CVR Energy Q1 2025 Earnings Report

CVR Energy EPS Results

• Actual EPS: -$0.58
• Consensus EPS: -$0.90
• Beat/Miss: Beat by +$0.32
• One Year Ago EPS: $0.04

CVR Energy Revenue Results

• Actual Revenue: $1.65 billion
• Expected Revenue: $1.61 billion
• Beat/Miss: Beat by +$33.04 million
• YoY Revenue Growth: -11.60%

CVR Energy Announcement Details

• Quarter: Q1 2025
• Date: 4/28/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, April 29, 2025
• Conference Call Time: 1:00PM ET

CVR Energy (NYSE:CVI), together with its subsidiaries, engages in the petroleum refining and marketing, and nitrogen fertilizer manufacturing activities in the United States. It operates in two segments, Petroleum and Nitrogen Fertilizer. The Petroleum segment refines and supplies gasoline, crude oil, distillate, diesel fuel, and other refined products. This segment also owns and operates a coking medium-sour crude oil refinery in southeast Kansas; and a crude oil refinery in Wynnewood, Oklahoma, as well as supporting logistics assets. This segment primarily serves retailers, railroads, farm cooperatives, and other refiners/marketers. The Nitrogen Fertilizer segment owns and operates a nitrogen fertilizer plant in North America that utilizes a pet coke gasification process to produce nitrogen fertilizer products; and a nitrogen fertilizer facility in East Dubuque, Illinois that produces nitrogen fertilizers in the form of ammonia and urea ammonium nitrate (UAN), nitric acid, and liquid and granulated urea. This segment primarily markets UAN products to agricultural customers; and ammonia products to agricultural and industrial customers. The company was founded in 1906 and is based in Sugar Land, Texas. CVR Energy, Inc. is a subsidiary of Icahn Enterprises L.P.

CVR Energy Q1 2025 Earnings Call Transcript

Key Takeaways

• During Q1 2025, CVR Energy reported a consolidated net loss of $105 million (loss per share $1.22) and an EBITDA loss of $61 million, offset by a favorable adjusted EBITDA of $24 million and an adjusted loss per share of $0.58 after excluding mark-to-market RFS impacts and other items.
• The planned and unplanned Coffeyville refinery turnaround—triggered by a freezing-weather incident at the Naphtha Hydrotreater—extended into Q2, reducing throughput by four weeks, with full ramp-up expected in Q2 and no further turnarounds planned for 2025–26.
• RIN costs surged, pushing average RIN prices up over 25% to $4.75 per barrel and creating a $112 million mark-to-market loss on outstanding RFS obligations, while CVR continues to pursue small refinery exemptions and pressures the EPA to act on multiple pending petitions.
• In the Renewables segment, CVR processed ~14 million gallons of renewable diesel in Q1, delivering a gross margin of $1.13 per gallon (vs. $0.65 in Q1 2024) and positive adjusted EBITDA despite the blender’s tax credit expiration, as it awaits final PTC rule clarity.
• The Fertilizer segment achieved 101% ammonia utilization in Q1, generating a $53 million adjusted EBITDA on strong spring planting demand and higher ammonia prices, positioning CVR well for seasonal momentum.

Presentation

[Operator]

and welcome to the CVR Energy First Quarter twenty twenty five 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, Financial Planning and Analysis and Investor Relations.

[Operator]

Thank you, sir. You may begin.

[Richard Roberts, VP - FP&A and IR at CVR Energy]

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

[Richard Roberts, VP - FP&A and IR at CVR Energy]

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.

[Richard Roberts, VP - FP&A and IR at CVR Energy]

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

[David Lamp, President & CEO at CVR Energy]

Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call. Yesterday, we reported a first quarter consolidated net loss of $105,000,000 and a loss per share of $1.22 EBITDA was a loss of $61,000,000 Our results were impacted by the planned turnaround at Coffeyville, the Coffeyville refinery, unplanned events in January, and an unfavorable mark to market impact of our outstanding RFS obligation. In our Petroleum segment, combined total throughput for the first quarter of twenty twenty five was approximately 125,000 barrels per day and light product yield was 95% on crude oil processed. The planned turnaround at Coffeyville began in late January following an incident at our Naphtha Hydrotreater during freezing weather conditions.

