SUGAR LAND, Texas, May 6 /PRNewswire-FirstCall/ -- CVR Energy, Inc.
(NYSE: CVI), a refiner and marketer of petroleum fuels and a
nitrogen fertilizer products manufacturer, today reported first
quarter 2009 net income of $30.7 million, or $0.36 per fully
diluted share, on net sales of $609.4 million. (Logo:
http://www.newscom.com/cgi-bin/prnh/20071203/CVRLOGO) The 2009
results increased from net income of $22.2 million, or $0.26 per
fully diluted share, on net sales of $1,223.0 million in the first
quarter of 2008. Operating income for the first quarter 2009
increased to $91.0 million compared to $87.4 million for the same
quarter in 2008. "Consistent operations at both our refinery and
nitrogen fertilizer plant clearly supported CVR Energy's financial
performance during the first quarter," said Chief Executive Officer
Jack Lipinski. "The nitrogen fertilizer plant operated at near full
capacity, and total throughput of crude oil and all other
feedstocks and blendstocks at our refinery averaged 120,667 barrels
per day. "We continue to manage our business conservatively," he
added. "Besides our efforts to ensure operational excellence, we
are focused on controlling costs and capital expenditures as one of
the best ways to create value for our shareholders." Net income
adjusted for unrealized gain or loss from Cash Flow Swap was $42.8
million in the first quarter of 2009 compared to $30.6 million for
the same quarter in 2008. Lipinski said "legacy issues" that have
clouded earnings since the company was acquired in 2005 are
diminishing. He said the Cash Flow Swap, required by lenders at
acquisition, will drop at the end of the second quarter 2009 from
5.9 million barrels per quarter to 1.5 million barrels per quarter,
or about 15 percent of production. The Cash Flow Swap is scheduled
to expire completely in June 2010. Also, during the first quarter
2009 CVR Energy paid off the remaining $62.4 million balance of a
deferral owed to J. Aron & Company as a result of the 2007
flood at the refinery in Coffeyville, Kan. That payment had been
due July 2009. Lipinski noted that the reported $91.0 million of
operating income represented a record first quarter performance for
the company. Petroleum Business The petroleum business reported
first quarter 2009 operating income of $64.7 million on net sales
of $545.3 million, compared to operating income for the same period
in 2008 of $63.6 million on net sales of $1,168.5 million. The
results for the first quarter of 2009 reflect an unfavorable impact
from first-in, first-out (FIFO) accounting practices of $6.0
million compared with a favorable FIFO impact of $20.0 million in
the first quarter of 2008. First quarter 2008 operating results
were negatively impacted by $5.5 million associated with a flood
that occurred in 2007. Crude oil throughput for the first quarter
2009 averaged 106,169 barrels per day compared with 106,445 barrels
per day for the same period in 2008. Refining margin per barrel was
$13.36 in the first quarter of 2009, a decrease from $13.77 during
the same period in 2008. Gross profit per crude oil throughput
barrel was $8.06 in the first quarter of 2009, up from $7.51 per
crude oil throughput barrel during the same period in 2008.
Nitrogen Fertilizer Business Nitrogen fertilizer operations
reported first quarter 2009 operating income of $29.3 million on
net sales of $67.8 million, compared to operating income of $26.0
million on net sales of $62.6 million during the equivalent period
in 2008. Improvements in the fertilizer segment's operating results
for the three months ended March 31, 2009, compared to the period a
year earlier were primarily the result of increased product sales
volume and UAN fertilizer prices. Additionally, decreased direct
operating expenses associated with repairs and maintenance also
contributed positively to first quarter 2009 results. For the first
quarter 2009, average plant sale prices for ammonia and UAN were
$373 per ton and $316 per ton respectively, compared to $494 per
ton and $262 per ton respectively for the equivalent period in
2008. Nitrogen Fertilizers produced 108,000 tons of ammonia and
169,700 tons of UAN during the first quarter of 2009, compared to
83,700 tons of ammonia and 150,100 tons of UAN in the equivalent
period of 2008. 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 December 31, 2008. 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; a crude oil gathering
system serving central Kansas, northern Oklahoma, eastern Colorado,
western Missouri and southwest Nebraska; an asphalt and refined
fuels storage and terminal business in Phillipsburg, Kan.; and
through a limited partnership, an ammonia and urea ammonium nitrate
fertilizer business located in Coffeyville, Kan. 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 months ended March 31, 2009 and 2008. Select balance sheet
data is as of March 31, 2009 and December 31, 2008. The summary
financial data for our two operating segments does not include
