SUGAR LAND, Texas, Dec. 5 /PRNewswire-FirstCall/ -- CVR Energy,
Inc. (NYSE:CVI) today reported third quarter 2007 net income of
$13.4 million, compared to net income of $129.0 million for the
third quarter of 2006. (Logo:
http://www.newscom.com/cgi-bin/prnh/20071203/CVRLOGO) Adjusted for
the unrealized gain from the company's cash flow swap, the company
reported a net loss for the third quarter 2007 of $40.8 million,
which compares to net income (as so adjusted) of $21.7 million for
the same quarter in 2006. These results reflect lost revenues, lost
profits and increased costs incurred due to a record flood that
shut down and damaged the company's refinery and nitrogen
fertilizer operations in Coffeyville, Kan., this past summer. The
company has since resumed full operations. Net income (loss) for
the nine months ended Sept. 30, 2007, was $(40.9) million compared
to $170.8 million for the same period in 2006. For the nine months
of 2007, net income (adjusted for the unrealized loss from the cash
flow swap) was $18.2 million, compared to net income (as so
adjusted) of $122.5 million for the same period in 2006. Nine-month
results for 2007 reflect the effects of the flood and a period of
several months in the spring during which the refinery was shut
down for a turnaround, or periodic maintenance. Third quarter
operating income was $38.7 million in 2007, compared with $52.1
million for the same period in 2006, and for the nine months ended
Sept. 30, 2007, operating income was $162.5 million compared with
$267.0 million in the same period of 2006. "Our refinery and
nitrogen fertilizer facilities in Coffeyville, Kan., recovered
rapidly from the devastating floods which swept across the area
beginning June 30, and in fact, our refinery is now operating
significantly above pre-flood rates," said Jack Lipinski, chief
executive officer. "In addition, the nitrogen fertilizer plant,
which was less affected by the flood and therefore lost only 18
days production, continues to perform well. It is the lowest-cost
nitrogen fertilizer producer in North America." "CVR Energy's rapid
recovery from the flood is the direct result of a committed effort
by our employees and the dedication of our contractors and
suppliers," he said. "Our return to normal operations so quickly
demonstrates the phenomenal talents in this organization." On Oct.
26, 2007, the company consummated an initial public offering (IPO)
of 23 million shares of its common stock. The initial public
offering price was $19 per share. The net proceeds to CVR Energy
from the sale of common stock were $408.5 million before offering
costs of approximately $11.4 million. The net proceeds were used to
repay $380 million of debt, including $50 million of outstanding
indebtedness under CVR Energy's revolving credit facility. The
variance from operating income guidance provided in CVR Energy's
IPO prospectus results from accelerating the recognition of
expenses associated with the flood and related crude oil discharge
into the third quarter. These expenses are within the original
total estimate of flood related expenditures. The company believes
it is fully insured for these expenses and will record any
additional insurance proceeds as collection becomes more imminent.
Petroleum Business Petroleum operations reported operating income
in the third quarter of 2007 of $26.5 million on sales of $545.9
million, compared with third quarter 2006 operating income of $55.5
million on sales of $747.3 million. For the nine months, petroleum
operations operating income was $129.4 million on sales of $1.7
billion in 2007, compared with $233.5 million in 2006 on sales of
$2.2 billion in 2006. Refining margins in the mid-continent region
were among the highest in the United States for the most recently
completed quarter. The gasoline crack spread in the Platt's Group 3
region averaged $20.48 per barrel for the third quarter 2007
compared to $15.20 for the same period in 2006. The distillate
crack spread averaged $22.49 per barrel for the quarter ended Sept.
30, 2007, compared to $23.20 for the third quarter 2006. Crude oil
throughput for the third quarter 2007 decreased to 52,497 barrels
per day compared to 94,019 per day for the third quarter 2006
primarily as a result of downtime associated with the flood.
