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


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
[email protected]

Media Relations:
Brandee Stephens
CVR Energy, Inc.
(281) 207-3516
[email protected]

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%

______________________________
(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

______________________________
(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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