[David Lamp, President & CEO at CVR Energy]

Inefficiencies resulting from the incident, including mobilizing contractors earlier than planned, among other factors, impacted the duration of the turnaround by approximately four weeks. Start up of the refinery is underway and we currently expect to ramp to full rates over the course of the second quarter as we draw down crude and intermediate inventories. For the duration of 2025 and 2026, we do not currently have any additional turnarounds planned in the Refining segment, with the next planned turnaround at Wynnewood scheduled for 2027. Group '3 '2 '11 benchmark cracks averaged $17.65 per barrel for the first quarter of twenty twenty five, compared to $19.55 per barrel for the first quarter of last year. Average RIN prices in the first quarter of twenty twenty five were approximately $0.84 on an RVO weighted basis, an increase of over 25% from the previous year period.

[David Lamp, President & CEO at CVR Energy]

On a per barrel basis, RINs were approximately $4.75 per barrel or more than 25% of the Group three two-one-one crack spread for the quarter. Regarding the RFS, we were pleased with the First Circuit granting the Wynnewood Refining Company's unopposed motion to stay its 2023 compliance obligations in March. Also in March, the Supreme Court heard oral arguments on whether venue for challenges to the EPA's denial of small refinery exemptions lies exclusively within the DC Circuit. We currently expect a ruling on the Venue case in the second quarter, although the ruling should make little difference in this case since the D. C.

[David Lamp, President & CEO at CVR Energy]

Circuit, like the Fifth Circuit before it, also held EPA's denial of small refinery exemptions were arbitrary, capricious, and contrary to the law. The Woody Wood Refinery Company filed its 2024 petition for small refinery exemptions last year, but EPA once again missed its deadline to rule. We urge EPA to meet with us as soon as possible or will be forced to file suit again. At this point, EPA is sitting on Wynnewood Small Refinery exemption petitions for 2019, '20 '20, '20 '20 '1, '20 '20 '2, and 2023. The prior administration only acted on our 2023 petition when it denied it in January for ridiculous and, we think, illegal reasons.

[David Lamp, President & CEO at CVR Energy]

The RIN market causes higher prices at the pump for all Americans, which EPA has omitted. As a reminder, we currently estimate the cost of RINs $0.10 to $0.15 per gallon on all transportation fuels. We believe that the EPA should be doing everything it can to keep fuel prices low. At a minimum, EPA should immediately hit the easy button and apply the same alternative compliance strategy it used in 2017 and 2018 for all historical SREs from 2019 to 2024. All these compliance periods are in the past, this harms no one, and could save small refineries from the risk of closure due to the crushing weight of RFS.

[David Lamp, President & CEO at CVR Energy]

Despite EPA's continued lack of action, we are encouraged by the administration's statement that they are reassessing their position on SREs. I am confident under President Trump's leadership, the EPA will see the critical role small refineries like ours play in supporting rural communities across America, exactly why Congress included small refinery exemptions in the Renewable Fuels Legislation. For the first quarter of twenty twenty five, we processed approximately 14,000,000 gallons of vegetable fuel oil in our renewable diesel unit at Wynnewood. Gross margin was approximately $1.13 per gallon for the first quarter of twenty twenty five compared to $0.65 per gallon for the first quarter of twenty twenty four. The blender's tax credit expired at the end of twenty twenty four.

[David Lamp, President & CEO at CVR Energy]

And we did not recognize any clean fuel production credits in the quarter as final rules have not been issued. Despite the loss of the BTC, we generated positive adjusted EBITDA in the Renewables section, primarily driven by increased RIN prices and reduced feedstock basis. In the Fertilizer segment, both facilities ran well during the quarter with a consolidated ammonia utilization rate of 101%. Nitrogen fertilizer prices in the first quarter of twenty twenty five were higher for ammonia and slightly lower for UAN compared to the first quarter of twenty twenty four. And we continue to see strong demand for both products as we head into the spring planting season.

