“CVR Energy’s second quarter 2020 results were negatively impacted by narrow crack spreads and tight crude oil differentials that resulted from COVID-19 demand destruction and global crude oil price wars,” said
“Highlights of the second quarter 2020 for
“Looking ahead, we will remain focused on maximizing cash flow by maintaining safe and reliable operations while judiciously managing our costs and capital spending across our businesses,” Lamp concluded.
Petroleum
The Petroleum Segment reported second quarter 2020 operating income of
Refining margin per total throughput barrel was
Second quarter 2020 combined total throughput was approximately 156,000 barrels per day (bpd), compared to approximately 216,000 bpd of combined total throughput for the second quarter of 2019. This decrease was primarily attributable to the turnaround at our
Fertilizer
The Nitrogen Fertilizer Segment reported an operating loss of
Second quarter 2020 average realized gate prices for urea ammonia nitrate (UAN) decreased over the prior year, down 24 percent to
CVR Partners’ fertilizer facilities produced a combined 216,000 tons of ammonia during the second quarter of 2020, of which 79,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 321,000 tons of UAN. During the second quarter 2019, the fertilizer facilities produced 211,000 tons of ammonia, of which 71,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 316,000 tons of UAN.
Corporate
The Company reported an income tax benefit of
Cash, Debt and Dividend
Consolidated cash and cash equivalents was
In
Second Quarter 2020 Earnings Conference Call
The second quarter 2020 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/poe2cn3o. A repeat of the call also can be accessed for 14 days by dialing (877) 660-6853, conference ID 13706820.
Forward-Looking Statements
This 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: impacts of COVID-19 including the duration thereof; gasoline demand, including recovery thereof in the Midcontinent; cash flow; safe and reliable operations; costs including management thereof; capital spending; derivatives activities and gains or losses associated therewith; income taxes including benefit or expense relating thereto, pretax income or loss and tax rates; value of securities, including marketability, income from and performance thereof; expectations for market conditions in the fertilizer industry; dividends and distributions including the timing, payment and amount (if any) thereof; impacts of global crude oil pricing; repurchases (if any) of
About
Headquartered in
For further information, please contact:
Investor Relations:
(281) 207-3205
InvestorRelations@CVREnergy.com
Media Relations:
(281) 207-3516
MediaRelations@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
The following are non-GAAP measures presented for the period ended
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.
Petroleum EBITDA and Refining Margin, adjusted for Inventory Valuation Impacts - Petroleum EBITDA and Refining Margin adjusted to exclude the impact of current period market price and volume fluctuations on crude oil and refined product inventories purchased in prior periods and lower of cost or net realizable value adjustments, if applicable. 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.
Refining Margin and Refining Margin adjusted for Inventory Valuation Impacts, per Throughput Barrel - Refining Margin divided by the total throughput barrels during 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.
Adjusted (Loss) Earnings per Share - (Loss) Earnings per share adjusted for inventory valuation impacts and other significant non-cash items on an after-tax basis.
Net Debt and Finance Lease Obligations Exclusive of Nitrogen Fertilizer - Net debt is total debt and finance lease obligations reduced for cash and cash equivalents.
Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer - Total debt and net debt and finance lease obligations is calculated as the consolidated debt and net debt and finance lease obligations less the Nitrogen Fertilizer Segment debt and net debt and finance lease obligations as of the most recent period ended divided by EBITDA exclusive of the Nitrogen Fertilizer Segment for the most recent twelve-month period.
Free Cash Flow - Net cash provided by (used in) operating activities less capital expenditures and capitalized turnaround expenditures.
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
Items or Events Impacting Comparability
Our results over the past two years have been affects by the following events, the understanding of which will aid in assessing the comparability of our period to period financial performance and financial condition.
