CVR Energy Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 30, 2024

There are 9 speakers on the call.

Operator

Greetings, and welcome to the CVR Energy First Quarter 20 24 Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Vice President of FP and A and Investor Relations.

Operator

Thank you, sir. You may begin.

Speaker 1

Thank you, Christine. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy Q1 2024 earnings call. With me today are Dave Lamp, our Chief Executive Officer Dave Newman, our Chief Financial Officer and other members of management. Prior to discussing our 2024 Q1 results, let me remind you that this conference call may contain forward looking statements as that term is defined under federal securities laws.

Speaker 1

For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward looking statements. We undertake no obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. This call also includes various non GAAP financial measures.

Speaker 1

The disclosures related to such non GAAP measures, including reconciliation of the most directly comparable GAAP financial measures, are included in our 2024 Q1 earnings release that we filed with the SEC in the Form 10 Q for the period and will be discussed during the call. With that said, I'll turn the call over to Dave.

Speaker 2

Thank you, Richard. Good afternoon, everyone. Thank you for joining our earnings call. Before I discuss our results for the quarter, I want to address an incident at the Wynnewood refinery that occurred over the weekend, early Sunday morning during severe weather in the area. The Wynnewood refinery experienced a fire that was later extinguished later that morning.

Speaker 2

No employees or contractors were injured and we are beginning in the beginning of the process of restarting portions of the refinery. We are still assessing the extent of the damage and we expect to provide additional details when they're available. Turning to our results. Yesterday, we reported a Q1 consolidated net income of $90,000,000 and earnings per share of $0.81 EBITDA was $203,000,000 Our solid results for the quarter were driven by continued declines in the prices of RINs and increased crude oil and refined product prices in the quarter, offset by lower crack spreads and fertilizer prices relative to a prior period. We are pleased to announce that our Board of Directors authorized a first quarter regular dividend of $0.50 per share, which will be paid on May 20 to shareholders of record at the close of the market on May 13.

Speaker 2

Our annualized dividend yield of approximately 6% yesterday based on yesterday's closing price remains best in class among the independent refiners. In our Petroleum segment, combined total throughput for the Q1 of 2024 was approximately 196,000 barrels per day and late product yield was 101% on crude oil processed. During the quarter, we completed the planned turnaround at the Wynnewood refinery. We currently do not have any additional turnarounds planned until Coffeyville's turnaround on a crude unit cat cracker and algae and other associated units currently scheduled for the spring of 2025. Benchmark crack softened during the Q1 with the Group 3, 211 averaging $19.55 per barrel compared to $23.66 per barrel for the Q4 of 2023.

Speaker 2

1st quarter average RIN prices declined from 4th quarter and ended the quarter at approximately $0.68 on an RVO weighted basis. While we're thrilled with the 5th Circuit's decision in November vacating EPA's denial of Wynnewood's small refinery exemption petitions for 2017 through 2021 and reprimanded those petitions back to EPA, EPA's egregious conduct continues. They still have not acted on Wynnewood's small refinery exemption petitions for 2017 through 2021, though 90 days have passed since the issuance of the 5th Circuit mandate, nor has EPA ruled on EPA small refinery exemptions petitioned for 2023 due last month. We will continue to push for a court ruling to force EPA to do its job and follow the law. The DC Court of Appeals heard oil arguments in the small refinery exemption denial cases for a few other small refineries a few weeks ago.

Speaker 2

While we expect the ruling will take some time, we were pleased with how the hearing went. We also continue to wait for a response from EPA regarding our petition for rulemaking related to the RFS. We believe the law is clear that only obligated parties who over comply with their RFS obligations can generate excess RINs and that they may sell those RINs only to other obligated parties who need the RINs for compliance. That EPA allows non obligated parties to exploit the RIN market for profit is just wrong, is not just wrong, it violates the law as written. If EPA does not respond to our petition, once again, we will see them in court.

Speaker 2

For the Q1 of 2024, we processed approximately 7,000,000 gallons of vegetable oil feedstocks at our Wynnewood Renewable Diesel Unit, the throughput in the quarter impacted by a planned catalyst change. The HOBO spread improved from the Q4 of 2023, but lower soybean oil prices, although prices for T4 RINs remained desvortrans remained depressed as a result of EPA's continued mismanagement of the RFS program. As a reminder, our renewable diesel business is currently reported in our Corporate and Other segment. In the Fertilizer segment, we achieved consolidated ammonia plant utilization of 90%, which was also impacted by some planned downtime in the quarter at our Coffeyville facility. Nitrogen fertilizer prices in the Q1 of 2024 remained fairly steady for the Q4 of 2000 with Q4 2023 pricing.

