CVR Energy reports Q1 2022 results and announces cash dividend of 40 cents, successfully completed conversion and startup of Wynnewood renewable diesel unit.
CVR Energy, Inc. (“CVR Energy” or the “Company”) (NYSE: CVI) announced net income of $94 million, or 93 cents per diluted share, on net sales of $2.4 billion for the first quarter of 2022, compared to a net loss of $39 million, or 39 cents per diluted share, on net sales of $1.5 billion for the first quarter of 2021.
First quarter 2022 EBITDA was $278 million, compared to first quarter 2021 EBITDA of less than $1 million.
Dave Lamp, CVR Energy’s Chief Executive Officer, said:
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CVR Energy reported solid results for the 2022 first quarter as the fundamentals for both the refining and fertilizer sectors continued to improve.
“Our Petroleum Segment’s first quarter results were driven by increased crude oil pricing and widening Group 3 2-1-1 crack spreads offset by elevated Renewable Identification Number (RIN) pricing. CVR Energy also announced a first quarter 2022 cash dividend of 40 cents per share and continued to advance its renewables restructuring plan.”
“CVR Partners achieved strong first quarter results led by robust global industry conditions and declared a first quarter 2022 cash distribution of $2.26 per common unit,” Lamp said.
“The U.S. spring crop planting season is progressing and we expect industry conditions to remain firm for the remainder of 2022.”
Petroleum
The Petroleum Segment reported first quarter 2022 operating income of $130 million on net sales of $2.2 billion, compared to an operating loss of $115 million on net sales of $1.4 billion in the first quarter of 2021.
Refining margin per total throughput barrel was $16.75 in the first quarter of 2022, compared to $3.05 during the same period in 2021. The increase in refining margin of $246 million was primarily due to an increase in product crack spreads and an increase in crude oil prices.
The Group 3 2-1-1 crack spread increased by $5.87 per barrel relative to the first quarter of 2021, driven by increasing refined product demand, tight inventory levels and supply concerns due to the ongoing Russia-Ukraine conflict.
Throughput volumes improved by 11,251 barrels per day (“bpd”) due to plant outages in the prior period resulting from weather events.
Offsetting these impacts, the Petroleum Segment recognized costs to comply with the Renewable Fuel Standard (“RFS”) of $88 million, or $4.93 per throughput barrel, which excludes the RINs revaluation impact of $19 million, or $1.08 per total throughput barrel, for the first quarter of 2022.
This is compared to RFS compliance costs of $66 million, or $3.97 per throughput barrel, which excludes the RINs revaluation impact of $111 million, or $6.65 per total throughput barrel, for the first quarter of 2021.
The increase in RFS compliance costs in 2022 was primarily related to higher RIN prices and a higher renewable volume obligation for the first quarter of 2022 compared to the 2021 period. The RINs revaluation impact decreased in 2022 as a result of decreased volatility in RIN prices for the current period.
The Petroleum Segment also recognized a first quarter 2022 derivative net gain of $8 million, or 47 cents per total throughput barrel, compared to a derivative loss of $32 million, or $1.90 per total throughput barrel, for the first quarter of 2021.
Included in this derivative net gain for the first quarter of 2022 was a $5 million unrealized gain, compared to a $43 million unrealized loss for the first quarter of 2021.
Further, crude oil prices rose during the quarter, which led to a favorable inventory valuation impact of $133 million, or $7.51 per total throughout barrel, compared to a favorable inventory valuation impact of $66 million, or $3.93 per total throughput barrel, during the first quarter of 2021.
First quarter 2022 combined total throughput was approximately 197,000 bpd, compared to approximately 186,000 bpd of combined total throughput for the first quarter of 2021. This increase was primarily attributable to improved throughputs as a result of Winter Storm Uri in the prior period.
Nitrogen Fertilizer
The Nitrogen Fertilizer Segment reported operating income of $104 million on net sales of $223 million for the first quarter of 2022, compared to an operating loss of $14 million on net sales of $61 million for the first quarter of 2021.
First quarter 2022 average realized gate prices for urea ammonia nitrate (“UAN”) showed an improvement over the prior year, up 212 percent to $496 per ton, and ammonia was up 252 percent over the prior year to $1,055 per ton.
Average realized gate prices for UAN and ammonia were $159 and $300 per ton, respectively, for the first quarter of 2021.
CVR Partners, LP’s (“CVR Partners”) fertilizer facilities produced a combined 187,000 tons of ammonia during the first quarter of 2022, of which 52,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 317,000 tons of UAN.
During the first quarter 2021, the fertilizer facilities produced 188,000 tons of ammonia, of which 70,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 272,000 tons of UAN.
Corporate
The Company reported an income tax expense of $34 million, or 18.0 percent of income before income taxes, for the three months ended March 31, 2022, as compared to an income tax benefit of $42 million, or 43.3 percent of loss before income taxes, for the three months ended March 31, 2021.
The fluctuation in income tax was due primarily to changes in pretax earnings and earnings attributable to noncontrolling interest.
The year-over-year decrease in effective income tax rate was due primarily to the relationship between pretax results, earnings attributable to noncontrolling interest and state income taxes generated.
Cash, Debt and Dividend
Consolidated cash and cash equivalents were $676 million at March 31, 2022, an increase of $166 million from December 31, 2021. Consolidated total debt and finance lease obligations were $1.6 billion at March 31, 2022, including $546 million held by the Nitrogen Fertilizer Segment.
On February 22, 2022, CVR Partners redeemed all of the outstanding $65 million in aggregate principal amount of its 9.25% Senior Secured Notes, due June 2023, at par and settled accrued interest of approximately $1 million through the date of redemption.
CVR Energy also announced a first quarter 2022 cash dividend of 40 cents per share. The dividend, as declared by CVR Energy’s Board of Directors, will be paid on May 23, 2022, to stockholders of record as of May 13, 2022.
CVR Partners announced that the Board of Directors of its general partner declared a first quarter 2022 cash distribution of $2.26 per common unit, which will be paid on May 23, 2022, to common unitholders of record as of May 13, 2022.
Corporate Structure
On February 22, 2022, in connection with our focus on decarbonization, we announced that our Board of Directors had approved a plan to restructure our business to segregate our renewables business.
As part of this restructuring, in the first quarter of 2022, we formed 16 new indirect, wholly owned subsidiaries (“NewCos”) of CVR Energy.
Over the coming year, the Company intends to evaluate the transfer of certain assets to these NewCos to, among other purposes, better align our organizational structure with management, financial reporting and our goal to maximize our renewables focus.
At the present time, we expect the restructuring to be completed during the first quarter of 2023.
First Quarter 2022 Earnings Conference Call
CVR Energy previously announced that it will host its first quarter 2022 Earnings Conference Call on Tuesday, May 3, at 1 p.m. Eastern. The Earnings Conference Call may also include discussion of Company developments, forward-looking information and other material information about business and financial matters.
The first quarter 2022 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/t6hq57yj. A repeat of the call also can be accessed for 14 days by dialing (877) 660-6853, conference ID 13728976.
Highlights:
- Declared a first quarter 2022 cash dividend of 40 cents per share
- Will receive $9 million from CVR Partners’ declared first quarter 2022 cash distribution of $2.26 per common unit
- Completed Wynnewood refinery turnaround on time and on budget
- Successfully completed conversion and startup of Wynnewood’s renewable diesel unit
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CVR Energy Reports First Quarter 2022 Results and Announces a Cash Dividend of 40 cents, SUGAR LAND, Texas, May 2, 2022