Petroleum Segment
Nitrogen Fertilizer Segment
Goodwill Impairment
As of
(all information in this release is unaudited)
Financial and Operational Data
Three Months Ended | Six Months Ended | ||||||||||||||||||
(in millions, except share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Consolidated Statement of Operations Data | |||||||||||||||||||
Net sales | $ | 675 | $ | 1,687 | $ | 1,806 | $ | 3,173 | |||||||||||
Operating costs and expenses: | |||||||||||||||||||
Cost of materials and other | 444 | 1,267 | 1,501 | 2,368 | |||||||||||||||
Direct operating expenses (exclusive of depreciation and amortization as reflected below) | 119 | 132 | 237 | 258 | |||||||||||||||
Depreciation and amortization | 71 | 76 | 134 | 141 | |||||||||||||||
Cost of sales | 634 | 1,475 | 1,872 | 2,767 | |||||||||||||||
Selling, general and administrative expenses (exclusive of depreciation and amortization as reflected below) | 22 | 27 | 47 | 57 | |||||||||||||||
Depreciation and amortization | 3 | 2 | 4 | 4 | |||||||||||||||
Loss (gain) on asset disposals | 1 | (9 | ) | 2 | (7 | ) | |||||||||||||
41 | — | 41 | — | ||||||||||||||||
Operating (loss) income | (26 | ) | 192 | (160 | ) | 352 | |||||||||||||
Other (expense) income: | |||||||||||||||||||
Interest expense, net | (31 | ) | (26 | ) | (67 | ) | (52 | ) | |||||||||||
Investment income from marketable securities | 21 | — | 52 | — | |||||||||||||||
Other (expense) income, net | (1 | ) | 3 | — | 6 | ||||||||||||||
(Loss) income before income tax expense | (37 | ) | 169 | (175 | ) | 306 | |||||||||||||
Income tax (benefit) expense | (5 | ) | 41 | (42 | ) | 76 | |||||||||||||
Net (loss) income | (32 | ) | 128 | (133 | ) | 230 | |||||||||||||
Less: Net (loss) income attributable to noncontrolling interest | (27 | ) | 12 | (41 | ) | 13 | |||||||||||||
Net (loss) income attributable to | $ | (5 | ) | $ | 116 | $ | (92 | ) | $ | 217 | |||||||||
Basic and diluted (loss) earnings per share | $ | (0.05 | ) | $ | 1.16 | $ | (0.92 | ) | $ | 2.16 | |||||||||
Dividends declared per share | $ | 0.40 | $ | 0.75 | $ | 1.20 | $ | 1.50 | |||||||||||
EBITDA* | $ | 68 | $ | 273 | $ | 30 | $ | 503 | |||||||||||
Weighted-average common shares outstanding - basic and diluted | 100.5 | 100.5 | 100.5 | 100.5 |
∗ | See “Non-GAAP Reconciliations” section below. |
Selected Balance Sheet Data
(in millions) | |||||||
Cash and cash equivalents | $ | 606 | $ | 652 | |||
Working capital | 890 | 678 | |||||
Total assets | 3,928 | 3,905 | |||||
Total debt and finance lease obligations, including current portion | 1,690 | 1,195 | |||||
Total liabilities | 2,515 | 2,237 | |||||
Total CVR stockholders’ equity | 1,180 | 1,393 |
Selected Cash Flow Data
Three Months Ended | Six Months Ended | |||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net cash flow provided by (used in): | ||||||||||||||||
Operating activities | $ | 9 | $ | 156 | $ | (49 | ) | $ | 384 | |||||||
Investing activities | (165 | ) | (1 | ) | (361 | ) | (43 | ) | ||||||||
Financing activities | (43 | ) | (82 | ) | 364 | (469 | ) | |||||||||
Net increase in cash and cash equivalents | $ | (199 | ) | $ | 73 | $ | (46 | ) | $ | (128 | ) | |||||
Free cash flow* | $ | (158 | ) | $ | 119 | $ | (273 | ) | $ | 305 |
* | See “Non-GAAP Reconciliations” section below. |
