CVR Energy, Inc. (NYSE:CVI) Q2 2023 Earnings Call Transcript August 1, 2023 1:00 PM ET Company Participants Richard Roberts - VP, FP&A and IR Dave Lamp - CEO Dane Neumann - CFO Conference Call Participants Matthew Blair - Tudor, Pickering, Holt Manav Gupta - UBS John Royall - JPMorgan Neil Mehta - Goldman Sachs Paul Cheng - Scotiabank Operator Greetings, and welcome to the CVR Energy, Inc. Second Quarter 2023 Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is n ...

Form 10-Q Delaware 61-1512186 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a shell compa ...

Financial Data and Key Metrics Changes - The company reported consolidated net income of $259 million and earnings per share of $1.94 for the first quarter of 2023, with EBITDA at $401 million [36][40] - Adjusted EBITDA for the quarter was $334 million, with adjusted earnings per share at $1.44 [19] - Cash provided by operations was $247 million, and free cash flow was $213 million [21] Business Line Data and Key Metrics Changes - In the Petroleum segment, adjusted EBITDA was $210 million, driven by strong product cracks in the Mid-Con [19] - Direct operating expenses in the Petroleum segment increased to $5.90 per barrel compared to $5.57 per barrel in the first quarter of 2022 [10] - The Fertilizer segment achieved adjusted EBITDA of $124 million, with strong production offsetting a decline in nitrogen fertilizer prices [10] Market Data and Key Metrics Changes - Group 3 2-1-1 cracks averaged $34.16 per barrel in the first quarter, while the average for the second quarter to date is $32.32 per barrel [17][29] - RIN prices remained high at $8 per barrel, with an estimated accrued RFS obligation of $582 million as of March 31 [6][9] - Fertilizer prices are approximately $500 for ammonia and $300 per ton for UAN [29] Company Strategy and Development Direction - The company plans to invest additional capital in fertilizer plants to improve reliability and lower carbon footprint [28] - A hedging program was authorized to enter into crack spread swaps for up to 30% of expected gasoline and diesel production for Q2 through Q4 of 2023 and all of 2024 [26] - The company is evaluating a potential transaction to spin off its GP and LP interests in CVR Partners [28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the near-term outlook, driven by solid contributions from both refining and fertilizer segments [47] - The company noted that while diesel cracks have softened, increased gas cracks have somewhat offset this decline [25] - Management highlighted strong demand for fertilizer due to favorable grain prices and farmer economics [39] Other Important Information - The Board of Directors authorized a first-quarter dividend of $0.50 per share, with an annualized dividend yield of approximately 7% [16] - Total consolidated capital spending for 2023 is estimated to be between $200 million and $226 million [11] Q&A Session Summary Question: Will the hedging strategy affect the modeling of capture rates? - Management acknowledged that the hedges would likely support margins and affect results materially in the upcoming quarters [31][54] Question: What is the outlook for distillate demand? - Management indicated that distillate demand has been strong, but there are signs of a slowdown in the industrial economy [71] Question: Can the $0.50 dividend be sustained? - Management stated that the dividend is evaluated quarterly, and while they aim to maintain it, market conditions will dictate future decisions [58] Question: What are the expected impacts of the E15 blend waiver? - Management believes the E15 waiver will generate more D6 RINs but does not expect it to have a significant impact on gasoline demand [79] Question: What is the sustaining CapEx for the corporation? - Management indicated that sustaining CapEx is estimated to be between $80 million and $100 million [82]

```markdown PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, changes in equity, and cash flows, along with detailed notes. Key financial highlights for Q1 2023 show an increase in total assets and equity, significant growth in operating and net income, and a decrease in cash from operating activities compared to Q1 2022 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's total assets increased from **$4,119 million** at December 31, 2022, to **$4,208 million** at March 31, 2023. Total liabilities decreased from **$3,328 million** to **$3,279 million**, while total equity rose from **$791 million** to **$929 million**. Key changes include an increase in cash and cash equivalents and a decrease in other current liabilities | Metric | Dec 31, 2022 (in millions) | Mar 31, 2023 (in millions) | | :----- | :------------------------- | :------------------------- | | Total Assets | $4,119 | $4,208 | | Total Liabilities | $3,328 | $3,279 | | Total Equity | $791 | $929 | | Cash and cash equivalents | $510 | $601 | | Other current liabilities | $942 | $835 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2023, net sales decreased to **$2,286 million** from **$2,373 million** in the prior year. However, operating income significantly increased to **$330 million** from **$220 million**, and net income rose to **$259 million** from **$153 million**. Basic and diluted EPS also saw a substantial increase to **$1.94** from **$0.93** | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Net sales | $2,286 | $2,373 | | Operating income | $330 | $220 | | Net income | $259 | $153 | | Net income attributable to CVR Energy stockholders | $195 | $94 | | Basic and diluted earnings per share | $1.94 | $0.93 | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased from **$791 million** at December 31, 2022, to **$929 million** at March 31, 2023. This increase was primarily driven by net income of **$259 million**, partially offset by dividends paid to CVR Energy stockholders (**$50 million**) and distributions to CVR Partners' public unitholders (**$70 million**) | Metric | Dec 31, 2022 (in millions) | Mar 31, 2023 (in millions) | | :----- | :------------------------- | :------------------------- | | Total Equity | $791 | $929 | | Net income | - | $259 | | Dividends paid to CVR Energy stockholders | - | ($50) | | Distributions from CVR Partners to public unitholders | - | ($70) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased to **$247 million** for the three months ended March 31, 2023, from **$322 million** in the prior year. Net cash used in investing activities decreased to **$34 million** from **$41 million**, while net cash used in financing activities increased to **$122 million** from **$115 million**. Overall, net increase in cash, cash equivalents, and restricted cash was **$91 million**, down from **$166 million** | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Net cash provided by operating activities | $247 | $322 | | Net cash used in investing activities | ($34) | ($41) | | Net cash used in financing activities | ($122) | ($115) | | Net increase in cash, cash equivalents and restricted cash | $91 | $166 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering the company's organization, accounting policies, specific asset and liability categories, revenue recognition, derivative instruments, share-based compensation, commitments, contingencies, business segment performance, and related party transactions [(1) Organization and Nature of Business](index=9&type=section&id=(1)%20Organization%20and%20Nature%20of%20Business) CVR Energy is a diversified holding company primarily engaged in petroleum refining and marketing, and nitrogen fertilizer manufacturing through CVR Partners, LP. The company also produces renewable diesel. Icahn Enterprises L.P. (IEP) holds approximately 71% of CVR Energy's outstanding common stock - CVR Energy operates in Petroleum refining/marketing and Nitrogen Fertilizer manufacturing, also producing renewable diesel[205](index=205&type=chunk) - Icahn Enterprises L.P. (IEP) holds approximately **71%** of CVR Energy's outstanding common stock as of March 31, 2023[205](index=205&type=chunk) [(2) Basis of Presentation](index=10&type=section&id=(2)%20Basis%20of%20Presentation) The condensed consolidated financial statements are prepared in conformity with GAAP and SEC rules, including the accounts of the Company and its majority-owned direct and indirect subsidiaries, such as CVR Partners (a variable interest entity). All intercompany accounts and transactions have been eliminated - Financial statements are prepared in accordance with GAAP and SEC rules, consolidating CVR Energy and its majority-owned subsidiaries, including CVR Partners (a VIE)[253](index=253&type=chunk) [(3) Inventories](index=10&type=section&id=(3)%20Inventories) Total inventories decreased slightly from **$624 million** at December 31, 2022, to **$609 million** at March 31, 2023. Finished goods saw a decrease, while raw materials, in-process inventories, and parts/supplies increased | Category | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :------- | :------------------------- | :------------------------- | | Finished goods | $267 | $297 | | Raw materials | $214 | $206 | | In-process inventories | $39 | $35 | | Parts, supplies and other | $89 | $86 | | **Total inventories** | **$609** | **$624** | [(4) Property, Plant and Equipment](index=10&type=section&id=(4)%20Property,%20Plant%20and%20Equipment) Total property, plant and equipment, net, decreased slightly from **$2,247 million** at December 31, 2022, to **$2,241 million** at March 31, 2023. Construction in progress increased from **$143 million** to **$182 million**. Depreciation and amortization expenses were **$50 million** and **$53 million** for the three months ended March 31, 2023 and 2022, respectively | Category | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :------- | :------------------------- | :------------------------- | | Machinery and equipment | $4,212 | $4,194 | | Buildings and improvements | $87 | $86 | | ROU finance leases | $79 | $79 | | Land and improvements | $72 | $72 | | Furniture and fixtures | $37 | $37 | | Construction in progress | $182 | $143 | | Other | $16 | $15 | | Less: Accumulated depreciation and amortization | ($2,444) | ($2,379) | | **Total property, plant and equipment, net** | **$2,241** | **$2,247** | - Depreciation and amortization expenses were **$50 million** for Q1 2023, down from **$53 million** in Q1 2022[399](index=399&type=chunk) [(5) Equity Method Investments](index=11&type=section&id=(5)%20Equity%20Method%20Investments) The company holds equity method investments in CVRP JV (**50%** interest, carbon oxide capture and sequestration), Enable South Central Pipeline, LLC (**40%** interest, crude oil pipeline), and Midway Pipeline, LLC (**50%** interest, crude oil pipeline). The investment in CVRP JV increased to **$27 million** at March 31, 2023, from **$0** at December 31, 2022, due to its inception and noncash consideration from the 45Q Transaction, partially offset by cash distributions - CVR Energy has equity method investments in CVRP JV (**50%**), Enable JV (**40%**), and Midway JV (**50%**)[231](index=231&type=chunk) | Investment | Dec 31, 2022 (in millions) | Mar 31, 2023 (in millions) | | :--------- | :------------------------- | :------------------------- | | CVRP JV | $0 | $27 | | Enable JV | $5 | $5 | | Midway JV | $71 | $71 | | **Total** | **$76** | **$103** | - CVRP JV inception added **$46 million**, offset by **$19 million** in cash distributions[259](index=259&type=chunk) [(6) Leases](index=11&type=section&id=(6)%20Leases) The company leases pipelines, storage tanks, railcars, office space, land, and equipment. Lease liabilities for operating leases were **$41 million** and for finance leases were **$47 million** as of March 31, 2023. The company expects to capitalize an estimated **$8 million** to **$12 million** for a new corporate office lease commencing October 2023 and **$20 million** to **$25 million** for an Oxygen Storage Vessel finance lease within the next 12 months | Lease Type | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :--------- | :------------------------- | :------------------------- | | Operating Lease Liability | $41 | $40 | | Finance Lease Liability | $47 | $48 | - Expected capitalization of **$8-12 million** for new corporate office lease (operating lease) and **$20-25 million** for Oxygen Storage Vessel (finance lease) within **12 months**[237](index=237&type=chunk)[266](index=266&type=chunk) [(7) Other Current Liabilities](index=14&type=section&id=(7)%20Other%20Current%20Liabilities) Total other current liabilities decreased from **$942 million** at December 31, 2022, to **$835 million** at March 31, 2023. This was primarily due to a decrease in the accrued Renewable Fuel Standards (RFS) obligation from **$692 million** to **$582 million** | Category | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :------- | :------------------------- | :------------------------- | | Accrued RFS obligation | $582 | $692 | | Accrued taxes other than income taxes | $46 | $51 | | Deferred revenue | $45 | $48 | | Share-based compensation | $37 | $31 | | Personnel accruals | $28 | $47 | | Accrued income taxes | $28 | $0 | | Accrued interest | $19 | $24 | | Operating lease liabilities | $15 | $15 | | Current portion of finance lease obligations | $6 | $6 | | Derivatives | $1 | $4 | | Other accrued expenses and liabilities | $28 | $24 | | **Total other current liabilities** | **$835** | **$942** | [(8) Long-Term Debt and Finance Lease Obligations](index=14&type=section&id=(8)%20Long-Term%20Debt%20and%20Finance%20Lease%20Obligations) Total long-term debt and finance lease obligations remained stable at **$1,590 million** at March 31, 2023, compared to **$1,591 million** at December 31, 2022. CVR Partners' debt is **$547 million**, and CVR Energy's debt is **$996 million**, consisting of **5.25%** Senior Notes due 2025 and **5.75%** Senior Notes due 2028. The company was in compliance with all debt covenants | Category | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :------- | :------------------------- | :------------------------- | | CVR Partners debt | $547 | $547 | | CVR Refining finance lease obligations | $41 | $42 | | CVR Energy debt | $996 | $996 | | Current portion of finance lease obligations | $6 | $6 | | **Total long-term debt and finance lease obligations** | **$1,590** | **$1,591** | - The company was in compliance with all debt covenants as of March 31, 2023[172](index=172&type=chunk)[421](index=421&type=chunk) [(9) Revenue](index=15&type=section&id=(9)%20Revenue) Total revenue for the three months ended March 31, 2023, was **$2,286 million**, a decrease from **$2,373 million** in the prior year. Petroleum Segment revenue was **$1,993 million**, and Nitrogen Fertilizer Segment revenue was **$226 million**. Gasoline and distillates were the largest revenue contributors | Product | Petroleum Segment (in millions) | Nitrogen Fertilizer Segment (in millions) | Other / Eliminations (in millions) | Consolidated (in millions) | | :------ | :------------------------------ | :---------------------------------------- | :--------------------------------- | :------------------------- | | Gasoline | $1,010 | $0 | $0 | $1,010 | | Distillates | $919 | $0 | $48 | $967 | | Ammonia | $0 | $38 | $0 | $38 | | UAN | $0 | $164 | $0 | $164 | | Other urea products | $0 | $8 | $0 | $8 | | Freight revenue | $3 | $11 | $0 | $14 | | Other | $33 | $5 | $19 | $57 | | Crude oil sales | $28 | $0 | $0 | $28 | | **Total revenue** | **$1,993** | **$226** | **$67** | **$2,286** | | Year | Total Revenue (in millions) | | :--- | :-------------------------- | | 2023 | $2,286 | | 2022 | $2,373 | [(10) Derivative Financial Instruments and Fair Value Measurements](index=17&type=section&id=(10)%20Derivative%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) The company uses derivative instruments for hedging activities, Canadian crude forward purchases/sales, and crack spread swaps. As of March 31, 2023, the Petroleum Segment had open fixed-price commitments to purchase **43 million** RINs. The total net gain on derivatives for the three months ended March 31, 2023, was **$45 million**, a significant increase from **$2 million** in the prior year - Petroleum Segment had open fixed-price commitments to purchase **43 million** RINs as of March 31, 2023[275](index=275&type=chunk) | Category | 2023 (in millions) | 2022 (in millions) | | :------- | :----------------- | :----------------- | | Forwards | $8 | $9 | | Swaps | $29 | $2 | | Futures | $8 | ($9) | | **Total gain on derivatives, net** | **$45** | **$2** | [(11) Share-Based Compensation](index=19&type=section&id=(11)%20Share-Based%20Compensation) Total share-based compensation expense for the three months ended March 31, 2023, was **$9 million**, a decrease from **$25 million** in the prior year. This reduction was primarily due to lower market prices for CVR Energy's common shares | Category | 2023 (in millions) | 2022 (in millions) | | :------- | :----------------- | :----------------- | | CVR Partners - Phantom Unit Awards | $2 | $14 | | Incentive Unit Awards | $7 | $11 | | **Total share-based compensation expense** | **$9** | **$25** | - Decrease in share-based compensation expense primarily due to lower market prices for CVR Energy's common shares[356](index=356&type=chunk) [(12) Commitments and Contingencies](index=19&type=section&id=(12)%20Commitments%20and%20Contingencies) The company faces various legal and regulatory matters, including RFS disputes and Clean Air Act matters. The RFS obligation decreased from **$692 million** at December 31, 2022, to **$582 million** at March 31, 2023, with a recognized benefit of **$11 million** for Q1 2023 compared to an expense of **$107 million** in Q1 2022. The company is appealing a summary judgment related to insurance coverage for call option lawsuits and is mediating Clean Air Act claims - Accrued RFS obligation decreased from **$692 million** (Dec 31, 2022) to **$582 million** (Mar 31, 2023)[283](index=283&type=chunk) - Recognized an **$11 million** benefit for RFS compliance in Q1 2023, compared to a **$107 million** expense in Q1 2022[283](index=283&type=chunk) - Company is appealing a summary judgment regarding insurance coverage for call option lawsuits and mediating Clean Air Act claims[317](index=317&type=chunk)[318](index=318&type=chunk) [(13) Business Segments](index=21&type=section&id=(13)%20Business%20Segments) CVR Energy operates two reportable segments: Petroleum and Nitrogen Fertilizer. Performance is evaluated based on segment operating income (loss) and EBITDA. For Q1 2023, Petroleum operating income increased to **$237 million** from **$130 million**, and Nitrogen Fertilizer operating income increased to **$109 million** from **$104 million**. Total assets for Petroleum were **$4,114 million** and for Nitrogen Fertilizer were **$1,116 million** as of March 31, 2023 | Segment | Mar 31, 2023 (in millions) | Mar 31, 2022 (in millions) | | :------ | :------------------------- | :------------------------- | | Petroleum | $237 | $130 | | Nitrogen Fertilizer | $109 | $104 | | Other, including intersegment eliminations | ($16) | ($14) | | **Total operating income** | **$330** | **$220** | | Segment | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :------ | :------------------------- | :------------------------- | | Petroleum | $4,114 | $4,354 | | Nitrogen Fertilizer | $1,116 | $1,100 | | Other, including intersegment eliminations | ($1,022) | ($1,335) | | **Total assets** | **$4,208** | **$4,119** | [(14) Supplemental Cash Flow Information](index=23&type=section&id=(14)%20Supplemental%20Cash%20Flow%20Information) Cash paid for income taxes was **$4 million** in Q1 2023 (up from **$0** in Q1 2022), and cash paid for interest was **$29 million** (down from **$30 million**). Noncash investing and financing activities included a **$4 million** change in capital expenditures included in accounts payable and a **$32 million** change in turnaround expenditures included in accounts payable for Q1 2023 | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Cash paid for income taxes, net of refunds | $4 | $0 | | Cash paid for interest | $29 | $30 | | Operating cash flows from operating leases | $4 | $4 | | Operating cash flows from finance leases | $1 | $1 | | Financing cash flows from finance leases | $1 | $1 | | Change in capital expenditures included in accounts payable | $4 | $24 | | Change in turnaround expenditures included in accounts payable | $32 | $49 | [(15) Related Party Transactions](index=23&type=section&id=(15)%20Related%20Party%20Transactions) Related party sales to a CVRP JV subsidiary were **$1 million** in Q1 2023. Purchases from related parties, primarily for crude oil transportation services, were **$9 million** in Q1 2023, up from **$7 million** in Q1 2022. Dividends paid to IEP were **$36 million** in Q1 2023 | Activity | 2023 (in millions) | 2022 (in millions) | | :------- | :----------------- | :----------------- | | Sales to related parties (CO Contract) | $1 | $0 | | Purchases from related parties (Joint Venture Transportation Agreement) | $3 | $2 | | Purchases from related parties (Joint Venture Agreement) | $6 | $5 | | Dividends paid to IEP | $36 | $0 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and operational results, including an overview of its business, strategic objectives, achievements, and the general business environment [Company Overview](index=26&type=section&id=Company%20Overview) CVR Energy is a diversified holding company in petroleum refining and marketing, and nitrogen fertilizer manufacturing, also producing renewable diesel. The company is exploring a potential tax-free spin-off of its nitrogen fertilizer business into a separately traded public company - CVR Energy operates in petroleum refining/marketing and nitrogen fertilizer manufacturing, with renewable diesel operations[296](index=296&type=chunk) - Management is exploring a potential tax-free spin-off of the nitrogen fertilizer business into a new public company[297](index=297&type=chunk)[329](index=329&type=chunk) [Mission and Core Values](index=27&type=section&id=Mission%20and%20Core%20Values) CVR Energy's mission is to be a top-tier North American renewable