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CST: 21/07/2019 08:57:20   

CVR Energy Reports 2018 Fourth Quarter and Full-Year Results And Announces Cash Dividend of 75 Cents

150 Days ago

  • Achieved significant year-over-year environmental, health and safety improvements at all sites.
  • Increased internal Renewable Identification Number generation through the initiation of biodiesel blending capabilities.
  • Completed Red River pipeline reversal to provide more shale oil to the Coffeyville refinery.
  • CVR Partners added unit train capabilities through a new Coffeyville rail loading rack, which enhanced its geographic reach and reduced its distribution costs.
  • Declared a fourth quarter 2018 cash dividend of 75 cents per share, bringing the cumulative cash dividends declared for 2018 to $2.75 per share.
  • $3.00 annualized dividend with a current yield of 7 percent.

SUGAR LAND, Texas, Feb. 20, 2019 (GLOBE NEWSWIRE) -- CVR Energy, Inc. (NYSE: CVI) today announced fourth quarter 2018 net income of $82 million, or 82 cents per diluted share, on net sales of $1.7 billion, compared to net income of $200 million, or $2.31 per diluted share, on net sales of $1.6 billion for the prior year period. The fourth quarter of 2017 benefited from a $201 million tax benefit resulting from new tax legislation. Fourth quarter 2018 adjusted EBITDA was $202 million, compared to $64 million for the same period a year earlier.

For full year 2018, the Company reported net income of $289 million, or $3.12 per diluted share, on net sales of $7.1 billion, compared to net income for full year 2017 of $235 million, or $2.70 per diluted share, on net sales of $6.0 billion. Adjusted EBITDA for full year 2018 was $825 million, compared to $406 million for the previous year.

“CVR Energy reported strong results for the 2018 full year, led by our petroleum segment and the improved second half results from our nitrogen fertilizer segment,” said Dave Lamp, CVR Energy’s Chief Executive Officer. “Our petroleum segment has experienced significantly increased earnings year-over-year, driven by stronger crack spreads, wide crude oil differentials, additional runs of regional shale oil, a lower Renewable Volume Obligation and lower Renewable Identification Number prices.

“CVR Partners benefited from higher netback pricing in 2018,” Lamp said. “We also are pleased to report that CVR Partners generated positive distributable cash and declared a 12 cent per unit distribution for the fourth quarter 2018.”

Petroleum

The petroleum segment, which is operated by CVR Refining and its subsidiaries and includes the Coffeyville and Wynnewood refineries, reported fourth quarter 2018 operating income of $135 million on net sales of $1.6 billion, compared to an operating loss of $19 million on net sales of $1.5 billion in the fourth quarter of 2017.

Refining margin, excluding the impacts of market price and volume fluctuations on inventories, per total throughput barrel, was $17.47 in the fourth quarter 2018, compared to $7.46 during the same period in 2017. Direct operating expenses (exclusive of depreciation and amortization), excluding turnaround expenses, per total throughput barrel, for the fourth quarter 2018 were $4.41, compared to $4.82 in the fourth quarter of 2017.

Fourth quarter 2018 combined total throughput was approximately 221,000 barrels per day (bpd), compared to approximately 205,000 bpd of combined total throughput for the fourth quarter of 2017.

Nitrogen Fertilizer

The nitrogen fertilizer segment, which is operated by CVR Partners and its subsidiaries and includes the Coffeyville and East Dubuque fertilizer facilities, reported fourth quarter 2018 operating income of $8 million on net sales of $98 million, compared to an operating loss of $11 million on net sales of $78 million for the fourth quarter of 2017.

CVR Partners’ fertilizer facilities produced a combined 209,000 tons of ammonia during the fourth quarter of 2018, of which 59,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 357,000 tons of UAN. In the 2017 fourth quarter, the fertilizer facilities produced 200,000 tons of ammonia, of which 64,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 306,000 tons of UAN.

Cash, Debt and Dividend

Consolidated cash and cash equivalents was $668 million at Dec. 31, 2018. Consolidated total debt was $1,170 million at Dec. 31, 2018. The Company had no debt exclusive of its segments’ debt.