certain selling, general and administrative expenses and
depreciation and amortization related to our corporate offices. For
further information, please contact: Investor Relations: Media
Relations: Stirling Pack, Jr. Steve Eames CVR Energy, Inc. CVR
Energy, Inc. 281-207-3464 281-207-3550 Three Months Ended March 31,
2009 2008 (in millions, except share data) (unaudited) Consolidated
Statement of Operations Data: Net sales $609.4 $1,223.0 Cost of
product sold* 421.6 1,036.2 Direct operating expenses* (1) 56.2
60.6 Selling, general and administrative expenses* (1) 19.5 13.4
Net costs associated with flood 0.2 5.8 Depreciation and
amortization 20.9 19.6 Operating income 91.0 87.4 Interest expense
and other financing costs (11.5) (11.3) Loss on derivatives, net
(36.9) (47.9) Other income, net 0.1 0.9 Income before income tax
expense 42.7 29.1 Income tax expense (12.0) (6.9) Net income $30.7
$22.2 * Amounts shown are exclusive of depreciation and
amortization. Basic earnings per share $0.36 $0.26 Diluted earnings
per share $0.36 $0.26 Weighted average shares Basic 86,243,745
86,141,291 Diluted 86,322,411 86,158,791 As of March 31, As of
December 31, 2009 2008 (in millions) (unaudited) Balance Sheet
Data: Cash and cash equivalents $28.4 $8.9 Unrealized receivable
associated with Cash Flow Swap (current) (2) 18.4 35.3 Unrealized
receivable associated with Cash Flow Swap (non-current) (2) 2.4 5.6
Working capital 174.9 128.5 Total assets 1,575.8 1,610.5 Total
debt, including current portion 490.9 495.9 Total stockholders'
equity 612.1 579.5 Three Months Ended March 31, 2009 2008 (in
millions) (unaudited) Other Financial Data: Cash flows provided by
operating activities $36.7 $24.2 Cash flows used in investing
activities (15.9) (26.2) Cash flows used in financing activities
(1.3) (3.4) Non-GAAP Measures: Reconciliation of Net Income to
Adjusted Net Income: Net income $30.7 $22.2 Less: Unrealized gain
(loss) from Cash Flow Swap, net of taxes (12.1) (8.4) Net income
adjusted for unrealized gain or loss from Cash Flow Swap (2) $42.8
$30.6 Special Items: Share-based compensation (1) 3.9 (0.4) Income
tax expense (benefit) of share-based compensation (0.8) 0.2
Adjusted net income (3) $45.9 $30.4 Adjusted net income per share,
fully diluted $0.53 $0.35 Three Months Ended March 31, 2009 2008
(in millions, except operating statistics) (unaudited) Petroleum
Business Financial Results: Net Sales $545.3 $1,168.5 Cost of
product sold* 417.6 1,035.1 Direct operating expenses* (1) 34.6
40.3 Net costs associated with flood 0.2 5.5 Depreciation and
amortization 15.9 14.9 Gross profit $77.0 $72.7 Plus direct
operating expenses* (1) 34.6 40.3 Plus net costs associated with
flood 0.2 5.5 Plus depreciation and amortization 15.9 14.9 Refining
margin (4) $127.7 $133.4 Operating income $64.7 $63.6 Share-based
compensation (1) 0.4 (0.5) Adjusted operating income (5) $65.1
$63.1 Petroleum Key Operating Statistics: Per crude oil throughput
barrel: Refining margin (4) $13.36 $13.77 Gross profit $8.06 $7.51
Direct operating expenses* (1) $3.62 $4.16 FIFO impact (favorable)
unfavorable (6) $6.0 $(20.0) FIFO impact (favorable) unfavorable
per crude oil throughput barrel (6) $0.63 $(2.07) * Amounts shown
are exclusive of depreciation and amortization Three Months Ended
March 31, 2009 2008 Refining Throughput and Production Data:
(unaudited) (barrels per day) % % Throughput: Sweet 74,958 62.1
73,043 61.0 Light/medium sour 20,733 17.2 18,079 15.1 Heavy sour
10,478 8.7 15,323 12.8 Total crude oil throughput 106,169 88.0
106,445 88.9 All other feedstocks and blendstocks 14,498 12.0
13,282 11.1 Total throughput 120,667 100.0 119,727 100.0
Production: Gasoline 64,327 53.3 59,662 49.4 Distillate 46,184 38.3
48,591 40.3 Other (excluding internally produced fuel) 10,133 8.4
12,467 10.3 Total refining production (excluding internally
produced fuel) 120,644 100.0 120,720 100.0 Product price (dollars
per gallon): Gasoline $1.24 $2.45 Distillate $1.32 $2.85 Market
Indicators (dollars per barrel): West Texas Intermediate (WTI)
NYMEX $43.31 $97.82 Crude Oil Differentials: WTI less WTS
(light/medium sour) 1.04 4.63 WTI less WCS (heavy sour) 3.26 19.84
NYMEX Crack Spreads: Gasoline 9.07 6.46 Heating Oil 13.13 17.16
NYMEX 2-1-1 Crack Spread 11.10 11.81 PADD II Group 3 Basis:
Gasoline (0.64) (1.46) Ultra Low Sulfur Diesel (1.82) 3.65 PADD II
Group 3 Product Crack: Gasoline 8.43 5.00 Ultra Low Sulfur Diesel
11.31 20.81 PADD II Group 3 2-1-1 9.87 12.90 Three Months Ended
March 31, 2009 2008 (in millions) (unaudited) Nitrogen Fertilizer
Business Financial Results: Net sales $67.8 $62.6 Cost of product
sold* 8.7 8.9 Direct operating expenses* (1) 21.6 20.3 Net cost
associated with flood - - Depreciation and amortization 4.6 4.5
Operating income $29.3 $26.0 Share-based compensation(1) 0.7 -
Adjusted operating income(5) $30.0 $26.0 Nitrogen Fertilizer Key
Operating Statistics: Production (thousand tons): Ammonia (gross
