Cvr Energy Inc. · NYSE:CVI
Cvr Energy — Investor Presentation (September 2019)
31 slides from Cvr Energy's investor presentation, Sep 4, 2019
Slide 1: September 2019 IR Presentation
September 2019 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: Petroleum Segment
omy ss i PETROLEUM SEGMENT
Slide 6: 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 • 2Q19 total throughput of 216,300 bpd Average complexity of 10.8 Located in Group 3 of PADD II Cushing & SCOOP/STACK Centric Refinerie
Slide 7: Strategically Located Mid-Con Refineries
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 ➢ R
Slide 8: 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) 3% Other(6) Condensate 6% 7% 5% Midland WTI Regional 11% Shale Oil 217,
Slide 9: Favorable Macro Environment
Favorable Macro Environment Supply and Demand Fundamentals Supportive of Constructive Outlook Feedstock Supply • Increasing U.S. shale oil production • Limited Canadian pipeline and rail takeaway capacity • Access to price-advantaged crude oils such as Canadian and Regional Shales Source: EIA Produc
Slide 10: Favorable Macro Environment: Forward Crack Spreads and Crude Differentials
Favorable Macro Environment Forward Crack Spreads and Crude Differentials Remain Attractive 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) $15 Futures Futur
Slide 11: Well Positioned to Benefit from IMO 2020 & Tier 3 Gasoline
Well Positioned to Benefit from IMO 2020 & Tier 3 Gasoline New Regulatory Standards Should Represent Tailwinds for CVR Energy IMO 2020 Should be a Net Positive for the Industry Annual EBITDA Sensitivity from $1/bbl change(2) Background: Beginning January 1, 2020 the International Maritime Organizati
Slide 12: Industry Leading Dividend Yield & Leverage
Industry Leading Dividend Yield & Leverage Best in Class Dividend and Balance Sheet Current Dividend Yield(1) over 2x Peer Group Average Dividend Payout Ratio Also >2x Peer Average Consistent Dividend Payouts Despite Oil Price Volatility Peer-Leading Leverage Position (1) Based on closing prices on
Slide 13: Strategic Initiatives
Strategic Initiatives Focus on Maximizing Reliability, Increasing Feedstock Flexibility & Premium Production Continue to improve in all Environmental, Health and Safety matters. Safety is Job 1 Environmental, Health and Safety ✓ 2018 total recordable incident rates down over 50% Y/Y and environmenta
Slide 14: Long-Term Value Creation Projects: Crude Optionality at Coffeyville
Long-Term Value Creation Projects Multi-Phase Project to Increase Feedstock Flexibility & Improve Liquid Yield Crude Optionality at Coffeyville Group 3 Gasoline vs. Conway Natural Gasoline ($/gal) If approved, Phase 1 would increase the capacity for YTD Spread ~$0.65/gal, over $27/bbl processing nat
Slide 15: Long-Term Value Creation Projects: Isomerization Unit at Wynnewood
Long-Term Value Creation Projects Increase Feedstock Flexibility & Improve Liquid Yield Isomerization Unit at Wynnewood Group 3 Premium Gasoline Spread over Subgrade ($/gal) Intended to: ➢ Run more SCOOP/STACK light crude oils and YTD Spread ~$0.26/gal, nearly $11/bbl condensates ➢ Improve liquid vo
Slide 16: Long-Term Value Creation Projects: KSAAT Project at Wynnewood
Long-Term Value Creation Projects Environmental Mitigation Project with Liquid Yield Enhancement KSAAT Project at Wynnewood KSAAT Project at Wynnewood KSAAT Solid Acid Alkylation Technology – Wynnewood Refinery ➢ Intended to eliminate the use of hydrofluoric (HF) acid catalyst in the alkylation unit
Slide 17: Capital Expenditures and Turnarounds
Capital Expenditures and Turnarounds Disciplined Approach to Capital Spending $250 2019 Total Capex budget of $130M - $140M $200 Environmental and Maintenance spending planned at $110M - $115M $150 $M $100 Growth capex budgeted at $20M - $25M $50 ➢ Approximately $10M - $20M of growth related project
Slide 18: Fertilizer Segment
FERTILIZER SEGMENT
Slide 19: Solid Trends in Fertilizer Demand Growth
Solid Trends in Fertilizer Demand Growth Global and Domestic Demand for Nitrogen Remains Strong Global nitrogen consumption increased Global Nitrogen Consumption by 15% between 2008 and 2018 driven by: 140 ➢ Population growth 130 120 ➢ Decrease in arable farmland per capita 110 ➢ Biofuel consumption
Slide 20: U.S. Nitrogen Supply & Demand
U.S Nitrogen Supply & Demand 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 ➢ 1H19 UAN prices increased $48/ton, or
Slide 21: Strong Demand for Corn in the U.S.
