管理層發言
Thank you for standing by. And welcome to the CVR Energy, Inc. Second Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session. If you would like to ask a question during that time, simply press star then the number 1 on your telephone keypad. I would now like to turn the call over to Richard Roberts, interim chief financial officer and vice president of FP&A and investor relations. Sir, please go ahead.
Thank you. Afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy second quarter 2026 earnings call. With me today are Dane J. Neumann, our Chief Executive Officer, Michael H. Wright Jr., Chief Operating Officer, and other members of management. To discuss our 2026 second quarter results, let me remind you that this conference call may contain forward-looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements as a result of new information, future events, or otherwise, except to the extent required by law. This call also includes various non-GAAP financial measures. Disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures, are included in our 2026 second quarter earnings release that we filed with the SEC today and in our Form 10-Q for the period, which will be discussed during the call. That said, I will turn the call over to Dane.
Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call. We posted another quarter of strong operating results, with crude utilization of 98% and ammonia plant utilization of 99%. The ongoing global conflicts have created tightness across energy and fertilizer markets, which directly benefited our asset base during the second quarter. We are pleased to announce the second quarter 2026 dividend of $0.10 per share, and we believe current market conditions could present opportunities to reduce leverage and add value for our shareholders. Let me turn the call over to Richard to discuss our financial highlights.
Thank you, Dane, and good afternoon, everyone. For the second quarter of 2026, consolidated net income was $46 million, net loss attributable to CVR Energy stockholders was $3 million, loss per diluted share was $0.03 and EBITDA was $161 million. Second quarter results include an unfavorable change in our RFS liability of $73 million, favorable inventory valuation impacts of $19 million, and unrealized derivative gains of $6 million. Excluding the above-mentioned items, adjusted EBITDA for the quarter was $209 million, and adjusted earnings per share was $0.34. Adjusted EBITDA in the Petroleum segment was $106 million for the second quarter compared to $38 million for the second quarter of 2025. Elevated Group 3 crack spreads and higher throughput volumes drove the majority of the increase from the prior year period, offset somewhat by higher RIN expenses, significant backwardation in WTI, and realized derivative losses. Combined total throughput for the second quarter of 2026 was approximately 213,000 barrels per day. Crude utilization for the quarter was approximately 98% of nameplate capacity, and light product yield was 92% on total throughput volumes. Benchmark cracks for the second quarter of 2026 increased from the prior year period, the Group 3 2-1-1 averaging $44.91 per barrel compared to $24.02 per barrel in the second quarter of 2025. Our second quarter realized margin, adjusted for the change in RFS liability, inventory valuation, and unrealized derivative gains was $12.43 per barrel, representing a 28% capture rate on the Group 3 2-1-1 benchmark. The RIN price increased significantly from second quarter 2025 levels — up over 125% to average nearly $14 per barrel for the second quarter 2026. RIN expense for the quarter, excluding the change in RFS liability, was $216 million or $11.16 per barrel which negatively impacted our capture rate by approximately 25%. The estimated accrued RFS obligation on the balance sheet was $408 million at June 30, representing a $169 million RIN mark-to-market at an average price of $2.41. EPA has still not ruled in our pending 2025 petition. As such, we will continue to recognize 100% of Wynnewood Refining Company's RIN obligation in our financials. The RIN obligation for Wynnewood for the second quarter of 2026 was approximately $77 million. If Wynnewood Refining Company received the 100% SRE that we believe it is entitled to, our consolidated capture rate for the quarter would have been improved by approximately 9%. EPA is now nine months delinquent in ruling on Wynnewood Refining Company's 2020 SRE petition. The current compliance date for 2025 is approximately one month away, and we still do