produced)(7) 108.0 83.7 Ammonia (net available for sale)(7) 38.8
22.1 UAN 169.7 150.1 Petroleum coke consumed (thousand tons) 125.3
118.1 Petroleum coke (cost per ton) $35 $30 Sales (thousand
tons)(8): Ammonia 48.0 24.1 UAN 143.0 158.0 Total sales 191.0 182.1
Product pricing (plant gate) (dollars per ton)(8): Ammonia $373
$494 UAN $316 $262 On-stream factors(9): Gasification 100.0% 91.8%
Ammonia 100.0% 90.7% UAN 96.0% 85.9% Reconciliation to net sales
(dollars in thousands): Freight in revenue $4,121 $4,022 Hydrogen
revenue 658 5,291 Sales net plant gate 63,010 53,287 Total net
sales $67,789 $62,600 Market Indicators: Natural gas NYMEX (dollars
per MMBtu) $4.47 $8.74 Ammonia - Southern Plains (dollars per ton)
$337 $590 UAN - Mid Cornbelt (dollars per ton) $274 $371 (1) The
Company has two classifications for share-based compensation
awards. Phantom Unit Plan awards are accounted for as liability
based awards. In accordance with FAS 123(R), 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. Override unit awards are accounted for as equity-
classified awards using the guidance for non-employee awards
prescribed by EITF Issue No. 00-12, Accounting by an Investor for
Stock-Based Compensation Granted to Employees of an Equity Method
Investee and EITF Issue No. 96-18, Accounting for Equity
Investments That Are Issued to Other Than 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. The
compensation expense associated with our Phantom Unit Plans and
override units is recorded in direct operating expenses, selling,
general and administrative expenses, and other income. Below is a
breakdown of the expense by Statement of Operations caption and by
business segment. Three Months Ended March 31, 2009 2008 (in
millions) Share-based compensation recorded in (unaudited) direct
operating expenses: Petroleum $0.2 $(0.5) Nitrogen 0.1 - Corporate
- - 0.3 (0.5) Share-based compensation recorded in selling, general
and administrative expenses: Petroleum 0.2 - Nitrogen 0.6 -
Corporate 2.8 0.1 3.6 0.1 Share-based compensation recorded in
other income: - - Total share-based compensation $3.9 $(0.4) (2)
The unrealized gain (loss) from Cash Flow Swap relates to the
derivative transaction that was executed in conjunction with the
acquisition of Coffeyville Group Holdings, LLC by Coffeyville
Acquisition LLC on June 24, 2005. On June 16, 2005, Coffeyville
Acquisition LLC entered into the Cash Flow Swap with J. Aron &
Company, a subsidiary of The Goldman Sachs Group, Inc., and a
related party of ours. The Cash Flow Swap was subsequently assigned
from Coffeyville Acquisition LLC to Coffeyville Resources, LLC on
June 24, 2005. The derivative took the form of three NYMEX swap
agreements whereby if absolute (i.e., in dollar terms, not a
percentage of crude oil prices) crack spreads fall below the fixed
level, J. Aron agreed to pay the difference to us, and if crack
spreads rise above the fixed level, we agreed to pay the difference
to J. Aron. Based upon expected crude oil capacity of 115,000 bpd,
the Cash Flow Swap represents approximately 57% and 14% of crude
oil capacity for the periods January 1, 2009, through June 30,
2009, and July 1, 2009 through June 30, 2010, respectively. We have
determined that the Cash Flow Swap does not qualify as a hedge for
hedge accounting purposes under current U.S. generally accepted
accounting principles ("GAAP"). As a result, our periodic
Statements of Operations reflect in each period material amounts of
unrealized gains and losses based on the increases or decreases in
market value of the unsettled position under the swap agreements
which are accounted for as an asset (Receivable from swap
counterparty) or liability (Payable to swap counterparty) on our
balance sheet, as applicable. As the absolute crack spreads
increase, we are required to record an increase in the liability
account with a corresponding expense entry to be made to our
Statement of Operations. Conversely, as absolute crack spreads
decline, we are required to record a decrease in the swap related
liability and post a corresponding income entry to our Statement of
Operations. Because of this inverse relationship between the
economic outlook for our underlying business (as represented by
crack spread levels) and the income impact of the unrealized gains
and losses, and given the significant periodic fluctuations in the
amounts of unrealized gains and losses, management utilizes Net
income (loss) adjusted for unrealized gain or loss from Cash Flow
Swap as a key indicator of our business performance. In managing
our business and assessing its growth and profitability from a
strategic and financial planning perspective, management and our
board of directors consider our GAAP net income results as well as
Net income (loss) adjusted for unrealized gain or loss from Cash
Flow Swap. We believe that Net income (loss) adjusted for
unrealized gain or loss from Cash Flow Swap, enhances the
understanding of our results of operations by highlighting income