[David Lamp, President & CEO at CVR Energy]

Now let me turn the call over to Dave to discuss our financial highlights.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

Thank you, Dave, and good afternoon everyone. For the first quarter of twenty twenty five, our consolidated net loss was $105,000,000 losses per share were $1.22 and EBITDA was a loss of $61,000,000 Our first quarter results include a negative mark to market impact on our outstanding RFS obligation of $112,000,000 a favorable inventory valuation impact of $24,000,000 and unrealized derivative gains of $3,000,000 Excluding the above mentioned items, adjusted EBITDA for the quarter was $24,000,000 and adjusted loss per share was $0.58 Adjusted EBITDA on the Petroleum segment was a loss of $30,000,000 for the first quarter, with the decline from the prior year period driven by reduced throughput volumes due to the planned and unplanned downtime at Coffeyville, along with lower product cracks in Group three. Our first quarter realized margin adjusted for RIN mark to market impacts, inventory valuation and unrealized derivative gains was $7.72 per barrel, representing a 44% capture rate on the Group three two-one-one benchmark. Net RINs expense for the quarter, excluding the mark to market impact was $27,000,000 or $2.47 per barrel, which negatively impacted our capture rate for the quarter by approximately 14%. The estimated accrued RFS obligation on the balance sheet was $438,000,000 at March 31, representing $488,000,000 RINs mark to market at an average price of $0.90 As a reminder, our estimated outstanding RIN obligation excludes the impact of any small refinery exemptions.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

Direct operating expenses in the Petroleum segment were $8.58 per barrel for the first quarter compared to $5.78 per barrel in the first quarter of twenty twenty four. The increase in direct operating expense per barrel was primarily driven by lower throughput volumes. Adjusted EBITDA on the Renewables segment was $3,000,000 for the first quarter, an improvement from the first quarter of twenty twenty four adjusted EBITDA of negative $5,000,000 The increase in adjusted EBITDA was driven by a combination of higher throughput volumes, increased rinse prices and reduced feedstock basis, partially offset by the expiration of the BTC. Adjusted EBITDA on the Fertilizer segment was $53,000,000 for the first quarter with higher UAN sales volumes and higher ammonia sales prices driving the increase relative to the prior year period. Partnership declared a distribution of $2.26 per common unit for the first quarter of twenty twenty five.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

As CVR Energy owns approximately 37% of CVR Partners' common units, will receive a proportionate cash distribution of approximately $9,000,000 Cash consumed by operations for the first quarter of twenty twenty five was $195,000,000 and free cash flow was a use of $285,000,000 Significant uses of cash in the quarter include $94,000,000 of capital and turnaround spending, 47,000,000 for cash interest, 12,000,000 paid for the non controlling interest portion of the CVR Partners fourth quarter twenty twenty four distribution, and a cash used from working capital of approximately $113,000,000 partially associated with inventories being built during the Coffeyville turnaround. Total consolidated capital spending on an accrual basis was 55,000,000 which included 49,000,000 in the petroleum segment, 6,000,000 in the fertilizer segment and less than 1,000,000 in the renewable segment. Turnaround spending on an accrual basis in the first quarter was approximately 166,000,000. For the full year of 2025, we estimate total consolidated capital spending to be approximately 180,000,000 to $210,000,000 and turnaround spending to be approximately 180,000,000 to $200,000,000 Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $695,000,000 which includes $122,000,000 of cash in the Fertilizer segment. Total liquidity as of March 31, excluding CVR Partners, was approximately $894,000,000 which was comprised primarily of $573,000,000 of cash and availability under the ABL facility of $321,000,000 While we ended the quarter above our targeted minimum cash balances, I want to highlight that the majority of the cash spend associated with the Coffeyville turnaround will be incurred in the second quarter, which should be partially offset by a drawdown of inventories built during the turnaround.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

Looking ahead to the second quarter of twenty twenty five, for our Petroleum segment, we estimate total throughputs to be approximately 160,000 to 180,000 barrels per day, direct operating expenses to range between 105,000,000 and $115,000,000 and total capital spending to be between 35,000,000 and $40,000,000 For the fertilizer segment, we estimate our ammonia utilization rate to be between 9397%, with some downtime planned at East Dubuque in the quarter. We expect direct operating expenses, excluding inventory impacts, to be between 57,000,000 and $62,000,000 and total capital spending to be between 18,000,000 and $22,000,000 For the Renewables segment, we estimate second quarter twenty twenty five total throughput to be approximately 16 to 20,000,000 gallons, direct operating expenses to range between 8,000,000 and $10,000,000 and total capital spending to be between 2,000,000 and 4,000,000 With that, Dave, I'll turn it back over to you.

[David Lamp, President & CEO at CVR Energy]

Thanks, Dane. Refining market conditions began to improve in the first quarter due in part to a heavy spring maintenance season and the closure of one U. S. Refinery. Several more closures have been announced in The U.

