Cvr Energy Inc. · NYSE:CVI
Cvr Energy — Investor Day (June 2011)
39 slides from Cvr Energy's investor day presentation, Jun 14, 2011
Slide 1: CVR Energy, Inc. Analyst Day June 14, 2011
CVR Energy, Inc. Anlyst Day June 14, 2011
Slide 2: Forward-looking statements
The following information contains forward-looking statements based on current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. You are cautioned not to put undue reli
Slide 3: Welcome
WELCOME
Slide 4: Diversified in mid-continent
Diversified in mid-continent 115k bpd high complexity refinery Rated capacity of 1,225 tpd ammonia; 2,025 tpd UAN Nitrogen fertilizer using pet coke gasification Crude slate flexibility Operate in higher margin markets Unique refining logistic assets supporting the business Financial flexibility
Slide 5: Recent accomplishments
Received first Canadian barrels on Keystone pipeline Refinanced revolver in petroleum segment Completed IPO of fertilizer segment in a simplified MLP structure Completed $150mm credit facility to support MLP growth capital Private equity Added management to support MLP growth strategy Carbon solutio
Slide 6: Key messages
Market outlook improving dramatically all business segments Crude logistics assets foundation for growth Strategic alternatives evaluating Market valuation continue to share the message Confident in continued success
Slide 7: Let's Get Started...
Let’s Get Started... Eneroy
Slide 8: Refinery utilization issue and our thoughts
Issue: Our thoughts: Continued U.S. rationalization, PADD II continues to be Refinery Utilization under supplied
Slide 9: Capacity eliminated from refinery closures
Capacity eliminated from refinery closures PADD I PADD II PADD III PADD IV PADD V 0 (100) mbpd (200) (300) (400) (500) Source: Public filings and company data
Slide 10: Refining utilization and PADD II stocks
Refining Utilization 100.0 95.0 88.7 90.0 86.1 84.7 82.1 85.0 80.0 75.0 70.0 2007 2008 2009 2010 PADD 1 PADD II PADD III PADD IV PADD V Average bbls PADD II Gasoline Stocks bbls PADD II Distillate Stocks (Millions) 4 Year Average (Millions) 4 Year Average 61 37 59 35 57 33 55 53 31 51 29 49 27 47 45
Slide 11: Mid-Continent differential
Issue: Our thoughts: Continued U.S. rationalization, PADD II continues to be Refinery Utilization under supplied Shift in global supply / demand and global uncertainty has Mid-Continent Differential permanently changed the world benchmark for crude
Slide 12: Cushing in-flows vs. outflows
Cushing In-Flows vs. Outflows Pipelines In-bound Pipelines Out-bound (In Thousands) Capacity (In Thousands) Capacity Keystone (Current) ~ 590 Outbound ~ 600 Keystone XL: (Proposed) ~ 110 Keystone XL: ~ 500 (Proposed) Spearhead ~ 200 Monarch ~ 350 BP/Basin ~ 450 (Proposed) Seaway ~ 300 Enterprise & E
Slide 13: CVR barrels sold and PADD II basis
CVR Barrels Sold 140,000 127,142 120,000 104,476 103,200 100,000 bpd 80,000 60,000 40,000 20,000 — 2006 2010 Q1 2011 PADD II — Group 3 Basis $12 10 Year Average = $1.49 $ / bbl $10 5 Year Average = $2.01 $ / bbl $8 Barrel $6 $4 / $2 $ $- $(2) $(4) 2-1-1 Basis
Slide 14: Crude opportunities
Issue: Our thoughts: Continued U.S. rationalization, PADD II continues to be Refinery Utilization under supplied Shift in global supply & demand and global uncertainty Mid-Continent Differential has permanently changed the world benchmark for crude Favors a complex refiner, Crude Opportunities expan
Slide 15: Canadian oil production expected to increase
