CVR Energy(US:CVI)2021-02-23 22:52Financial Data and Key Metrics Changes - For the full year 2020, the company reported a net loss of $320 million and a loss of $2.54 per share, while for the fourth quarter, the net loss was $78 million and a loss per share of $0.67 [11][18] - EBITDA for the year was a negative $7 million, and for the quarter, it was a positive $1 million [11][18] - The effective tax rate for the fourth quarter of 2020 was 23% compared to 40% for the prior year period [18] Business Line Data and Key Metrics Changes - The Petroleum segment's EBITDA for Q4 2020 was a negative $66 million compared to a positive $135 million in Q4 2019, driven by narrower crack spreads and elevated RIN prices [19] - The Fertilizer segment reported an operating loss of $1 million and a net loss of $17 million for Q4 2020, compared to an operating loss of $9 million and a net loss of $25 million in Q4 2019 [24] - Ammonia production reached 852,000 tons for the year, with a combined utilization of 95% [10] Market Data and Key Metrics Changes - The combined total throughput for the Petroleum segment in Q4 2020 was approximately 219,000 barrels per day, up from 213,000 barrels per day in Q4 2019 [13] - Group 3 2-1-1 crack spreads averaged $8.44 per barrel in Q4 2020, significantly lower than $16.65 per barrel in Q4 2019 [14] - RINs expense in Q4 2020 was $120 million, compared to $13 million for the same period last year [21] Company Strategy and Development Direction - The company plans to reduce refining capacity and retool for renewable diesel production, focusing on sustainability [7][8] - The acquisition of Blueknight Energy's crude oil pipeline assets is expected to expand crude gathering reach [9] - The company is evaluating potential refinancing of CVR Partners' senior notes at lower costs as credit markets strengthen [36] Management's Comments on Operating Environment and Future Outlook - The management expressed cautious optimism regarding market fundamentals, despite the ongoing challenges posed by high RIN prices and low demand for refined products [31][34] - The company anticipates a net obligation from refining operations of approximately 280 million RINs for 2021 [22] - Management highlighted the need for rationalization of capacity to see sustained improvements in crack spreads [33] Other Important Information - The total consolidated capital spending for 2020 was $121 million, with an estimated range of $215 million to $230 million for 2021 [26] - The company ended 2020 with approximately $667 million in cash and $929 million in liquidity [28] Q&A Session Summary Question: RIN prices and renewable diesel expansion - Management noted that current RIN prices exceed initial project expectations, but they anticipate a potential decrease in the future [41][42] Question: Use of excess cash from renewable diesel project - The Board is evaluating options for excess cash, including share buybacks or debt reduction, but emphasized the importance of maintaining liquidity in uncertain market conditions [44] Question: Delek investment and board nominations - Management expressed that the aim of the letter to Delek was to shift their focus from growth to free cash flow generation, suggesting that the current refineries may present negative gross margins [51][52] Question: Feedstock availability for renewable diesel - Management indicated that securing feedstock for the Wynnewood project is manageable in the short term, but long-term availability remains a concern [57] Question: Capital returns and dividend reinstatement - Management stated that the decision on reinstating dividends will depend on clarity regarding demand and RIN prices, with a focus on free cash flow [60]