fuels, petroleum refining, and nitrogen-based fertilizer company, driven by five core values: Safety, Environment, Integrity, Continuous Improvement, and Corporate Citizenship - Mission is to be a top-tier North American renewable fuels, petroleum refining, and nitrogen-based fertilizer company[277](index=277&type=chunk) - Core values include Safety, Environment, Integrity, Continuous Improvement, and Corporate Citizenship[28](index=28&type=chunk)[60](index=60&type=chunk)[332](index=332&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) [Strategic Objectives](index=27&type=section&id=Strategic%20Objectives) The company's strategic objectives include achieving continuous improvement in EH&S, industry-leading utilization rates through reliable operations, maximizing market capture by improving realized pricing and reducing variable costs, and maintaining financial discipline through low operating costs and disciplined capital deployment - Strategic objectives focus on EH&S improvement, achieving industry-leading utilization rates, maximizing market capture, and maintaining financial discipline[60](index=60&type=chunk)[61](index=61&type=chunk)[299](index=299&type=chunk)[333](index=333&type=chunk) [Achievements](index=28&type=section&id=Achievements) In Q1 2023, the company achieved a **100%** reduction in process safety management tier 1 incidents compared to Q1 2022. Corporate achievements include declaring a **$0.50** quarterly cash dividend, transforming the business to segregate renewables operations, and continuing to explore a nitrogen fertilizer spin-off. The Petroleum Segment operated reliably and increased crude oil gathering volumes by over **12%**. The Nitrogen Fertilizer Segment achieved record combined ammonia and UAN production and record truck shipments from Coffeyville - Achieved **100%** reduction in process safety management tier 1 incidents (YoY)[30](index=30&type=chunk) - Declared a quarterly cash dividend of **$0.50** per share for Q1 2023[30](index=30&type=chunk) - Completed business transformation to segregate renewables operations and continued exploration of nitrogen fertilizer spin-off[30](index=30&type=chunk) - Petroleum Segment increased crude oil gathering volumes by over **12%** (YoY)[30](index=30&type=chunk) - Nitrogen Fertilizer Segment achieved record combined ammonia and UAN production for Q1 2023 and record truck shipments from Coffeyville in March 2023[30](index=30&type=chunk) [General Business Environment](index=28&type=section&id=General%20Business%20Environment) The global economy faces heightened uncertainty due to the Russia-Ukraine conflict, leading to oil price volatility and elevated natural gas prices, which could impact financial condition. Refining market recovered post-pandemic, but refined product demand declined **5%** nationwide in Q1 2023 from 2019 average. Warmer winter weather in Europe reduced natural gas prices, impacting U.S. refiners' advantage. Industrial slowdown reduced distillate pricing, but improving gasoline pricing offset this - Russia-Ukraine conflict causes global economic uncertainty, oil price volatility, and elevated natural gas prices[62](index=62&type=chunk)[335](index=335&type=chunk) - Refined product demand declined **5%** nationwide in Q1 2023 compared to 2019 pre-pandemic average[64](index=64&type=chunk) - Warmer European winter reduced natural gas prices, flattening the global cost curve and reducing U.S. refiners' advantage[64](index=64&type=chunk) - Industrial slowdown and reduced freight volumes led to lower distillate pricing, partially offset by improving gasoline pricing[64](index=64&type=chunk) [Petroleum Segment](index=29&type=section&id=Petroleum%20Segment) The Petroleum Segment's earnings and cash flows are primarily affected by the relationship between refined product prices and crude oil/feedstock prices, as well as refinery compliance costs. The segment experienced improved crack spreads and lower RFS-related expenses in Q1 2023, despite a decrease in net sales due to normalizing prices and a planned turnaround. Direct operating expenses increased due to higher repairs, maintenance, and personnel costs [Current Market Outlook](index=29&type=section&id=Current%20Market%20Outlook) The refining market has largely recovered from the pandemic, but demand for refined products declined **5%** nationwide in Q1 2023 from 2019 levels. The Russia-Ukraine conflict continues to influence commodity markets, with sanctions on Russian oil exports impacting diesel. Heavy turnaround activity in Q1 2023 resulted in strong refining margins, but prices may be affected in Q2 and Q3 2023 due to completion of turnarounds and higher utilization. RIN prices remain high at **$7.81 per barrel** - Refined product demand declined **5%** nationwide in Q1 2023 from 2019 average[64](index=64&type=chunk) - Russia-Ukraine conflict and sanctions on Russian oil exports continue to influence commodity markets, particularly diesel[337](index=337&type=chunk) - Heavy turnaround activity in Q1 2023 led to strong refining margins, with potential price impacts in Q2/Q3 2023 due to higher utilization post-turnaround[337](index=337&type=chunk) - RINs remain high at **$7.81 per barrel**, with EPA's proposed RVO for 2023-2025 still subject to change[337](index=337&type=chunk) [Regulatory Environment](index=30&type=section&id=Regulatory%20Environment) The company is significantly impacted by volatility and high RIN prices due to RFS compliance requirements and proposed climate change laws. The EPA's delays in establishing RVOs and denying small refinery exemptions have contributed to this volatility. The Wynnewood Refinery received a stay on RFS enforcement pending resolution of its lawsuit against the EPA regarding SREs. The estimated consolidated cost to comply with RFS for 2023 is **$140-$150 million**, net of estimated RINs generation from renewable diesel operations - Significant volatility and high RIN prices persist due to RFS compliance and climate change regulations[370](index=370&type=chunk) - EPA's delays in RVO establishment and SRE denials have contributed to RIN price volatility[370](index=370&type=chunk) - Wynnewood Refinery granted a stay on RFS enforcement pending SRE lawsuit resolution[370](index=370&type=chunk) - Estimated consolidated RFS compliance cost for 2023 is **$140-$150 million**, net of **$205-$215 million** in renewable diesel RINs generation[339](index=339&type=chunk) [Company Initiatives](index=30&type=section&id=Company%20Initiatives) The company is undertaking a pretreater project at the Wynnewood Refinery, expected to be completed in Q3 2023 at an estimated cost of **$91 million**. This project aims to process a wider variety of lower carbon intensity renewable diesel feedstocks, potentially mitigating a substantial majority of future RFS exposure - Wynnewood Refinery pretreater project (estimated **$91 million**, Q3 2023 completion) aims to process diverse renewable diesel feedstocks with lower carbon intensity[338](index=338&type=chunk) - The project is expected to substantially mitigate future RFS exposure[338](index=338&type=chunk) [Market Indicators](index=31&type=section&id=Market%20Indicators) Both NYMEX 2-1-1 and Group 3 2-1-1 crack spreads increased significantly in Q1 2023 compared to Q1 2022. NYMEX 2-1-1 averaged **$38.37/barrel** (up from **$28.67**), and Group 3 2-1-1 averaged **$34.16/barrel** (up from **$22.20**). Average monthly RIN prices increased **32.6%** YoY in Q1 2023, approximating **$8.11 per barrel** | Metric | 2023 (per barrel) | 2022 (per barrel) | Change (per barrel) | | :----- | :---------------- | :---------------- | :------------------ | | NYMEX 2-1-1 Crack Spread | $38.37 | $28.67 | +$9.70 | | Group 3 2-1-1 Crack Spread | $34.16 | $22.20 | +$11.96 | - Average monthly RIN prices increased **32.6%** YoY in Q1 2023, reaching approximately **$8.11 per barrel**[68](index=68&type=chunk) [Petroleum Segment Financial Highlights](index=39&type=section&id=Petroleum%20Segment%20Financial%20Highlights) Operating income for the Petroleum Segment increased to **$237 million** (up **$107 million** YoY) and net income to **$259 million** (up **$133 million** YoY) for Q1 2023. These improvements were driven by improved crack spreads and lower RFS-related expenses, partially offset by favorable inventory impacts in the prior period | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Operating Income | $237 | $130 | | Net Income | $259 | $126 | | EBITDA | $285 | $167 | [Net Sales](index=39&type=section&id=Net%20Sales) Petroleum Segment net sales decreased by **$161 million** to **$1,993 million** in Q1 2023 compared to Q1 2022. This decrease was due to lower refined product prices (normalizing) and decreased sales volumes resulting from a planned turnaround at the Coffeyville Refinery | Year | Net Sales (in millions) | | :--- | :---------------------- | | 2023 | $1,993 | | 2022 | $2,154 | - Decrease driven by lower refined product prices and decreased sales volumes due to Coffeyville Refinery turnaround[105](index=105&type=chunk) [Refining Margin](index=40&type=section&id=Refining%20Margin) Refining margin increased by **$114 million** to **$411 million** (**$23.24 per throughput barrel**) in Q1 2023, up from **$297 million** (**$16.75 per throughput barrel**) in Q1 2022. This increase was primarily due to higher product crack spreads, with the Group 3 2-1-1 crack spread increasing by **$11.96 per barrel**. RFS compliance costs were **$95 million** (excluding **$56 million** RINs revaluation benefit) in Q1 2023, compared to **$88 million** (excluding **$19 million** RINs revaluation expense) in Q1 2022. An unfavorable inventory valuation impact of **$12 million** in Q1 2023 offset these gains, compared to a favorable impact of **$133 million** in Q1 2022 | Metric | 2023 | 2022 | | :----- | :--- | :--- | | Refining Margin (in millions) | $411 | $297 | | Refining Margin per throughput barrel | $23.24 | $16.75 | - Group 3 2-1-1 crack spread increased by **$11.96 per barrel**[106](index=106&type=chunk) - RFS compliance costs were **$95 million** (excluding **$56 million** RINs revaluation benefit) in Q1 2023, compared to **$88 million** (excluding **$19 million** RINs revaluation expense) in Q1 2022[106](index=106&type=chunk) - Unfavorable inventory valuation impact of **$12 million** in Q1 2023, compared to a favorable impact of **$133 million** in Q1 2022[106](index=106&type=chunk) [Direct Operating Expenses (Exclusive of Depreciation and Amortization)](index=41&type=section&id=Direct%20Operating%20Expenses%20(Exclusive%20of%20Depreciation%20and%20Amortization)) Direct operating expenses increased to **$104 million** in Q1 2023 from **$99 million** in Q1 2022, primarily due to increased repairs and maintenance, personnel costs, and electricity expense, partially offset by decreased natural gas costs. Per throughput barrel, these expenses increased to **$5.90** from **$5.57** | Metric | 2023 | 2022 | | :----- | :--- | :--- | | Direct Operating Expenses (in millions) | $104 | $99 | | Direct Operating Expenses per throughput barrel | $5.90 | $5.57 | - Increase driven by