Strong Demand for Corn in the U.S. Increasing Corn Consumption is Positive for Nitrogen Demand U.S. Domestic Corn Use 14.0 ➢ Corn has a variety of uses and applications, 12.0 including feed grains, ethanol for fuel and 10.0 food, seed and industrial (FSI) 8.0 6.0 4.0 ➢ Feed grains (Bushels billions)
Slide 22: 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 23: 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 June 30, 2019. 23 (3) Excludes fr
Slide 24: Capital Expenditures and Turnaround Expenses
Capital Expenditures and Turnaround Expenses Primarily Focused on Maintenance Spending East Dubuque Merger on 2019 Total Capex budget of $20M - $25M $30 April 1, 2016 $25 Environmental and Maintenance spending $20 planned at $18M - $20M $15 $M Growth capex budgeted at $2.0M - $5.0M $10 ➢ Growth cape
Slide 25: Appendix
APPENDIX
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA represents net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense. Adjusted EBITDA as it relates only to our Fertilizer segment represents EBITDA adjusted to exclude consolidated turnaro
Slide 27: Non-GAAP Financial Measures: CVR Energy, Inc.
Non-GAAP Financial Measures (In USD Millions) CVR Energy, Inc. 2015 2016 2017 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 LTM Net Income $ 350 $ 10 $ 258 $ 366 $ 110 $ 96 $ 102 $ 128 $ 436 Add: Interest expense and other financing costs, net of interest income 47 83 109 102 26 24 26 26 102 Add: Income tax
Slide 28: Non-GAAP Financial Measures: CVR Partners, LP
Non-GAAP Financial Measures (In USD Millions) CVR Partners, LP 2015 2016 2017 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 LTM Net Income (loss) $ 62 $ (27) $ (73) $ (50) $ (13) $ (1) $ (6) $ 19 $ (2) Add: Interest expense and other financing costs, net of interest income 7 49 63 63 16 16 16 16 62 Add: Inco
Slide 29: Reconciliation of Projected Logistics Net Income to EBITDA
Non-GAAP Financial Measures Reconciliation of Projected Logistics Net Income to Projected Logistics EBITDA (Annual, USD Millions) Projected Logistics Net Income $ 49 to $ 55 Income tax expense 10 to 12 Depreciation & amortization 6 to 8 Projected Logistics EBITDA $ 65 to $ 75 Note: reconciliation ab
Slide 30: 2019 Estimated Capital Expenditures
2019 Estimated Capital Expenditures 2018 Actual 2019 Estimate (1)(2) Maintenance Growth Total Maintenance Growth Total Low High Low High Low High Petroleum $ 62 $ 17 $ 79 $ 110 $ 115 $ 20 $ 25 $ 130 $ 140 Nitrogen Fertilizer 15 4 19 18 20 2 5 20 25 Other 4 - 4 10 15 - - 10 15 Total $ 81 $ 21 $ 102 $
Slide 31: Organizational Structure
Organizational Structure1 IEP Public 70.8% 29.2% CVR Energy, Inc. (CVI) 100% Holding Companies (1) 100% Coffeyville Resources, LLC 34.1% 100% 100% 34.4% CVR Refining Holdings, LLC CVR GP, LLC Public 100% 65.9% 65.6% CVR Refining GP, LLC CVR Partners, LP CVR Refining, LP (UAN) (CVRR) Coffeyville Reso