Selected Segment Data
(in millions) | Petroleum | Nitrogen Fertilizer | Consolidated | ||||||||
Three Months Ended | |||||||||||
Net sales | $ | 572 | $ | 105 | $ | 675 | |||||
Operating (loss) income | 5 | (26 | ) | (26 | ) | ||||||
Net loss | 6 | (42 | ) | (32 | ) | ||||||
EBITDA* | 54 | (2 | ) | 68 | |||||||
Capital expenditures (1) | |||||||||||
Maintenance capital expenditures | $ | 16 | $ | 2 | $ | 19 | |||||
Growth capital expenditures | 6 | 1 | 7 | ||||||||
Total capital expenditures | $ | 22 | $ | 3 | $ | 26 | |||||
Six Months Ended | |||||||||||
Net sales | $ | 1,629 | $ | 180 | $ | 1,806 | |||||
Operating loss | (122 | ) | (31 | ) | (160 | ) | |||||
Net loss | (124 | ) | (62 | ) | (133 | ) | |||||
EBITDA* | (23 | ) | 8 | 30 | |||||||
Capital expenditures (1) | |||||||||||
Maintenance capital expenditures | $ | 54 | $ | 6 | $ | 62 | |||||
Growth capital expenditures | 9 | 2 | 11 | ||||||||
Total capital expenditures | $ | 63 | $ | 8 | $ | 73 |
(in millions) | Petroleum | Nitrogen Fertilizer | Consolidated | ||||||||
Three Months Ended | |||||||||||
Net sales | $ | 1,552 | $ | 138 | $ | 1,687 | |||||
Operating income | 163 | 35 | 192 | ||||||||
Net income (loss) | 158 | 19 | 128 | ||||||||
EBITDA* | 216 | 60 | 273 | ||||||||
Capital expenditures (1) | |||||||||||
Maintenance capital expenditures | $ | 15 | $ | 2 | $ | 20 | |||||
Growth capital expenditures | 2 | — | 2 | ||||||||
Total capital expenditures | $ | 17 | $ | 2 | $ | 22 | |||||
Six months ended | |||||||||||
Net sales | $ | 2,949 | $ | 230 | $ | 3,173 | |||||
Operating income (loss) | 319 | 44 | 352 | ||||||||
Net income (loss) | 307 | 13 | 230 | ||||||||
EBITDA* | 425 | 86 | 503 | ||||||||
Capital expenditures (1) | |||||||||||
Maintenance capital expenditures | $ | 34 | $ | 5 | $ | 42 | |||||
Growth capital expenditures | 4 | — | 4 | ||||||||
Total capital expenditures | $ | 38 | $ | 5 | $ | 46 |
* | See “Non-GAAP Reconciliations” section below. |
(1) | Capital expenditures are shown exclusive of capitalized turnaround expenditures and capitalized software costs. |
Selected Balance Sheet Data
(in millions) | Petroleum | Nitrogen Fertilizer | Consolidated | ||||||||
Cash and cash equivalents (1) | $ | 306 | $ | 33 | $ | 606 | |||||
Total assets | 2,872 | 1,043 | 3,928 | ||||||||
Total debt and finance lease obligations, including current portion (2) | 62 | 634 | 1,690 | ||||||||
Cash and cash equivalents (1) | $ | 583 | $ | 37 | $ | 652 | |||||
Total assets | 3,187 | 1,138 | 3,905 | ||||||||
Total debt and finance lease obligations, including current portion (2) | 563 | 632 | 1,195 |
(1) | Corporate cash and cash equivalents consisted of |
(2) | Corporate total debt and finance lease obligations, including current portion consisted of |
Petroleum Segment
Key Operating Metrics per Total Throughput Barrel
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Refining margin * | $ | 10.43 | $ | 15.66 | $ | 5.97 | $ | 16.10 | |||||||
Refining margin adjusted for inventory valuation impacts * | 7.18 | 15.68 | 9.12 | 15.28 | |||||||||||
Direct operating expenses * | 5.52 | 4.40 | 5.69 | 4.57 |
∗ | See “Non-GAAP Reconciliations” section below. |
Throughput Data by Refinery
Three Months Ended | Six Months Ended | ||||||||||
(in bpd) | 2020 | 2019 | 2020 | 2019 | |||||||