not know what our compliance obligation will be. RIN prices have gotten completely out of hand due to the blending obligations EPA established in Set 2, effectively creating a short market that will require imported biofuels in order to potentially meet the required obligations — the complete opposite of the stated intent of the RFS. Meanwhile, RIN prices are adding nearly $0.40 a gallon to the price of gasoline in the U.S., and RFS compliance costs are more than twice all the other combined operating costs for many refineries. We have stated numerous times, if the administration is serious about lowering fuel prices, it should start with the RFS. Second quarter 2026 results included derivative losses totaling $75 million comprised of an $81 million realized loss and a $6 million unrealized gain. The realized loss for the quarter was related to the crack spread swaps that we discussed on the first quarter call. We settled approximately 4.4 million barrels of crack spread swap positions during the second quarter, leaving open positions totaling approximately 8.2 million barrels. For the remainder of 2026, approximately 4.6 million barrels of diesel is hedged and 400,000 barrels of gasoline is hedged, with the diesel exposure fairly split between the third and fourth quarters and all of the gasoline exposure in the third quarter. Total notional value of the open crack spread swaps for the third quarter is approximately $102 million. For 2027, we have approximately 3.2 million barrels of diesel hedged, fairly ratably across the year. We will continue to actively monitor these positions and plan to be opportunistic in managing our exposure going forward, which could include closing out these positions or adding other positions, depending on market conditions. Direct operating expenses in the Petroleum segment were $5.93 per barrel for the second quarter, compared to $6.45 per barrel in the second quarter of 2025. The decrease in direct operating expenses per barrel was primarily due to increased throughput volumes, as the Coffeyville Refinery was coming out of turnaround in the second quarter of 2025. Adjusted EBITDA in the Fertilizer segment was $107 million for the second quarter, compared to $67 million for the prior year period. Our ammonia utilization rate was 99%, with both plants running well and experiencing minimal downtime during the quarter. The Board of Directors of CVR Partners' general partner declared a distribution of $6.08 per common unit for the second quarter of 2026. CVR Energy owns approximately 37% of CVR Partners' common units and will receive a proportionate cash distribution of approximately $24 million. Cash flow from operations for the second quarter of 2026 was $307 million and free cash flow was $264 million. Significant uses of cash in the quarter included $43 million of capital spending, $27 million paid for the noncontrolling interest portion of the CVR Partners first quarter 2026 distribution, $20 million for cash interest, and $10 million for dividends. Total consolidated capital spending on an accrual basis was $46 million, which included $29 million in the Petroleum segment and $17 million in Fertilizer. For the full year 2026, we estimate total consolidated capital spending to be approximately $215 million to $240 million. Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $737 million, which includes $137 million of cash in the Fertilizer segment. Total liquidity as of June 30 excluding CVR Partners was approximately $1.1 billion, which was comprised primarily of $600 million of cash and availability under the ABL facility of $540 million. We remain committed to our deleveraging goal and plan to continue working towards a gross leverage target of $1 billion, excluding debt at CVR Partners. Heading into the third quarter of 2026, for our Petroleum segment, we estimate total throughput to be approximately 205,000 to 220,000 barrels per day, operating expenses to range between $110 million and $120 million, and total capital spending to be between $41 million and $50 million. For the Fertilizer segment, we estimate our ammonia utilization rate to be between 75% to 80%, which will be impacted by the upcoming planned turnaround at the East Dubuque facility. We estimate direct operating expenses, excluding inventory and turnaround impacts, to be between $57 million and $62 million, turnaround expenses to be between $30 million and $35 million, and total capital spending to be between $40 million and $49 million. With that, Dane, I will turn it back over to you.