Nitrogen Fertilizer Business Nitrogen fertilizer operations
reported third quarter 2007 operating income of $13.8 million on
sales of $40.8 million, compared with a loss of $3.0 million on
sales of $32.5 million during the same period in 2006. For the nine
month period in 2007, the nitrogen fertilizer operations reported
operating income of $34.9 million on sales of $115.1 million,
compared with operating income of $34.1 million on sales of $128.2
million during the equivalent nine month period of 2006. Nitrogen
fertilizer operations benefited from significantly improved pricing
from prior year levels for all products, reflecting a positive
outlook for North American agricultural markets and a favorable
supply/demand situation in world markets. For the third quarter of
2007, nitrogen fertilizer operations reported increases in average
plant gate prices of 28 percent and 66 percent for ammonia and urea
ammonium nitrate (UAN), respectively, as compared to the third
quarter of 2006. On-stream factors for the gasification and ammonia
units for the third quarter 2007 improved from the comparable
period in 2006 despite approximately eighteen days of downtime
associated with the flood. Third quarter 2006 on- stream factors
were negatively impacted by a major scheduled turnaround at the
Coffeyville nitrogen plant. On-stream factors for the UAN plant for
the third quarter 2007 were lower than the comparable period of
2006 primarily due to downtime associated with the flood and other
unscheduled repair and maintenance activities during the third
quarter 2007. This news release contains forward-looking statements
within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act of 1934, as amended. You can
generally identify forward-looking statements by our use of
forward-looking terminology such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "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. For a discussion of risk
factors which may affect our results, please see the risk factors
disclosed in our SEC filings, including our Form 10-Q for the
quarter ended September 30, 2007. These 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 press release are made only as of the date hereof.
The Company undertakes no duty to update its forward-looking
statements. About CVR Energy, Inc. Headquartered in Sugar Land,
Texas, CVR Energy, Inc. is an independent refiner and marketer of
high value transportation fuels and, through a limited partnership,
a producer of ammonia and urea ammonia nitrate fertilizers. CVR
Energy's petroleum business includes a 113,500 barrel per day,
complex, full- coking sour crude refinery in Coffeyville, Kan., In
addition, CVR Energy's supporting businesses include a crude oil
gathering system serving central Kansas, northern Oklahoma and
southwest Nebraska; storage and terminal facilities for asphalt and
refined fuels in Phillipsburg, Kan.; and a rack marketing division
supplying product to customers through tanker trucks and at
throughput terminals. For further information, please contact:
Investor Relations: Media Relations: Stirling Pack, Jr. Steve Eames
CVR Energy, Inc. CVR Energy, Inc. 281-207-3464 281-207-3550 CVR
Energy, Inc. The following tables summarize the financial data and
key operating statistics for CVR and our two operating segments for
the three and nine months ended September 30, 2006 and 2007. The
summary financial data for our two operating segments does not
include certain SG&A expenses and depreciation and amortization
related to our corporate offices. The following data should be read
in conjunction with our condensed consolidated financial statements
and the notes thereto included in our Form 10-Q. Three Months Ended
Nine Months Ended September 30, September 30, 2006 2007 2006 2007
(unaudited) (in millions, except as otherwise indicated)
Consolidated Statement of Operations Data: Net sales $778.6 $586.0
$2,329.2 $1,819.9 Cost of product sold (exclusive of depreciation
and amortization) 644.7 446.2 1,848.1 1,319.5 Direct operating
expense (exclusive of depreciation and amortization) 56.7 44.4
144.5 218.8 Selling, general and administrative expense (exclusive
of depreciation and amortization) 12.3 14.0 32.8 42.1 Net costs
associated with flood(1) - 32.2 - 34.3 Depreciation and
amortization (2) (3) 12.8 10.5 36.8 42.7 Operating income $52.1
$38.7 $267.0 $162.5 Other income (expense) 1.7 0.2 3.1 0.9 Interest
