Cvr Energy Inc. · NYSE:CVI
Cvr Energy — Investor Presentation (May 2020)
30 slides from Cvr Energy's investor presentation, May 11, 2020
Slide 1: May 2020 IR Presentation
May 2020 IR Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements (“FLS”) which are protected as FLS under the PSLRA, and which are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. The assumptions and estimates underl
Slide 3: Mission and Values
Mission and Values Our Guiding Principles Our mission is to be a top-tier North American petroleum refining and nitrogen-based fertilizer company as measured by safe and reliable operations, superior financial performance and profitable growth. Our core values define the way we do business every day
Slide 4: Company Overview: Mid-Continent Focused Refining & Fertilizer Businesses
Company Overview Mid-Continent Focused Refining & Fertilizer Businesses CVR Energy is a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries. CVR Energy’s Petroleum segment is the larger of the two businesses and is comprised of two
Slide 5: Strategic Priorities
Strategic Priorities Focus on Operating Safely, Controlling Costs and Maintaining Balance Sheet & Liquidity Environmental, Continuing to improve in all Environmental, Health and Safety matters - Safety is Job 1 Health and Safety ✓ 1Q 2020 Total Recordable Incident Rate was down 83%, Process Safety O
Slide 6: Petroleum Segment
oe) = i PETROLEUM SEGMENT
Slide 7: Asset Footprint
Asset Footprint Strategically Located Assets near Cushing and SCOOP/STACK Mid-Continent Refineries Nameplate crude oil capacity of 206,500 bpd across two refineries • 1Q20 total throughput of 156,518 bpd (impacted by planned Coffeyville turnaround) • 2019 total throughput of 215,971 bpd Average comp
Slide 8: Strategically Located Mid-Con Refineries: Multiple Takeaway Options
Strategically Located Mid-Con Refineries Multiple Takeaway Options Provide Product Placement Flexibility Marketing Network Optionality ➢ Marketing activities focused in central mid- continent area via rack marketing, supplying customers nearby and at terminals on third- party distribution systems ➢
Slide 9: High-Quality Refining Assets
High-Quality Refining Assets Favorable Product Mix and Low-Cost Operations Consolidated Favorable High Distillate Yield (1) Consolidated Low Cost Operator(2) (3) Total Throughput(2) Total Production(2) Heavy Canadian (4) Other (5) Other (6) Condensate 2% 6% 6% 6% Midland WTI 5% WTL 1% 201,971 Region
Slide 10: Challenging Macro Environment
Challenging Macro Environment Expect Crack Spreads to Improve as the U.S. Reopens and Product Demand Recovers 2-1-1 Crack Spreads & Brent-WTI Differentials ($/bbl) Midland-Cushing and WTL-WTI Differentials ($/bbl) $30 $5 NYMEX 2-1-1 Group 3 2-1-1 Brent-WTI Midland - Cushing WTL - WTI $25 $0 $20 ($5)
Slide 11: Competitive Dividend Yield & Leverage Position
Competitive Dividend Yield & Leverage Position Consistent Cash Return Profile and Below Average Net Leverage Current Dividend Yield Highest Among US Refiners Dividend Payout Ratio >2x Peer Average Consistent Return of Cash through Dividends Net Leverage Position Well Below Peer Average(1)(2) (1) Bas
Slide 12: Long-Term Value Creation Projects
Long-Term Value Creation Projects Environmental Mitigation Project with Expected Liquid Yield Enhancement KSAAT Project at Wynnewood HF Mitigation Project at Wynnewood Intended to: ➢ Eliminate the use of hydrofluoric (HF) acid catalyst in the alkylation unit ➢ Increase liquid yield and production of
Slide 13: Capital Expenditures and Turnarounds
Capital Expenditures and Turnarounds Disciplined Approach to Capital Spending $250 2020 Total Capex budget of $74M - $78M $200 Reduced 2020 planned spending by over 30% $150 Environmental and Maintenance spending planned $M at $65M - $68M $100 $50 Growth capex budgeted at $9M - $10M $0 ➢ Capital spe
Slide 14: Fertilizer Segment
FERTILIZER SEGMENT
Slide 15: Solid Trends in Fertilizer Demand Growth
Solid Trends in Fertilizer Demand Growth Global and Domestic Demand for Nitrogen Remains Strong Global nitrogen consumption increased by 15% between 2008 and 2018 driven by: Global Nitrogen Consumption ➢ Population growth 140 130 ➢ Decrease in arable farmland per capita 120 ➢ Biofuel consumption 110
Slide 16: U.S. Nitrogen Supply & Demand
U.S Nitrogen Supply & Demand Domestic Supply and Demand Picture is More Balanced Corn Stocks to Use Compared to Netback Fertilizer Pricing US Nitrogen Supply ➢ Nitrogen fertilizers represent approximately 15% of farmers’ cost structure and significantly improves yields ➢ UAN prices for 1Q 2020 decli
Slide 17: Strong Demand for Corn in the U.S.
