the 2018 second quarter was $147 million compared to adjusted EBITDA of $43 million for the 2017 second quarter.

    For the first six months of 2018, net income was $265 million on net sales of $3,282 million, compared to net income of $48 million on net sales of $2,762 million for the comparable period a year earlier.  Adjusted EBITDA for the first six months of 2018 was $273 million, compared to adjusted EBITDA of $158 million for the first six months of 2017.

    “CVR Refining reported another period of solid results for the 2018 second quarter,” said Dave Lamp, Chief Executive Officer of CVR Refining's general partner. “The quarter’s success was attributable to a $4.88 increase in Group 3 crack spreads, low Renewable Identification Number (RIN) prices and wide crude oil differentials compared to the same period last year.

    “Looking ahead, CVR Refining is off to a good start in the third quarter,” Lamp said. "While crack spreads have moderated in July, crude oil differentials are strong and RIN prices remain low."

    Consolidated Operations

    Second quarter 2018 combined crude oil throughput was approximately 206,000 barrels per day (bpd). Combined crude oil throughput was approximately 214,000 bpd for the same period in 2017.

    Refining margin adjusted for FIFO impact per combined total throughput, a non-GAAP financial measure, was $12.61 in the 2018 second quarter, compared to $7.21 during the same period in 2017. Direct operating expenses (exclusive of depreciation and amortization), excluding major scheduled turnaround expenses, per combined total throughput, for the 2018 second quarter were $4.76, compared to $4.13 in the second quarter of 2017.

    Distributions

    CVR Refining also announced today a second quarter 2018 distribution of 66 cents per common unit. The distribution, as set by the board of CVR Refining GP, LLC, the general partner of CVR Refining, will be paid on Aug. 13, 2018, to unitholders of record on Aug. 6, 2018. CVR Refining's second quarter cash distribution brings the cumulative cash distributions paid or declared for the first six months of 2018 to $1.17 per common unit.

    CVR Refining is a variable distribution master limited partnership. As a result, its distributions, if any, will vary from quarter to quarter due to several factors, including, but not limited to, its operating performance, fluctuations in the prices paid for crude oil and other feedstocks, as well as the prices received for finished products, RINs’ costs and cash reserves deemed necessary or appropriate by the board of directors of its general partner.

    Second Quarter 2018 Earnings Conference Call

    CVR Refining previously announced that it will host its second quarter 2018 Earnings Conference Call for analysts and investors on Thursday, July 26, at 1 p.m. Eastern. The Earnings Conference Call may also include discussion of the partnership’s developments, forward-looking information and other material information about business and financial matters.

    The Earnings Conference Call will be broadcast live over the Internet at
    https://edge.media-server.com/m6/p/w32e2qev. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8289.

    For those unable to listen live, the webcast will be archived and available for 14 days at
    https://edge.media-server.com/m6/p/w32e2qev. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13681418.

    Qualified Notice
    This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of CVR Refining’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, CVR Refining’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.

    Forward-Looking Statements
    This news release contains forward-looking statements. 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: crude oil differentials; RINs, crude oil, feedstock and product prices; distributions; operating performance; reserves; third quarter performance including throughput, production, direct operating expenses, capital spending and depreciation; and other matters. You can generally identify forward-looking statements by our use of forward-looking terminology such as “outlook,” “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. 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; our ability to make cash distributions; potential operating hazards; costs of compliance with existing, or compliance with new, laws and regulations and potential liabilities arising therefrom; 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 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 Refining disclaims any intention or obligation to update publicly or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

    About CVR Refining, LP
    Headquartered in Sugar Land, Texas, CVR Refining, LP is an independent downstream energy limited partnership that owns refining and related logistics assets in the Midcontinent United States. CVR Refining’s subsidiaries operate a complex full coking medium-sour crude oil refinery with a capacity of 132,000 barrels per calendar day (bpcd) in Coffeyville, Kansas, and a complex crude oil refinery with a capacity of 74,500 bpcd in Wynnewood, Oklahoma. CVR Refining’s subsidiaries also operate and invest in supporting logistics assets, including approximately 570 miles of owned, leased and joint venture pipelines, approximately 130 crude oil transports, a network of strategically located crude oil gathering tank farms, and approximately 6.4 million barrels of owned and leased crude oil storage capacity.