CVR Energy also announced that, on Feb. 20, 2019, its Board of Directors approved a fourth quarter 2018 cash dividend of 75 cents per share. The dividend will be paid on March 11, 2019, to stockholders of record on March 4, 2019. CVR Energy’s fourth quarter cash dividend brings the cumulative cash dividends declared for the 2018 full year to $2.50 per share.

Today, CVR Partners announced that the Board of Directors of its general partner declared a 2018 fourth quarter cash distribution of 12 cents per common unit, which will be paid on March 11, 2019, to common unitholders of record on March 4, 2019.

Fourth Quarter 2018 Earnings Conference Call

CVR Energy previously announced that it will host its fourth quarter and full-year 2018 Earnings Conference Call on Thursday, Feb. 21, at 3 p.m. Eastern. This Earnings Conference Call may also include discussion of Company developments, forward-looking information and other material information about business and financial matters.

The fourth quarter and full-year 2018 Earnings Conference Call will be webcast live and can be accessed on the Investor Relations section of CVR Energy’s website at www.CVREnergy.com. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8291. The webcast will be archived and available through March 7 at https://edge.media-server.com/m6/p/8ue9x8pd. A repeat of the call can be accessed through March 7 by dialing (877) 660-6853, conference ID 13687296.

Forward-Looking Statements
This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws.  These forward-looking statements include, but are not limited to, statements regarding future: increased RIN generation; biodiesel blending; ability to provide more shale oil to the Coffeyville refinery; unit train capabilities; enhancement of CVR Partners’ geographic reach and reduction of distribution costs; reduction of overhead costs; payment of dividends and distributions, including the payment, amount and timing thereof; yield; RINs and RVO, first quarter performance, including throughput, production, direct operating expenses, capital spending; depreciation; amortization and turnaround expenses; safe and reliable operations; and other matters. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. Investors are cautioned that various factors may affect these forward-looking statements, including (among others) price volatility of crude oil, other feedstocks and refined products; the ability of our subsidiaries, including CVR Partners, to make cash distributions; potential operating hazards; costs of compliance with existing, or compliance with new, laws and regulations and potential liabilities arising therefrom; impacts of planting season on CVR Partners; general economic and business conditions; and other risks. For additional discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings. These and other risks may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this news release are made only as of the date hereof. CVR Energy disclaims any intention or obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

About CVR Energy, Inc.
Headquartered in Sugar Land, Texas, CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing business through its interest in CVR Refining and the nitrogen fertilizer manufacturing business through its interest in CVR Partners, LP. CVR Energy subsidiaries serve as the general partner and own 34 percent of the common units of CVR Partners.

For further information, please contact:

Investor Contact:
Jay Finks
CVR Energy, Inc.
(281) 207-3588
InvestorRelations@CVREnergy.com

Media Relations:
Brandee Stephens
CVR Energy, Inc.
(281) 207-3516
MediaRelations@CVREnergy.com

Non-GAAP Measures

Our management uses certain non-GAAP performance measures to evaluate current and past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These non-GAAP financial measures are important factors in assessing our operating results and profitability and include the performance and liquidity measures defined below.

During the fourth quarter of 2018, management revised its internal and external use of non-GAAP measures. Earnings before interest, tax, depreciation and amortization (“EBITDA”) is now reconciled from net income (loss). Adjusted EBITDA, as defined below, was revised to remove adjustments for (i) first-in-first-out inventory impacts, (ii) derivative gains or losses, and (iii) business interruption insurance recoveries. Additionally, due to the revisions to Adjusted EBITDA to remove certain adjustments, we revised the definitions of our Refining Margin and Direct Operating Expense metrics in our Petroleum segment to conform. Refer to the revised definitions below for further information.

EBITDA - Consolidated net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.

Petroleum EBITDA and Nitrogen Fertilizer EBITDA - Segment net income (loss) before segment (i) interest expense, net, (ii) income tax expense (benefit), and (iii) depreciation and amortization.

Adjusted EBITDA - EBITDA adjusted to exclude consolidated turnaround expense and other non-recurring items which management believes are material to an investor’s understanding of the Company’s underlying operating results.

Petroleum Adjusted EBITDA and Nitrogen Fertilizer Adjusted EBITDA - Segment EBITDA adjusted to exclude turnaround expense attributable to each segment and other non-recurring segment items which management believes are material to an investor’s understanding of the Petroleum or Nitrogen Fertilizer segments’ underlying operating results.