Total Canadian oil production is expected to increase 68% by 2025 Production expectations continue to increase Canadian Oil Sands & Conventional Production kbpd
Slide 16: Refining and crude logistics assets
Jackson Salt Lake City Utah Legend 0.7 Coffeyville Resources Refining & Marketing and Nitrogen 0.5 Refinery Fertilizer 1.0 Gathering Coffeyville Resources Refined Fuel Products / Asphalt Terminal Cushing Owned* Coffeyville Resources Crude Transportation 2.7 Cushing Leased Offshore Deepwater Crude Fo
Slide 17: Crude gathering and growth prospects
North South Total Consumed Crude Discount to WTI $3 $2 Colorado $1 $0 ($1) /bbl ($2) ($3) $ ($4) ($5) ($6) ($7) Corporate Refining Operations Headquarters Barrels Gathered Per Day LTM Q1 2011 15,000+ Up to 10,000 Up to 1,000 Growth Prospects
Slide 18: Regulatory issues
Issue: Our thoughts: Continued U.S. rationalization, PADD II continues to be Refinery Utilization under supplied Shift in global supply & demand and global uncertainty Mid-Continent Differential has permanently changed the world benchmark for crude Favors a complex refiner, there’s Crude Opportuniti
Slide 19: CO2 off-take agreement
Twenty year off-take agreement for 850,000 annual CO 2 tons Chaparral to construct CO 2 compression facility, install pipeline to the North Burbank field in OK CO 2 enhanced oil recovery to increase current field production
Slide 20: Global grain stocks
Issue: Our thoughts: Continued U.S. rationalization, PADD II continues to be Refinery Utilization under supplied Shift in global supply & demand and global uncertainty Mid-Continent Differential has permanently changed the world benchmark for crude Favors a complex refiner, Crude Opportunities expan
Slide 21: Global fertilizer consumption over time
Global Fertilizer Consumption Over Time Fertilizer consumption is driven by: (Millions of Metric Tonnes) (Population in Millions) 200 8,000 Population growth Decrease in farmland 7,000 Income growth in emerging 150 6,000 markets, preference for proteins 5,000 Ethanol production 100 4,000 Nitrogen re
Slide 22: World grain production and farmland per capita
• World demand for grain has increased significantly, leading to increases in grain prices — USDA projects 2011 U.S. grain stocks to be at 15-year lows • Grain production is directly tied to nitrogen fertilizer applications • Farmland per capita is declining World Grain Production and Stock to Use R
Slide 23: Corn and nitrogen fertilizer input costs
Corn consumes the largest amount of nitrogen fertilizer At current & projected corn prices, farmers expected to generate significant income Nitrogen fertilizer represents small Corn Spot Prices Breakdown of U.S. Farmer Total Input Costs Input Costs and Prices per Bushel ($) 8 8 Corn Futures Prices:
Slide 24: Financials: flexible capital structure
Issue: Our thoughts: Continued U.S. rationalization, PADD II continues to be Refinery Utilization under supplied Shift in global supply & demand and global uncertainty Mid-Continent Differential has permanently changed the world benchmark for crude Favors a complex refiner, there’s Crude Opportuniti
Slide 25: Operating cash to cash waterfall
Operating Cash to Cash Waterfall Adjusted EBITDA(1) Cash Flow $ in TTM TTM TTM TTM $400 Thousands 3/31/10 3/31/11 3/31/10 3/31/11 $350 $65 $61 $300 Petroleum 46,247 246,175 17,435 87,666 $49 $250 $139 Fertilizer 44,862 68,550 85,288 74,845 $54 $200 Total $150 $88 Consolidated D&A 65,443 293,818 $100
Slide 26: Year-end net debt / cash
