CVR ENERGY INC Q1 FY2026 earnings call

In the first quarter, operations performed well with crude utilization of 97% and ammonia plant utilization of 103%. Major geopolitical events drove volatility in energy and fertilizer markets, creating attractive market opportunities for the rest of 2026. Announced the first quarter 2026 dividend of 10 cents per share. For the first quarter of 2026, consolidated net loss was $160 million, losses per share were $1.91, and EBITDA was a loss of $52 million. Included unrealized derivative losses of $158 million, unfavorable change in RFS liability of $51 million, and favorable inventory valuation impacts of $120 million. Excluding these items, adjusted EBITDA was $37 million and adjusted losses per share were $1.24. Estimated total consolidated capital spending for 2026 is approximately $200 to $240 million. For the second quarter of 2026, petroleum segment estimates total throughputs to be approximately 200 to 215,000 barrels per day, direct operating expenses to range between $110 and $120 million, and total capital spending to be between $35 and $40 million. Fertilizer segment estimates ammonia utilization rate to be between 95 and 100%, direct operating expenses excluding inventory and turnaround impacts to be between $57 and $62 million, and total capital spending to be between $28 and $32 million. Refining segment: global inventories of crude oil and refined products tightened, US refining fleet largely unimpacted but refined product inventories declining. MidCon refined product supply and demand fundamentals improved, basis tightened. Fertilizer segment: spring planting season underway, USDA estimates 95 million acres of corn to be planted in 2026, industry nitrogen fertilizer inventory tight at start of year, Middle East events tightened fertilizer markets further.

For the petroleum segment in the first quarter of 2026, adjusted EBITDA was a loss of $50 million, compared to a loss of $30 million in the first quarter of 2025. Total throughput for the first quarter of 2026 was approximately 214,000 barrels per day. Period utilization was approximately 97% of main plate capacity, and light product yield was 93% on total throughput volumes. Benchmark cracks for the first quarter of 2026 increased from the prior year period. The realized margin adjusted for unrealized derivative losses, change in RFS liability, and inventory valuation was $4.72 per barrel, representing a 22% capture rate on the Group 3-2-1-1 benchmark. Net RINs expense for the quarter, excluding the change in RFS liability, was $143 million, or $7.37 per barrel, negatively impacting the capture rate. For the fertilizer segment, adjusted EBITDA was $78 million for the first quarter compared to $53 million in the prior year period. Ammonia utilization rate was 103%, with both plants running well and minimal downtime during the quarter. CVR Energy owns approximately 37% of CVR Partners common units and will receive a proportionate cash distribution of approximately $16 million.

Estimates total consolidated capital spending for 2026 to be approximately $200 to $240 million. Petroleum segment estimates second quarter 2026 total throughputs to be approximately 200 to 215,000 barrels per day, direct operating expenses to range between $110 and $120 million, and total capital spending to be between $35 and $40 million. Fertilizer segment estimates second quarter 2026 ammonia utilization rate to be between 95 and 100%, direct operating expenses excluding inventory and turnaround impacts to be between $57 and $62 million, and total capital spending to be between $28 and $32 million.

Geopolitical events cause volatility in energy and fertilizer markets, potentially affecting margin capture. Unfavorable change in RFS liability had a negative impact in the quarter. Unrealized derivative losses, though not viewed as detrimental to current period, may be affected by market changes. EPA's delay in ruling on Winningwood Refining Company's 2025 SRE petition may impact financial performance.

Q: Matthew Blair asked about increasing crude slate exposure and derivative exposure.

A: Mark and Dane answered on reasons for crude change and first and second quarter derivative exposure.

Q: Manav Gupta asked about refining macro and dividend nature.

A: Mark answered on refining macro market changes and dividend being non-variable.

Q: Alexa Petrick asked about hedge decision and capital allocation priorities.

A: Relevant personnel answered on hedge decision reasons and balancing deleveraging and dividend return, and M&A opportunities but prioritizing managing base business currently.