Adjusted net income (loss) is not a recognized term under GAAP and should not be substituted for net income as a measure of our performance, but rather should be utilized as a supplemental measure of financial performance in evaluating our business. Management believes that adjusted net income (loss) provides relevant and useful information that enables external users of our financial statements, such as industry analysts, investors, lenders and rating agencies, to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance. Adjusted net income (loss) per diluted share represents adjusted net income (loss) divided by the weighted-average diluted shares outstanding. Adjusted net income (loss) represents net income, as adjusted, that is attributable to CVR Energy stockholders.

Refining Margin - The difference between Petroleum segment net sales and cost of materials and other.

Refining Margin, excluding Inventory Valuation Impacts - Refining Margin adjusted to exclude the impact of current period market price and volume fluctuations on crude oil and refined product inventories recorded in prior periods. We record our commodity inventories on the first-in-first-out basis. As a result, significant current period fluctuations in market prices and the volumes we hold in inventory can have favorable or unfavorable impacts on our refining margins as compared to similar metrics used by other publicly-traded companies in the refining industry.

Refining Margin and Refining Margin, excluding Inventory Valuation Impacts, per Total Throughput Barrel - Refining Margin divided by the total throughput barrels during period, which is calculated as total throughput barrels per day times the number of days in the period.

Direct Operating Expenses per Throughput Barrel - Direct operating expenses for our Petroleum segment divided by total throughput barrels for the period, which is calculated as total throughput barrels per day times the number of days in the period.

Direct Operating Expenses per Total Throughput Barrel, excluding Turnaround Expense - Direct operating expenses for our Petroleum segment, excluding turnaround expenses reported as direct operating expense, divided by total throughput barrels for the period, which is calculated as total throughput barrels per day times the number of days in the period.

We present these measures because we believe they may help investors, analysts, lenders and ratings agencies analyze our results of operations and liquidity in conjunction with our U.S. GAAP results, including but not limited to our operating performance as compared to other publicly-traded companies in the refining industry, without regard to historical cost basis or financing methods and our ability to incur and service debt and fund capital expenditures. Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. See “Non-GAAP Reconciliations” section included herein for reconciliation of these amounts.

Items or Events Impacting Comparability

Refer to the “Non-GAAP Measures” section above for discussion of the changes made during the fourth quarter of 2018 to the Company’s definition of certain non-GAAP measures.

Petroleum Segment

Starting with the fourth quarter of 2018, derivative gains or losses are now presented within Cost of Materials and Other. Prior period amounts have been conformed to the current presentation.

Coffeyville Refinery - During the first quarter of 2018, our Coffeyville, Kansas refinery (the “Coffeyville Refinery”) experienced an outage with its fluid catalytic cracking unit (“FCC”) lasting 48 days. The FCC outage had a significant negative impact on production and sales during that period.

Wynnewood Refinery - During 2017, the Wynnewood, Oklahoma (“Wynnewood Refinery”) underwent a turnaround on its hydrocracking unit in the first quarter of 2017 at a cost of $13 million and the first phase of its planned facility turnaround, with the second phase scheduled for the first quarter of 2019, at a cost of approximately $67 million, including $43 million in the fourth quarter of 2017.

Nitrogen Fertilizer Segment

During the fourth quarter of 2018, we recognized a $6 million business interruption insurance recovery associated with outages at its Coffeyville, Kansas (the “Coffeyville Facility”). The recovery is recorded in the Other Income (Expense) line item. Prior year amounts, which were not material, were conformed to the current year presentation.

Coffeyville Facility - During 2018, our Coffeyville, Kansas nitrogen fertilizer facility (the “Coffeyville Facility”) had a planned, full facility turnaround lasting 15 days and incurred approximately $6 million in turnaround expense in the second quarter of 2018. During 2017, the Coffeyville Facility’s third-party air separation unit experienced a shut down. Paired with this shut down and subsequent operational challenges, the Coffeyville Facility experienced unplanned UAN downtime of 11 days during the second quarter of 2017.