repairs, maintenance, personnel, and electricity costs, partially offset by lower natural gas costs[107](index=107&type=chunk) [Selling, General, and Administrative Expenses, and Other](index=41&type=section&id=Selling,%20General,%20and%20Administrative%20Expenses,%20and%20Other) Selling, general, and administrative expenses, and other, increased to **$24 million** in Q1 2023 from **$22 million** in Q1 2022, mainly due to legal accruals, partially offset by decreased personnel costs | Year | Amount (in millions) | | :--- | :------------------- | | 2023 | $24 | | 2022 | $22 | - Increase primarily due to legal accruals, partially offset by decreased personnel costs[388](index=388&type=chunk) [Depreciation and Amortization Expense](index=41&type=section&id=Depreciation%20and%20Amortization%20Expense) Depreciation and amortization expense for the Petroleum Segment remained flat at **$46 million** for both Q1 2023 and Q1 2022 | Year | Amount (in millions) | | :--- | :------------------- | | 2023 | $46 | | 2022 | $46 | [Nitrogen Fertilizer Segment](index=33&type=section&id=Nitrogen%20Fertilizer%20Segment) The Nitrogen Fertilizer Segment's performance is influenced by product prices, utilization, and operating costs. In Q1 2023, the segment saw increased utilization and production volumes due to reliable operations post-turnarounds, leading to higher net sales despite lower product sales prices for ammonia and UAN, primarily driven by reduced natural gas costs [Market Indicators](index=34&type=section&id=Market%20Indicators) Earnings and cash flows are affected by nitrogen fertilizer product prices, utilization, and operating costs (pet coke and natural gas). The Russia-Ukraine conflict initially tightened global supply, but relaxed export restrictions led to lower grain prices. Natural gas prices in Europe fell significantly in Q1 2023 due to warmer weather and conservation, leading to a global reduction in nitrogen fertilizer prices. USDA estimates a **3.8%** increase in corn acres planted in spring 2023, favoring corn over soybeans due to lower input costs. Demand for nitrogen fertilizer is expected to be strong for spring 2023 planting season due to low grain inventory levels - Nitrogen fertilizer earnings are influenced by product prices, utilization, and feedstock costs (pet coke, natural gas)[39](index=39&type=chunk) - Natural gas prices in Europe fell significantly in Q1 2023, leading to a global reduction in nitrogen fertilizer prices[380](index=380&type=chunk) - USDA estimates **92.0 million** corn acres planted in spring 2023 (**3.8%** increase YoY), with economics favoring corn over soybeans[73](index=73&type=chunk) - Strong demand for nitrogen fertilizer is expected for spring 2023 due to low grain inventory levels[75](index=75&type=chunk) [Utilization and Production Volumes](index=42&type=section&id=Utilization%20and%20Production%20Volumes) Consolidated ammonia utilization increased to **105%** in Q1 2023 from **88%** in Q1 2022, primarily due to more reliable operations after planned turnarounds in Q3 2022 and reduced unplanned downtime. Gross ammonia production increased to **224 thousand tons** from **187 thousand tons**, and UAN production increased to **366 thousand tons** from **317 thousand tons** | Metric | 2023 | 2022 | | :----- | :--- | :--- | | Consolidated Ammonia Utilization | 105% | 88% | | Ammonia (gross produced, thousand tons) | 224 | 187 | | Ammonia (net available for sale, thousand tons) | 62 | 52 | | UAN (thousand tons) | 366 | 317 | - Increased utilization and production volumes primarily due to reliable operations post-turnarounds and reduced unplanned downtime[85](index=85&type=chunk) [Sales and Pricing per Ton](index=42&type=section&id=Sales%20and%20Pricing%20per%20Ton) Total product sales volumes were favorable due to increased production. However, total product sales prices were unfavorable, with ammonia prices decreasing by **16%** to **$888 per ton** and UAN prices decreasing by **8%** to **$457 per ton** in Q1 2023 compared to Q1 2022. These price decreases were mainly attributable to lower natural gas prices and deferred fertilizer demand | Metric | 2023 | 2022 | | :----- | :--- | :--- | | Ammonia Sales (thousand tons) | 42 | 40 | | UAN Sales (thousand tons) | 359 | 322 | | Ammonia Price (dollars per ton) | $888 | $1,055 | | UAN Price (dollars per ton) | $457 | $496 | - Price decreases primarily due to lower natural gas prices and deferred fertilizer demand[1](index=1&type=chunk) [Nitrogen Fertilizer Segment Financial Highlights](index=43&type=section&id=Nitrogen%20Fertilizer%20Segment%20Financial%20Highlights) Operating income for the Nitrogen Fertilizer Segment increased to **$109 million** (up **$5 million** YoY) and net income to **$102 million** (up **$8 million** YoY) for Q1 2023. These increases were driven by higher production and sales volumes, partially offset by lower product sales prices | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Operating Income | $109 | $104 | | Net Income | $102 | $94 | | EBITDA | $124 | $123 | [Net Sales](index=44&type=section&id=Net%20Sales) Nitrogen Fertilizer Segment net sales increased by **$3 million** to **$226 million** in Q1 2023 compared to Q1 2022. This increase was primarily due to favorable UAN and ammonia sales volumes, which contributed **$22 million** in higher revenues, partially offset by decreased sales prices, which reduced revenues by **$21 million** | Year | Net Sales (in millions) | | :--- | :---------------------- | | 2023 | $226 | | 2022 | $223 | - Increase driven by favorable UAN and ammonia sales volumes (**+$22 million**), partially offset by decreased sales prices (**-$21 million**)[113](index=113&type=chunk) [Cost of Materials and Other](index=44&type=section&id=Cost%20of%20Materials%20and%20Other) Cost of materials and other for the Nitrogen Fertilizer Segment increased to **$37 million** in Q1 2023 from **$30 million** in Q1 2022. This increase was primarily driven by increased petroleum coke feedstock costs (**+$4 million**) and natural gas costs (**+$2 million**) | Year | Amount (in millions) | | :--- | :------------------- | | 2023 | $37 | | 2022 | $30 | - Increase primarily due to increased petroleum coke feedstock costs (**+$4 million**) and natural gas costs (**+$2 million**)[178](index=178&type=chunk) [Consolidated](index=36&type=section&id=Consolidated) For Q1 2023, consolidated operating income was **$330 million** (up **$110 million** YoY) and net income was **$259 million** (up **$106 million** YoY). Net income attributable to CVR Energy stockholders increased to **$195 million** from **$94 million**. Basic and diluted EPS rose to **$1.94** from **$0.93**. EBITDA increased to **$401 million** from **$278 million** | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Operating income | $330 | $220 | | Net income | $259 | $153 | | Net income attributable to CVR Energy stockholders | $195 | $94 | | Basic and diluted earnings per share | $1.94 | $0.93 | | EBITDA | $401 | $278 | [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Income tax expense for Q1 2023 was **$56 million** (**17.8%** of pretax income), up from **$34 million** (**18.0%**) in Q1 2022, primarily due to increased pretax earnings | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Income tax expense | $56 | $34 | | % of income before income tax | 17.8% | 18.0% | [Non-GAAP Measures](index=44&type=section&id=Non-GAAP%20Measures) The company presents several non-GAAP measures to supplement GAAP financial information, including EBITDA, Petroleum EBITDA, Nitrogen Fertilizer EBITDA, Refining Margin, Refining Margin adjusted for Inventory Valuation Impacts, Direct Operating Expenses per Throughput Barrel, Adjusted Earnings (Loss) per Share, Adjusted EBITDA, Free Cash Flow, Net Debt and Finance Lease Obligations, and Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer. These measures are used to evaluate performance, profitability, and liquidity, and are reconciled to their most directly comparable GAAP measures - Non-GAAP measures include EBITDA, segment EBITDAs, Refining Margin (adjusted), Direct Operating Expenses per Throughput Barrel, Adjusted EPS, Free Cash Flow, and Net Debt metrics[3](index=3&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - These measures help analyze operating results and liquidity, compare performance to peers, and assess debt servicing ability[186](index=186&type=chunk) [Non-GAAP Reconciliations](index=46&type=section&id=Non-GAAP%20Reconciliations) Consolidated EBITDA increased to **$401 million** in Q1 2023 from **$278 million** in Q1 2022, with Adjusted EBITDA increasing to **$334 million** from **$155 million**. Adjusted earnings per share increased to **$1.44** from **$0.02**. Free cash flow decreased to **$213 million** from **$281 million**. Petroleum Adjusted EBITDA increased significantly to **$210 million** from **$48 million**. Nitrogen Fertilizer EBITDA and Adjusted EBITDA remained stable at **$124 million** | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Net income | $259 | $153 | | EBITDA | $401 | $278 | | Adjusted EBITDA | $334 | $155 | | Basic and diluted earnings per share | $1.94 | $0.93 | | Adjusted earnings per share | $1.44 | $0.02 | | Net cash provided by operating activities | $247 | $322 | | Free cash flow | $213 | $281 | | Metric | 2023 (in millions) | 2022 (in millions) | | :----- | :----------------- | :----------------- | | Petroleum net income | $259 | $126 | | Petroleum EBITDA | $285 | $167 | | Petroleum Adjusted EBITDA | $210 | $48 | | Nitrogen Fertilizer net income | $102 | $94 | | Nitrogen Fertilizer EBITDA and Adjusted EBITDA | $124 | $123 | [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's financial liquidity, capital spending, dividend and distribution policies, capital structure, and cash flow activities, along with critical accounting estimates [Cash Balances and Other Liquidity](index=51&type=section&id=Cash%20Balances%20and%20Other%20Liquidity) Total liquidity as of March 31, 2023, was approximately **$891 million**, consisting of **$601 million** in consolidated cash and cash equivalents, **$255 million** available under the Petroleum ABL, and **$35 million** available under the Nitrogen Fertilizer ABL. Consolidated cash and cash equivalents increased from **$510 million** at December 31, 2022. The company believes current cash from operations and existing cash will be sufficient for anticipated cash requirements for at least the next **12 months** | Metric | Mar 31, 2023 (in millions) | Dec 31, 2022 (in millions) | | :----- | :------------------------- | :------------------------- | | Consolidated cash and cash equivalents | $601 | $510 | | Available under Petroleum ABL | $255 | - | | Available under Nitrogen Fertilizer ABL | $35 | - | | **Total liquidity** | **$891** | - | - The company believes current cash from operations, existing cash, and available borrowings will be sufficient for anticipated cash requirements for at least the next **12 months**[143](index=143&type=chunk) [Capital Spending](index=51&type=section&id=Capital%20Spending) Total capital expenditures for Q1 2023 were **$59 million**, up from **$50 million** in Q1 2022. This includes **$42 million** for Petroleum, **$12 million** for Renewables, and **$4 million** for Nitrogen Fertilizer. The Coffeyville Refinery turnaround capitalized expenditures were **$40 million** in Q1 2023. The next planned turnaround for Wynnewood Refinery is in spring 2024, estimated at **$34 million** | Segment | Maintenance (in millions) | Growth (in millions) | Total (in millions) | | :------ | :------------------------ | :------------------- | :------------------ | | Petroleum | $36 | $6 | $42 | | Renewables | $0 | $12 | $12 | | Nitrogen Fertilizer | $4 | $0 | $4 | | Other | $1 | $0 | $1 | | **Total** | **$41** | **$18** | **$59** | - Coffeyville Refinery turnaround capitalized expenditures were **$40 million** in Q1 2023[402](index=402&type=chunk) - Wynnewood Refinery's next planned turnaround is in spring 2024, estimated at **$34 million**[402](index=402&type=chunk) [Dividends to CVR Energy Stockholders](index=52&type=section&id=Dividends%20to%20CVR%20Energy%20Stockholders) For Q1 2023, the Board declared a cash dividend of **$0.50** per share, totaling **$50 million**, payable in May 2023. IEP received **$36 million** of this amount. In 2022, total quarterly dividends were **$1.20** per share (**$121 million**), plus special dividends of **$2.60** and **$1.00** per share (**$261 million** and **$101 million**, respectively) - Q1 2023 cash dividend declared: **$0.50** per share, totaling **$50 million**[405](index=405&type=chunk) - IEP received **$36 million** of the Q1 2023 dividend[405](index=405&type=chunk) | Related Period | Quarterly Per Share | Public Stockholders (in millions) | IEP (in millions) | Total (in millions) | | :------------- | :------------------ | :-------------------------------- | :---------------- | :------------------ | | 2022 - 1st Quarter | $0.40 | $12 | $28 | $40 | | 2022 - 2nd Quarter | $0.40 | $12 | $28 | $40 | | 2022 - 3rd Quarter | $0.40 | $12 | $28 | $40 | | **Total 2022 quarterly dividends** | **$1.20** | **$35** | **$85** | **$121** | - Special dividends in 2022 were **$2.60** and **$1.00** per share, totaling **$261 million** and **$101 million** respectively[149](index=149&type=chunk) [Distributions to CVR Partners' Unitholders](index=53&type=section&id=Distributions%20to%20CVR%20Partners'%20Unitholders) For Q1 2023, CVR Partners declared a distribution of **$10.43** per common unit, totaling **$110 million**, with CVR Energy receiving approximately **$41 million**. In 2022, total quarterly distributions were **$19.32** per common unit (**$205 million**). CVR Partners did not repurchase any common units in Q1 2023, but repurchased **$12 million** in Q1 2022 - Q1 2023 distribution declared: **$10.43** per common unit, totaling **$110 million**[150](index=150&type=chunk)[326](index=326&type=chunk) - CVR Energy received approximately **$41 million** of the Q1 2023 distribution[150](index=150&type=chunk)[326](index=326&type=chunk) | Related Period | Quarterly Per Common Unit | Public Unitholders (in millions) | CVR Energy (in millions) | Total (in millions) | | :------------- | :------------------------ | :------------------------------- | :----------------------- | :------------------ | | 2022 - 4th Quarter | $10.50 | $70 | $41 | $111 | | 2021 - 4th Quarter | $5.24 | $36 | $20 | $56 | | 2022 - 1st Quarter | $2.26 | $15 | $9 | $24 | | 2022 - 2nd Quarter | $10.05 | $67 | $39 | $106 | | 2022 - 3rd Quarter | $1.77 | $12 | $7 | $19 | | **Total 2022 quarterly distributions** | **$19.32** | **$130** | **$75** | **$205** | - CVR Partners did not repurchase common units in Q1 2023; repurchased **$12 million** in Q1 2022[151](index=151&type=chunk)[224](index=224&type=chunk) [Capital Structure](index=53&type=section&id=Capital%20Structure) The Board authorized a stock repurchase program for up to **$300 million** of common stock, but no repurchases have been made as of March 31, 2023 - Stock Repurchase Program authorized for up to **$300 million** of common stock; no repurchases made as of March 31, 2023[123](index=123&type=chunk) [Cash Flows](index=54&type=section&id=Cash%20Flows) This section details the changes in cash flows from operating, investing, and financing activities for the three months ended March 31, 2023, compared to the prior year, highlighting the primary drivers for each category [Operating Activities](index=54&type=section&id=Operating%20Activities) Net cash provided by operating activities decreased by **$75 million** to **$247 million** in Q1 2023 compared to Q1 2022. This was primarily due to a **$141 million** decrease in working capital (mainly inventory increases), a **$26 million** decrease from noncash change in unrealized gain on derivatives, and a **$16 million** decrease in noncash share-based compensation, partially offset by a **$106 million** increase in net income and a **$7 million** increase in deferred taxes | Year | Amount (in millions) | | :--- | :------------------- | | 2023 | $247 | | 2022 | $322 | - Decrease primarily due to **$141 million** decrease in working capital, **$26 million** decrease from unrealized gain on derivatives, and **$16 million** decrease in share-based compensation[152](index=152&type=chunk) - Partially offset by **$106 million** increase in net income and **$7 million** increase in deferred taxes[152](index=152&type=chunk) [Investing Activities](index=54&type=section&id=Investing%20Activities) Net cash used in investing activities decreased by **$7 million** to **$34 million** in Q1 2023 compared to Q1 2022. This was due to **$19 million** in distributions from CVR Partners' equity method investment (45Q Transaction) and a **$7 million** decrease in turnaround expenditures, partially offset by a **$19 million** increase in capital expenditures | Year | Amount (in millions) | | :--- | :------------------- | | 2023 | ($34) | | 2022 | ($41) | - Decrease due to **$19 million** distributions from 45Q Transaction and **$7 million** decrease in turnaround expenditures[408](index=408&type=chunk) - Partially offset by **$19 million** increase in capital expenditures[408](index=408&type=chunk) [Financing Activities](index=54&type=section&id=Financing%20Activities) Net cash used in financing activities increased by **$7 million** to **$122 million** in Q1 2023 compared to Q1 2022. This was primarily due to increased dividends paid to CVR Partners' noncontrolling interest holders (**+$34 million**) and CVR Energy stockholders (**+$50 million**), and changes from the redemption of 2023 UAN Notes (**+$65 million** in 2022) and CVR Partners' unit repurchases (**+$12 million** in 2022), with no corresponding amounts in 2023 | Year | Amount (in millions) | | :--- | :------------------- | | 2023 | ($122) | | 2022 | ($115) | - Increase primarily due to increased dividends to CVR Partners' noncontrolling interest holders (**+$34 million**) and CVR Energy stockholders (**+$50 million**)[426](index=426&type=chunk) - Also impacted by the absence of 2022 activities: **$65 million** redemption of 2023 UAN Notes and **$12 million** in CVR Partners' unit repurchases[426](index=426&type=chunk) [Critical Accounting Estimates](index=54&type=section&id=Critical%20Accounting%20Estimates) No material modifications were made to the critical accounting estimates disclosed in the 2022 Form 10-K during the three months ended March 31, 2023 - No material changes to critical accounting estimates in Q1 2023[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's market risks as of and for the three months ended March 31, 2023, compared to those discussed in the 2022 Form 10-K - No material changes to market risks in Q1 2023[127](index=127&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=55&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2023 - Disclosure controls and procedures were effective as of March 31, 2023[128](index=128&type=chunk) [Changes in Internal Control Over Financial Reporting](index=55&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal controls over financial reporting occurred during the fiscal quarter ended March 31, 2023 - No material changes in internal controls over financial reporting in Q1 2023[155](index=155&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Part I, Item 1, Note 12 ("Commitments and Contingencies") for a description of certain litigation, legal, and administrative proceedings and environmental matters - Legal proceedings are detailed in Note 12 ("Commitments and Contingencies")[131](index=131&type=chunk) [Item 1A. Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) No material changes from the risk factors previously disclosed in Part I, Item 1A of the 2022 Form 10-K. Additional unknown or immaterial risks could still adversely affect the business - No material changes to risk factors in Q1 2023[132](index=132&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) States "None." indicating no other information to report under this item - No other information to report[133](index=133&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists various exhibits filed with the report, including performance-based bonus plans, agreements related to carbon capture and sequestration, and certifications of officers - Exhibits include performance-based bonus plans, carbon capture agreements, and officer certifications[134](index=134&type=chunk) [SIGNATURES](index=58&type=section&id=SIGNATURES) The report was duly signed on May 2, 2023, by Dane J. Neumann (Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary) and Jeffrey D. Conaway (Vice President, Chief Accounting Officer and Corporate Controller) - Report signed by Dane J. Neumann (Principal Financial Officer) and Jeffrey D. Conaway (Principal Accounting Officer) on May 2, 2023[138](index=138&type=chunk)[189](index=189&type=chunk) ```

CVR Energy, Inc. (NYSE:CVI) Q4 2022 Results Conference Call February 22, 2023 1:00 PM ET Company Participants Richard Roberts - IR Dave Lamp - CEO Dan Newman - CFO Conference Call Participants John Royall - JP Morgan Neil Mehta - Goldman Sachs Paul Cheng - Scotiabank Operator Greetings, and welcome to the CVR Energy Fourth Quarter 2022 Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Vice President of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________________________ Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year endedDecember 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-33492 _____________________________________________________________ CVR ...

CVR Energy, Inc. (NYSE:CVI) Q3 2022 Earnings Conference Call November 1, 2022 1:00 PM ET Company Participants Richard Roberts - Vice President of FP&A and IR Dave Lamp - President, CEO & Director Dane Neumann - EVP, CFO, Treasurer & Assistant Secretary Conference Call Participants Matthew Blair - TPH John Royall - JPMorgan Carly Davenport - Goldman Sachs Paul Cheng - Scotiabank Operator Greetings, and welcome to the CVR Energy, Inc. Third Quarter 2021 Conference Call. At this time, all participants are in a ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-33492 CVR ENERGY, INC. (Exact name of registrant as specified in its charter) Delaware 61-1512186 (State ...