    For further information, please contact:

    Investor Contact:
    Jay Finks
    CVR Refining, LP
    (281) 207-3588
    IR@CVRRefining.com

    Media Relations:
    Brandee Stephens
    CVR Refining, LP
    (281) 207-3516
    MediaRelations@CVRRefining.com


    CVR Refining, LP

    Financial and Operational Data (all information in this release is unaudited other than the balance sheet data as of December 31, 2017).

        
     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
     (in millions, except per unit data)
    Statement of Operations Data:       
    Net sales$1,824  $1,338  $3,282  $2,762 
    Operating costs and expenses:       
    Cost of materials and other1,553  1,208  2,771  2,409 
    Direct operating expenses(1)(2)94  86  187  188 
    Depreciation and amortization32  31  65  65 
    Cost of sales1,679  1,325  3,023  2,662 
    Selling, general and administrative expenses(1)22  19  38  40 
    Depreciation and amortization1  1  2  1 
    Loss on asset disposals5    5   
    Operating income (loss)117  (7) 214  59 
    Interest expense, net(11) (12) (22) (23)
    Gain on derivatives, net10    70  12 
    Other income, net2    3   
    Net income (loss)$118  $(19) $265  $48 
            
    Net income (loss) per common unit - basic and diluted$0.80  $(0.13) $1.80  $0.32 
            
    Adjusted EBITDA*$147  $43  $273  $158 
    Available cash for distribution*$97  $  $173  $ 
            
    Weighted average, number of common units outstanding:       
      Basic and diluted147.6  147.6  147.6  147.6 
                

    ______________________________
          * See “Use of Non-GAAP Financial Measures” below.

    (1)  Direct operating expenses and selling, general and administrative expenses for the three and six months ended June 30, 2018 and 2017 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses and selling, general and administrative expenses.

    (2)  Direct operating expenses includes $0 million and $0 million of major turnaround expenses during the three and six months ended June 30, 2018, respectively. Direct operating expenses includes $3 million and $16 million of major turnaround expenses during the three and six months ended June 30, 2017, respectively.

     
     As of June 30, 2018 As of December 31, 2017
       (audited)
     (in millions)
    Balance Sheet Data:   
    Cash and cash equivalents$258  $174 
    Working capital391  218 
    Total assets2,366  2,270 
    Total debt, including current portion540  541 
    Total partners’ capital1,370  1,247 
          


     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
     (in millions)
    Cash Flow Data:       
    Net cash flow provided by (used in):       
    Operating activities$242  $135  $258  $252 
    Investing activities(15) (28) (31) (49)
    Financing activities(76) (1) (143) (1)
    Net increase in cash and cash equivalents$151  $106  $84  $202 
            
    Capital expenditures for property, plant and equipment:       
    Maintenance capital expenditures$11  $25  $23  $43 
    Growth capital expenditures5  2  9  5 
    Total capital expenditures$16  $27  $32  $48 
                    

    Operating Data

    The following tables set forth information about our consolidated operations and our Coffeyville and Wynnewood refineries. Reconciliations of certain non-GAAP financial measures are provided under “Use of Non-GAAP Financial Measures” below.

        
     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
    Key Operating Statistics (dollars per barrel):       
    Per total throughput barrel:       
    Gross profit$7.29  $0.60  $7.05  $2.43 
    Refining margin*13.71  6.45  13.93  8.64 
    FIFO impact, (favorable) unfavorable(1.10) 0.76  (1.15) 0.39 
    Refining margin adjusted for FIFO impact*12.61  7.21  12.78  9.03 
    Direct operating expenses and major turnaround expenses4.76  4.27  5.10  4.62 
    Direct operating expenses excluding major turnaround expenses4.76  4.13  5.10  4.23 
                

