CVR Energy(US:CVI)2022-05-02 16:00Part I. Financial Information Financial Statements Presents unaudited condensed consolidated financial statements for CVR Energy, Inc. as of March 31, 2022, including balance sheets, operations, equity, and cash flows Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $1,766 | $1,369 | | Total Assets | $4,345 | $3,906 | | Total Current Liabilities | $1,552 | $1,156 | | Total Liabilities | $3,469 | $3,136 | | Total Equity | $876 | $770 | Condensed Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Sales | $2,373 | $1,463 | | Operating Income (Loss) | $220 | $(135) | | Net Income (Loss) | $153 | $(55) | | Net Income (Loss) Attributable to CVR Energy Stockholders | $94 | $(39) | | Basic and Diluted Earnings (Loss) per Share | $0.93 | $(0.39) | Condensed Consolidated Statement of Cash Flows Highlights (in millions) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $322 | $96 | | Net cash used in investing activities | $(41) | $(54) | | Net cash used in financing activities | $(115) | $(2) | | Net increase in cash and cash equivalents | $166 | $40 | Notes to the Condensed Consolidated Financial Statements Detailed notes cover organization, accounting policies, segment performance, revenue, debt, RFS costs, litigation, and related party transactions - CVR Energy operates through Petroleum Refining and Nitrogen Fertilizer segments, with Icahn Enterprises L.P. owning approximately 71% of common stock as of March 31, 202228 Disaggregated Revenue by Segment (in millions) | Segment | Q1 2022 Revenue | Q1 2021 Revenue | | :--- | :--- | :--- | | Petroleum | $2,154 | $1,404 | | Nitrogen Fertilizer | $223 | $61 | | Other / Elimination | $(4) | $(2) | | Consolidated Total | $2,373 | $1,463 | - Accrued liability for Renewable Fuel Standards (RFS) obligation increased to $585 million as of March 31, 2022, from $494 million at year-end 202147 - CVR Partners redeemed all outstanding 9.25% Senior Secured Notes due 2023 on February 22, 2022, incurring a $1 million loss on debt extinguishment49 - The company is involved in 'Call Option Lawsuits' with plaintiffs seeking damages exceeding $300 million, which the company disputes74 - The Board declared a cash dividend of $0.40 per share for Q1 2022, payable in May 202290 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2022 financial condition and operations, covering business environment, segment performance, liquidity, capital resources, and non-GAAP reconciliations Company Overview and Strategy CVR Energy initiated a business restructuring in Q1 2022 to segregate renewables operations by Q1 2023, aiming to be a top-tier North American energy company - The Board approved a plan to segregate renewables operations into new subsidiaries, targeting completion by Q1 2023 for better alignment with management and financial reporting97 - Key strategic objectives include continuous improvement in EH&S, achieving industry-leading utilization, maximizing market capture, and maintaining financial discipline105106107 Industry Factors and Market Indicators Global oil and fertilizer markets were disrupted by the Russia-Ukraine conflict, leading to higher commodity prices and improved crack spreads for Petroleum and rising prices for Nitrogen Fertilizer - The Russia-Ukraine conflict disrupted global oil, fertilizer, and agriculture markets, leading to higher prices and heightened uncertainty110111 - The NYMEX 2-1-1 crack spread averaged $28.67 per barrel in Q1 2022, a significant increase from $15.84 per barrel in Q1 2021, indicating improved refining margins123 - The Wynnewood Refinery's renewable diesel unit (RDU) conversion completed in April 2022, expected to significantly reduce RFS compliance costs with a planned pretreater unit118 - Estimated open RFS obligation for 2020-2022 was approximately 426 million RINs, with a potential liability of $585 million as of March 31, 2022119 - USDA's preliminary 2022 report indicates a 4.1% decrease in corn acres and a 4.3% increase in soybean acres compared to 2021, influenced by higher input costs and strong demand for renewable diesel134 Results of Operations Consolidated operating income improved to $220 million in Q1 2022 from a $135 million loss in Q1 2021, driven by higher refining margins in Petroleum and increased pricing and volumes in Nitrogen Fertilizer Segment Operating Income (Loss) (in millions) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Petroleum | $130 | $(115) | | Nitrogen Fertilizer | $104 | $(14) | | Other / Eliminations | $(14) | $(6) | | Consolidated Total | $220 | $(135) | - The Petroleum segment's refining margin increased to $16.75 per throughput barrel in Q1 2022 from $3.05 in Q1 2021, driven by higher product crack spreads and crude oil prices162 - The Nitrogen Fertilizer segment experienced product sales price increases of 252% for ammonia and 212% for UAN in Q1 2022 due to strong market conditions173 Liquidity and Capital Resources The company's liquidity, primarily from operations, is deemed sufficient for the next 12 months, with estimated 2022 capital spending between $209 million and $239 million, including renewables, and a $0.40 per share dividend declared for Q1 2022 - The company believes cash from operations and existing cash will be sufficient to satisfy anticipated cash requirements for at least the next 12 months217 2022 Estimated Capital Spending (in millions) | Category | Low Estimate | High Estimate | | :--- | :--- | :--- | | Petroleum | $91 | $105 | | Renewables | $73 | $83 | | Nitrogen Fertilizer | $38 | $42 | | Other | $7 | $9 | | Total | $209 | $239 | - For Q1 2022, the Board declared a cash dividend of $0.40 per share ($40 million total), payable May 23, 2022234 - CVR Partners repurchased 111,695 common units for $12 million in Q1 2022 under its Unit Repurchase Program, with nominal authority remaining239 Quantitative and Qualitative Disclosures About Market Risk No material changes occurred to the company's market risks as of March 31, 2022, compared to those disclosed in the 2021 Annual Report on Form 10-K - There were no material changes to the company's market risks during the first quarter of 2022246 Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2022247 - No changes in internal controls over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal control248 Part II. Other Information Legal Proceedings Information on litigation, legal, and environmental matters is incorporated by reference from Note 12 of the financial statements - Details regarding legal proceedings are provided in Note 12 ("Commitments and Contingencies") of the financial statements250 Risk Factors No material changes from previously disclosed risk factors in the 2021 Form 10-K, though the Russia-Ukraine conflict may influence these risks - There have been no material changes from the risk factors disclosed in the 2021 Form 10-K, though the Russia-Ukraine conflict is noted as a potential influence251 Other Information No other information is reported for the period - No information was reported under this item252 Exhibits An index of all exhibits filed with the quarterly report is provided, including agreements, officer certifications, and Inline XBRL financial data files - An index of exhibits is provided, listing supplemental indentures, amendments to agreements, incentive plans, officer certifications, and XBRL data files253254