[PART I. Financial Information](index=2&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents CVR Energy's unaudited consolidated financial statements, including balance sheets, operations, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased from **$3,906 million** to **$4,671 million**, driven by cash, receivables, and inventories, with total liabilities also rising due to increased current liabilities Balance Sheet Summary | Metric | June 30, 2022 (in millions) | December 31, 2021 (in millions) | | :-------------------------------- | :-------------------------- | :---------------------------- | | **ASSETS** | | | | Cash and cash equivalents | $893 | $510 | | Accounts receivable | $418 | $299 | | Inventories | $722 | $484 | | Total current assets | $2,119 | $1,369 | | Property, plant and equipment, net | $2,252 | $2,273 | | Total assets | $4,671 | $3,906 | | **LIABILITIES AND EQUITY** | | | | Accounts payable | $666 | $409 | | Other current liabilities | $1,029 | $747 | | Total current liabilities | $1,695 | $1,156 | | Long-term debt and finance lease obligations, net of current portion | $1,588 | $1,654 | | Total liabilities | $3,611 | $3,136 | | Total equity | $1,060 | $770 | | Total liabilities and equity | $4,671 | $3,906 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) CVR Energy reported a significant turnaround, with net income attributable to stockholders surging to **$165 million** for Q2 2022 and **$258 million** for H1 2022, driven by higher net sales and operating income Statements of Operations Summary | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net sales | $3,144 | $1,783 | $5,517 | $3,246 | | Operating income (loss) | $402 | $6 | $623 | $(129) | | Income (loss) before income tax expense | $305 | $(8) | $491 | $(105) | | Net income (loss) | $239 | $(2) | $392 | $(57) | | Net income (loss) attributable to CVR Energy stockholders | $165 | $(6) | $258 | $(45) | | Basic and diluted earnings (loss) per share | $1.64 | $(0.06) | $2.57 | $(0.45) | | Dividends declared per share | $0.40 | $4.89 | $0.40 | $4.89 | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased from **$770 million** to **$1,060 million**, primarily due to net income, partially offset by dividends paid to CVR Energy stockholders and distributions to CVR Partners' public unitholders Changes in Equity Summary | Metric | Balance at Dec 31, 2021 (in millions) | Balance at June 30, 2022 (in millions) | | :------------------------------------ | :------------------------------------ | :----------------------------------- | | Total CVR Stockholders' Equity | $553 | $769 | | Noncontrolling Interest | $217 | $291 | | Total Equity | $770 | $1,060 | - Net income contributed **$94 million** in Q1 2022 and **$165 million** in Q2 2022 to equity, while dividends paid to CVR Energy stockholders totaled **$40 million** in Q2 2022[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to **$712 million** for H1 2022, driving a **$383 million** net increase in cash and cash equivalents, despite cash used in investing and financing activities Cash Flow Summary | Metric | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :---------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $712 | $243 | | Net cash used in investing activities | $(156) | $(141) | | Net cash used in financing activities | $(173) | $(250) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $383 | $(148) | | Cash, cash equivalents and restricted cash, end of period | $900 | $526 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's organization, accounting policies, and specific financial line items, covering inventories, property, leases, liabilities, debt, revenue, derivatives, share-based compensation, and contingencies [ (1) Organization and Nature of Business](index=9&type=section&id=(1)%20Organization%20and%20Nature%20of%20Business) CVR Energy is a diversified holding company in petroleum refining and nitrogen fertilizer manufacturing, with Icahn Enterprises L.P. holding approximately **71%** of its common stock - CVR Energy operates in petroleum refining (CVR Refining) and nitrogen fertilizer manufacturing (CVR Partners)[27](index=27&type=chunk) - Icahn Enterprises L.P. and its affiliates owned approximately **71%** of the Company's outstanding common stock as of June 30, 2022[27](index=27&type=chunk) - CVR Partners repurchased **111,695 common units** for **$12 million** during the six months ended June 30, 2022, at an average price of **$110.98 per unit**[29](index=29&type=chunk) [ (2) Basis of Presentation](index=9&type=section&id=(2)%20Basis%20of%20Presentation) The condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules, consolidating CVR Partners as a variable interest entity, with all necessary adjustments made - Financial statements are prepared in accordance with GAAP and SEC rules, consolidating CVR Partners as a variable interest entity[31](index=31&type=chunk)[32](index=32&type=chunk) [ (3) Recent Accounting Pronouncements and Accounting Changes](index=11&type=section&id=(3)%20Recent%20Accounting%20Pronouncements%20and%20Accounting%20Changes) The company is assessing ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance for accounting for reference rate reform - The company is evaluating ASU 2020-04 (Reference Rate Reform) but has not yet utilized its optional expedients or exceptions[36](index=36&type=chunk) [ (4) Inventories](index=11&type=section&id=(4)%20Inventories) Total inventories increased from **$484 million** to **$722 million**, primarily driven by increases in finished goods and raw materials Inventory Breakdown | Inventory Type | June 30, 2022 (in millions) | December 31, 2021 (in millions) | | :--------------- | :-------------------------- | :---------------------------- | | Finished goods | $345 | $215 | | Raw materials | $262 | $177 | | In-process | $31 | $20 | | Parts, supplies and other | $84 | $72 | | Total inventories | $722 | $484 | [ (5) Property, Plant and Equipment](index=11&type=section&id=(5)%20Property,%20Plant%20and%20Equipment) Net property, plant and equipment slightly decreased from **$2,273 million** to **$2,252 million**, with construction in progress also decreasing Property, Plant and Equipment Summary | Category | June 30, 2022 (in millions) | December 31, 2021 (in millions) | | :------------------------------------ | :-------------------------- | :---------------------------- | | Machinery and equipment | $4,161 | $4,033 | | Construction in progress | $104 | $142 | | Less: Accumulated depreciation and amortization | $(2,305) | $(2,194) | | Total property, plant and equipment, net | $2,252 | $2,273 | [ (6) Leases](index=12&type=section&id=(6)%20Leases) The company leases various assets, with operating lease expense stable at **$4 million** for Q2 2022, and a new **$25 million** finance lease for an Oxygen Storage Vessel expected to be capitalized Lease Expense Components | Lease Expense Component | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Operating lease expense | $4 | $4 | | Finance lease expense: Amortization of ROU asset | $1 | $1 | | Finance lease expense: Interest expense on lease liability | $1 | $2 | | Short-term lease expense | $2 | $2 | - A new finance lease for an Oxygen Storage Vessel, approximately **$25 million**, is expected to be capitalized upon lease commencement[45](index=45&type=chunk) [ (7) Other Current Liabilities](index=14&type=section&id=(7)%20Other%20Current%20Liabilities) Other current liabilities significantly increased from **$747 million** to **$1,029 million**, primarily due to a substantial rise in accrued RFS obligations and other accrued expenses Other Current Liabilities Breakdown | Liability Type | June 30, 2022 (in millions) | December 31, 2021 (in millions) | | :---------------------------------------------------- | :-------------------------- | :---------------------------- | | Accrued Renewable Fuel Standards ("RFS") obligation | $708 | $494 | | Accrued taxes other than income taxes | $49 | $45 | | Share-based compensation | $37 | $15 | | Personnel accruals | $33 | $46 | | Accrued interest | $24 | $24 | | Accrued income taxes | $22 | $0 | | Derivatives | $20 | $2 | | Operating lease liabilities | $14 | $13 | | Current portion of long-term debt and finance lease obligations | $6 | $6 | | Deferred revenue | $4 | $87 | | Other accrued expenses and liabilities | $112 | $15 | | Total other current liabilities | $1,029 | $747 | [ (8) Long-Term Debt and Finance Lease Obligations](index=14&type=section&id=(8)%20Long-Term%20Debt%20and%20Finance%20Lease%20Obligations) Total long-term debt and finance lease obligations decreased from **$1,654 million** to **$1,588 million**, following CVR Partners' redemption of 2023 UAN Notes and CVR Refining's ABL Credit Agreement amendment Long-Term Debt and Finance Lease Obligations Summary | Debt Type | June 30, 2022 (in millions) | December 31, 2021 (in millions) | | :-------------------------------------------------------------------- | :-------------------------- | :---------------------------- | | CVR Partners: 9.25% Senior Secured Notes, due June 2023 | $0 | $65 | | CVR Partners: 6.125% Senior Secured Notes, due June 2028 | $550 | $550 | | CVR Energy: 5.25% Senior Notes, due February 2025 | $600 | $600 | | CVR Energy: 5.75% Senior Notes, due February 2028 | $400 | $400 | | Total long-term debt and finance lease obligations, net of current portion | $1,588 | $1,654 | - CVR Partners redeemed all outstanding **2023 UAN Notes** at par on February 22, 2022, recognizing a **$1 million loss** on extinguishment of debt[51](index=51&type=chunk) - CVR Refining amended its ABL Credit Agreement, establishing a senior secured revolving credit facility of up to **$275 million**, maturing on June 30, 2027[53](index=53&type=chunk) [ (9) Revenue](index=16&type=section&id=(9)%20Revenue) Consolidated net sales significantly increased to **$3,144 million** for Q2 2022 and **$5,517 million** for H1 2022, driven by strong performance in both the Petroleum and Nitrogen Fertilizer segments Revenue by Segment and Product | Segment/Product | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | **Petroleum Segment** | | | | | | Gasoline | $1,421 | $908 | $2,524 | $1,657 | | Distillates | $1,350 | $685 | $2,312 | $1,273 | | Other Revenue from product sales | $81 | $41 | $160 | $73 | | Crude oil sales | $12 | $8 | $17 | $37 | | **Nitrogen Fertilizer Segment** | | | | | | Ammonia | $61 | $32 | $103 | $42 | | UAN | $159 | $87 | $319 | $126 | | Other urea products | $11 | $7 | $20 | $11 | | Other Revenue from product sales | $3 | $3 | $6 | $5 | | **Total Revenue** | $3,144 | $1,783 | $5,517 | $3,246 | - The Nitrogen Fertilizer Segment has **$8 million** in remaining performance obligations, with **$4 million** expected to be recognized as revenue by the end of 2022[65](index=65&type=chunk) [ (10) Derivative Financial Instruments, Investments and Fair Value Measurements](index=17&type=section&id=(10)%20Derivative%20Financial%20Instruments,%20Investments%20and%20Fair%20Value%20Measurements) The Petroleum Segment uses commodity derivatives, recognizing a total net loss of **$68 million** for Q2 2022 and **$66 million** for H1 2022, while the company divested its remaining investment in Delek US Holdings, Inc. Derivative Financial Instruments Net Loss | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :--------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Forwards | $(4) | $4 | $6 | $22 | | Swaps | $(49) | $(5) | $(48) | $(55) | | Futures | $(15) | $(1) | $(24) | $(1) | | Total loss on derivatives, net | $(68) | $(2) | $(66) | $(34) | - The company divested its remaining nominal investment in Delek US Holdings, Inc. on January 18, 2022, and recognized no investment income on marketable securities for the three and six months ended June 30, 2022[73](index=73&type=chunk) [ (11) Share-Based Compensation](index=20&type=section&id=(11)%20Share-Based%20Compensation) Total share-based compensation expense was **$11 million** for Q2 2022 and **$36 million** for H1 2022, primarily driven by Incentive Unit Awards Share-Based Compensation Expense | Compensation Type | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Performance Unit Awards | $0 | $0 | $0 | $(3) | | CVR Partners - Phantom Unit Awards | $(3) | $7 | $11 | $12 | | Incentive Unit Awards | $14 | $5 | $25 | $11 | | Total share-based compensation expense | $11 | $12 | $36 | $20 | [ (12) Commitments and Contingencies](index=20&type=section&id=(12)%20Commitments%20and%20Contingencies) The company faces significant commitments and contingencies, including a **$708 million** RFS obligation for the Petroleum Segment, an expected **$79 million** settlement for Call Option Lawsuits, and ongoing RFS disputes with the EPA - The Petroleum Segment's RFS obligation was approximately **$708 million** as of June 30, 2022, recorded in Other current liabilities[82](index=82&type=chunk) - The company expects to settle Call Option Lawsuits for **$79 million**, recognized within Other current liabilities and Other (expense) income, net as of June 30, 2022[84](index=84&type=chunk) - The EPA denied **36 small refinery exemptions (SREs)** for 2018 and WRC's SREs for 2017, 2019, 2020, and 2021, leading WRC to file petitions challenging these denials[86](index=86&type=chunk) [ (13) Business Segments](index=22&type=section&id=(13)%20Business%20Segments) CVR Energy operates two segments, Petroleum and Nitrogen Fertilizer, both showing significant improvements in net sales and operating income for Q2 and H1 2022, with Petroleum Segment assets increasing to **$4,280 million** Segment Performance Highlights | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | **Net sales:** | | | | | | Petroleum | $2,868 | $1,648 | $5,022 | $3,052 | | Nitrogen Fertilizer | $244 | $138 | $467 | $199 | | Total net sales | $3,144 | $1,783 | $5,517 | $3,246 | | **Operating income (loss):** | | | | | | Petroleum | $297 | $(20) | $427 | $(136) | | Nitrogen Fertilizer | $126 | $30 | $230 | $16 | | Total operating income (loss) | $402 | $6 | $623 | $(129) | | **Capital expenditures:** | | | | | | Petroleum | $19 | $9 | $38 | $19 | | Nitrogen Fertilizer | $9 | $4 | $14 | $7 | | Total capital expenditures | $41 | $83 | $91 | $151 | Segment Assets | Segment | June 30, 2022 (in millions) | December 31, 2021 (in millions) | | :-------------------------------- | :-------------------------- | :---------------------------- | | Petroleum | $4,280 | $3,368 | | Nitrogen Fertilizer | $1,119 | $1,127 | | Other, including intersegment eliminations | $(728) | $(589) | | Total assets | $4,671 | $3,906 | [ (14) Supplemental Cash Flow Information](index=24&type=section&id=(14)%20Supplemental%20Cash%20Flow%20Information) Cash paid for income taxes was **$60 million** for H1 2022, while cash paid for interest was **$49 million**, and non-cash capital expenditures included in accounts payable significantly decreased Supplemental Cash Flow Details | Metric | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :-------------------------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Cash paid for income taxes, net of refunds | $60 | $0 | | Cash paid for interest | $49 | $65 | | Operating cash flows from operating leases | $9 | $8 | | Operating cash flows from finance leases | $2 | $3 | | Financing cash flows from finance leases | $3 | $3 | | Change in capital expenditures included in accounts payable | $3 | $25 | | Non-cash dividends to CVR Energy stockholders | $0 | $251 | [ (15) Related Party Transactions](index=24&type=section&id=(15)%20Related%20Party%20Transactions) Related party expenses for the Enable Joint Venture Transportation Agreement were **$2 million** for Q2 2022 and **$5 million** for H1 2022, with dividends paid to IEP totaling **$28 million** for both periods Related Party Transaction Summary | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Expenses from Related Parties: Enable Joint Venture Transportation Agreement | $2 | $3 | $5 | $6 | | Payments made: Dividends to IEP | $28 | $348 | $28 | $348 | - For Q2 2022, CVR Energy declared a cash dividend of **$0.40 per share** (**$40 million total**) and a special dividend of **$2.60 per share** (**$261 million total**), with IEP receiving **$28 million** and **$185 million**, respectively[105](index=105&type=chunk)[106](index=106&type=chunk) - CVR Partners declared a distribution of **$10.05 per common unit** for Q2 2022, totaling **$106 million**, of which CVR Energy will receive approximately **$39 million**[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on CVR Energy's financial performance, condition, and outlook, highlighting improved operating and net income across segments, market impacts, strategic initiatives, liquidity, capital resources, and non-GAAP measures [Company Overview](index=27&type=section&id=Company%20Overview) CVR Energy is a diversified holding company in petroleum refining and nitrogen fertilizer manufacturing, currently restructuring to segregate its renewables operations, with completion expected in **Q1 2023** - CVR Energy is a diversified holding company in petroleum refining (CVR Refining) and nitrogen fertilizer manufacturing (CVR Partners)[111](index=111&type=chunk) - The company is restructuring to segregate its renewables business, forming **16 new indirect, wholly owned subsidiaries** in Q1 2022, with completion expected in **Q1 2023**[113](index=113&type=chunk) [Strategy and Goals](index=27&type=section&id=Strategy%20and%20Goals) CVR Energy aims to be a top-tier North American renewable fuels, petroleum refining, and nitrogen-based fertilizer company, guided by core values and strategic objectives focused on EH&S, utilization rates, market capture, and financial discipline - Mission: To be a top-tier North American renewable fuels, petroleum refining, and nitrogen-based fertilizer company, measured by safe and reliable operations, superior performance, and profitable growth[116](index=116&type=chunk) - Core Values: **Safety**, **Environment**, **Integrity**, **Corporate Citizenship**, and **Continuous Improvement**[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Strategic Objectives: Continuous improvement in EH&S, industry-leading utilization rates, maximizing market capture, and financial discipline[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Achievements in H1 2022 include reductions in environmental events (**13%**), process safety management tier 1 incidents (**70%**), and total recordable incident rate (**92%**) compared to H1 2021[124](index=124&type=chunk) - Completed the conversion of the Wynnewood hydrocracker to renewable diesel service and safely completed the planned turnaround at the Wynnewood Refinery on time and on budget[124](index=124&type=chunk) - Achieved record UAN production volumes at the Coffeyville Fertilizer Facility in March 2022 and completed CVR Partners' **$95 million debt reduction plan**[124](index=124&type=chunk) [Industry Factors and Market Indicators](index=29&type=section&id=Industry%20Factors%20and%20Market%20Indicators) The global economy faces volatility from the COVID-19 pandemic and Russia-Ukraine conflict, impacting oil, fertilizer, and natural gas markets, leading to significant RFS compliance costs for Petroleum and benefits from tight supply for Nitrogen Fertilizer - The Russia-Ukraine conflict has disrupted global oil, fertilizer, and agriculture markets, leading to higher oil and natural gas prices and increased commodity price volatility[127](index=127&type=chunk) - The Petroleum Segment's RFS compliance costs remain significant, with an estimated open position of approximately **440 million RINs** (excluding commitments) and a potential liability of **$708 million** as of June 30, 2022[136](index=136&type=chunk) - The Wynnewood Refinery's hydrocracker conversion to a renewable diesel unit (RDU) was completed in April 2022, expected to produce up to **100 million gallons of renewable diesel per year** and generate **170-180 million RINs annually**[135](index=135&type=chunk) - The NYMEX 2-1-1 crack spread averaged **$41.31 per barrel** during H1 2022, up from **$18.10 per barrel** in H1 2021, while the Group 3 2-1-1 crack spread averaged **$35.56 per barrel**, up from **$17.76 per barrel**[140](index=140&type=chunk) - The Nitrogen Fertilizer Segment benefits from tight global supply conditions due to the Russia-Ukraine conflict and increased grain prices, with UAN and ammonia prices rising[151](index=151&type=chunk) - The USDA estimates a **3.7% decrease** in planted corn acres and a **1.3% increase** in planted soybean acres in spring 2022 compared to 2021, supporting corn prices[156](index=156&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) CVR Energy experienced significant improvement in consolidated operating and net income for Q2 and H1 2022, driven by strong refining margins and higher product sales prices in both the Petroleum and Nitrogen Fertilizer segments [Consolidated Financial Highlights](index=38&type=section&id=Consolidated%20Financial%20Highlights) Consolidated operating income surged to **$402 million** in Q2 2022 and **$623 million** in H1 2022, with net income attributable to CVR Energy stockholders also substantially increasing to **$165 million** in Q2 2022 and **$258 million** in H1 2022 Consolidated Financial Performance | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Operating income (loss) | $402 | $6 | $623 | $(129) | | Net income (loss) attributable to CVR Energy stockholders | $165 | $(6) | $258 | $(45) | | EBITDA | $401 | $102 | $679 | $102 | | Basic and diluted earnings (loss) per share | $1.64 | $(0.06) | $2.57 | $(0.45) | - Other expense, net, was **$74 million** for Q2 2022 and **$84 million** for H1 2022, primarily due to the expected settlement of litigation[173](index=173&type=chunk) [Petroleum Segment](index=39&type=section&id=Petroleum%20Segment) The Petroleum Segment's operating income significantly improved to **$297 million** in Q2 2022 and **$427 million** in H1 2022, driven by improved crack spreads and higher net sales, despite decreased total throughput due to turnaround and RDU conversion Petroleum Segment Financial Performance | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net Sales | $2,868 | $1,648 | $5,022 | $3,052 | | Operating Income (Loss) | $297 | $(20) | $427 | $(136) | | Net Income (Loss) | $306 | $(13) | $432 | $(123) | | EBITDA | $347 | $33 | $514 | $(29) | Petroleum Segment Throughput Data | Throughput Data (in bpd) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total throughput | 201,246 | 216,626 | 199,306 | 201,444 | - Refining margin increased by **$345 million** in Q2 2022 compared to Q2 2021, primarily due to a **$29.35 per barrel** increase in the Group 3 2-1-1 crack spread[188](index=188&type=chunk) - RFS compliance costs (excluding revaluation) decreased in 2022 due to a lower renewable volume obligation and decreased RINs prices[188](index=188&type=chunk)[189](index=189&type=chunk) - Direct operating expenses (exclusive of depreciation and amortization) increased to **$6.12 per barrel** in Q2 2022 (from **$4.23**) and **$5.85 per barrel** in H1 2022 (from **$4.99**), driven by higher natural gas, repairs, maintenance, and personnel costs[194](index=194&type=chunk) [Nitrogen Fertilizer Segment](index=45&type=section&id=Nitrogen%20Fertilizer%20Segment) The Nitrogen Fertilizer Segment's operating income increased to **$126 million** in Q2 2022 and **$230 million** in H1 2022, driven by significantly higher product sales prices for UAN and ammonia, despite decreased ammonia utilization due to unplanned downtime Nitrogen Fertilizer Financial Performance | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net Sales | $244 | $138 | $467 | $199 | | Operating Income | $126 | $30 | $230 | $16 | | Net Income (Loss) | $118 | $7 | $211 | $(18) | | EBITDA | $147 | $51 | $271 | $56 | Nitrogen Fertilizer Production and Sales Metrics | Production/Sales Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consolidated Ammonia Utilization | 89% | 98% | 88% | 93% | | Ammonia (gross produced, thousand tons) | 193 | 217 | 380 | 404 | | Ammonia (net available for sale, thousand tons) | 50 | 70 | 102 | 140 | | UAN (thousand tons) | 331 | 334 | 648 | 606 | | Ammonia product pricing at gate ($/ton) | $1,182 | $403 | $1,127 | $373 | | UAN product pricing at gate ($/ton) | $555 | $237 | $524 | $206 | - The increase in net sales was primarily due