    ______________________________
          * See “Use of Non-GAAP Financial Measures” below.

        
     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
    Market Indicators (dollars per barrel):       
    West Texas Intermediate (WTI) NYMEX$67.91  $48.15  $65.46  $49.95 
    Crude Oil Differentials:       
    WTI less WTS (light/medium sour)8.50  1.06  5.05  1.24 
    WTI less WCS (heavy sour)18.02  10.00  21.81  11.88 
    WTI less Condensate0.46  0.15  0.42  0.12 
    Midland Cushing Differential8.12  0.83  4.34  0.41 
    NYMEX Crack Spreads:       
    Gasoline20.63  18.07  18.06  16.39 
    Heating Oil22.22  15.11  21.36  15.32 
    NYMEX 2-1-1 Crack Spread21.43  16.59  19.71  15.85 
    PADD II Group 3 Basis:       
    Gasoline(4.44) (3.95) (3.19) (2.96)
    Ultra Low Sulfur Diesel(0.05) (0.62) (0.33) (1.10)
    PADD II Group 3 Product Crack Spread:       
    Gasoline16.19  14.12  14.87  13.42 
    Ultra Low Sulfur Diesel22.17  14.49  21.03  14.23 
    PADD II Group 3 2-1-119.18  14.30  17.95  13.82 
                


        
     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
       %   %   %   %
    Refining Throughput and Production Data (bpd):               
    Throughput:               
    Condensate9,127  4.2  1,258  0.6  15,560  7.7  4,363  1.9 
    Sweet190,595  88.0  200,812  90.4  172,969  85.4  195,610  86.9 
    Heavy sour6,249  2.9  11,771  5.3  3,385  1.7  14,130  6.3 
    Total crude oil throughput205,971  95.1  213,841  96.3  191,914  94.8  214,103  95.1 
    All other feedstocks and blendstocks10,694  4.9  8,113  3.7  10,681  5.2  11,161  4.9 
    Total throughput216,665  100.0  221,954  100.0  202,595  100.0  225,264  100.0 
    Production:               
    Gasoline106,431  49.1  112,284  50.4  99,279  49.0  115,600  51.2 
    Distillate94,784  43.7  96,578  43.4  86,870  42.9  93,260  41.3 
    Other (excluding internally produced fuel)15,609  7.2  13,775  6.2  16,495  8.1  17,019  7.5 
    Total refining production (excluding internally produced fuel)216,824  100.0  222,637  100.0  202,644  100.0  225,879  100.0 
                            


     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
       %   %   %   %
    Coffeyville Refinery Throughput and Production Data (bpd):               
    Throughput:               
    Condensate1,547  1.1  1,258  0.9  9,586  8.0  4,363  3.1 
    Sweet120,975  89.3  120,790  86.4  100,863  84.2  113,804  80.9 
    Heavy sour6,249  4.6  11,771  8.4  3,385  2.8  14,130  10.0 
    Total crude oil throughput128,771  95.0  133,819  95.7  113,834  95.0  132,297  94.0 
    All other feedstocks and blendstocks6,671  5.0  6,077  4.3  6,022  5.0  8,482  6.0 
    Total throughput135,442  100.0  139,896  100.0  119,856  100.0  140,779  100.0 
    Production:               
    Gasoline66,577  48.6  70,032  49.3  57,565  47.5  72,271  50.5 
    Distillate59,797  43.7  59,703  42.1  52,064  42.9  59,573  41.6 
    Other (excluding internally produced fuel)10,500  7.7  12,146  8.6  11,657  9.6  11,246  7.9 
    Total refining production (excluding internally produced fuel)136,874  100.0  141,881  100.0  121,286  100.0  143,090  100.0 
                            


        
     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
       %   %   %   %
    Wynnewood Refinery Throughput and Production Data (bpd):               
    Throughput:               
    Condensate7,580  9.3      5,974  7.2     
    Sweet69,620  85.7  80,022  97.5  72,106  87.1  81,806  96.8 
    Total crude oil throughput77,200  95.0  80,022  97.5  78,080  94.3  81,806  96.8 
    All other feedstocks and blendstocks4,023  5.0  2,036  2.5  4,659  5.7  2,679  3.2 
    Total throughput81,223  100.0  82,058  100.0  82,739  100.0  84,485  100.0 
    Production:               
    Gasoline39,854  49.8  42,252  52.3  41,714  51.3  43,329  52.3 
    Distillate34,987  43.8  36,875  45.7  34,806  42.8  33,687  40.7 
    Other (excluding internally produced fuel)5,109  6.4  1,629  2.0  4,838  5.9  5,773  7.0 
    Total refining production (excluding internally produced fuel)79,950  100.0  80,756  100.0  81,358  100.0  82,789  100.0 
                            

    Use of Non-GAAP Financial Measures

    To supplement our actual results in accordance with accounting principles generally accepted in the United States of America ("GAAP") for the applicable periods, CVR Refining, LP (the "Partnership") also uses the non-GAAP financial and operational measures noted above, which are reconciled to our GAAP-based results below. These non-GAAP financial and operational measures should not be considered an alternative for GAAP results. The adjustments are provided to enhance an overall understanding of the Partnership’s financial performance for the applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods.