(expense) (10.7) (18.3) (33.0) (46.0) Gain (loss) on derivatives
171.2 40.5 44.7 (251.9) Income (loss) before income taxes and
minority interest in subsidiaries $214.3 $61.1 $281.8 $(134.5)
Income tax (expense) benefit (85.3) (47.6) (111.0) 93.4 Minority
interest in (income) loss of subsidiaries - (0.1) - 0.2 Net income
(loss) (4) $129.0 $13.4 $170.8 $(40.9) Pro forma earnings per
share, basic $1.50 $0.16 $1.98 $(0.47) Pro forma earnings per
share, diluted $1.50 $0.16 $1.98 $(0.47) Pro forma weighted average
shares, basic 86,141,291 86,141,291 86,141,291 86,141,291 Pro forma
weighted average shares, diluted 86,158,791 86,158,791 86,158,791
86,141,291 Balance Sheet Data: Cash and cash equivalents $38.1
$27.3 Working capital 173.4 (27.0) Total assets 1,397.7 1,848.6
Total debt, including current portion 527.8 847.0 Minority interest
in subsidiaries - 5.2 Management units subject to compromise 9.0
8.7 Members' equity 303.1 34.5 Stockholders' equity - - Other
Financial Data: Depreciation and amortization (3) $12.8 $10.5 $36.8
$42.7 Net Income (loss) adjusted for unrealized gain or loss from
Cash Flow Swap (5) 21.7 (40.8) 122.5 18.2 Cash flows (used in)
provided by operating activities (22.4) 3.9 97.9 161.5 Cash flows
(used in) investing activities (86.8) (25.6) (173.0) (239.7) Cash
flows provided by financing activities 19.4 26.0 48.5 63.6 Capital
expenditures for property, plant and equipment 86.8 25.6 173.0
239.7 Three Months Ended Nine Months Ended September 30, September
30, 2006 2007 2006 2007 Key Operating Statistics: Petroleum
Business Production (barrels per day) (6) 107,094 58,382 106,975
71,454 Crude oil throughput (barrels per day) (6) 94,019 52,497
94,061 64,829 Nitrogen Fertilizer Business Production Volume:
Ammonia (tons in thousands) 78.3 75.9 283.9 244.9 UAN (tons in
thousands) 136.7 128.0 465.0 432.6 (1) Represents the write-off of
approximate net costs associated with the flood and oil spill that
are not probable of recovery. (2) Depreciation and amortization is
comprised of the following components as excluded from cost of
products sold, direct operating expense and selling, general and
administrative expense: Three Months Nine Months Ended September
30, Ended September 30, 2006 2007 2006 2007 (unaudited) (in
millions) Depreciation and amortization included in cost of product
sold $0.5 $0.6 $1.6 $1.8 Depreciation and amortization included in
direct operating expense 11.7 9.6 34.5 40.2 Depreciation and
amortization included in selling, general and administrative
expense 0.6 0.3 0.7 0.7 Total depreciation and amortization $12.8
$10.5 $36.8 $42.7 (3) Depreciation and amortization does not
include approximately $7.6 million for both the three and nine
months ended September 30, 2007 which is included in net costs
associated with flood due to the facilities being temporarily
idled. (4) The following are certain charges and costs incurred in
each of the relevant periods that are meaningful to understanding
our net income (loss) and in evaluating our performance due to
their unusual or infrequent nature: Three Months Nine Months Ended
September 30, Ended September 30, 2006 2007 2006 2007 (unaudited)
(in millions) Funded letter of credit expense and interest rate
swap not included in interest expense (a) $(0.4) $0.7 $0.2 $0.9
Major scheduled turnaround expense (b) 4.1 - 4.4 76.8 Unrealized
(gain) loss from Cash Flow Swap (178.5) (90.2) (80.3) 98.3 (a)
Consists of fees which are expensed to selling, general and
administrative expense in connection with the funded letter of
credit facility of $150.0 million issued in support of the Cash
Flow Swap. We consider these fees to be equivalent to interest
expense and the fees are treated as such in the calculation of
EBITDA in the Credit Facility. (b) Represents expenses associated
with a major scheduled turnaround at the nitrogen fertilizer plant
and our refinery. (5) Net income adjusted for unrealized gain or
loss from Cash Flow Swap results from adjusting for the derivative
transaction that was executed in conjunction with the acquisition
of Coffeyville Group Holdings, LLC by Coffeyville Acquisition LLC
on June 24, 2005. On June 16, 2005, Coffeyville Acquisition LLC
entered into the Cash Flow Swap with J. Aron, a subsidiary of The
Goldman Sachs Group, Inc., and a related party of ours. The Cash
Flow Swap was subsequently assigned from Coffeyville Acquisition