to favorable UAN and ammonia pricing conditions, contributing **$131 million** in Q2 2022 and **$262 million** in H1 2022, partially offset by decreased sales volumes[210](index=210&type=chunk)[214](index=214&type=chunk) - Cost of materials and other increased due to higher natural gas pricing and usage, increased purchases of nitrogen and ammonia, and higher distribution costs[216](index=216&type=chunk) [Non-GAAP Reconciliations](index=48&type=section&id=Non-GAAP%20Reconciliations) This section defines and reconciles various non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Refining Margin, and Free Cash Flow, to their most directly comparable GAAP measures, providing insights into performance Non-GAAP Financial Measures | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income (loss) | $239 | $(2) | $392 | $(57) | | EBITDA | $401 | $102 | $679 | $102 | | Adjusted EBITDA | $511 | $66 | $666 | $93 | | Basic and diluted earnings (loss) per share | $1.64 | $(0.06) | $2.57 | $(0.45) | | Adjusted earnings (loss) per share | $2.45 | $(0.32) | $2.47 | $(0.51) | | Net cash provided by operating activities | $390 | $147 | $712 | $243 | | Free cash flow | $275 | $54 | $556 | $115 | Petroleum and Nitrogen Fertilizer Non-GAAP Metrics | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Petroleum EBITDA | $347 | $33 | $514 | $(29) | | Petroleum Adjusted EBITDA | $383 | $18 | $431 | $45 | | Refining margin | $478 | $133 | $775 | $184 | | Refining margin, adjusted for inventory valuation impacts | $441 | $97 | $605 | $82 | | Refining margin per total throughput barrel | $26.10 | $6.72 | $21.50 | $5.04 | | Refining margin adjusted for inventory valuation impact per total throughput barrel | $24.08 | $4.92 | $16.77 | $2.25 | | Direct operating expenses per total throughput barrel | $6.12 | $4.23 | $5.85 | $4.99 | | Nitrogen Fertilizer EBITDA and Adjusted EBITDA | $147 | $51 | $271 | $56 | Debt and EBITDA Ratios | Metric | Twelve Months Ended June 30, 2022 (in millions) | | :-------------------------------------------------------------------- | :---------------------------------------------- | | Total debt and finance lease obligations | $1,594 | | Nitrogen Fertilizer debt and finance lease obligations | $547 | | Total debt and finance lease obligations exclusive of Nitrogen Fertilizer | $1,047 | | EBITDA exclusive of Nitrogen Fertilizer | $611 | | Total debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer | 1.71 | | Consolidated cash and cash equivalents | $893 | | Nitrogen Fertilizer cash and cash equivalents | $156 | | Cash and cash equivalents exclusive of Nitrogen Fertilizer | $737 | | Net debt and finance lease obligations exclusive of Nitrogen Fertilizer | $310 | | Net debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer | 0.51 | [Factors Affecting Comparability of Our Financial Results](index=49&type=section&id=Factors%20Affecting%20Comparability%20of%20Our%20Financial%20Results) Comparability of financial results is affected by significant capital projects and planned turnarounds, including the Wynnewood Refinery's major turnaround and RDU conversion, and upcoming turnarounds for the Coffeyville and East Dubuque fertilizer facilities - The Wynnewood Refinery's major planned turnaround began in late February 2022 and was completed in early April 2022, with **$67 million** capitalized for the six months ended June 30, 2022[230](index=230&type=chunk) - A planned turnaround at the Coffeyville Fertilizer Facility commenced in July 2022 and is expected to be completed in early to mid-August 2022, with an estimated cost of **$12 to $15 million**[232](index=232&type=chunk)[260](index=260&type=chunk) - The next planned turnaround at the East Dubuque Fertilizer Facility is expected to commence during August 2022, with an estimated cost of **$19 to $21 million**[233](index=233&type=chunk)[260](index=260&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily driven by improved cash from operations in H1 2022, supported by strategic financial discipline, including deferred growth capital and focused maintenance, and reflected in declared cash and special dividends for Q2 2022 - Principal sources of liquidity are cash from operations, which improved due to better market conditions in 2021 and 2022[240](index=240&type=chunk)[242](index=242&type=chunk) - The Board declared a **$0.40 cash dividend** and a **$2.60 special cash dividend** for Q2 2022, payable August 22, 2022[243](index=243&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Strategic measures include deferring most growth capital (except RDU and pretreater projects), focusing maintenance capital, and disciplined cost management[243](index=243&type=chunk) Capital Spending Estimates | Capital Spending Category | Six Months Ended June 30, 2022 (in millions) | 2022 Low Estimate (in millions) | 2022 High Estimate (in millions) | | :------------------------ | :------------------------------------------- | :------------------------------ | :------------------------------- | | Petroleum Maintenance | $37 | $85 | $95 | | Petroleum Growth | $1 | $4 | $8 | | Renewables (RDU project) | $38 | $56 | $66 | | Nitrogen Fertilizer Maintenance | $13 | $43 | $45 | | Nitrogen Fertilizer Growth | $1 | $1 | $2 | | Total Capital Expenditures | $91 | $195 | $224 | - CVR Partners repurchased **111,695 common units** for **$12 million** during H1 2022 under its Unit Repurchase Program[272](index=272&type=chunk) Cash Flow Activity Summary | Cash Flow Activity | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | Change (in millions) | | :------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------- | | Operating activities | $712 | $243 | $469 | | Investing activities | $(156) | $(141) | $(15) | | Financing activities | $(173) | $(250) | $77 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $383 | $(148) | $531 | [Critical Accounting Estimates](index=60&type=section&id=Critical%20Accounting%20Estimates) No modifications were made to the critical accounting estimates disclosed in the 2021 Form 10-K during the three and six months ended June 30, 2022 - No modifications were made to critical accounting estimates during the three and six months ended June 30, 2022[278](index=278&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the company's market risks as of and for the three and six months ended June 30, 2022, compared to those discussed in the 2021 Form 10-K - No material changes to market risks as of and for the three and six months ended June 30, 2022, compared to the 2021 Form 10-K[279](index=279&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2022, with no material changes in internal control over financial reporting during the fiscal quarter - Disclosure controls and procedures were effective as of June 30, 2022[280](index=280&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2022[281](index=281&type=chunk) [PART II. Other Information](index=61&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 of Part I, Item 1 for a description of certain litigation, legal, administrative proceedings, and environmental matters - Legal proceedings are detailed in Note 12 ('Commitments and Contingencies') to Part I, Item 1 of this Report[283](index=283&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the 2021 Form 10-K, though these could be affected by the potential impacts of the Russia-Ukraine conflict - No material changes to risk factors from the 2021 Form 10-K, but potential effects of the Russia-Ukraine conflict could impact them[284](index=284&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including supplemental indentures, joinder agreements, amendments to credit agreements, and certifications, along with a disclaimer regarding their purpose and limitations - Exhibits include supplemental indentures, joinder agreements, and amendments to the ABL Credit Agreement, reflecting changes related to CVR Renewables and other subsidiaries[286](index=286&type=chunk) - The section includes certifications from the President and CEO, CFO, and Chief Accounting Officer[286](index=286&type=chunk) [SIGNATURES](index=63&type=section&id=SIGNATURES) [Signatures](index=63&type=section&id=Signatures) The report is duly signed on behalf of CVR Energy, Inc. by Dane J. Neumann (Principal Financial Officer) and Jeffrey D. Conaway (Principal Accounting Officer) on August 2, 2022 - The report was signed by Dane J. Neumann (Principal Financial Officer) and Jeffrey D. Conaway (Principal Accounting Officer) on August 2, 2022[294](index=294&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net income for Q2 2022 was $239 million, with earnings per share of $1.64 and EBITDA of $401 million, showing year-over-year improvement despite a legal accrual in the corporate segment [8][17] - Adjusted EBITDA for the quarter was $511 million, with adjusted earnings per share at $2.45, reflecting strong performance in the Petroleum segment [18] - Total consolidated capital spending for Q2 2022 was $41 million, with an estimated total for 2022 projected between $195 million and $224 million [27][28] Business Line Data and Key Metrics Changes - In the Petroleum segment, adjusted EBITDA for Q2 2022 was $383 million, a significant increase from $18 million in Q2 2021, driven by higher product cracks and RIN prices [18] - The Fertilizer segment reported operating income of $126 million and EBITDA of $147 million for Q2 2022, compared to $30 million and $51 million respectively in Q2 2021, primarily due to higher sales prices [25] Market Data and Key Metrics Changes - The average Group 2-1-1 crack spread was $48.50 per barrel in Q2 2022, up from $19.15 in Q2 2021, indicating improved refining margins [11] - Ammonia prices exceeded $950 per ton, while UAN prices were over $450 per ton, reflecting strong market conditions in the Fertilizer segment [46] Company Strategy and Development Direction - The company plans to maintain its refining assets with minimal investment, focusing on the renewables business for future growth [57] - The Renewable Diesel unit is expected to improve margins with the addition of a pretreatment unit, anticipated to be operational in the second half of 2023 [44][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the near-term outlook for both refining and fertilizer businesses, citing tight supply and demand fundamentals [34] - Concerns were raised about potential demand destruction due to high prices and the risk of a global recession impacting future demand [37] Other Important Information - The company declared a regular dividend of $0.40 per share and a special dividend of $2.60 per share, representing a combined yield of nearly 13% [9] - The company ended Q2 2022 with approximately $893 million in cash and $983 million in liquidity, indicating a strong balance sheet [30] Q&A Session Summary Question: Capital allocation priorities and potential for special dividends - Management reiterated commitment to returning cash to shareholders and will evaluate capital allocation strategies quarterly [52] Question: Performance of Wynnewood renewable diesel and logistics challenges - The conversion to renewable diesel has been smooth operationally, with logistics being the main challenge [54] Question: Update on the PTU and its reporting as a segment - The PTU is expected to be operational in the second half of 2022, with plans to report renewables as a separate segment when appropriate [58][59] Question: Near-term fundamentals in the Fertilizer business - Strong fertilizer prices are expected to persist, driven by high natural gas prices in Europe [64] Question: Update on the hydro treater conversion at Coffeyville - The project is on hold pending favorable market conditions and regulatory clarity [66] Question: WCS runs and economics of selling excess barrels - The company continues to sell excess WCS barrels at Cushing, maintaining profitability [70] Question: Obligation on the balance sheet for RINs - The total obligation on the balance sheet was $708 million, covering open positions for 2020, 2021, and 2022 [72] Question: Impact of rising recession fears on balance sheet management - Management maintains a minimum cash balance strategy, adjusting based on crude price volatility [81]