[David Lamp, President & CEO at CVR Energy]

S. And in Europe for 2025 and 2026. Recent data from EIA indicates days of gasoline supply are 12% below the five year average, while diesel is currently 17% below. Within the Mid Con where we operate, days of gasoline supply are currently 8% below the five year average and diesel is nearly 13% below. Given the improvement in supply and demand fundamentals and the increase in RIN prices, we are surprised that cracks are not higher.

[David Lamp, President & CEO at CVR Energy]

In the near term, the evolving tariff environment and associated concerns in the market around potential demand impacts will likely weigh on the market to some degree. As it relates to tariffs and our refining assets, we are relatively well positioned given our location at Mid Con and our limited exposure to Canadian crude oil. Unlike other refiners in PADD II that are more dependent on heavy Canadian crude oil, we typically only run a few thousand barrels per day of WCS at Coffeyville and sell the remainder at Cushing. If those barrels are ultimately not economic, we can run the Coffeyville refinery at full rates with no Canadian crude oil at all. During the turnaround at Coffeyville, we completed tie ins for the initial phase of the distillate recovery project.

[David Lamp, President & CEO at CVR Energy]

This project should give us the ability to increase Coffeyville's distillate yield by approximately 2%. We have a similar project planned at Wynnewood that has already received Board approval. Over the next few months, we plan to install some additional piping and revamp some of our tankage at Coffeyville, which should enable us to make up to 9,000 barrels a day of jet by the end of the third quarter. We also have the potential to increase capacity further with additional investment. We believe the opportunity to ship barrels to the West will continue to grow over the next several years, and with jet fuel being a likely important part of the mix.

[David Lamp, President & CEO at CVR Energy]

As a reminder, jet fuel production is not subject to an RVO, and shifting production from diesel to jet fuel would reduce our annual RIN obligations. We also continue to make progress on the Wynnewood Appalachian project that when completed would eliminate usage of HF acid and provide a margin capture improvement opportunities through increased production of premium gasoline. In the Renewable segment, we completed a catalyst change in January and continue to run the unit at 5,000 barrels per day in an effort to optimize yield and catalyst life. RIN prices have increased over the past few months due in part to the significant decline in D4 RIN generation after the expiration of the blenders tax credit at the end of twenty twenty four. As we continue to evaluate whether renewable business makes sense, we currently intend to operate the renewable diesel unit at similar rates while we wait for clarity on the BTC and or see the final rules on the PTC.

[David Lamp, President & CEO at CVR Energy]

As we stated on our last earnings call, we remain fully willing to participate in the renewable space, but cannot invest additional time and capital without further assurance the government will support the businesses it created. In the Fertilizer segment, recent USDA estimates are calling for an inventory carryout levels for corn and soybeans at 10% or less. The spring planting season is well underway and the weather has been favorable. With the USDA estimating 95,000,000 acres of corn planted this year, we expect to see strong fertilizer demand for the spring and prices have been increasing over the past few months. Looking at the second quarter of twenty twenty five, quarter to date metrics are as follows: Group two-one-one cracks have averaged $24.67 per barrel, with the Brent TI spread at $3.39 per barrel and the WCS differential at $9.55 per barrel under WTI.

[David Lamp, President & CEO at CVR Energy]

The HOBO spread has averaged a negative $1.47 per gallon. As of yesterday, Group three two-one-one cracks were $27.15 Brent TI was $3.65 and WCS was $9.6 under WTI. The Hobo spread was negative $1.62 per gallon and RINs were approximately $6.42 per barrel. Prompt fertilizer prices are approximately $600 a ton for ammonia and $3.8 per ton for UAN. With the large turnaround at Coffeyville behind us, we are well positioned to capitalize on any and all continued improvements in the refining sector as we approach the summer driving season, and we look forward to the remainder of 2025 and 2026 with no additional planned refinery turnarounds.

[David Lamp, President & CEO at CVR Energy]

In addition to our constant focus on safe, reliable operations at our facilities, we will prioritize efforts to reduce debt and restore our balance sheet to targeted leverage ratios as soon as we can, subject to market conditions. We also continue to look for ways to improve capture, reduce cost, and ultimately grow our business profitably. With that, we're ready for questions.