    Performance and Liquidity Measures

    EBITDA is a performance measure representing net income (loss) before (i) interest expense and other financing costs, net of interest income, (ii) income tax expense and (iii) depreciation and amortization.

    Adjusted EBITDA. Adjusted EBITDA is a performance measure representing EBITDA adjusted for (i) (favorable) unfavorable FIFO impacts associated with our crude oil and refined product inventories, (ii) major turnaround expenses (that many of our competitors capitalize and thereby exclude from their measures of EBITDA and adjusted EBITDA), (iii) (gain) loss on derivatives, net and (iv) current period settlements on derivative contracts. Adjusted EBITDA represents the starting point for determining available cash for distribution. Refer to discussion below for the Refining margin, adjusted for FIFO impact non-GAAP measure for discussion of why management adjusted for the FIFO impact of our inventories. We exclude major turnaround expenses because these amounts are required expenditures for our refineries, are not closely related to current period operations and many of our peer companies capitalize these amounts thereby excluding these amounts from their EBITDA-related measures. For derivatives, we adjust EBITDA to exclude the unrealized or non-cash portion of our derivative gain or loss from our results in order to arrive at our starting point for available cash for distribution.

    Refining margin. This performance measure represents the difference between net sales and cost of materials and other as reported on our Condensed Consolidated Statement of Operations.

    Refining margin, adjusted for FIFO impact. This performance measure represents our refining margin adjusted to exclude the impact of price changes in our crude oil and refined products inventories. Under our FIFO accounting method for crude oil and refined products, changes in crude oil prices can cause fluctuations in the inventory valuation of our raw material, work in process and finished good inventories, thereby resulting in a favorable FIFO impact when crude oil prices increase and an unfavorable FIFO impact when crude oil prices decrease. In periods of significant price volatility, these price changes have a significant impact on the valuation on our inventories and thus our results.

    Available cash for distribution. This performance and liquidity measure is equal to Adjusted EBITDA reduced for cash needed for (i) debt service, (ii) reserves for environmental and maintenance capital expenditures, (iii) reserves for major turnaround expenses and, to the extent applicable, (iv) reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate, if any. Available cash for distribution may be increased by the release of previously established cash reserves, if any, and other excess cash, at the discretion of the board of directors of our general partner.

    Operating Metrics

    During the second quarter of 2018, we changed the metrics discussed below from a crude oil throughput barrel basis to a total throughput barrel basis. Prior period information has been revised to conform to current presentation.

    Refining margin and refining margin adjusted for FIFO impact per total throughput barrel. For both refining margin and refining margin adjusted for FIFO impact, we present these measures on a per total throughput barrel basis. In order to calculate these non-GAAP operating metrics, we utilize the total dollar figures for refining margin and refining margin adjusted for FIFO impact, as derived above and divide by the applicable number of total throughput barrels for the period.

    Direct operating expenses, excluding major turnaround expenses, per total throughput barrel. We provide this performance measure to exclude major turnaround expenses from the reported amounts of direct operating expense during a given period. Major turnaround expenses are not directly correlated to our current period operations and thus excluding them provides investors and analysts with the current period cost, exclusive of depreciation and amortization, we incur to convert a barrel of crude oil into refined product.

    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.

    A reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA for the three and six months ended June 30, 2018 and 2017 is as follows:

        
     Three Months Ended
     June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
     (in millions)
    Net income (loss)$118  $(19) $265  $48 
    Add:       
    Interest expense, net11  12  22  23 
    Depreciation and amortization33  32  67  66 
    EBITDA162  25  354  137 
    Add:       
    FIFO impact, (favorable) unfavorable(22) 15  (42) 16 
    Major turnaround expenses  3    16 
    Gain on derivatives, net(10)   (70) (12)
    Current period settlements on derivative contracts(1)17    31  1 
    Adjusted EBITDA$147  $43  $273  $158 
                    

       _________________________

    (1)  Represents the portion of (gain) loss on derivatives, net related to contracts that matured during the respective periods and settled with counterparties. There are no premiums paid or received at inception of the derivative contracts and upon settlement, there is no cost recovery associated with these contracts.

