CVR Energy Q2 Earnings Call Highlights

Key Points

• CVR Energy delivered strong Q2 operating results, with $161 million in EBITDA, $209 million in adjusted EBITDA and $307 million in operating cash flow. Refining adjusted EBITDA rose to $106 million on higher crack spreads and 98% refinery utilization, while fertilizer adjusted EBITDA increased to $107 million with 99% ammonia utilization.
• RIN obligations and hedge losses remained significant headwinds. Net RIN expense totaled $216 million, while realized derivative losses reached $81 million; the company had approximately 8.2 million barrels of crack-spread swaps outstanding at quarter-end.
• Management is prioritizing deleveraging and selective growth, targeting $1 billion in gross leverage excluding CVR Partners debt. Third-quarter refinery throughput is expected at 205,000–220,000 barrels per day, while fertilizer utilization will fall to 75%–80% during the East Dubuque turnaround and expansion.

CVR Energy NYSE: CVI reported strong operating performance in the second quarter of 2026, supported by high refinery and ammonia plant utilization, elevated refining margins and favorable fertilizer-market conditions. The company said it generated consolidated net income of $46 million, while reporting a loss per share of $0.03, EBITDA of $161 million and adjusted EBITDA of $209 million.

Chief Executive Officer Dane Neumann said the company’s asset base benefited from tight energy and fertilizer markets linked to ongoing global conflicts. CVR Energy declared a second-quarter dividend of $0.10 per share and said current market conditions could create opportunities to reduce leverage and add shareholder value.

Refining Results Improve on Higher Crack Spreads

CVR Energy’s petroleum segment generated adjusted EBITDA of $106 million in the second quarter, up from $38 million a year earlier. The company attributed the improvement primarily to higher Group 3 crack spreads and increased throughput volumes, partly offset by higher Brent expenses, WTI backwardation and realized derivative losses.

Combined refinery throughput totaled approximately 213,000 barrels per day, representing crude utilization of about 98% of nameplate capacity. Light-product yield was 92% of total throughput.

The Group 3 2-1-1 crack spread averaged $44.91 per barrel during the quarter, compared with $24.02 per barrel in the second quarter of 2025. CVR Energy’s realized margin, adjusted for renewable fuel standard, inventory valuation and unrealized derivative impacts, was $12.43 per barrel, or a 28% capture rate on the Group 3 benchmark.

Renewable Identification Number, or RIN, costs remained a major drag on results. Net RIN expense, excluding the change in the company’s RFS liability, was $216 million, or $11.16 per barrel. Richard Roberts, interim chief financial officer and vice president of FP&A and investor relations, said the expense reduced the company’s capture rate by approximately 25%.

CVR Energy had an estimated accrued RFS obligation of $408 million as of June 30, representing 169 million RINs marked at an average price of $2.41. The Environmental Protection Agency had not ruled on Wynnewood Refining Company’s pending 2025 small-refinery-exemption petition, Roberts said. The company continues to recognize 100% of Wynnewood’s RIN obligation in its financial statements, which was approximately $77 million for the quarter.

Roberts said a 100% exemption for Wynnewood would have improved the company’s consolidated capture rate by roughly 9% during the quarter. CVR Energy said it is purchasing 50% of Wynnewood’s expected 2026 obligation while maintaining that the refinery qualifies for a full waiver under the Department of Energy scoring methodology.

Hedge Losses and Third-Quarter Exposure

Second-quarter results included derivative losses of $75 million, comprising an $81 million realized loss and a $6 million unrealized gain. The realized loss stemmed from crack-spread swaps, with approximately 4.4 million barrels of positions settled during the quarter.

Roberts said the realized loss equated to about $4.16 per barrel and reduced capture by roughly 9%. The company had open crack-spread swap positions totaling approximately 8.2 million barrels at quarter-end.

• For the remainder of 2026, CVR Energy had approximately 4.6 million barrels of diesel hedged and 400,000 barrels of gasoline hedged.
• Third-quarter crack-spread swap exposure totaled about 2.7 million barrels, with a notional value of approximately $102 million.
• For 2027, the company had roughly 3.2 million barrels of diesel hedged, distributed relatively evenly across the year.

Neumann said CVR Energy historically sought board authorization to hedge around 30% of production for roughly a calendar year. Going forward, he said the company may seek lower authorization levels and take a more cautious approach to layering in hedges.

Fertilizer Segment Posts Higher EBITDA

The fertilizer segment reported adjusted EBITDA of $107 million, compared with $67 million in the prior-year period. Ammonia utilization reached 99% as both plants operated with minimal downtime.

CVR Partners’ general partner declared a second-quarter distribution of $6.08 per common unit. Because CVR Energy owns approximately 37% of CVR Partners’ common units, it expects to receive a proportionate cash distribution of about $24 million.

Neumann said nitrogen demand was strong during the spring planting season, while summer fill and fall prepay activity produced a “solid book of business” for the second half of 2026 at what he called attractive pricing. Prompt third-quarter fertilizer prices were cited at $650 to $700 per ton for ammonia and $325 to $350 per ton for UAN.

The company expects to begin a planned turnaround at its East Dubuque facility in late August. During that work, CVR Energy intends to complete a brownfield expansion that it believes will increase ammonia production capacity by approximately 5%. It also expects to finalize a detailed design and construction plan this year for using natural gas as an alternative feedstock to third-party petroleum coke.

Cash Flow, Deleveraging and Outlook

CVR Energy generated $307 million of operating cash flow and $264 million of free cash flow in the second quarter. Cash spending included $43 million of capital expenditures, $27 million for the non-controlling interest portion of CVR Partners’ first-quarter distribution, $20 million of cash interest and $10 million in dividends.

The company ended the quarter with $737 million in consolidated cash, including $137 million in the fertilizer segment. Liquidity excluding CVR Partners was approximately $1.1 billion, including about $600 million of cash and $540 million of availability under its asset-based lending facility.

Management reiterated its goal of reducing gross leverage to $1 billion, excluding CVR Partners debt. Neumann said debt reduction remains a priority, though the company could consider a sustainable increase in its dividend if it makes meaningful progress toward that target. He also said CVR Energy continues to seek accretive growth opportunities, including potential refining and logistics investments, but would look to funding sources other than cash on the balance sheet for meaningful acquisitions.

For the third quarter, CVR Energy expects petroleum-segment throughput of 205,000 to 220,000 barrels per day. Fertilizer ammonia utilization is projected at 75% to 80%, reflecting the East Dubuque turnaround. Neumann said the company remains optimistic that refining and fertilizer conditions could stay above mid-cycle levels well into 2027.

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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