Coffeyville | |||||||||||
Regional crude | 34,193 | 49,979 | 36,534 | 45,808 | |||||||
WTI | 40,002 | 75,090 | 34,731 | 71,075 | |||||||
Midland WTI | — | 863 | — | 6,750 | |||||||
Condensate | 6,873 | 3,125 | 5,780 | 4,203 | |||||||
Heavy Canadian | 1,531 | 3,511 | 2,040 | 5,526 | |||||||
Other feedstocks and blendstocks | 5,085 | 8,083 | 6,393 | 8,685 | |||||||
Wynnewood | |||||||||||
Regional crude | 49,377 | 52,359 | 50,600 | 48,383 | |||||||
WTL | 6,335 | — | 6,153 | — | |||||||
Midland WTI | 2,719 | 13,410 | 2,369 | 12,961 | |||||||
Condensate | 6,784 | 7,038 | 8,107 | 7,394 | |||||||
Other feedstocks and blendstocks | 3,469 | 2,825 | 3,737 | 3,770 | |||||||
Total throughput | 156,369 | 216,283 | 156,443 | 214,555 |
Production Data by Refinery
Three Months Ended | Six Months Ended | ||||||||||
(in bpd) | 2020 | 2019 | 2020 | 2019 | |||||||
Coffeyville | |||||||||||
Gasoline | 46,464 | 70,506 | 45,492 | 72,170 | |||||||
Distillate | 34,144 | 59,049 | 33,703 | 59,288 | |||||||
Other liquid products | 4,011 | 6,786 | 3,864 | 6,631 | |||||||
Solids | 2,401 | 5,113 | 2,560 | 5,042 | |||||||
Wynnewood | |||||||||||
Gasoline | 35,381 | 39,153 | 37,442 | 36,746 | |||||||
Distillate | 28,293 | 31,997 | 28,524 | 29,689 | |||||||
Other liquid products | 2,428 | 1,360 | 2,441 | 3,728 | |||||||
Solids | 26 | 33 | 26 | 31 | |||||||
Total production | 153,148 | 213,997 | 154,052 | 213,325 | |||||||
Light product yield (as % of crude throughput) (1) | 97.6 | % | 97.7 | % | 99.2 | % | 97.9 | % | |||
Liquid volume yield (as % of total throughput) (2) | 96.4 | % | 96.6 | % | 96.8 | % | 97.1 | % | |||
Distillate yield (as % of crude throughput) (3) | 42.2 | % | 44.3 | % | 42.5 | % | 44.0 | % |
(1) | Total Gasoline and Distillate divided by total Regional crude, WTI, WTL, Midland WTI, Condensate, and Heavy Canadian throughput. |
(2) | Total Gasoline, Distillate, and Other liquid products divided by total throughput. |
(3) | Total Distillate divided by total Regional crude, WTI, WTL, Midland WTI, Condensate, and Heavy Canadian throughput. |
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Market Indicators (dollars per barrel) | |||||||||||||||
West Texas Intermediate (WTI) NYMEX | $ | 28.00 | $ | 59.91 | $ | 36.82 | $ | 57.44 | |||||||
Crude Oil Differentials to WTI: | |||||||||||||||
Brent | 5.39 | 8.56 | 5.29 | 8.72 | |||||||||||
WCS (heavy sour) | (9.45 | ) | (12.63 | ) | (13.58 | ) | (11.59 | ) | |||||||
Condensate | (2.61 | ) | (1.26 | ) | (1.99 | ) | (1.23 | ) | |||||||
Midland | 0.40 | (2.27 | ) | 0.17 | (1.74 | ) | |||||||||
NYMEX Crack Spreads: | |||||||||||||||
Gasoline | 11.52 | 21.37 | 10.95 | 16.64 | |||||||||||
Heating Oil | 13.05 | 23.46 | 15.99 | 24.90 | |||||||||||
NYMEX 2-1-1 Crack Spread | 12.29 | 22.41 | 13.47 | 20.77 | |||||||||||
Gasoline | (5.37 | ) | (2.56 | ) | (4.25 | ) | (2.31 | ) | |||||||
Ultra Low Sulfur Diesel | (1.69 | ) | (0.93 | ) | (1.75 | ) | (1.24 | ) | |||||||
Gasoline | 6.15 | 18.81 | 6.69 | 14.33 | |||||||||||
Ultra Low Sulfur Diesel | 11.35 | 22.52 | 14.24 | 23.65 | |||||||||||
8.75 | 20.67 | 10.47 | 18.99 |
Q3 2020 Petroleum Segment Outlook
The table below summarizes our outlook for certain operational statistics and financial information for the third quarter of 2020. See “Forward-Looking Statements” above.