Speaker 2

And we saw strong demand for ammonia with favorable weather conditions during the quarter. Now let me turn the call over to Dane to discuss our financial highlights.

Speaker 3

Thank you, Dave, and good afternoon, everyone. The Q1 of 2024, our consolidated net income was $90,000,000 earnings per share was $0.81 and EBITDA was 203,000,000 dollars Our Q1 results include a reduction to quarterly RINs expense due to a mark to market impact on our estimated outstanding RFS obligation of 91,000,000 dollars a favorable inventory valuation impact of $37,000,000 and unrealized derivative losses of 24,000,000 Excluding the above mentioned items, adjusted EBITDA for the quarter was $99,000,000 and adjusted earnings per share was 0

Speaker 2

point 0

Speaker 3

$4 Adjusted EBITDA in the Petroleum segment was $67,000,000 for the Q1 with the decline from the prior year period primarily driven by lower product cracks in Group 3. Our Q1 realized margin adjusted for inventory valuation, unrealized derivative losses and RIN mark to market impacts was $10.46 per barrel, representing a 54% capture rate on the Group 3,211 benchmark. RIN's expense for the quarter, excluding the mark to market impact was $45,000,000 or $2.52 per barrel, which negatively impacted our capture rate for the quarter by approximately 13%. The estimated accrued RFS obligation on the balance sheet was $294,000,000 at March 31, representing R449,000,000 mark to market at an average price of $0.66 As a reminder, our estimated outstanding RIN obligation excludes the impact of any small refinery exemptions. Direct operating expenses in the Petroleum segment were $5.78 per barrel for the Q1 compared to $5.90 per barrel in the Q1 of 2023.

Speaker 3

The decrease in direct operating expenses was primarily due to lower natural gas and electricity prices. On a per barrel basis, our direct operating expenses were elevated in the Q1 of 2024 and the prior year period due to lower throughput rates as a result of planned turnarounds. Adjusted EBITDA in the Fertilizer segment was $40,000,000 for the Q1 with lower feedstock costs and direct operating expenses somewhat offsetting the decline in prices relative to the prior year period. The partnership declared a distribution of $1.92 per common unit for the Q1 of 2024. As CVR Energy owns approximately 37% of CVR Partners common units, we will receive a proportionate cash distribution of approximately 7,000,000 dollars Cash provided by operations for the Q1 of 2024 was $177,000,000 and free cash flow was $121,000,000 Significant uses of cash in the quarter included $61,000,000 for cash taxes and interest, dollars 59,000,000 of capital and turnaround spending, dollars 50,000,000 for the Q4 2023 regular dividend and $11,000,000 paid for the non controlling interest portion of the CVR Partners Q4 2023 distribution.

Speaker 3

Total consolidated capital spending was $51,000,000 which included $36,000,000 in the Petroleum segment, dollars 5,000,000 in the Fertilizer segment and $8,000,000 for the RDU primarily related to the pretreatment unit. Turnaround spending in the Q1 was approximately $39,000,000 For the full year 2024, we estimate total consolidated capital spending to be approximately $225,000,000 to 250,000,000 and turnaround spending to be approximately $55,000,000 to $65,000,000 Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $644,000,000 which includes $65,000,000 of cash in the fertilizer segment. Total liquidity as of March 31, excluding CVR Partners, was approximately $831,000,000 which was comprised primarily of $580,000,000 of cash and availability under the ABL facility of $251,000,000 Looking ahead to the Q2 of 2024, as Dave mentioned, are still assessing the extent of the damage from the fire at Wynnewood. We will provide an updated outlook for the Petroleum segment and the Renewable Diesel Unit once the impact of the incident is determined. The Coffeyville refinery continues to operate as planned.

Speaker 3

For the Fertilizer segment, we estimate our Q2 2024 ammonia utilization rate to be between 95% 100%, direct operating expenses to be approximately $1,000,000 to $55,000,000 excluding inventory impacts and total capital spending to be between $15,000,000 $20,000,000 With that Dave, I'll turn it back over to you. Thank you, Dane. In summary, market conditions were challenging for much of the Q1, particularly in the Petroleum segment,

Speaker 2

as refined product inventories were elevated coming into 2024 and distillate demand has been weak with a warm winter and depressed industrial activity. We would characterize current crack spreads as just above mid cycles. Starting with refining, elevated maintenance activity and unplanned downtime in the United States over the past few months help clean up inventories with gasoline and diesel inventories both near or below 5 year averages. We believe there's additional maintenance work yet to be completed in the United States, Europe and Asia and the impacts to global refining supply from recent drone attacks on the Russian refineries remains a wildcard. We also continue to monitor the startup of new global refining capacity expected this year, which could offset some of the supply impacts just discussed.