LLC to Coffeyville Resources, LLC on June 24, 2005. The derivative
took the form of three NYMEX swap agreements whereby if crack
spreads fall below the fixed level, J. Aron agreed to pay the
difference to us, and if crack spreads rise above the fixed level,
we agreed to pay the difference to J. Aron. With crude oil capacity
expected to reach 115,000 bpd by the end of 2007, the Cash Flow
Swap represents approximately 58% and 14% of crude oil capacity for
the periods January 1, 2008 through June 30, 2009 and July 1, 2009
through June 30, 2010, respectively. Under the terms of our Credit
Facility and upon meeting specific requirements related to our
leverage ratio and our credit ratings, we may reduce the Cash Flow
Swap to 35,000 bpd, or approximately 30% of executed crude oil
capacity, for the period from April 1, 2008 through December 31,
2008 and terminate the Cash Flow Swap in 2009 and 2010. We have
determined that the Cash Flow Swap does not qualify as a hedge for
hedge accounting purposes under current GAAP. As a result, our
periodic statements of operations reflect in each period material
amounts of unrealized gains and losses based on the increases or
decreases in market value of the unsettled position under the swap
agreements which is accounted for as a liability on our balance
sheet. As the crack spreads increase we are required to record an
increase in this liability account with a corresponding expense
entry to be made to our statement of operations. Conversely, as
crack spreads decline we are required to record a decrease in the
swap related liability and post a corresponding income entry to our
statement of operations. Because of this inverse relationship
between the economic outlook for our underlying business (as
represented by crack spread levels) and the income impact of the
unrecognized gains and losses, and given the significant periodic
fluctuations in the amounts of unrealized gains and losses,
management utilizes Net income adjusted for unrealized gain or loss
from Cash Flow Swap as a key indicator of our business performance.
In managing our business and assessing its growth and profitability
from a strategic and financial planning perspective, management and
our board of directors considers our U.S. GAAP net income results
as well as Net income adjusted for unrealized gain or loss from
Cash Flow Swap. We believe that Net income adjusted for unrealized
gain or loss from Cash Flow Swap enhances the understanding of our
results of operations by highlighting income attributable to our
ongoing operating performance exclusive of charges and income
resulting from mark to market adjustments that are not necessarily
indicative of the performance of our underlying business and our
industry. The adjustment has been made for the unrealized loss from
Cash Flow Swap net of its related tax benefit. Net income adjusted
for unrealized gain or loss from Cash Flow Swap is not a recognized
term under GAAP and should not be substituted for net income as a
measure of our performance but instead should be utilized as a
supplemental measure of financial performance or liquidity in
evaluating our business. Because Net income adjusted for unrealized
gain or loss from Cash Flow Swap excludes mark to market
adjustments, the measure does not reflect the fair market value of
our Cash Flow Swap in our net income. As a result, the measure does
not include potential cash payments that may be required to be made
on the Cash Flow Swap in the future. Also, our presentation of this
non-GAAP measure may not be comparable to similarly titled measures
of other companies. The following is a reconciliation of Net income
(loss) adjusted for unrealized gain or loss from Cash Flow Swap to
Net income: Three Months Nine Months Ended September 30, Ended
September 30, 2006 2007 2006 2007 (unaudited) (in millions) Net
income (loss) adjusted for unrealized gain or loss from Cash Flow
Swap $21.7 $(40.8) $122.5 $18.2 Plus: Unrealized gain (loss) from
Cash Flow Swap, net of taxes 107.3 54.2 48.3 (59.1) Net income
(loss) $129.0 $13.4 $170.8 $(40.9) (6) Barrels per day is
calculated by dividing the volume in the period by the number of
calendar days in the period. Barrels per day as shown here is
impacted by plant down-time and other plant disruptions and does
not represent the capacity of the facility's continuous operations.