attributable to our ongoing operating performance exclusive of
charges and income resulting from mark-to-market adjustments that
are not necessarily indicative of the performance of our underlying
business and our industry. The adjustment has been made for the
unrealized gain or loss from Cash Flow Swap net of its related tax
effect. Net income (loss) adjusted for unrealized gain or loss from
Cash Flow Swap is not a recognized financial measure under GAAP and
should not be substituted for net income as a measure of our
performance but instead should be utilized as a supplemental
measure of financial performance or liquidity in evaluating our
business. Because Net income (loss) adjusted for unrealized gain or
loss from Cash Flow Swap excludes mark-to-market adjustments, the
measure does not reflect the fair market value of our Cash Flow
Swap in our net income. As a result, the measure does not include
potential cash payments that may be required to be made on the Cash
Flow Swap in the future. Also, our presentation of this non-GAAP
measure may not be comparable to similarly titled measures of other
companies. We believe that Net income (loss) adjusted for
unrealized gain or loss from Cash Flow Swap 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. The
unrealized receivable associated with the Cash Flow Swap, current
and non-current, represents the unsettled position resulting from
unrealized gains and losses on the Cash Flow Swap. Historically,
the unrealized position has been and may continue to be subject to
significant fluctuations due to the volatility of the underlying
quoted market prices used to mark-to-market our commodity
derivatives. The unrealized balance is also impacted by the length
of the remaining term of the Cash Flow Swap. As the remaining term
of the Cash Flow Swap becomes shorter with each passing quarter, it
is our expectation that the unsettled unrealized position will
experience less volatility; however, there can be no assurance of
this result. In the event the Cash Flow Swap would be terminated,
the unrealized balance at that date, resulting from quoted market
prices, would become a fixed obligation or receivable with the
counterparty based upon the unrealized position at that time. (3)
Net income (loss) adjusted for unrealized gain or loss from Cash
Flow Swap and other special items results from adjusting net income
for items that the Company believes are non-operating in nature.
For the three months ended March 31, 2009 and 2008, these items
included the unrealized gain (loss) from Cash Flow swap and
share-based compensation. Net income (loss) adjusted is not a
recognized term under GAAP and should not be substituted for net
income as a measure of our performance but instead should be
utilized as a supplemental measure of financial performance or
liquidity in evaluating our business. We believe that Net income
(loss) adjusted 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. (4) Refining margin 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. (5) Operating income (loss) adjusted for special items
is a non-GAAP measure that we believe is important in evaluating
the on-going operations of our segments. This calculation is made
in order to adjust for what the Company believes are significant
non-operating items such as the impact of our share-based
compensation. Included within both the Petroleum and Nitrogen
Fertilizer segment's operating income are unusual or infrequent
events that also impact our results. Below is a table summarizing
these items. Three Months Ended March 31, 2009 2008 (in millions)
(unaudited) Petroleum: FIFO impact (favorable) unfavorable $6.0
$(20.0) Net costs associated with flood 0.2 5.5 Nitrogen
Fertilizer: Net costs associated with flood $- $- Operating income
(loss) adjusted is not a recognized term under GAAP and should not
be substituted for operating income as a measure of our performance
but instead should be utilized as a supplemental measure of
financial performance or liquidity in evaluating our business. We
believe that operating income (loss) adjusted 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. (6)
First-in, first-out (FIFO) is the Company's basis for determining
inventory value on a 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. (7) 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. (8) 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. (9) 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 U.S.
generally accepted accounting principles (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 uses for planning
and forecasting future periods.
http://www.newscom.com/cgi-bin/prnh/20071203/CVRLOGO
http://photoarchive.ap.org/ DATASOURCE: CVR Energy, Inc. CONTACT:
Investor Relations, Stirling Pack, Jr., +1-281-207-3464, , or Media
Relations, Steve Eames, +1-281-207-3550, Web Site:
http://www.cvrenergy.com/
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