CVR ENERGY INC Q1 FY2025 earnings call

Management Statement and Operational Highlights

• The first quarter results were impacted by a planned turnaround at Coffeyville refinery, unplanned events in January, and an unfavorable mark-to-market impact of the RFS obligation. Startup of the Coffeyville refinery is underway with expected ramp to full rates in second quarter.
• No additional refinery turnarounds planned for 2025 and 2026, with the next planned at Wynnewood in 2027. Completed tie-ins for the distillate recovery project at Coffeyville, and a similar project at Wynnewood received board approval.
• In renewables, processed 14 million gallons of vegetable fuel oil, with margin improvement due to higher RIN prices and reduced feedstock basis. In fertilizer, strong demand ahead of spring planting season with ammonia prices higher and UAN slightly lower.

Segment Performance

• Petroleum: First quarter 2025 combined total throughput was approximately 125,000 barrels per day, light product yield 95% on crude processed. Adjusted EBITDA was a loss of $30 million. Realized margin adjusted for various impacts was $7.72 per barrel, representing a 44% capture rate on the Group 3211 benchmark.
• Renewables: First quarter 2025 processed approximately 14 million gallons of vegetable fuel oil in the renewable diesel unit at Wynnewood. Gross margin was approximately $1.13 per gallon, an improvement from $0.65 per gallon in first quarter 2024. Adjusted EBITDA was $3 million, an improvement from negative $5 million in first quarter 2024.
• Fertilizer: Both facilities ran well during the quarter. Adjusted EBITDA was $53 million for the first quarter, driven by higher UAN sales volumes and higher ammonia sales prices.

Guidance

• Full year 2025 estimated total consolidated capital spending: $180 million to $210 million; turnaround spending: $180 million to $200 million.
• Second quarter 2025 estimates: Petroleum segment throughputs 160,000-180,000 barrels per day; Fertilizer segment ammonia utilization 93%-97% with planned downtime at East Dubuque; Renewables segment throughput 16 million-20 million gallons.

Risks

• Unfavorable mark-to-market impact of the outstanding RFS obligation.
• Evolving tariff environment potentially weighing on the refining market.
• Uncertainty around renewable fuel credit rules (e.g., PTC clarity, BTC expiration) affecting profitability.

Question and Answer

• Q: Understanding refining macro and demand. A: Dave Lamp discussed supply-demand balance, RIN prices, and refining position, noting cracks not higher despite improved fundamentals and RIN price increase.
• Q: RD EBITDA and 45C. A: Dane Neumann mentioned need for clarity on qualifying sale provisions for PTC and conservative approach until certainty.
• Q: Refinery M&A and consolidation. A: Dave Lamp agreed economies of scale are important, seeing potential for industry consolidation but noting thin counterparties.
• Q: Coffeyville turnaround and dividend. A: Dave Lamp discussed challenges of the Coffeyville turnaround and goal to return to dividend payment once margins improve.
• Q: Renewable side and PTC assurance. A: Dave Lamp emphasized need for government assurance on credit rules to make renewable investments viable.
• Q: Renewable margin and hedging. A: Dane Neumann explained hedging related to price-exposed inventory and volatility in renewable margins.
• Q: U.S. shale and insider activity. A: Dave Lamp commented on U.S. shale growth depending on region and declined to comment on insider activity.