Three Months Nine Months Ended September 30, Ended September 30,
2006 2007 2006 2007 (unaudited) Petroleum Business: (in millions,
except as otherwise indicated) Net sales $747.3 $545.9 $2,205.0
$1,707.3 Cost of product sold (exclusive of depreciation and
amortization) 637.5 443.1 1,828.1 1,312.2 Direct operating expense
(exclusive of depreciation and amortization) 38.2 29.5 97.3 170.7
Net costs associated with flood - 28.6 - 30.6 Depreciation and
amortization 7.9 6.6 23.6 29.7 Gross profit $63.7 $38.1 $256.0
$164.1 Plus direct operating expense (exclusive of depreciation and
amortization) 38.2 29.5 97.3 170.7 Plus Net costs associated with
flood - 28.6 - 30.6 Plus depreciation and amortization 7.9 6.6 23.6
29.7 Refining margin (1) $109.8 $102.8 $376.9 $395.1 Refining
margin per crude oil throughput barrel $12.69 $21.28 $14.68 $22.32
Gross profit per crude oil throughput barrel $7.36 $7.89 $9.97
$9.27 Direct operating expense (exclusive of depreciation and
amortization) per crude oil throughput barrel $4.42 $6.11 $3.79
$9.64 Operating income (loss) 55.5 26.5 233.5 129.4 (1) Refining
margin is a measurement calculated as the difference between net
sales and cost of products sold (exclusive of depreciation and
amortization).Refining margin is a non-GAAP measure that we believe
is important to investors in evaluating our refinery's performance
as a general indication of the amount above our cost of products
sold that we are able to sell refined products. Each of the
components used in this calculation (net sales and cost of products
sold exclusive of depreciation and amortization) can be taken
directly from our statement of operations. Our calculation of
refining margin may differ from similar calculations of other
companies in our industry, thereby limiting its usefulness as a
comparative measure. Three Months Ended Nine Months Ended September
30, September 30, Market Indicators 2006 2007 2006 2007 (dollars
per barrel) West Texas Intermediate (WTI) crude oil $70.54 $75.15
$68.26 $66.19 NYMEX 2-1-1 Crack Spread 10.85 12.12 11.63 15.45
Crude Oil Differentials: WTI less WTS (sour) 4.54 5.30 5.43 4.69
WTI less Maya (heavy sour) 14.89 12.34 15.55 11.56 WTI less Dated
Brent (foreign) 0.99 0.52 1.33 0.89 PADD II Group 3 versus NYMEX
Basis: Gasoline 4.00 8.93 1.82 4.74 Heating Oil 12.49 9.97 7.90
9.54 Three Months Ended Nine Months Ended September 30, September
30, Company Operating 2006 2007 2006 2007 Statistics (unaudited)
(dollars per barrel) Per barrel profit, margin and expense of crude
oil throughput: Refining margin $12.69 $21.28 $14.68 $22.32 Gross
profit 7.36 7.89 9.97 9.27 Direct operating expense (exclusive of
depreciation and amortization) 4.42 6.11 3.79 9.64 Per gallon sales
price: Gasoline 2.11 2.28 1.99 2.14 Distillate 2.20 2.35 2.04 2.12
Three Months Ended Nine Months Ended September 30, September 30,
2006 2007 2006 2007 Barrels Barrels Barrels Barrels Per Day % Per
Day % Per Day % Per Day % Selected Company Volumetric Data
Production: Total gasoline 41,980 39.2 25,971 44.4 46,137 43.1