Speaker 2

Demand side of the equation, gasoline demand in the U. S. Remains steady and is trending above the 5 year average levels recently, while distillate demand remains soft. Looking more specifically at the Mid Con, refined product demand in Group 3 has remained steady, although inventory levels are elevated relative to the U. S.

Speaker 2

As a whole. As a result, the basis in the Group 3 is unusually wide for gasoline and we have been increasing our fuel by rail shipments to the West through our new transload facility at Coffeyville. The Brent TI differential has averaged nearly $5 per barrel so far this year, supported by crude oil export volumes averaging over 4,000,000 barrels a day. With crude prices in the $85 per barrel range, we expect continued strength in shale oil production volumes, which should be supportive of our crude oil gathering business. For the Q1, our crude oil gathering volumes were approximately 130,000 barrels per day.

Speaker 2

This is an important part of our strategy given the uplift we usually experience by bringing in neat barrels to the refinery gates. I'm pleased to announce that the Board recently approved a distillate yield product yield improvement project at the Wynnewood refinery. Through some modifications to the vacuum tower and our diesel hydrotreating unit, we will believe we'll be able to increase the insulate production at the Wynnewood refinery by approximately 2,500 barrels per day. We completed tie in work for the project Wynnewood's recent turnaround project and we currently expect final completion in the first half of twenty twenty five at a capital cost of less than $15,000,000 We are also studying a similar project at Coffeyville, which if approved by the Board and successfully implemented could be completed in 2026.

Speaker 1

Turning to the

Speaker 2

fertilizer segment, we had good ammonia sales in the Q1 with favorable weather conditions allowing farmers to apply ammonia earlier in the year. We expect strong demand for spring with planning expectations currently at 90,000,000 acres for corn and 87,000,000 acres for soybeans. We currently do not have any additional downtime plan for either fertilizer facilities until 2025. The pre treater for the renewable diesel unit began operations in the Q1 and we expect to replan production rates during the Q2. We are optimistic with the combination of new catalyst load in the RD unit plus the PTU when operational would result in improvements in our renewable diesel product yield, catalyst life and resulting economics.

Speaker 2

We continue to explore opportunities in the renewable space and are currently in discussions related to the potential conversion of the Wynnewood Renewable Diesel Unit up to 100% SAF. As we have discussed previously, our focus is in exploring this project would be to structure the offtake agreements such that would significantly derisk a margin that could justify the capital we need to invest. On the larger potential project at Coffeyville, we expect to have the project scope, cost and development plan ready to take to the market by the end of the year. We still believe there will be a market for renewable diesel and sustainable aviation going forward despite EPA's continued mismanagement of the RFS regulation. Finally, in March, we issued a Form 8 ks announcing that we were routinely consider and currently considering potential strategic action transactions both in refining and potentially related to CVR Partners.

Speaker 2

While we have nothing to disclose and certainly provide no assurances that we could successfully close any such transactions, There are some very interesting and transformative opportunities out there for both our refining business and CVR partners. Looking at the Q2 of 2024 quarter to date metrics are as follows. Group 211 cracks have averaged $20.67 per barrel and Brent TI spread at $4.48 per barrel and the Midland differential of $1.42 over WTI. Prop fertilizer prices are approximately $600 per ton for ammonia and $300 per ton for UAN. As of yesterday, Group 3,211 cracks were 21.01 dollars per barrel.

Speaker 2

Brent TI spread was $5.77 per barrel and WCS was $13.21 under WTI. RINs were approximately 3 point to strive to operate our plants in a safe, reliable and environmentally responsible manner and to explore opportunities to grow our renewable business. We will continue to focus on maximizing free cash flow, which underpins our peer leading dividend yield. With that operator, we're ready for questions.

Operator

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Manav Gupta with UBS.

Speaker 4

You are considered a good and safe operator. And I understand you're are still evaluating what happened over the weekend, but help us understand a little bit what is it a weather related event, exactly what went wrong over the weekend, which caused some of the issues that you're seeing?