East Dubuque Facility - During 2017, our East Dubuque, Illinois nitrogen fertilizer facility (the “East Dubuque Facility”) had a planned, full facility turnaround lasting 14 days and incurred approximately $3 million in turnaround expense in the third quarter of 2017. Additionally, during the fourth quarter of 2017, the East Dubuque Facility experienced unplanned downtime totaling 12 days.


CVR Energy, Inc.
Consolidated Statements of Operations
(Unaudited)

    Three Months Ended
December 31,
  Year Ended
December 31,
(in millions, except per share amounts)   2018   2017   2018   2017
             
Net sales   $ 1,737     $ 1,593     $ 7,124     $ 5,988  
Operating costs and expenses:                
Cost of materials and other (exclusive of depreciation and amortization)   1,387     1,366     5,683     4,953  
Direct operating expenses (exclusive of depreciation and amortization)   130     175     523     598  
Depreciation and amortization   51     52     202     203  
Cost of sales   1,568     1,593     6,408     5,754  
Selling, general and administrative expenses   28     31     112     113  
Depreciation and amortization   3     3     11     11  
Loss on asset disposal       2     6     3  
Operating income   138     (36 )   587     107  
Other income (expense):                
Interest expense, net   (24 )   (27 )   (102 )   (109 )
Other income, net   8     2     15     2  
Income (loss) before income taxes   122     (61 )   500      
Income tax expense (benefit)   16     (234 )   89     (217 )
Net income   106     173     411     217  
Less: Net income (loss) attributable to noncontrolling interest   24     (27 )   122     (18 )
Net income attributable to CVR Energy stockholders   $ 82     $ 200     $ 289     $ 235  
                 
Basic and diluted earnings per share   $ 0.82     $ 2.31     $ 3.12     $ 2.70  
Dividends declared per share   $ 0.75     $ 0.50     $ 2.50     $ 2.00  
                 
EBITDA *   $ 200     $ 21     $ 815     $ 323  
Adjusted EBITDA*   $ 202     $ 64     $ 825     $ 406  
                 
Weighted-average common shares outstanding:                
Basic and Diluted   100.5     86.8     92.5     86.8  

____________________
* See “Non-GAAP Reconciliations” section below reconciliation of these amounts.


Selected Balance Sheet Data:

  As of December 31,
(in millions) 2018   2017
       
Cash and cash equivalents $ 668     $ 482  
Working capital 797     534  
Total assets 3,907     3,807  
Total debt 1,170     1,166  
Total liabilities 2,039     2,103  
Total CVR stockholders’ equity 1,246     919  


Selected Cash Flow Data:

  Three Months Ended
December 31,
  Year Ended
 December 31,
(in millions) 2018   2017   2018   2017
               
   
Net cash flow provided by (used in):              
Operating activities $ 101     $ (159 )   $ 620     $ 168  
Investing activities (33 )   (115 )   (100 )   (196 )
Financing activities (102 )   (93 )   (334 )   (226 )
Net cash flow $ (34 )   $ (367 )   $ 186     $ (254 )


Selected Segment Data:

  Petroleum   Nitrogen Fertilizer   Corporate and
Other
  Consolidated
(in millions)      
Three Months Ended December 31, 2018              
Net sales $ 1,641     $ 98     $ (2 )   $ 1,737  
Operating income (loss) 135     8     (5 )   138  
Net income (loss) 128     (1 )   (21 )   106  
               
Capital Expenditures:              
Maintenance capital expenditures $ 22     $ 4     $ 1     $ 27  
Growth capital expenditures 6             6  
Total capital expenditures 28     4     1     33  
               
               
Three Months Ended December 31, 2017              
Net sales $ 1,517     $ 78     $ (2 )   $ 1,593  
Operating income (loss) (19 )   (11 )   (6 )   (36 )
Net income (loss) (29 )   (27 )   229     173  
               
Capital Expenditures:              
Maintenance capital expenditures $ 20     $ 3     $ 2     $ 25  
Growth capital expenditures 14             14  
Total capital expenditures 34     3     2     39  


  Petroleum   Nitrogen Fertilizer   Corporate and
Other
  Consolidated
(in millions)      
Year Ended December 31, 2018              
Net sales $ 6,780     $ 351     $ (7 )   $ 7,124  
Operating income (loss) 599     6     (18 )   587  
Net income (loss) 567     (50 )   (106 )   411  
               