[Operator]

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

[Manav Gupta, Executive Director at UBS Group]

Good morning, guys. I wanted to understand a little bit more on the refining macro. On one hand, you are indicating that you actually believe that market conditions did improve. And if it was not for the tariffs, you believe the cracks would be higher. So I'm just trying to understand, do you see a pretty strong demand or at least resilient demand in the regions in which you are operating versus a possibility of a recession, which could actually mean significantly lower demand?

[Manav Gupta, Executive Director at UBS Group]

So help us understand what you're seeing in terms of refined product demand out there in the markets you operate.

[David Lamp, President & CEO at CVR Energy]

Well Manav, I think as I mentioned in the prepared remarks, days of supply have shrunk quite a bit compared to the five year average, which indicates to us that the supply demand balance is correcting itself. And some of that may be due to the heavy turnaround season for the spring. But in general, I think it shows a little bit more discipline in the market. And as that wears off, it'll be interesting to see what demand does in the summer season and how much of uptick we get in gasoline. Diesel is still a little bit slow, but inventories are telling me that the crack is probably a little bit low from where it should be.

[David Lamp, President & CEO at CVR Energy]

And of course, offsetting it all is this increase in the RVO and the RIN price that accelerated almost $2 in the quarter.

[Manav Gupta, Executive Director at UBS Group]

Perfect guys. A quick question here on the RVO and SRE side. I mean, Trump administration last time in office understood the importance of SREs, so that's one other that we are hearing out there is they actually want to raise the RVO on the D4 side with the, you know, multiple participants being involved in the discussion. So how do you see this playing out? And in your opinion, is the right way to decouple d four and d six and let them operate separately?

[Manav Gupta, Executive Director at UBS Group]

Help us understand what would be the best solution in your opinion. Thank you.

[David Lamp, President & CEO at CVR Energy]

Well, this is, as you know, a highly controversial issue. But we do believe decoupling 4s from 6s is an important move. And the only way it can really happen is if the D6 mandate is lowered or is something below an E10 that is really adjusted for volume because we're having it fixed at $15,000,000,000 which by the way is the majority of the $22,000,000,000 20 3 billion dollars mandate really just drives D4s into having to make it up because the volumes are not there. All that said, again the government created these businesses and what they did with the RVO that was issued three years ago was just cut the legs out from under it and generate a lot of excess D4s and just kind of messed the whole thing up. And then the BTC expired which automatically increases the RIN price.

[David Lamp, President & CEO at CVR Energy]

So know who suffers out all this? Well it's the driving public. The American citizen that is the hard working men and women who really depend on low cost fuel to really drive the economy. So I think the government's got a lot of thinking to do. Our minds, they should do is do everything they can to minimize RIN prices just because it affects the driving public.

[David Lamp, President & CEO at CVR Energy]

That said, on the other hand, they should set production on renewable diesel and biodiesel to what the production capabilities are, which they have not done. And the law kind of implies that's what should be done. So as I've said many times, this RFS was poorly conceived, poorly written, poorly implemented, and poorly managed. And I don't see that changing.

[Manav Gupta, Executive Director at UBS Group]

Thank you, sir.

[Operator]

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

[Matthew Blair, Managing Director at TPH&Co]

Hey, good morning, Dave, and congrats on the positive RD EBITDA result in the first quarter, even without the 45C. Could you talk about how things are progressing so far in the second quarter? Do you still expect to be EBITDA positive in Q2? And then some of your peers have been recording the 45Z benefit. So could you talk about what you need to see to get more comfortable in recording the 45Z for CVI?

[David Lamp, President & CEO at CVR Energy]

Sure. Well, I don't know that we see much changing other than RINs going up in the second quarter. And that obviously is helping our margins in renewable diesel. Bean oil has also gone up and HOBO as I mentioned has gone more negative than ever. So all those offsets all depends on what basis does as well as our hedging strategy on the feedstocks and the product.

[David Lamp, President & CEO at CVR Energy]

So that's kind of where we sit today. As far as the PTC and recognizing that, Dane, you want to address that?

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

Yeah, Matt. The notice that the IRS put out in January just left a number of questions as to what specifically counts as a qualifying sale. We just wanted to get a little more comfort and clarity around the qualifying sale provisions that are out before we go ahead and book anything. In addition to that, there's still a lot of talk around what the actual PTC credit value could be. Just for reference, we could ballpark the number we didn't book around $2,000,000 and don't lose the ability to book that going forward.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

It's just we want more certainty before we

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

take it. So a little

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

bit of a conservative position when things shake out.