Strong Demand for Corn in the U.S. Increasing Corn Consumption is Positive for Nitrogen Demand ➢ Corn has a variety of uses and applications, U.S. Domestic Corn Use including feed grains, ethanol for fuel and 14.0 food, seed and industrial (FSI) 12.0 10.0 8.0 ➢ Feed grains 6.0 ▪ ~96% of domestic fee
Slide 18: Strategically Located Assets
Strategically Located Assets Well-Positioned in Premium Pricing Regions ➢ Large geographic footprint serving the Southern Plains and Corn Belt region ➢ Well positioned to minimize distribution costs and maximize net back pricing ➢ New rail loading rack at Coffeyville increases logistics optionality
Slide 19: Key Operating Statistics
Key Operating Statistics Consistent High Utilization at Both Facilities Consolidated Production Volumes Ammonia Utilization(1) Consolidated Feedstocks Costs(2) Consolidated Sales Revenue(2)(3) (1) Adjusted by planned turnarounds. (2) For the last twelve months ended March 31, 2020. 19 (3) Excludes f
Slide 20: Capital Expenditures and Turnaround Expenses
Capital Expenditures and Turnaround Expenses Primarily Focused on Maintenance Spending East Dubuque Merger on 2020 Total Capex budget of $19M - $23M April 1, 2016 $25 Reduced 2020 planned spending by over 15% $20 Environmental and Maintenance spending planned $15 at $14M - $16M $M $10 Growth capex b
Slide 21: Appendix
APPENDIX
Slide 22: Long-Term Value Creation Projects: Coffeyville Crude Oil Optionality
Long-Term Value Creation Projects Increase Feedstock Flexibility & Improve Liquid Yield at Coffeyville Crude Oil Optionality at Coffeyville Group 3 Gasoline vs. Conway Natural Gasoline ($/gal) If approved, this project would increase Coffeyville’s YTD Spread ~$0.27/gal, over $11/bbl capacity to run
Slide 23: Long-Term Value Creation Projects: Isomerization Unit at Wynnewood
Long-Term Value Creation Projects Increase Feedstock Flexibility & Improve Liquid Yield Isomerization Unit at Wynnewood Group 3 Premium Gasoline Spread over Subgrade ($/gal) Intended to: YTD Spread ~$0.28/gal, over $11.50/bbl ➢ Run more SCOOP/STACK light crude oils and condensates ➢ Improve liquid v
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Available Cash for Distribution - EBITDA reduced for cash reserves established by the board of directors of our general partner for (i) debt service, (ii) maintenance capital expenditures, and, to the extent applicable, (iii) reserves for future operating or capital needs
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In USD Millions) CVR Energy, Inc. 2015 2016 2017 2018 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 TTM Net Income $ 350 $ 10 $ 258 $ 366 $ 362 $ 128 $ 104 $ 28 $ (101) $ 159 Add: Interest expense and other financing costs, net of interest income 47 83 109 102 102 26 26 24 35 111
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended Twelve Months (In USD Millions) June 30, September 30, December 31, March 31, Ended 2019 2019 2019 2020 March 31, 2019 Consolidated Net income (loss) $ 128 $ 104 $ 28 $ (101) $ 159 Add: Interest expense, net 26 26 24 35 111 Income tax expense (benefit)
Slide 27: Reconciliation of Total Debt and Net Debt to EBITDA
Non-GAAP Financial Measures Reconciliation of Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer (In USD Millions) Twelve Months Ended March 31, 2020 Total debt and finance lease obligations(1) $ 1,691 Less: Nitrogen Fertilizer debt and finance lease obl
Slide 28: Non-GAAP Financial Measures: CVR Partners, LP
Non-GAAP Financial Measures (In USD Millions) CVR Partners, LP 2015 2016 2017 2018 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 TTM Net Income (loss) $ 62 $ (27) $ (73) $ (50) $ (35) $ 19 $ (23) $ (25) $ (21) $ (50) Add: Interest expense and other financing costs, net of interest income 7 49 63 63 62 16 16
Slide 29: 2020 Estimated Capital Expenditures
2020 Estimated Capital Expenditures 2019 Actual 2020 Estimate (1)(2) Maintenance Growth Total Maintenance Growth Total Low High Low High Low High Petroleum $ 79 $ 10 $ 89 $ 65 $ 68 $ 9 $ 10 $ 74 $ 78 Nitrogen Fertilizer 18 2 20 14 16 5 7 19 23 Other 5 - 5 2 4 - - 2 4 Total $ 102 $ 12 $ 114 $ 81 $ 88
Slide 30: Simplified Organizational Structure
Simplified Organizational Structure 30