CVR Energy Q1 Earnings Call Highlights

Key Points

• CVR reported a consolidated net loss of $160 million (loss of $1.91/share) and an EBITDA loss of $52 million in Q1, driven largely by $158 million unrealized derivative mark-to-market losses and a $51 million unfavorable RFS liability; on an adjusted basis, Adjusted EBITDA was $37 million and adjusted loss per share was $1.24.
• Refining performance was hampered by renewable fuel costs and hedges: benchmark Group 3-2-1 cracks rose to $21.58/bbl but CVR’s realized margin capture was only $4.72/bbl (a 22% capture rate) after $143 million of net RIN expenses (~$7.37/bbl) and $182 million of derivative losses.
• The fertilizer segment strengthened with Adjusted EBITDA of $78 million and ammonia utilization at 103%, enabling a reinstated $0.10/share dividend while management pursues deleveraging toward a $1 billion gross leverage target amid tighter market fundamentals from Middle East disruptions.

CVR Energy NYSE: CVI reported a mixed start to 2026 as strong operational performance in both refining and fertilizer was overshadowed by derivative mark-to-market losses and higher renewable fuel compliance costs.

On the company’s first-quarter earnings call, Chief Executive Officer Mark Pytosh said the company’s assets “performed well” with crude utilization of 97% and ammonia plant utilization of 103%, adding that geopolitical disruptions have increased volatility but also “set up attractive market opportunities for the balance of 2026.”

First-quarter results weighed down by derivatives and RFS impacts

Chief Financial Officer Dane Neumann said CVR Energy posted a consolidated net loss of $160 million, or $1.91 per share, with EBITDA a loss of $52 million for the first quarter of 2026.

Neumann attributed much of the quarter’s reported loss to items that management adjusts out of its non-GAAP view, including:

• $158 million of unrealized derivative losses tied primarily to NYMEX gasoline and diesel crack spread swaps entered into during the quarter
• $51 million unfavorable change in the company’s Renewable Fuel Standard (RFS) liability
• $120 million of favorable inventory valuation impacts

Excluding those items, Neumann said Adjusted EBITDA was $37 million and adjusted losses per share were $1.24.

Petroleum segment: higher cracks but margin capture pressured by RINs and hedges

In refining, Neumann said Adjusted EBITDA in the petroleum segment was a loss of $50 million, compared with a loss of $30 million in the first quarter of 2025, citing increased RIN expenses, higher operating costs, and realized derivative losses.

Combined total throughput was approximately 214,000 barrels per day, with crude utilization at about 97% of nameplate capacity. Light product yield was 93% on total throughput volumes. Benchmark cracks improved year over year, with the Group 3-2-1 averaging $21.58 per barrel versus $17.65 per barrel in the prior-year quarter.

Despite higher benchmark cracks, Neumann said the company’s first-quarter realized margin—adjusted for unrealized derivative losses, the change in RFS liability, and inventory valuation—was $4.72 per barrel, representing a 22% capture rate on the Group 3-2-1 benchmark.

Renewable Identification Numbers (RINs) costs were a key factor. Neumann said RIN prices more than doubled year over year to “almost $9.50 per barrel” for the quarter. Net RIN expense, excluding the change in RFS liability, totaled $143 million, or $7.37 per barrel, which he said reduced the capture rate by about 34%.

Neumann also discussed the company’s small refinery exemption (SRE) petition related to Wynnewood Refining Company. Because the EPA had not ruled on the company’s pending 2025 petition, Neumann said CVR Energy continues to recognize 100% of Wynnewood’s RIN obligation in its financials, totaling about $52 million in the first quarter. He said that if Wynnewood received the “100% SRE we believe it is entitled to,” the consolidated capture rate would have improved by about 12%.

On hedging, Neumann said first-quarter results included $182 million of derivative losses, including the $158 million unrealized mark-to-market impact tied to open crack spread swap positions. He said management does not view that unrealized loss as detrimental to the current period because the physical positions intended to offset those swaps will be sold as the contracts expire through 2027.

As of March 31, Neumann said open crack swap positions included 9.9 million barrels of diesel and 2.4 million barrels of gasoline, representing roughly 15% of expected gasoline and diesel production volumes for 2026 and 4% for 2027.

In response to analyst questions, Neumann said realized losses on crack spread positions were about $25 million, with the remainder of loss associated with inventory hedging as crude prices rose, “particularly in the month of March.”