[Matthew Blair, Managing Director at TPH&Co]

Thanks. That's helpful. And then my follow-up is around refiner M and A and the potential for industry consolidation. So if we look back over the past ten years, which I think covers a range of environments, there's been pretty significant outperformance by the large cap refiners. And if we look forward, futures curves on the product side are a little weaker, futures curves on crude differentials are relatively tight for inland barrels.

[Matthew Blair, Managing Director at TPH&Co]

It really seems like the benefits of economies of scale would be even greater going forward. And so my question is, do you agree with this assessment? And do you think that small refiners need to get bigger? And if so, do you think it'll actually happen? Thank you.

[David Lamp, President & CEO at CVR Energy]

Well, lot in that question, Matt. I think we would definitely agree with you. Economies of scale are the only way to survive these days. And of our problem is that we're highly concentrated in the Mid Con only. Anything we can do to diversify that is helpful as long as it's profitable.

[David Lamp, President & CEO at CVR Energy]

So I do think there's potential out there for some more consolidation, although it's getting pretty thin on the counterparties that can even make any sense. But we definitely agree with your approach on that.

[Matthew Blair, Managing Director at TPH&Co]

Great, thank you. Thank you.

[Operator]

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

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

All right, Dave and team, thanks for taking the time. My first question is on Coffeeville. Congratulations on getting that asset up and running. I know the turnaround took a little bit longer and extended into Q2. But just talk about what you achieved during that, the time to the next turnaround and thoughts on the ability to start up, stay up.

[David Lamp, President & CEO at CVR Energy]

Yes, Neil, I guess I would tell you this is not the way to do a turnaround. Having to come down early like we did, mean losing that naphtha meter really, really hurt us. And that was in the dead of winter, of course, which didn't help either. We had a pretty cool, I'll call it cool, not necessarily cold winter. And when you get out of sequence, all kinds of things happen.

[David Lamp, President & CEO at CVR Energy]

You get a different team that may have been occupied somewhere else on your contractors. Just about anything that can go wrong went wrong for us in this turnaround. And it shows in the duration was extended. Whether or not we have an insurance claim to do, we're still contemplating, but it looks like to me that there's a good chance there could be something just because of the delays that hit us and the lack of productivity during the weather events and the other factors that happened that was out of our control. When you hit the forty five thousand man hours of pre turnaround work that you needed to complete that before you start the turnaround and shove that into the turnaround, can see how it is very disruptive.

[David Lamp, President & CEO at CVR Energy]

But I think we're through it largely and we're going to recover strong. We're looking forward to improve margins. It's been a bit of a drought since we've had the kind of margins we're seeing right now. And obviously, even despite RINs being elevated, our profitability should be improved.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Yes, makes sense. And then assuming margins start to come back a little bit, how do you think about the potential to return the dividends? It's been a big part of the CVI story for a long time. I was curious on that. I have a couple of other

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

questions and I'll queue back You've

[David Lamp, President & CEO at CVR Energy]

heard me say many times we're a dividend machine. We have taken a siesta on that a little bit here just because of where margins were for most of 2024. But our goal, as I mentioned in our prepared remarks, is to pay down this additional debt that we took on, get back to normal and start dividend at that time. Of course, the Board looks at it every month or every quarter. And I think they'll continue to do that.

[David Lamp, President & CEO at CVR Energy]

And if margins stay where they're at, be looking at a dividend in the future.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Okay. I'll queue back in. Thanks, Tim.

[Operator]

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

[John Royall, Executive Director at JP Morgan]

Hi, good afternoon. Thanks for taking my question. So my first question is on the jet expansion at Coffeyville. When you spoke about that in 4Q, you mentioned at the time one big constraint to think about or one big challenge to think about was building a book of customers to buy jet. Is there any update you can give on those efforts?

[John Royall, Executive Director at JP Morgan]

Do you think that the demand will be there by the time you're ready to start producing?

[David Lamp, President & CEO at CVR Energy]

Well, I think it will be, John. I mean, where we're at right now is a lot of the major airlines are on three year bid contracts, and those are coming up for at least two of them in N-twenty five. So we're anticipating that we'll achieve some of that business. So that's probably our greatest look. We also have our fuel by rail that we have that when the arbs open to the West, can move J.