Capital Expenditures:              
Maintenance capital expenditures $ 62     $ 15     $ 4     $ 81  
Growth capital expenditures 17     4         21  
Total capital expenditures 79     19     4     102  
               
               
Year Ended December 31, 2017              
Net sales $ 5,664     $ 331     $ (7 )   $ 5,988  
Operating income (loss) 134     (10 )   (17 )   107  
Net income (loss) 89     (73 )   201     217  
               
Capital Expenditures:              
Maintenance capital expenditures $ 79     $ 14     $ 5     $ 98  
Growth capital expenditures 22             22  
Total capital expenditures 101     14     5     120  


  Petroleum   Nitrogen Fertilizer   Corporate and
Other
  Consolidated
(in millions)      
December 31, 2018              
Cash and cash equivalents $ 353     $ 62     $ 253     $ 668  
Total assets 2,360     1,254     293     3,907  
Total debt 541     629         1,170  
               
December 31, 2017              
Cash and cash equivalents $ 174     $ 49     $ 259     $ 482  
Total assets 2,270     1,234     303     3,807  
Total debt 541     625         1,166  


Petroleum Segment:

  Three Months Ended
December 31,
  Year Ended
December 31,
(in millions) 2018   2017   2018   2017
Net sales $ 1,641     $ 1,517     $ 6,780     $ 5,664  
Operating costs and expenses:              
Cost of materials and other (1) 1,362     1,346     5,602     4,875  
Direct operating expenses (1) 92     133     364     441  
Depreciation and amortization 32     33     130     129  
Cost of sales 1,486     1,512     6,096     5,445  
Selling, general and administrative expenses 19     21     75     78  
Depreciation and amortization 1     1     4     4  
Loss on asset disposals     2     6     3  
Operating income (loss) 135     (19 )   599     134  
Interest expense, net (9 )   (12 )   (41 )   (47 )
Other income, net 2     2     9     2  
Net income (loss) $ 128     $ (29 )   $ 567     $ 89  
               
Petroleum EBITDA * $ 170     $ 17     $ 742     $ 269  
Petroleum Adjusted EBITDA* $ 172     $ 60     $ 746     $ 349  
               
Key Operating Metrics per Total Throughput Barrel              
Refining Margin * $ 13.67     $ 9.07     $ 15.18     $ 9.92  
Refining Margin, excluding Inventory Valuation Impacts * $ 17.47     $ 7.46     $ 15.60     $ 9.55  
Direct Operating Expenses * $ 4.52     $ 7.10     $ 4.69     $ 5.55  
Direct Operating Expenses, excluding Turnaround Expenses * $ 4.41     $ 4.82     $ 4.65     $ 4.54  

____________________
* See “Non-GAAP Reconciliations” section below reconciliation of these amounts.

(1) Amounts are shown exclusive of depreciation and amortization.


Throughput Data by Refinery

  Three Months Ended
 December 31,
  Year Ended
 December 31,
(in bpd) 2018   2017   2018   2017
Coffeyville              
Regional shale crude 35,855     40,204     31,350     34,805  
WTI 72,468     87,363     66,952     84,460  
Midland WTI 18,506         15,893      
Condensate 672     19     4,992     2,169  
Heavy Canadian 7,629     5,657     5,302     10,135  
Other feedstocks and blendstocks 12,033     12,689     8,369     9,921  
Wynnewood              
Regional shale crude 51,959     27,323     54,746     27,750  
WTI     4,466     2,354     15,251  
Midland WTI 7,776     21,215     10,332     29,045  
Condensate 8,808     1,749     7,237     1,134  
Heavy Canadian              
Other feedstocks and blendstocks 5,775     3,893     5,068     3,511  
Total throughput 221,481     204,578     212,595     218,181  


Production Data by Refinery

  Three Months Ended
 December 31,
  Year Ended
 December 31,
(in bpd) 2018   2017   2018   2017
Coffeyville              
Gasoline 78,291     76,385     67,091     72,778  
Distillate 60,080     61,568     56,307     59,593  
Other liquid products 4,834     4,005     5,737     4,704  
Solids 5,682     6,485     5,190     6,631  
Wynnewood              
Gasoline 39,033     28,638     40,291     38,311  
Distillate 30,568     23,982     33,442     30,816  
Other liquid products 2,992     4,607     4,025     5,429  
Solids 27     31     41     54  
Total production 221,507     205,701     212,124     218,316  