Q3 2020 | |||||||
Low | High | ||||||
Total throughput (bpd) | 190,000 | 210,000 | |||||
Direct operating expenses (1) (in millions) | $ | 75 | $ | 85 | |||
Total capital expenditures (2) (in millions) | $ | 15 | $ | 25 |
(1) | Direct operating expenses are shown exclusive of depreciation and amortization. |
(2) | Capital expenditures are disclosed on an accrual basis. |
Nitrogen Fertilizer Segment:
Key Operating Data:
Ammonia Utilization Rates (3) | Two Years Ended | ||||
(capacity utilization) | 2020 | 2019 | |||
Consolidated | 94 | % | 92 | % | |
Coffeyville | 95 | % | 94 | % | |
East Dubuque | 94 | % | 90 | % |
(3) | 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 | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Consolidated sales (thousand tons): | |||||||||||||||
Ammonia | 111 | 110 | 164 | 146 | |||||||||||
UAN | 337 | 340 | 621 | 628 | |||||||||||
Consolidated product pricing at gate (dollars per ton) (1): | |||||||||||||||
Ammonia | $ | 332 | $ | 456 | $ | 310 | $ | 434 | |||||||
UAN | 165 | 217 | 166 | 219 | |||||||||||
Consolidated production volume (thousand tons): | |||||||||||||||
Ammonia (gross produced) (2) | 216 | 211 | 417 | 390 | |||||||||||
Ammonia (net available for sale) (2) | 79 | 71 | 157 | 112 | |||||||||||
UAN | 321 | 316 | 638 | 651 | |||||||||||
Feedstock: | |||||||||||||||
Petroleum coke used in production (thousand tons) | 138 | 134 | 263 | 266 | |||||||||||
Petroleum coke (dollars per ton) | $ | 31.13 | $ | 34.60 | $ | 37.59 | $ | 36.14 | |||||||
Natural gas used in production (thousands of MMBtu) (3) | 2,131 | 2,070 | 4,272 | 3,510 | |||||||||||
Natural gas used in production (dollars per MMBtu) (3) | $ | 1.94 | $ | 2.61 | $ | 2.18 | $ | 3.11 | |||||||
Natural gas in cost of materials and other (thousands of MMBtus) (3) | 3,216 | 3,185 | 4,633 | 4,193 | |||||||||||
Natural gas in cost of materials and other (dollars per MMBtu) (3) | $ | 2.17 | $ | 3.32 | $ | 2.36 | $ | 3.45 |
(1) | Product pricing at gate represents sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure that is comparable across the fertilizer industry. |
(2) | Gross tons produced for ammonia represent total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represent ammonia available for sale that was not upgraded into other fertilizer products. |
(3) | 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. |
Key Market Indicators
Three Months Ended | Six Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Ammonia — Southern Plains (dollars per ton) | $ | 261 | $ | 382 | $ | 266 | $ | 404 | |||||||
Ammonia — Corn belt (dollars per ton) | 346 | 495 | 355 | 496 | |||||||||||
UAN — Corn belt (dollars per ton) | 183 | 226 | 176 | 228 | |||||||||||
Natural gas NYMEX (dollars per MMBtu) | $ | 1.75 | $ | 2.51 | $ | 1.81 | $ | 2.69 |
Q3 2020 Nitrogen Fertilizer Segment Outlook
The table below summarizes our outlook for certain operational statistics and financial information for the third quarter of 2020. See “Forward-Looking Statements” above.
Q3 2020 | |||||||
Low | High | ||||||
Ammonia utilization rates (1) | |||||||
Consolidated | 95 | % | 100 | % | |||
Coffeyville | 95 | % | 100 | % | |||
East Dubuque | 95 | % | 100 | % | |||
Direct operating expenses (2) (in millions) | $ | 37 | $ | 42 | |||
Total capital expenditures (3) (in millions) | $ | 3 | $ | 6 |
(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. |
(3) | Capital expenditures are disclosed on an accrual basis. |
Non-GAAP Reconciliations:
Reconciliation of Net (Loss) Income to EBITDA
Three Months Ended | Six Months Ended | ||||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Net (loss) income | $ | (32 | ) | $ | 128 | $ | (133 | ) | $ | 230 | |||||||
Add: | |||||||||||||||||
Interest expense, net | 31 | 26 | 67 | 52 | |||||||||||||
Income tax (benefit) expense | (5 | ) | 41 | (42 | ) | 76 | |||||||||||
Depreciation and amortization | 74 | 78 | 138 | 145 | |||||||||||||
EBITDA | $ | 68 | $ | 273 | $ | 30 | $ | 503 |
Reconciliation of
Three Months Ended | Six Months Ended | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Net cash (used in) provided by operating activities | $ | 9 | $ | 156 | $ | (49 | ) | $ | 384 | ||||||||||