[David Lamp, President & CEO at CVR Energy]

T. That way. And I don't think it's going to be a big problem, but it's going to take a little time to build a book of business. You look at what we've done at Wynnewood, we've made J. T.

[David Lamp, President & CEO at CVR Energy]

There for years and most of it was through military contract. We lost that last year and we've been still been successful in moving J. T. Out of plant. So I don't think it's going to be a big problem.

[John Royall, Executive Director at JP Morgan]

Great, thank you. And then my follow ups on the renewable side, you talked about needing further assurance to get to a positive investment decision on a project within renewables today. Can you talk about what would give you that type of assurance? Is it just finalizing the PTC rules and the LCFS plan and getting the RFS complete? Or would you need some sort of longer term assurance?

[John Royall, Executive Director at JP Morgan]

Is it more than just the near term rules?

[David Lamp, President & CEO at CVR Energy]

Well, there's one thing we've learned in the renewable diesel business is that you can't count on credits. They change, the government administrations change, you get different philosophies. And the approach we've taken is largely we're willing to do SAF if somebody is willing to take the credit risk. We'll give them the credits that are there, but we're not going to take it ourselves. And that's just kind summarizes renewable diesel and SAF to me across the board.

[David Lamp, President & CEO at CVR Energy]

We have a larger project at Coffeyville that we've put together and designed and have a cost estimate done on it. It's a 500,000,000 gallon a year plant and it's costly but if SAF is really needed and renewable diesel and we could design that for 100% SAF if we wanted to. We sit in the middle of the ag area certainly for corn oil we're advantaged and that's a low CI feedstock. So there's a lot we can do but we're not going to do it. We can't trust the government to provide a steady stream of credits that when you're taking a $4 or $5 oil and trying to shove it into a $2 market, it just doesn't work.

[John Royall, Executive Director at JP Morgan]

Thank you.

[David Lamp, President & CEO at CVR Energy]

You're welcome.

[Operator]

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

[Paul Cheng, Analyst at Scotiabank]

Hey guys, good morning. Dan, maybe you can help me. I still couldn't understand why the renewable result is so good. In the fourth quarter, your gross margin is 1.13 and in the first quarter, you're $1.15

[Paul Cheng, Analyst at Scotiabank]

and in the first quarter, you are doing about

[Paul Cheng, Analyst at Scotiabank]

$93 but you lost BTC that's $1 per gallon. So I mean, what else is in there? In other words, that is the first quarter, we need is a good baseline or that there's something relate to your hedging program or that the way how you can the inventory and as a result that that's not a totally good baseline?

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

Yeah, Paul, I think you hit one of them on the head. There was about a $0.14 per gallon favorable realized hedge in place just associated with the inventory. In addition to that, the elevated rinse price picked up another, call it $0.15 a gallon. So those two just gave us a lift right away. There were some inventory impacts, you know, maybe another dime to 15¢, something like that.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

So, you know, to say to say it's a good baseline, there were some items that were, you call it, maybe exceptional for the period. We'll, of course, keep deploying the same strategy we have and see what results come out of it in the volatile market of renewable diesel. The one thing that was different that is probably more baseline is just our feedstock basis was was much improved. One of what are really one of our highest cost feedstocks was lower than our lowest cost feedstock in the prior period, which is really a testament to, having the pretreater on getting into that feed, getting better yields and running more reliably. So from that component, I would say you baseline there that we've improved that.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

But as far as some of the other items go, I wouldn't want to say that's a permanent fixture in the volatile market that RD is.

[David Lamp, President & CEO at CVR Energy]

And yield was up too, Paul. So I mean, don't underestimate that. 5% yield improvement goes a long way.

[Paul Cheng, Analyst at Scotiabank]

Well, I'm trying to say, okay, I mean, if you report $0.93 based on Dane, what you say about those three items is roughly about $0.45 So is that a good base line that we can use to project forward? Yes, assuming somewhere in the $0.45 and that's not including PTC at all. That seems like it's a phenomenal number comparing to some of your larger competitor that what they report.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

So I guess I would say, Paul, for the the if you're referencing like an adjusted margin, you know, it was 85¢ for q, 93¢ in in one q. That takes out that inventory benefit that I referenced.

[Paul Cheng, Analyst at Scotiabank]

Right.