29,949 41.9 Total distillate 39,682 37.1 23,448 40.2 41,401 38.7
29,511 41.3 Total other 25,432 23.7 8,963 15.4 19,437 18.2 11,994
16.8 Total all produ- ction 107,094 100.0 58,382 100.0 106,975
100.0 71,454 100.0 Crude oil throughput 94,019 92.3 52,497 93.9
94,061 92.6 64,829 94.7 All other inputs 7,831 7.7 3,403 6.1 7,463
7.4 3,643 5.3 Total feed- stocks 101,850 100.0 55,900 100.0 101,524
100.0 68,472 100.0 Three Months Ended September 30, 2006 2007 Total
Total Barrels % Barrels % Crude oil throughput by crude type: Sweet
5,466,637 63.2 2,835,032 58.7 Light/medium sour 3,105,258 35.9
1,168,786 24.2 Heavy sour 77,848 0.9 825,878 17.1 Total crude oil
throughput 8,649,743 100.0 4,829,696 100.0 Nine Months Ended
September 30, 2006 2007 Total Total Barrels % Barrels % Crude oil
throughput by crude type: Sweet 12,916,402 50.3 11,203,099 63.3
Light/medium sour 12,685,293 49.4 5,256,430 29.7 Heavy sour 77,036
0.3 1,238,889 7.0 Total crude oil throughput 25,678,731 100.0
17,698,418 100.0 Three Months Nine Months Ended September 30, Ended
September 30, 2006 2007 2006 2007 Nitrogen Fertilizer (unaudited)
Business: (in millions, except as otherwise indicated) Net sales
$32.5 $40.8 $128.2 $115.1 Cost of product sold (exclusive of
depreciation and amortization) 8.3 3.7 23.8 9.9 Direct operating
expense (exclusive of depreciation and amortization) 18.5 14.9 47.2
48.1 Net costs associated with flood - 1.9 - 2.0 Depreciation and
amortization 4.3 3.6 12.7 12.4 Operating income (loss) (3.0) 13.8
34.1 34.9 Three Months Ended Nine Months Ended September 30,
September 30, Company Operating 2006 2007 2006 2007 Statistics
(unaudited) Production (thousand tons): Ammonia 78.3 75.9 283.9
244.9 UAN 136.7 128.0 465.0 432.6 Total 215.0 203.9 748.9 677.5
Sales (thousand tons) (1): Ammonia 30.6 24.7 96.8 58.8 UAN 138.4
120.6 477.7 414.2 Total 169.0 145.3 574.5 473.0 Product pricing
(plant gate) (dollars per ton) (1): Ammonia $283 $363 $346 $358 UAN
141 234 169 203 Three Months Ended Nine Months Ended September 30,
September 30, Company Operating 2006 2007 2006 2007 Statistics
(unaudited) On-stream factor (2): Gasification 80.7% 81.3% 91.7%
87.4% Ammonia 74.2% 80.4% 87.8% 84.6% UAN 76.2% 71.8% 87.9% 78.5%
Reconciliation to net sales (dollars in thousands): Freight in
revenue $4,420 $3,581 $13,860 $10,011 Sales net plant gate 28,103
37,175 114,295 105,080 Total net sales 32,523 40,756 128,155
115,091 (1) Plant gate sales per ton represents net sales less
freight revenue divided by sales tons. Plant gate pricing per ton
is shown in order to provide industry comparability. (2) On-stream
factor is the total number of hours operated divided by the total
number of hours in the reporting period.
http://www.newscom.com/cgi-bin/prnh/20071203/CVRLOGO
http://photoarchive.ap.org/ DATASOURCE: CVR Energy, Inc. CONTACT:
Investor Relations, Stirling Pack, Jr., +1-281-207-3464, ; or Media
Relations, Steve Eames, +1-281-207-3550, , both of CVR Energy, Inc.
Web site: http://www.cvrenergy.com/
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