Liquid Volume Yield for Petroleum Segment

  Three Months Ended
 December 31,
  Year Ended
 December 31,
(as percentage of total throughput) 2018   2017   2018   2017
Liquid volume yield 97.4 %   97.3%   97.3 %   96.9%


Key Market Indicators



 
Three Months Ended
 December 31,
  Year Ended
 December 31,
(dollars per barrel) 2018   2017   2018   2017
West Texas Intermediate (WTI) NYMEX $ 59.34     $ 55.30     $ 64.90     $ 50.85  
Crude Oil Differentials:              
WTI less WTS (light/medium sour) 6.63     0.42     7.77     0.97  
WTI less WCS (heavy sour) 34.54     16.61     26.38     12.69  
WTI less Condensate 0.65     0.10     0.46     0.12  
Midland Cushing Differential 6.34     (0.25 )   7.36     0.34  
NYMEX Crack Spreads:              
Gasoline 9.81     16.63     15.69     17.46  
Heating Oil 27.74     23.96     23.15     18.93  
NYMEX 2-1-1 Crack Spread 18.77     20.29     19.42     18.19  
PADD II Group 3 Product Basis:              
Gasoline (0.35 )   (0.14 )   (1.58 )   (1.83 )
Ultra Low Sulfur Diesel (0.25 )   (0.53 )   0.01     (0.50 )
PADD II Group 3 Product Crack Spread:              
Gasoline 9.46     16.49     14.11     15.63  
Ultra Low Sulfur Diesel 27.49     23.42     23.16     18.42  
PADD II Group 3 2-1-1 18.48     19.96     18.63     17.03  


Q1 2019 Petroleum Segment Outlook

The table below summarizes our outlook for certain refining statistics and financial information for the first quarter of 2019. See “forward looking statements.”

  Q1 2019
  Low   High
Refinery Statistics:      
Total throughput (bpd) 205,000     215,000  
       
Direct operating expenses (1) (in millions) $ 85     $ 95  
       
Total capital spending (in millions) $ 35     $ 45  

_________________________
(1) Direct operating expenses are shown exclusive of depreciation and amortization and turnaround expenses.


Nitrogen Fertilizer Segment:

  Three Months Ended
December 31,
  Year Ended
December 31,
(in millions) 2018   2017   2018   2017
               
Net sales $ 98     $ 78     $ 351     $ 331  
Operating costs and expenses:              
Cost of materials and other 27     22     88     85  
Direct operating expenses(1) 38     42     159     157  
Depreciation and amortization 19     19     72     74  
Cost of sales 84     83     319     316  
Selling, general and administrative expenses(1) 6     6     26     25  
Loss on asset disposals              
Operating income (loss) 8     (11 )   6     (10 )
Other income (expense):              
Interest expense, net (15 )   (16 )   (62 )   (63 )
Other income (expense), net 6         6      
Loss before income tax expense (1 )   (27 )   (50 )   (73 )
Income tax expense (benefit)              
Net loss $ (1 )   $ (27 )   $ (50 )   $ (73 )
               
EBITDA * $ 33     $ 8     $ 84     $ 64  
Adjusted EBITDA* $ 33     $ 8     $ 90     $ 67  

____________________
* See “Non-GAAP Reconciliations” section below reconciliation of these amounts.

(1) Amounts are shown exclusive of depreciation and amortization.


Key Operating Data:

Ammonia Utilization Rates (1)  
  Two Years Ended December 31,
(percent of capacity utilization) 2018   2017
       
Consolidated 93%   92%
Coffeyville 92%   94%
East Dubuque 93%   89%

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(1) Reflects ammonia utilization rates on a consolidated basis and at each of the Nitrogen Fertilizer facilities. Utilization is an important measure used by management to assess operational output at each of the facilities. Utilization is calculated as actual tons produced divided by capacity. The Nitrogen Fertilizer Segment presents utilization on a two-year rolling average to take into account the impact of  current turnaround cycles on any specific period. The two-year rolling average is a more useful presentation of the long-term utilization performance of our plants. Additionally, we present utilization solely on ammonia production rather than each nitrogen product as it provides a comparative baseline against industry peers and eliminates the disparity of plant configurations for upgrade of ammonia into other nitrogen products. With the Nitrogen Fertilizer Segments’ efforts being primarily focused on ammonia upgrade capabilities, this measure provides a meaningful view of how well the facilities operate.