Thank you, Richard. In summary, we had another good quarter of operations in our refining and fertilizer businesses. We are optimistic about the near-term outlook for both segments and believe we could remain above mid-cycle conditions well into 2027. The ongoing geopolitical conflicts across the globe continue to create volatility; however, the U.S. has remained fairly insulated and able to benefit from these conditions with relatively abundant supplies of available crude oil, natural gas, and critical refining infrastructure. Starting with the refining segment, the ongoing conflicts in the Middle East have so far been more impactful for refined products than crude oil. In addition to reduced flows of crude oil from the closure of the Strait of Hormuz, a number of refineries in the Middle East have been damaged, and the status of those repairs and timelines on potential restarts remains unknown. Outside of the Middle East, Ukraine has stepped up its attacks on Russian refineries over the past few months with reports estimating one-third to nearly one-half of Russia's refining capacity could be offline. As a result, refined product exports from Russia have been effectively shut off. China has also halted refined product exports for several months. Looking at the U.S., the tightness in global refined product supply has created opportunities for increased refined product exports. Year-to-date exports of gasoline, diesel, and jet fuel have increased 16% compared to the same period last year to over 2.6 million barrels per day on average. Meanwhile, U.S. demand for refined products has remained resilient, driving gasoline and diesel inventories near or below 5-year lows on a days-of-supply basis. In the Mid-Continent where we operate, we are seeing similar trends, with days of supply hovering near 5-year lows for the past several months. Cracks were strong in the second quarter; quarter-to-date cracks have increased further, and we should see some improvements to capture as crude oil backwardation narrows in the third quarter. In the fertilizer segment, the spring planting season went well and demand for nitrogen was strong overall. Grain prices have increased some recently with expectations for lower carryout inventories driven by a combination of hot and dry conditions across the Western Corn Belt, increased export demand, and a smaller than expected corn crop in Argentina. Summer fill and fall prepay for ammonia occurred in late June, and UAN fill was completed in early July. Overall, we saw strong demand for both products and were able to secure a solid book of business for the second half of 2026 at attractive pricing. We expect to start the planned turnaround at East Dubuque in late August, during which we intend to complete the brownfield capacity expansion which we believe should increase its ammonia production capacity by approximately 5%. We also expect to finalize a detailed design and construction plan this year intended to allow the plant to utilize natural gas as an alternative feedstock to third-party pet coke. Looking at quarter-to-date pricing metrics for the third quarter of 2026, Group 3 2-1-1 cracks have averaged $58.70 per barrel with the Brent-WTI spread at $4.82 per barrel and the WCS differential at $14.04 per barrel under WTI. Prompt fertilizer prices are $650 to $700 per ton for ammonia, and $325 to $350 per ton for UAN. After eight years at the company, I have seen the benefits of focusing on safety, reliability, cost management, and prudent capital allocation. We have a strong team in place, and I look forward to continuing to execute on the strategy we laid out earlier this year. In addition to our constant focus on safe and reliable operations, we remain committed to working to improve margin capture in our base business, and we are laser-focused on pursuing accretive growth opportunities that would add value for our shareholders. With that, operator, we are ready for questions.
分析師問答
At this time, if you would like to ask a question, press star, then the number 1 on your telephone keypad. To withdraw your question, simply press 1 again. We kindly ask that you limit your questions to one question and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Manav Gupta with UBS. Please go ahead.
Good morning. Congratulations on a very strong quarter. You provided some outlook on macro, which was pretty constructive. I am just trying to understand based on everything you said you could be building a lot of cash. Coming back to your vision of expanding your refining footprint, is that still a goal for you to have higher refining capacity? And if that is the case, how will you plan to fund it, including the surplus cash that you will likely accumulate because margins are well above mid-cycle?
Thanks, Manav. Our strategy remains that CVR Energy should grow in barrels and diversify from its core region of the southern Mid-Continent. Regarding the growing cash balances, our immediate focus is reducing the debt levels of CVR Energy in our base business. As we look at commercial opportunities, we are mindful that we may come across a couple of smaller, immaterial opportunities to advance our logistics footprint. I do not currently consider the cash on the balance sheet as likely to be the primary funding source for a meaningful M&A. If a larger opportunity were to arise, we believe capital markets are open and we would evaluate alternative funding approaches rather than relying solely on cash on hand. The market has learned a valuable lesson on the value of the U.S. refining complex, and frankly, we are going backwards in capacity when we should be adding capacity. I consider these topics separate and would look to fund larger transactions alternatively rather than simply using cash on the balance sheet.
And a quick one again on your hedging strategy. This is somewhat unique; most of your peers do not hedge as much or do not admit to hedging that much. Can you walk us through the hedging strategy that you have in place for the next few quarters and next year? Thank you.
Sure. Historically, we would get board authorization to target around 30% of our production, usually around a calendar year. Historically, when opportunities have presented themselves, we would layer into the market and often miss the timing and not get the hedges on that we wanted. This time around, we learned from the past and acted very quickly as the conflict began. As we look forward, we are satisfied with where our book is for the rest of the year. 2027 is a much smaller amount. Going forward, we will probably look to lower the percentage authorization; 30% may be a little high on a go-forward basis. We will continue to assess as we go and be more cautious as we layer in hedges.