Less: | |||||||||||||||||||
Capital expenditures | (42 | ) | (26 | ) | (77 | ) | (55 | ) | |||||||||||
Capitalized turnaround expenditures | (125 | ) | (11 | ) | (147 | ) | (24 | ) | |||||||||||
Free cash flow | $ | (158 | ) | $ | 119 | $ | (273 | ) | $ | 305 |
Reconciliation of Petroleum Segment Net Income (Loss) to EBITDA and EBITDA Adjusted for Inventory Valuation Impacts
Three Months Ended | Six Months Ended | ||||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Petroleum net (loss) income | $ | 6 | $ | 158 | $ | (124 | ) | $ | 307 | ||||||||
Add: | |||||||||||||||||
Interest (income) expense, net | (2 | ) | 6 | 2 | 17 | ||||||||||||
Depreciation and amortization | 50 | 52 | 99 | 101 | |||||||||||||
Petroleum EBITDA | 54 | 216 | (23 | ) | 425 | ||||||||||||
Inventory valuation impacts, (favorable) unfavorable (1) (2) | (46 | ) | — | 90 | (32 | ) | |||||||||||
Petroleum EBITDA adjusted for inventory valuation impacts | $ | 8 | $ | 216 | $ | 67 | $ | 393 |
(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. |
(2) | Includes an inventory valuation charge of $58 million recorded in the first quarter of 2020, as inventories were reflected at the lower of cost or net realizable value. No such charge was recognized in the second quarter of 2020 or the 2019 periods. |
Reconciliation of Petroleum Segment Gross Profit to Refining Margin and Refining Margin Adjusted for Inventory Valuation Impacts
Three Months Ended | Six Months Ended | |||||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
Net sales | $ | 572 | $ | 1,552 | $ | 1,629 | $ | 2,949 | ||||||||||
Cost of materials and other | 424 | 1,244 | 1,459 | 2,324 | ||||||||||||||
Direct operating expenses (exclusive of depreciation and amortization as reflected below) | 79 | 86 | 162 | 177 | ||||||||||||||
Depreciation and amortization | 50 | 52 | 99 | 101 | ||||||||||||||
Gross profit (loss) | 19 | 170 | (91 | ) | 347 | |||||||||||||
Add: | ||||||||||||||||||
Direct operating expenses (exclusive of depreciation and amortization as reflected below) | 79 | 86 | 162 | 177 | ||||||||||||||
Depreciation and amortization | 50 | 52 | 99 | 101 | ||||||||||||||
Refining margin | 148 | 308 | 170 | 625 | ||||||||||||||
Inventory valuation impacts, (favorable) unfavorable (3) (4) | (46 | ) | — | 90 | (32 | ) | ||||||||||||
Refining margin adjusted for inventory valuation impacts | $ | 102 | $ | 308 | $ | 260 | $ | 593 |
(3) | 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. |
(4) | Includes an inventory valuation charge of $58 million recorded in the first quarter of 2020, as inventories were reflected at the lower of cost or net realizable value. No such charge was recognized in the second quarter of 2020 or the 2019 periods. |
Reconciliation of Petroleum Segment Total Throughput Barrels
Three Months Ended | Six Months Ended | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Total throughput barrels per day | 156,369 | 216,283 | 156,443 | 214,555 | |||||||
Days in the period | 91 | 91 | 182 | 181 | |||||||
Total throughput barrels | 14,229,541 | 19,681,753 | 28,472,702 | 38,834,455 |
Reconciliation of Petroleum Segment Refining Margin per Total Throughput Barrels
Three Months Ended | Six Months Ended | ||||||||||||||
(in millions, except for per throughput barrel data) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Refining margin | $ | 148 | $ | 308 | $ | 170 | $ | 625 | |||||||
Divided by: total throughput barrels | 14 | 20 | 28 | 39 | |||||||||||
Refining margin per total throughput barrel | $ | 10.43 | $ | 15.66 | $ | 5.97 | $ | 16.10 |
Reconciliation of Petroleum Segment Refining Margin Adjusted for Inventory Valuation Impact per Total Throughput Barrel
Three Months Ended | Six Months Ended | ||||||||||||||
(in millions, except for throughput barrel data) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Refining margin adjusted for inventory valuation impacts | $ | 102 | $ | 308 | $ | 260 | $ | 593 | |||||||
Divided by: total throughput barrels | 14 | 20 | 28 | 39 | |||||||||||