    A reconciliation of Adjusted EBITDA to Available cash for distribution is as follows:

        
     Three Months Ended
     June 30, 2018
     Six Months Ended
     June 30, 2018
     (in millions, except per unit data)
    Adjusted EBITDA$147  $273 
    Adjustments:   
    Less:   
    Cash needs for debt service(10) (20)
    Reserves for environmental and maintenance capital expenditures(25) (50)
    Reserves for major turnaround expenses(15) (30)
    Available cash for distribution$97  $173 
        
    Distribution declared, per common unit$0.66  $1.17 
    Common units outstanding147.6  147.6 
          

    The calculation of refining margin, refining margin adjusted for FIFO impact, refining margin per total throughput barrel, refining margin adjusted for FIFO impact per total throughput barrel and direct operating expenses (exclusive of depreciation and amortization and major turnaround expenses) per total throughput barrel (each a non-GAAP financial measure), including a reconciliation to the most directly comparable GAAP financial measure for the three and six months ended June 30, 2018 and 2017 is as follows:

            
    Consolidated Operating Data       
     Three Months
    Ended June 30,
     Six Months
    Ended June 30,
     2018 2017 2018 2017
     (in millions)
    Net sales$1,824  $1,338  $3,282  $2,762 
    Cost of materials and other1,553  1,208  2,771  2,409 
    Direct operating expenses (exclusive of depreciation and amortization as reflected below)94  86  187  188 
    Depreciation and amortization32  31  65  65 
    Gross profit145  13  259  100 
    Add:       
    Direct operating expenses (exclusive of depreciation and amortization as reflected below)94  86  187  188 
    Depreciation and amortization32  31  65  65 
    Refining margin271  130  511  353 
    FIFO impact, (favorable) unfavorable(22) 15  (42) 16 
    Refining margin adjusted for FIFO impact$249  $145  $469  $369 
                    


        
     Three Months
    Ended June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
    Total throughput barrels per day216,665  221,954  202,595  225,264 
    Days in the period91  91  181  181 
    Total throughput barrels19,716,515  20,197,814  36,669,695  40,772,784 
                


        
     Three Months
    Ended June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
     (in millions, except for $ per barrel data)
    Refining margin$271  $130  $511  $353 
    Divided by: total throughput barrels20  20  37  41 
    Refining margin per total throughput barrel$13.71  $6.45  $13.93  $8.64 
                    


        
     Three Months
    Ended June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
     (in millions, except for $ per barrel data)
    Refining margin adjusted for FIFO impact$249  $145  $469  $369 
    Divided by: total throughput barrels20  20  37  41 
    Refining margin adjusted for FIFO impact per total throughput barrel$12.61  $7.21  $12.78  $9.03 
                    


        
     Three Months
    Ended June 30,
     Six Months Ended
     June 30,
     2018 2017 2018 2017
     (in millions, except for $ per barrel data)
    Direct operating expenses (exclusive of depreciation and amortization)$94  $86  $187  $188 
    Major turnaround expenses  3    16 
    Direct operating expenses(1)$94  $83  $187  $172 
    Divided by: total throughput barrels20  20  37  41 
    Direct operating expenses, excluding major turnaround expenses, per total throughput barrel$4.76  $4.18  $5.10  $4.23 
                    

    Q3 2018 Outlook. The table below summarizes our outlook for certain refining statistics and financial information for the third quarter of 2018. See “forward looking statements.”

      
     Q3 2018
     Low High
    Refinery Statistics:   
    Total throughput (bpd)200,000  210,000 
    Total refining production (bpd)210,000  220,000 
        
    Direct operating expenses(1) (in millions)$85  $95 
        
    Total capital spending (in millions)$20  $30 
            

    _________________________
    (1) Direct operating expenses are shown exclusive of depreciation and amortization and major turnaround expenses.

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