Your next question comes from the line of Matthew Blair with TPH. Please go ahead.
Thanks, and good morning. Maybe to stick on the hedging side. If I heard correctly, it sounded like the realized hedge loss in the quarter was $81 million which I think shakes out to about $4.20 a barrel as a headwind. Is that how you look at it as well? And do you have an estimate on what the mark-to-market hedging impacts would look like in Q3? Would that be something around $100 million to $120 million? Thank you.
Hey, Matthew. It's Richard. You are right on the Q2 impact. It was an $81 million realized loss, which was about $4.16 a barrel, and that was about a 9% hit to capture. We did say in the prepared remarks that for Q3 total exposure is about 2.7 million barrels and the notional value of that position right now is $102 million. We step down again in Q4, and for 2027 it is a lot smaller, as I mentioned earlier. If you want to back into it, you can look at where NYMEX diesel cracks were when we put these hedges on, which was fairly early when the Iran conflict started in late February/early March, to get a sense of where we locked in relative to current levels.
Okay, thanks. That is helpful. And then do you have any concerns on 2026 RIN compliance? Any concerns that there might not be enough RINs in the market and if so, are you adjusting your RIN purchase strategy, or are you buying any RINs now to avoid potential shortage later in the year?
That is a great question, Matthew. I do have concerns about the 2026 RVO. In brief, the program has been mismanaged; we are not helping farmers, we are harming consumers, and we are not giving businesses clarity on planning related to EPA waivers and deadlines. I do not believe EPA can let the RIN bank go short without taking action. Regarding RIN purchasing, our plan is always ratable. When prices started to spike in February, we slowed down a bit because we thought EPA would have to take action. That strategy has paid off a little as we've seen some recent softness in RINs. We will continue to focus on ratable buying with some catch-up in the third quarter.
Okay. And can I just clarify for Wynnewood, are you currently buying 50% of your expected 2026 obligation?
Yes. We intend to buy 50% of the obligation for Wynnewood, although we still maintain that using the Department of Energy scoring methodology we deserve a 100% waiver and have demonstrated that.
Your next question comes from the line of Alexa Petrich with Goldman Sachs. Please go ahead.
Hey, team, and thanks for taking our question. First of all, congratulations, Dane and Richard, on your new roles. Well deserved. Can you talk about what you are focused on in these new seats? And how's the leadership transition going?
Thank you. The leadership transition has been great. We have a really strong team in place. I have been at the company a long time, as have many of our senior leaders. The team I had in the CFO organization is very strong, and bringing Richard up to help us has been a great move. I do not feel like we missed a beat. The team is capable of wearing many hats, has broad experience, and has made it relatively easy to manage through the transition. Strategically, nothing really changes. We will continue to focus on the core commercial business, improving capture, and pursuing accretive opportunities for shareholders. We are moving forward and hope to have information to share soon.
Thanks. Appreciate that. As a follow-up, on capital allocation can you talk a little more about balancing a dividend with debt reduction? And as you look at potentials to scale up refining, what does the M&A landscape look like right now?
Sure. On capital allocation, consistent with prior comments, we want to get back to the target gross debt level of $1 billion excluding CVR Partners. That remains a priority. We have previously said we did not have to reach that target before returning a dividend, and we delivered on a base dividend in the first quarter. If we can make meaningful progress toward the remaining debt target — which we have a line of sight to do — there is certainly opportunity to discuss some incremental increase to the dividend given current market conditions. I do not see us returning to the high historical dividend levels, but rather something sustainable and regular through the cycle. On M&A, this feels like an attractive time for portfolio rebalancing. The ability for refining assets to trade at mid-cycle levels presents opportunities where value can be achieved and risk-reward balanced. Historically, bid-ask spreads have been wide, but current conditions present scenarios where action can be taken. We will continue to evaluate opportunities.
Thank you. That concludes our Q&A session. I will now turn the call back over to Dane J. Neumann for closing remarks.
Again, I would like to thank you all for your interest in CVR Energy and our employees for their hard work and commitment toward safe, reliable, and environmentally responsible operations. We look forward to reviewing our third quarter 2026 results during our next earnings call. Have a safe day.
Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.