CVR Energy(US:CVI)2021-05-04 22:07Financial Data and Key Metrics Changes - The company reported a consolidated net loss of $55 million for Q1 2021, with a loss per share of $0.39, impacted by unplanned downtime and increased operating costs due to a winter storm, which negatively affected results by approximately $41 million [7][8] - The Petroleum segment's EBITDA for Q1 2021 was negative $61 million, compared to negative $77 million in Q1 2020, with the decline primarily driven by elevated RIN prices and increased operating expenses [15][16] - Cash provided by operations for Q1 2021 was $96 million, generating free cash flow of $61 million despite elevated costs [23] Business Line Data and Key Metrics Changes - The Petroleum segment's combined throughput for Q1 2021 was approximately 186,000 barrels per day, up from 157,000 barrels per day in Q1 2020 [9] - In the Fertilizer segment, ammonia utilization rates were 87% at Coffeyville and 89% at East Dubuque, with an operating loss of $14 million reported for Q1 2021 [13][20] - The company gathered approximately 112,000 barrels per day of crude oil in Q1 2021, down from 136,000 barrels per day in the same period last year due to severe winter weather [12] Market Data and Key Metrics Changes - RIN prices averaged approximately $5.57 per barrel in Q1 2021, a 250% increase from Q1 2020 [11] - The Brent-WTI differential averaged $3.18 per barrel in Q1 2021, compared to $5.04 per barrel in the prior year [11] - Current market fundamentals indicate that global oil demand is projected at 96 million barrels per day for 2021, a year-over-year increase of 6 million barrels per day [28] Company Strategy and Development Direction - The company is focused on maximizing gasoline production and blending biofuels, with no turnarounds scheduled for 2021 [31] - The construction of the Wynnewood renewable diesel unit is underway, with expectations for it to be online by the end of Q3 2021, despite delays due to severe weather [33] - Future capital spending is expected to prioritize sustainability and renewable projects, with a focus on biomass and low-carbon fuel standards [65] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism based on market fundamentals, noting that refining margins have improved and gasoline demand is increasing [27][28] - The company anticipates a continued strength in crop prices, which will positively impact fertilizer demand and pricing [13] - Management highlighted the importance of the Supreme Court ruling regarding small refinery exemptions, which could significantly affect the company's RIN obligations [76][78] Other Important Information - The company ended Q1 2021 with approximately $707 million in cash, an increase of $40 million from the end of 2020 [24] - Total consolidated capital spending for Q1 2021 was $68 million, with expectations for 2021 capital spending to be approximately $235 million to $250 million [21][22] Q&A Session Summary Question: Comments on EPA's actions regarding small refinery exemptions - Management noted that the EPA's reversal of small refinery exemptions could lead to higher gasoline and diesel prices, indicating a political process that needs revision [40][42] Question: Feedstock cost escalation and securing alternatives - Management confirmed that they are close to selecting technology for Phase 2, which will allow flexibility in feedstock usage, including alternatives like corn oil and tallow [44] Question: Timing for Phase 2 of the renewable diesel project - Management indicated that Phase 2 could be completed within 18 months from the decision to proceed, maintaining the original timeline [49] Question: Approach to the 2020 RVO liability - Management explained that they are awaiting a Supreme Court ruling, which could significantly impact their RIN obligations and cash return strategies [76][78] Question: Carbon capture opportunities - Management discussed ongoing efforts to leverage 45Q tax credits for carbon capture at both the refining and fertilizer segments, indicating potential benefits for sustainability initiatives [85][87]