Year— End Net Debt / Cash $ Millions 500 Net Cash 0 2 $(8.6) 3 5 3 (500) 4 Net (1,000) Debt (1,500) (2,000) 2007 2008 2009 2010 2011 Q1 1 CVI Ranking Relative to Peer Peer range: FTO, ALJ, 1 being the highest net cash HOC, WNR, TSO, DK (1) Proforma balance sheet from CVR 8-K/A dated May 23, 2011 26
Slide 27: Ammonia cost advantage and operating expense per barrel
CVR Partners Ammonia Cost Advantage per Ton* $140 $115 $120 $100 $82 $80 $49 $60 $40 $16 $20 $(1) $- $4.00 $4.50 $5.50 $6.50 $7.50 Q1 2011 LTM CVI Operating Expense(a) per Barrel of Crude Operating Expense(a) per Barrel of Crude $7.40 $8.00 $4.00 $7.00 $5.78 $6.00 $5.15 $3.50 $4.53 $4.54 $5.00 $3.84
Slide 28: Debt maturities and liquidity
as of May 16, 2011 Date Closed Balance 1st Call Date Maturity Date 1st Lien 4/ 2010 $247.1 April 6, 2012 (106.75) April 6, 2015 2nd Lien 4/ 2010 $222.8 April 6, 2013 (108.15) April 6, 2017 Asset Based Loan 2/ 2011 $31.6* August 22, 2015 MLP Term Loan 4/ 2011 $125.0 April 13, 2016 MLP Revolver 4/ 201
Slide 29: Financial metrics vs. peer group
Financials Peer Group 2007 2008 2009 2010 2011(1) (In Thousands) Average (3) Cash 30,509 8,923 36,905 200,049 586,923 Debt 500,842 495,871 491,277 476,968 595,570 Net Debt 470,333 486,948 454,372 276,919 8,647 Market Capital 2,148,000 345,000 592,000 1,317,000 1,846,000 Free Cash Flow (122,678) (3,2
Slide 30: What's Next...
What’s Next... Enero
Slide 31: Possible uses of cash flow
Possible Uses of Cash Flow Continue to de-leverage Conserve cash Initiate on-going dividend Initiate special dividend Initiate share repurchase Capital investment: M&A opportunities (refining, fertilizer, logistics) Organic growth capital projects 32
Slide 32: Investor events
2010 Event Dates Hosting Institution Event Type January 6th — 8th Deutsche Bank Refining Conference January 11th — 13th Simmons & Co. Investor Roadshow March 18th — 19th High Yield Roadshow March 21st — 24th Howard Weil Energy Conference May 12 — 14 Royal Bank of Scotland High Yield Conference June
Slide 33: Full valuation of CVI not yet recognized
Full valuation of CVI not yet recognized by the market Diversified through 70% ownership in fertilizer MLP Management expertise Flexible balance sheet 34
Slide 34: Q & A
Q & A 35
Slide 35: Appendix
Appendix Enero
Slide 36: Non-GAAP financial measures
To supplement the actual results in accordance with U.S. generally accepted accounting principles (GAAP), for the applicable periods, the Company also uses certain non-GAAP financial measures as discussed below, which are adjusted for GAAP-based results. The use of non-GAAP adjustments are not in ac
Slide 37: EBITDA definitions
EBITDA: EBITDA represents net income before the effect of interest expense, interest income, income tax expense (benefit) and depreciation and amortization. EBITDA is not a calculation based upon GAAP; however, the amounts included in EBITDA are derived from amounts included in the consolidated stat
Slide 38: Operating income to Adjusted EBITDA by segment
Below is a reconciliation of Operating Income to Adjusted EBITDA, by segment (in thousands) TTM 3/31/10 TTM 3/31/11 Petroleum Operating income 98,430 217,350 Depreciation and amortization 64,680 67,173 Realized gain (loss) on derivatives, net (4,175) (18,212) Other income (expense) 273 758 FIFO impa
Slide 39: Net income to Adjusted EBITDA reconciliation
TTM 3/31/10 TTM 3/31/11 (In Thousands) Consolidated Net Income 26,330 72,441 Interest expense, net of interest income 40,571 51,467 Depreciation and amortization 85,224 87,512 Income tax expense 9,523 48,607 FIFO impact (favorable), unfavorable (111,027) (41,260) Share-based compensation 12,221 49,0