Refining margin adjusted for inventory valuation impacts per total throughput barrel | $ | 7.18 | $ | 15.68 | $ | 9.12 | $ | 15.28 |
Reconciliation of Petroleum Segment Direct Operating Expenses per Total Throughput Barrel
Three Months Ended | Six Months Ended | ||||||||||||||
(in millions, except for throughput barrel data) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | $ | 79 | $ | 86 | $ | 162 | $ | 177 | |||||||
Divided by: total throughput barrels | 14 | 20 | 28 | 39 | |||||||||||
Direct operating expenses per total throughput barrel | $ | 5.52 | $ | 4.40 | $ | 5.69 | $ | 4.57 |
Reconciliation of Nitrogen Fertilizer Segment Net Loss to EBITDA
Three Months Ended | Six Months Ended | ||||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Nitrogen fertilizer net loss | $ | (42 | ) | $ | 19 | $ | (62 | ) | $ | 13 | |||||||
Add: | |||||||||||||||||
Interest expense, net | 16 | 16 | 31 | 31 | |||||||||||||
Depreciation and amortization | 24 | 25 | 39 | 42 | |||||||||||||
Nitrogen Fertilizer EBITDA | $ | (2 | ) | $ | 60 | $ | 8 | $ | 86 |
Reconciliation of Basic and Diluted (Loss) Earnings per Share to Adjusted (Loss) Earnings per Share
Three Months Ended | Six Months Ended | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
Basic and diluted (loss) earnings per share | $ | (0.05 | ) | $ | 1.16 | $ | (0.92 | ) | $ | 2.16 | ||||||||
Adjustments: | ||||||||||||||||||
Inventory valuation impacts (1) | (0.34 | ) | — | 0.66 | (0.24 | ) | ||||||||||||
Unrealized gain on marketable securities (1) | (0.13 | ) | — | (0.35 | ) | — | ||||||||||||
0.08 | — | 0.07 | — | |||||||||||||||
Adjusted (loss) earnings per share | $ | (0.44 | ) | $ | 1.16 | $ | (0.54 | ) | $ | 1.92 |
(1) | Amounts are shown after-tax, using the Company’s marginal tax rate, and are presented on a per share basis using the weighted average shares outstanding for each period. |
(2) | Amount is shown exclusive of noncontrolling interests. |
Reconciliation of Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer
Twelve Months Ended | |||
Total debt and finance lease obligations (1) | $ | 1,690 | |
Less: | |||
Nitrogen Fertilizer debt and finance lease obligations (1) | $ | 634 | |
Total debt and finance lease obligations exclusive of Nitrogen Fertilizer | 1,056 | ||
EBITDA exclusive of Nitrogen Fertilizer | $ | 376 | |
Total debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer | 2.81 | ||
Consolidated cash and cash equivalents | $ | 606 | |
Less: | |||
Nitrogen Fertilizer cash and cash equivalents | 33 | ||
Cash and cash equivalents exclusive of Nitrogen Fertilizer | 573 | ||
Net debt and finance lease obligations exclusive of Nitrogen Fertilizer (2) | $ | 483 | |
Net debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer (2) | 1.28 |
(1) | Amounts are shown inclusive of the current portion of long-term debt and finance lease obligations. |
(2) | Net debt represents total debt and finance lease obligations exclusive of cash and cash equivalents. |
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
2020 | 2020 | |||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||
Net income (loss) | $ | 104 | $ | 28 | $ | (101 | ) | $ | (32 | ) | $ | (1 | ) | |||||||||||
Add: | ||||||||||||||||||||||||
Interest expense, net | 26 | 24 | 35 | 31 | 116 | |||||||||||||||||||
Income tax expense (benefit) | 34 | 19 | (36 | ) | (5 | ) | 12 | |||||||||||||||||
Depreciation and amortization | 71 | 71 | 64 | 74 | 280 | |||||||||||||||||||
EBITDA | $ | 235 | $ | 142 | $ | (38 | ) | $ | 68 | $ | 407 | |||||||||||||
Nitrogen Fertilizer | ||||||||||||||||||||||||
Net (loss) income | $ | (23 | ) | $ | (25 | ) | $ | (21 | ) | $ | (42 | ) | (111 | ) | ||||||||||
Add: | ||||||||||||||||||||||||
Interest expense, net | 16 | 16 | 16 | 16 | 64 | |||||||||||||||||||
Depreciation and amortization | 18 | 20 | 16 | 24 | 78 | |||||||||||||||||||
EBITDA | $ | 11 | $ | 11 | $ | 11 | $ | (2 | ) | $ | 31 | |||||||||||||
EBITDA exclusive of Nitrogen Fertilizer | $ | 224 | $ | 131 | $ | (49 | ) | $ | 70 | $ | 376 |
Source:
2020 GlobeNewswire, Inc., source