Speaker 2

Well, we don't know exactly all the facts yet Manav, but it appears like we got hit by lightning in one of our process areas. And that lightning caused the impending fire and then that spread a little bit as it got hot. I think our response was excellent to it from the community standpoint, our employee standpoint, a contractor standpoint. But it's an unfortunate event that we're sometimes exposed to. If you recall the town of Sulphur, which is probably, I don't know, 15 miles from us, experienced a very bad tornado.

Speaker 2

And that storms were really bad that night and lightning was flying all over the place and we think we took a direct hit, but you never can be sure as it happens so fast.

Speaker 4

Right. So there's literally nothing you would have done about it. So just was trying to make sure. And my second question is, looks like your PTO is now going to be up and running is running at your RD facility. Help us understand how it you are you looking to transform from refined soybean oil to unrefined soybean oil?

Speaker 4

Are you looking to some tallow and stuff? And do you think that does make a material difference to your renewable diesel profitability?

Speaker 2

Well, there's no doubt that we've been catalyst starved with the unit without a PTU. We've had pretty short runs and poor yields, I'll call it, on actual renewable diesel. We're very encouraged with even buying treated feed or refined deodorized and de gummed feed, it was still had a lot of impurities in it in the forms of metals and phosphorus and other things. And the results of the pretreater look really good at this point. And we're starting this run with the pre treater up.

Speaker 2

And the catalyst performance is already looking very good, yields of 90 plus percent on renewable diesel and much less byproducts that we hadn't seen before that. So I'm really optimistic that we'll pick up not only ability to run untreated corn oil and soybean oil, but maybe some other options for some other things. But right now, we're really focused on the corn oil as a substitute for the soybean oil. And we think that the margin on that right now is probably in the $0.80 range per gallon on a pretreated basis. So if we look at the Q1, we ended we still we had a margin of about $0.65 a gallon, which if we could have run more barrels, we would have probably shown a profit on that unit.

Speaker 2

As it is, we were just kind of breakeven.

Speaker 4

Thank you. Very helpful. Thank you.

Speaker 2

You're welcome.

Operator

Our next question comes from the line of Matthew Blair with Tudor, Pickering, Holt. Please proceed with your question.

Speaker 5

Thank you and good afternoon, Dave. I want to follow-up on your comments regarding, I think you mentioned something about railing gasoline to the West Coast. So just wanted to confirm that that you are railing gasoline to California and capitalizing on the higher margins in that space? And also just curious, can you make that carb spec or is it a blended spec? And what kind of volumes are we talking about here?

Speaker 5

Thanks.

Speaker 2

Sure. As I mentioned, I said to the West, not necessarily to California. But no, we have we put in a transloading facility. I had a third party put it in and we're underwriting it with tariffs. But our plan is to be able to load up to 120,000 barrels per month.

Speaker 2

And that's our capability of the transloader. But we'll go probably wherever the margins are the best. As far as making carb, we really haven't looked at that much, although I probably pretty sure we could make some of it to some degree if we had the segregated tankage. But we haven't gone that far yet. If California continues to get shorter and shorter, it might be an attractive move.

Speaker 2

But the arb is open to other areas such as Grand Junction, even Denver occasionally and other places like Salt Lake City and Phoenix on occasion. So there's where we're focused mostly.

Speaker 5

Is there a good rule of thumb for the rail costs associated with that, like maybe $0.30 or $0.40 a barrel or sorry, a gallon?

Speaker 2

Well, normally anytime you move anything by rail, it's $6 to $8 per barrel. So that's a good rule of thumb, depends on how far you go and where you go. So then you have unloading fees and loading fees on the front side. So but that's a good rule of thumb.

Speaker 5

Sounds good. And then, my follow-up, do you think anything will change on your WCS exposure as TMX ramps? Or do you expect to receive the same volumes on, I think it's at least the Express pipeline, there might be one other. And we've noticed that the WCS futures curve, it widens out to about $15 a barrel by the end of this year. Is that just from expectations of continuing production growth in Canada?

Speaker 5

Thanks.

Speaker 2

Yes. I think mostly what you're seeing right now is the line fill, which is taking what 4,500,000 barrels off the market permanently. And that's what brings it down to the $13 range that it's at today. I would expect it to widen back out a little bit once the line fill is complete. And I don't think I think most of the barrels that are going to be replaced are the ones that were going offshore out of the Gulf of Mexico.