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

Yep. So so the 8¢ improvement, I mean, got 15 from hedging, you've got another dime or so. So if you you take out that 20¢, you'd be in the the 70¢ range. You know, I I that is excluding PTC, which would be an incremental kicker. But again, I think the market's so volatile that I wouldn't want to set a baseline of expectations for how much these markers move around.

[Paul Cheng, Analyst at Scotiabank]

Right, understand. And then is the hedging, that the $0.14 benefit from the hedging. We continue going to see that into the second and third quarter or that the hedging benefit will just disappear or that reverse?

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

So Paul, hedging is really around price exposed inventory or excess inventory. So we'll take a protective position or short position on any excess inventories. So, from that perspective, again, to what the market does and how our feed performs.

[Paul Cheng, Analyst at Scotiabank]

I see. Dave, think in the past that, and you say it here again, about the economy of scale, the desire that for diversification beyond your current footprint. Where are we in that whole exercise at this point? Are we essentially say just waiting for other people that to come to you or that is still being actively pursue or that is is there any colors that you can share?

[David Lamp, President & CEO at CVR Energy]

Well, nothing I can really share, Paul. As we've said before, we really we look at everything that comes on the market and try to screen it through our picture. To date, it's been the bid ask been too wide for us. And thank goodness because the market really took a hit in 2024, come off a record year in 2023 and go to just a record low year in 2024. So I think we're pretty conservative and we want I won't say we're bottom fishers, but we're pretty close to that.

[David Lamp, President & CEO at CVR Energy]

And we're not going to overpay for an asset.

[Paul Cheng, Analyst at Scotiabank]

And can I just make some one clarification? I think, Dan, you earlier say that $2,000,000 for the PTC, if you will be able to fully book it for the quarter. Is that do I get the number right?

[Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary at CVR Energy]

That is correct. And as I mentioned, there's ongoing debate around what the value of the PTC is based on your feed and there's some questions out there. That that number I wouldn't say is final, but based on some of the rumors we've heard or some of the conversations that are going on, that could be

[Richard Roberts, VP - FP&A and IR at CVR Energy]

a conservative number. Could be double that.

[Paul Cheng, Analyst at Scotiabank]

Okay, will do. Thank you.

[David Lamp, President & CEO at CVR Energy]

You're welcome, Paul.

[Operator]

Our next question is a follow-up from Neil Mehta with Goldman Sachs. Please proceed with your question.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Two quick ones, Dave. You always have great perspective on US shale. Mean, TI is pushing on $60 at this point. What's your perspective on U. S.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Oil growth and what are the pricing levels that you think activity changes?

[David Lamp, President & CEO at CVR Energy]

Well, I think I've said many times is, I think we're in a it depends on the company you're talking about, but a lot of them are breakevens are being approached with the numbers we're at or just slightly breakeven slightly below that. Very much depends on the region you're in. Obviously, Permian is probably the lowest in Anadarko or DJ Basin or some of those others are probably the higher or Bakken too. So it really depends on where you're at and the rigs are falling. I expect that to continue.

[David Lamp, President & CEO at CVR Energy]

And we've had in our basin, the Antarctica had really probably pretty big growth, but it's really one player. What they're going to go do from here on out, we really don't know. Our gathering volumes are still pretty strong, but I'm anticipating they're going to fall off a little bit.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

All right. Well, we'll keep on watching. The other one's a little trickier that I think a lot of the investment community is a little confused about all the insider activity at the company. I don't know if anything you can comment around that. It's just unusual.

[David Lamp, President & CEO at CVR Energy]

Yeah, we probably can't comment much on that. You probably have to ask them themselves.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Thanks. I figured. Thanks, Dave.

[Richard Roberts, VP - FP&A and IR at CVR Energy]

You're welcome.

[Operator]

We have reached the end of the question and answer session. I would now like to turn the floor back over to management for closing comments.

[David Lamp, President & CEO at CVR Energy]

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 to our safe, reliable and environmentally responsible operations. We look forward to reviewing our second quarter twenty twenty five results on our next earnings call. Thank you very much.

[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.

Participants

Executives

• Richard Roberts, VP - FP&A and IR
• David Lamp, President & CEO
• Dane Neumann, EVP, CFO, Treasurer & Assistant Secretary

Analysts

• Manav Gupta, Executive Director at UBS Group
• Matthew Blair, Managing Director at TPH&Co
• Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs
• John Royall, Executive Director at JP Morgan
• Paul Cheng, Analyst at Scotiabank