Sales and Production Data      
  Three Months Ended
December 31,
  Year Ended
December 31,
  2018   2017   2018   2017
Consolidated sales (thousand tons):              
Ammonia 46     84     202     286  
UAN 364     303     1,289     1,255  
               
Consolidated product pricing at gate (dollars per ton) (2):              
Ammonia $ 324     $ 264     $ 328     $ 280  
UAN $ 180     $ 132     $ 173     $ 152  
               
Consolidated production volume (thousand tons):              
Ammonia (gross produced) (3) 209     200     794     815  
Ammonia (net available for sale) (3) 59     64     246     268  
UAN 357     306     1,276     1,268  
               
Feedstock:              
Petroleum coke used in production (thousand tons) 139     117     463     488  
Petroleum coke used in production (dollars per ton) $ 41     $ 13     $ 28     $ 17  
Natural gas used in production (thousands of MMBtus) (4) 2,000     1,839     7,933     7,620  
Natural gas used in production (dollars per MMBtu) (4) $ 4.06     $ 3.24     $ 3.28     $ 3.24  
Natural gas in cost of materials and other (thousands of MMBtus) (4) 1,854     2,153     7,122     8,052  
Natural gas in cost of materials and other (dollars per MMBtu) (4) $ 3.50     $ 3.17     $ 3.15     $ 3.26  

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(2) Product pricing at gate represents net sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure that is comparable across the fertilizer industry.
(3) Gross tons produced for ammonia represent total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represent ammonia available for sale that was not upgraded into other fertilizer products.
(4) The feedstock natural gas shown above does not include natural gas used for fuel. The cost of fuel natural gas is included in direct operating expense.


Key Market Indicators      
  Three Months Ended
December 31,
  Year Ended
December 31,
  2018   2017   2018   2017
Ammonia - Southern plains (dollars per ton) 423     315     370     314  
Ammonia - Corn belt (dollars per ton) 479     340     424     358  
UAN - Corn belt (dollars per ton) 255     190     219     192  
               
Natural gas NYMEX (dollars per MMBtu) 3.75     2.92     3.08     3.02  
                       


Non-GAAP Reconciliations:

Reconciliation of Consolidated Net Income to EBITDA and Adjusted EBITDA
  Three Months Ended
 December 31,
  Year Ended
 December 31,
(in millions) 2018   2017   2018   2017
Net income $ 106     $ 173     $ 411     $ 217  
Add:              
Interest expense, net 24     27     102     109  
Income tax expense (benefit) 16     (234 )   89     (217 )
Depreciation and amortization 54     55     213     214  
EBITDA 200     21     815     323  
Add:              
Turnaround expenses 2     43     10     83  
Adjusted EBITDA $ 202     $ 64     $ 825     $ 406  


Reconciliation of Income before income tax expense to Adjusted Net Income
  Three Months Ended
 December 31,
  Year Ended
 December 31,
(in millions) 2018   2017   2018   2017
Income before income tax expense $ 122     $ (61 )   $ 500     $  
Adjustments:              
Turnaround expenses 2     43     10     83  
Adjusted net income before income tax expense and noncontrolling interest 124     (18 )   510     83  
Adjusted net income attributed to noncontrolling interest (24 )   13     (127 )   (12 )
Income tax expense (benefit), as adjusted (17 )   223     (91 )   196  
Adjusted net income $ 83     $ 218     $ 292     $ 267  
               
Adjusted net income per diluted share $ 0.83     $ 2.51     $ 3.16     $ 3.08  


Reconciliation of Petroleum Segment Net Income to Petroleum EBITDA and Petroleum Adjusted EBITDA
  Three Months Ended
 December 31,
  Year Ended
 December 31,
(in millions) 2018   2017   2018   2017
Net income (loss) $ 128     $ (29 )   $ 567     $ 89  
Add:              
Interest expense, net 9     12     41     47  
Depreciation and amortization 33     34     134     133  
Petroleum EBITDA 170     17     742     269  
Add:              
Turnaround expenses 2     43     4     80  
Adjusted Petroleum EBITDA $ 172     $ 60     $ 746     $ 349  


