Cvr Energy Inc. · NYSE:CVI
Cvr Energy — Investor Presentation (February 2020)
30 slides from Cvr Energy's investor presentation, Feb 28, 2020
Slide 1: March 2020 IR Presentation
Exhibit 99.1 March 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: 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 • 2019 total throughput of 215,971 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 ➢
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) Other (6) 2% 6% Condensate 6% 6% Midland WTI WTL 7% 1% 215,971 Region
Slide 9: Favorable Macro Environment: Supply and Demand Fundamentals
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 • Low natural gas prices benefits Petroleum & Fertilize
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 ($10)
Slide 11: Industry Leading Dividend Yield & Leverage
Industry Leading Dividend Yield & Leverage Best in Class Dividend and Balance Sheet Current Dividend Yield(1) over 2x Peer Group Average Dividend Payout Ratio Also >2x Peer Average Consistent Dividend Payouts Despite Oil Price Volatility Peer-Leading Leverage Position(1)(2) (1) Based on closing pric
Slide 12: Strategic Initiatives
Strategic Initiatives Focus on Maximizing Reliability, Increasing Feedstock Flexibility & Premium Production Continue to improve in all Environmental, Health and Safety matters. Safety is Job 1 Environmental, ✓ 2019 total recordable incident rate declined 11% Y/Y, following a reduction of over 50% i
Slide 13: Long-Term Value Creation Projects: Coffeyville Crude Optionality
Long-Term Value Creation Projects Increase Feedstock Flexibility & Improve Liquid Yield at Coffeyville Crude Optionality at Coffeyville Group 3 Gasoline vs. Conway Natural Gasoline ($/gal) If approved, this project would increase Coffeyville’s capacity to run natural gasoline to 10,000 bpd and/or YT
Slide 14: 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 ~$0.25/gal, over $10.50/bbl condensates ➢ Improve liquid v
Slide 15: Long-Term Value Creation Projects: Environmental Mitigation Project
Long-Term Value Creation Projects Environmental Mitigation Project with 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 ➢ Also expected to increase liquid yield and produ
Slide 16: Capital Expenditures and Turnarounds
Capital Expenditures and Turnarounds Disciplined Approach to Capital Spending $250 2020 Total Capex budget of $105M - $115M $200 Environmental and Maintenance spending $150 planned at $55M - $60M $M $100 Growth capex budgeted at $50M - $55M $50 ➢ Approximately $45M - $55M of growth-related $0 projec
Slide 17: Fertilizer Segment
FERTILIZER SEGMENT
Slide 18: 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 19: 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 increased $26/ton
Slide 20: 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 ➢ Corn has a variety of uses and applications, 14.0 including feed grains, ethanol for fuel and food, seed and industrial (FSI) 12.0 10.0 8.0 ➢ Feed grains 6.0 4.0 (Bushels (Bushels
Slide 21: 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 22: 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) Urea Products 6% Hydrogen 10% Natural Ammonia Gas 26% 45% UAN Pet Coke 69% 45% (1) Adjusted by planned turn
Slide 23: Capital Expenditures and Turnaround Expenses
Capital Expenditures and Turnaround Expenses Primarily Focused on Maintenance Spending 2020 Total Capex budget of $23M - $27M East Dubuque Merger on April 1, 2016 $30 Environmental and Maintenance spending planned at $19M - $21M $25 $20 Growth capex budgeted at $4M - $6M $15 $M ➢ Growth capex budget
Slide 24: Appendix
APPENDIX
Slide 25: 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 26: Non-GAAP Financial Measures: CVR Energy, Inc.
Non-GAAP Financial Measures (In USD Millions) CVR Energy, Inc. 2015 2016 2017 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 2019 Net Income $ 350 $ 10 $ 258 $ 366 $ 102 $ 128 $ 104 $ 28 $ 362 Add: Interest expense and other financing costs, net of interest income 47 83 109 102 26 26 26 24 102 Add: Income tax
Slide 27: Non-GAAP Financial Measures: CVR Partners, LP
Non-GAAP Financial Measures (In USD Millions) CVR Partners, LP 2015 2016 2017 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 2019 Net Income (loss) $ 62 $ (27) $ (73) $ (50) $ (6) $ 19 $ (23) $ (25) $ (35) Add: Interest expense and other financing costs, net of interest income 7 49 63 63 16 16 16 16 63 Add: I
Slide 28: Reconciliation of Projected Logistics and Isomerization 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 Reconciliation of Proje
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 $ 55 $ 60 $ 50 $ 55 $ 105 $ 115 Nitrogen Fertilizer 18 2 20 19 21 4 6 23 27 Other 5 - 5 5 8 - - 5 8 Total $ 102 $ 12 $ 114 $ 79 $
Slide 30: Simplified Organizational Structure
Simplified Organizational Structure 30