Fertilizer segment: stronger year-over-year performance and CVR Partners distribution

CVR Energy’s fertilizer segment performed better year over year. Neumann said Adjusted EBITDA in the fertilizer segment was $78 million, compared with $53 million in the first quarter of 2025. Ammonia utilization was 103% as “both plants [were] running well and experiencing minimal downtime during the quarter.”

Neumann noted that the board of directors of CVR Partners’ general partner declared a $4 per common unit distribution for the first quarter. Because CVR Energy owns about 37% of CVR Partners common units, it expects to receive a proportional cash distribution of about $16 million.

Capital allocation: dividend reinstated alongside deleveraging goal

Management announced a $0.10 per share dividend for the first quarter of 2026. Pytosh said the company believes its outlook supports “balanced debt reduction and capital returns to shareholder as we move forward.”

During the Q&A, Pytosh confirmed to UBS analyst Manav Gupta that the reinstated dividend is “not meant to be a variable dividend,” distinguishing it from the variable nature of the fertilizer business.

Neumann said first-quarter cash flow from operations was $64 million and free cash flow was $21 million, “of which approximately $63 million was generated by the fertilizer segment.” Key cash uses included $47 million of capital spending, $40 million of cash interest, $15 million tied to debt refinancing costs, and $3 million paid for the non-controlling interest portion of CVR Partners’ fourth-quarter 2025 distribution.

The company ended the quarter with $512 million of consolidated cash, including $128 million in the fertilizer segment. Excluding CVR Partners, Neumann said total liquidity was about $923 million, comprised primarily of $384 million of cash and $539 million of availability under the ABL facility. He reiterated the company’s goal of reducing gross leverage to $1 billion, excluding CVR Partners debt.

Asked about balancing debt reduction, dividends, and potential M&A, Pytosh said the company believes it can “continue on the path we’ve been on from a deleveraging” while also paying dividends given improved market dynamics. He added that M&A remains a priority, though volatility has made it less of a near-term focus as management concentrates on positioning the base business.

Market outlook: Middle East disruption reshapes refining and fertilizer fundamentals

Pytosh said market conditions have changed quickly after a “slow start to the year in the refining segment,” adding that the company sees a constructive outlook for both refining and fertilizer.

In refining, he pointed to tightened crude and refined product inventories globally following what he described as the “effective closure of the Strait of Hormuz,” along with uncertainty about damage to refining capacity. He said U.S. refining has “largely been unimpacted so far,” though inventories have been declining partly due to increased exports.

In the Mid-Continent, Pytosh said gasoline inventories declined 17% and diesel inventories declined 20% compared with the beginning of the year, with demand trends improving. He said CVR Energy is working to access higher-demand regions outside the Mid-Continent to improve margin capture, including beginning to use a rail loading facility at Wynnewood that was repurposed after the reversion of the renewable diesel unit. He also cited an expected pipeline from Kansas to Denver scheduled to come online later in 2026, as well as other projects under development such as the Western Gateway Pipeline.

In fertilizer, Pytosh said the spring planting season “is underway and it’s going well so far,” noting USDA estimates of about 95 million acres of corn plantings in 2026. He said nitrogen fertilizer inventories started the year tight and have tightened further amid Middle East disruptions, citing that roughly 30% of nitrogen fertilizer production typically transits through the Strait of Hormuz and that multiple production facilities in the Middle East have been damaged or curtailed due to limited natural gas supplies.

Pytosh also shared quarter-to-date second-quarter pricing metrics discussed on the call, including Group 3-2-1 cracks averaging $38.36 per barrel. He added that prompt fertilizer prices were about $950 per ton for ammonia and $525 per ton for UAN.

Looking to the second quarter, Neumann guided to petroleum throughput of 200,000 to 215,000 barrels per day, petroleum segment direct operating expenses of $110 million to $120 million, and petroleum capital spending of $35 million to $40 million. For fertilizer, he forecast ammonia utilization of 95% to 100%, direct operating expenses excluding inventory and turnaround impacts of $57 million to $62 million, and capital spending of $28 million to $32 million.

About CVR Energy NYSE: CVI

CVR Energy, Inc is an independent downstream energy company engaged primarily in petroleum refining and nitrogen fertilizer production in the United States. Headquartered in Sugar Land, Texas, CVR Energy operates through two reportable segments—Petroleum Products and Nitrogen Fertilizers—leveraging its refining expertise and distribution network to serve both wholesale and retail markets across key regions in the U.S.

In its Petroleum Products segment, the company owns and operates the Coffeyville, Kansas refinery, which has the capability to process various grades of crude oil into gasoline, diesel, jet fuel and other refined products.

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