Speaker 2

So I don't anticipating any problems getting barrels. We don't run all we can move on the pipe. So we end up selling quite a bit in Cushing and we can we plan to continue that effort. I don't see any reason why it wouldn't continue where the production is today. I think the real benefit of TMX is really for the future, however.

Speaker 2

It gives the Canadian producers an outlet that they didn't have before. And unfortunately, Keystone got canceled, which would have given them that capacity to the United States rather than shipping to the West and the rest of the world. But I think still the effect will be there and that means more Canadian crude in the future.

Speaker 6

Great. Thanks, Kate.

Speaker 2

You're welcome.

Operator

Our next question comes from the line of John Royall with JPMorgan. Please proceed with your question.

Speaker 6

Hi, good afternoon. Thanks for taking my question. So I was hoping for some additional color on refining M and A in light of the 8 ks. And could that impact some of the things you would otherwise do on the organic side, particularly thinking about the bigger projects you're considering with R and D? Is it sort of an either or with M and A or could both be done at the same time?

Speaker 2

Well, John, remember that our larger R and D project or SAF project, however you want to call it, is really banked on our contribution being our Wynnewood operation of renewable diesel or SAF. What we are doing is wet equity. We're providing the location, the land, the permits, the design, all the rest will operate it for whatever. But we will not do the project without a partner that is strategic in nature and is interested in the space with the idea that we would IPO that company out as an eventual exit strategy. As far as other M and A, there's some very intriguing deals out there that are transformative for our company as well as others.

Speaker 2

And I think as we've always said, we look at everything and we continue to look at everything. And like I said, some unique opportunities in the refining space that really made us pick up our pencil again and look at it again. So more to come on that.

Speaker 6

Great. And then a follow-up sticking with the 8 ks. On the potential strategic options for UAN, I know this is something you looked at about maybe about a year ago. And now it looks like the idea of potentially separating UAN is back on the docket. Can you talk about the type of transaction that could potentially take place there?

Speaker 6

And what's changed between then and now in terms of being back and looking at some of the parts for fertilizers, is it just the equity coming back a little bit or are there other drivers?

Speaker 2

Well, I think you probably heard about the recent transaction that's occurred with or hasn't closed yet, but it's been proposed for the Weaver plant with OCI that kind of mark to market a pretty big value, pretty much twice the value of what UAN is today. So that's what kind of sparked the interest in it and we're just exploring opportunities that that might incur going forward.

Speaker 6

Thank you.

Speaker 2

You're welcome.

Operator

Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed

Speaker 7

Dave, just building on the M and A comments that you have made in the 8 ks, are there characteristics that you would say define what would be a successful M and A transaction for you on the refining side, whether it's specific regions? And as you think about potential M and A, do you have a preference for packages versus single assets? Just trying to get a context of the framework by which you evaluate success as you consider different options?

Speaker 2

Yes. Sure, Neal. I think one of our biggest impediments to our stock price, I think is our lack of diversification. So we've in the past have pointed to the west as our desired area, but I don't I think what we need is size and scale and diversity of our refining fleet. And any of these actions, any available transactions would scratch that edge.

Speaker 2

So, I think that's mainly what we're looking for. When you sit here in the mid con and that's all you got, particularly Group 3, you're subject to the realms of the market with nothing to offset it other than fertilizer. So, if you look at the size of our fertilizer business compared to the rest of it, it's relatively small. So, any diversification we can do there is a benefit to the stock and the shareholders is my point of view.

Speaker 7

Yes. Thanks, Dave. And the follow-up is just distillate. You have a distillate heavy mix here, which has been a huge tailwind over the last couple of years. It has softened a little bit here more recently and part of that does seem to be seasonal, but has anything changed in your structurally bullish distillate and diesel view?

Speaker 7

And are you seeing anything real time that would say that things should turn more positive as we work our way through the summer?

Speaker 2

Well, we came off of 2 very mild winters, frankly. Some people say it was the mildest winter ever in the States. I don't know, because we had some severe weather in our markets that makes me wonder if how much the climate is really changing. But that said, I think the bigger impact is really is the industrial activity and just the movement of goods around the country is just been kind of anemic. That said, if you just look at and the other thing I'd add to it, we're up to almost 5% now of renewable diesel in the pool.

Speaker 2

That was less than 1% a year and a half ago. So that it's really come on and it's certainly is changing the California market, but it's probably affecting everywhere to some degree. Now that's all that said, if you look at the practicality of EVs in the heavy trucking industry, It's poor at best and renewable diesel is by far a better solution. So I don't think that the market can't handle that. It's just if we have a little bit of industrial and any kind of manufacturing industrial activity, diesel demand will pick right back up.