Reconciliation of Petroleum Gross Profit to Refining Margin
  Three Months Ended
 December 31,
  Year Ended
 December 31,
(in millions) 2018   2017   2018   2017
Net sales $ 1,641     $ 1,517     $ 6,780     $ 5,664  
Cost of materials and other 1,362     1,346     5,602     4,875  
Direct operating expenses (exclusive of depreciation and amortization and turnaround expenses as reflected below) 90     90     360     361  
Turnaround expenses 2     43     4     80  
Depreciation and amortization 32     33     130     129  
Gross profit 155     5     684     219  
Add:              
Direct operating expenses (exclusive of depreciation and amortization and turnaround expenses as reflected below) 90     90     360     361  
Turnaround expenses 2     43     4     80  
Depreciation and amortization 32     33     130     129  
Refining margin $ 279     $ 171     $ 1,178     $ 789  
               
Exclude: (favorable) unfavorable inventory valuation impacts 77     (31 )   32     (29 )
Refining margin, excluding inventory valuation impacts $ 356     $ 140     $ 1,210     $ 760  


Reconciliation of Refining Margin and Refining Margin, excluding Inventory Valuation Impacts, per Total Throughput Barrel
               
  Three Months Ended
 December 31,
  Year Ended
 December 31,
  2018   2017   2018   2017
Total throughput barrels per day 221,481     204,578     212,595     218,181  
Days in the period 92     92     365     365  
Total throughput barrels 20,376,252     18,821,176     77,597,175     79,636,065  


  Three Months Ended
 December 31,
  Year Ended
 December 31,
(In millions) 2018   2017   2018   2017
Refining margin $ 279     $ 171     $ 1,178     $ 789  
Divided by: total throughput barrels 20     19     78     80  
Refining margin per total throughput barrel $ 13.67     $ 9.07     $ 15.18     $ 9.92  


  Three Months Ended
 December 31,
  Year Ended
 December 31,
(In millions) 2018   2017   2018   2017
Refining margin, excluding inventory valuation impacts $ 356     $ 140     $ 1,210     $ 760  
Divided by: total throughput barrels 20     19     78     80  
Refining margin, excluding inventory valuation impacts, per total throughput barrel $ 17.47     $ 7.46     $ 15.60     $ 9.55  


Reconciliation of Petroleum Direct Operating Expenses and Direct Operating Expenses, excluding Turnaround Expenses, per Total Throughput Barrel
       
  Three Months Ended
 December 31,
  Year Ended
 December 31,
(In millions) 2018   2017   2018   2017
Direct operating expenses (exclusive of depreciation and amortization) $ 92     $ 133     $ 364     $ 441  
Divided by: total throughput barrels 20     19     78     80  
Direct operating expense per total throughput barrel 4.52     7.10     4.69     5.55  
               
Direct operating expenses (exclusive of depreciation and amortization) 92     133     364     441  
Turnaround expenses 2     43     4     80  
Direct operating expenses, excluding turnaround expenses 90     90     360     361  
Divided by: total throughput barrels 20     19     78     80  
Direct operating expenses, excluding turnaround
expenses, per total throughput barrel
$ 4.41     $ 4.82     $ 4.65     $ 4.54  


Reconciliation of Nitrogen Fertilizer Net Loss to Nitrogen Fertilizer EBITDA and Nitrogen Fertilizer Adjusted EBITDA
       
  Three Months Ended
December 31,
  Year Ended
December 31,
(in millions) 2018   2017   2018   2017
               
Net loss $ (1 )   $ (27 )   $ (50 )   $ (73 )
Add:              
Interest expense, net 15     16     62     63  
Depreciation and amortization 19     19     72     74  
Nitrogen Fertilizer EBITDA 33     8     84     64  
Add:              
Turnaround expenses         6     3  
Nitrogen Fertilizer Adjusted EBITDA $ 33     $ 8     $ 90     $ 67  

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