Speaker 2

And that's kind of our view.

Speaker 7

Okay. Very helpful. Thanks, Dave.

Speaker 2

You're welcome.

Operator

Our next question comes from the line of Paul Cheng with Scotiabank. Please proceed with your question.

Speaker 8

Good morning, guys. Dave or Dan that in the event if there's a good transaction in refining, how much of the debt flow you will be willing to put on in terms of the balance sheet that I mean, how should we look at it?

Speaker 2

Can you repeat it again, Paul?

Speaker 8

If that's a good transaction that a acquisition target that you think is really good for you, how far you will be willing to stretch your balance sheet?

Speaker 3

Yes, Paul. It would obviously depend on the target and what the earnings power of that target would be. We've always said we're comfortable between the 1 and 2 times levered ratio. So depending on the target, I don't think our we want to change our debt profile materially long term. So I'd still use that as a benchmark over the long haul.

Speaker 2

And we want to use our equity too to some degree Paul. So

Speaker 8

Right. But I mean that, Dane, I understand your long term Nippish target, you haven't changed. But in terms of the short term, how far are you willing to go? What is within an acceptable level of debt, say, within the 12 months after you close the deal?

Speaker 3

I'll lever off what Dave said. It really would depend on the depth of the equity market. Is there a scenario where we potentially stretch if there was a very clear path of delevering? Yes. But probably not too aggressively beyond what our current targets are.

Speaker 8

Okay. Second question. Dan, can you tell us that what is your remaining hedging position for the rest of the year? And also, Dave, when you talk about the Q2, the Audi Audi will be reaching the capacity. Are you talking about reaching the run at 100%?

Speaker 8

Because previously, I think you've been talking about running maybe more like in the 70%. So I just want to make sure I understand your comment on that.

Speaker 2

Yes. Paul, on the R and D side of it is, we're planning to run this run at 5,000 barrels per day, which is about 75,000 of renewable diesel compared to our nameplate of 100. So we're probably a little higher in the numbers you said, but right in that angle. And what we're trying to explore here is catalyst life and find the optimum in that. And we'll sneak up on that probably the next load, increasing it to maybe 6,000 and then we'll go from there.

Speaker 3

Your other question? Yes. On open derivative positions, Paul, so for 2024, we're at about 8% of gasoline and diesel production. The only thing I want to caveat is that production rate does assume a full run rate of Wynnewood. So we have to once we know more, we'll be able to appropriately adjust what that would look like any downtime that's associated with the fire.

Speaker 3

And then for 2025, we're about 4% of total gasoline diesel production. That's 100% of that's diesel production, so 9% on diesel production for 2025.

Speaker 8

Then you say 4% in total in 4% in gasoline and diesel, but that because it's all in diesel, so it's 9% in diesel and 0 in gasoline, right?

Speaker 3

That is correct.

Speaker 8

And is the position for the Q2 right now is making money or losing money?

Speaker 2

Making money for the second half.

Speaker 8

For the second quarter right now. Is your divested position in the Q2 is making money or losing money?

Speaker 2

Yes, we're making money. It's in

Speaker 3

the money right now, Paul.

Speaker 8

Okay. Thank you.

Speaker 2

You're welcome.

Operator

Thank you. We have no further questions at this time. I would like to turn the floor back over to management for closing comments.

Speaker 2

Again, I'd like to thank you all for your interest in CVR Energy. Additionally, I'd like to thank our employees for their hard work and commitment towards safe, reliable and environmentally responsible operations. We look forward to reviewing our Q2 2024 results in our next earnings call. Thank you.

Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

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Key Takeaways

  • Fire incident at the Wynnewood refinery during severe weather shut down units, with damage assessment and partial restart underway.
  • Q1 net income of $90 million, EPS of $0.81 and EBITDA of $203 million, and a $0.50 per share quarterly dividend (6% yield) declared.
  • Company continues to face delays on EPA small refinery exemption petitions and RFS rulemaking petitions, prompting potential legal action over unresolved RIN obligations.
  • Start-up of the pretreatment unit improved renewable diesel yields to over 90% and extended catalyst life, targeting ~$0.80/gal margin on pretreated feedstocks.
  • Board approved a <$15 million distillate yield improvement project at Wynnewood to boost diesel output by ~2,500 bpd, expected online in 1H 2025.
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Earnings Conference Call
CVR Energy Q1 2024
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