SUGAR LAND, Texas, Feb. 22, 2022 (GLOBE NEWSWIRE) — CVR Energy, Inc. (NYSE: CVI) today announced a fourth quarter 2021 net loss of $14 million, or 14 cents per diluted share, on net sales of $2.1 billion, compared to a fourth quarter 2020 net loss of $67 million, or 67 cents per diluted share, on net sales of $1.1 billion. Fourth quarter 2021 EBITDA was $116 million, compared to fourth quarter 2020 EBITDA of $1 million.
For full-year 2021, the Company reported net income of $25 million, or 25 cents per diluted share, on net sales of $7.2 billion, compared to net loss for full-year 2020 of $256 million, or $2.54 per diluted share, on net sales of $3.9 billion. Full-year 2021 EBITDA was $462 million, compared to full-year 2020 EBITDA loss of $7 million.
“While our 2021 results reflected positive improvements in crack spreads compared to last year, ridiculously high Renewable Identification Number (“RIN”) prices continued to weigh on our performance,” said Dave Lamp, CVR Energy’s President and Chief Executive Officer. “We remain focused on offsetting the impact of this broken program and look forward to the expected startup of Wynnewood’s renewable diesel unit in the second quarter of 2022. We also have taken a large step forward in our focus on decarbonization with approval by our Board of Directors of a comprehensive plan to restructure our business to segregate our renewables operations, which we currently expect to execute over the following year. We believe we are uniquely positioned, given the synergistic relationship between refining and renewables as well as our proximity to the farm belt.
“CVR Partners achieved solid production during 2021, with a combined ammonia utilization rate of 92 percent,” Lamp said. “Ammonia and UAN pricing continued to strengthen into the 2021 fourth quarter, and we expect the momentum to continue into the spring 2022 planting season, with grain prices near multi-year highs and crop inventory levels near multi-year lows.”
Petroleum
The Petroleum Segment reported a fourth quarter 2021 operating loss of $27 million, on net sales of $1.9 billion, compared to a fourth quarter 2020 operating loss of $120 million, on net sales of $1.0 billion.
Refining margin per total throughput barrel was $7.13 in the fourth quarter 2021, compared to $1.32 during the same period in 2020. The increase in refining margin of $119 million was primarily driven by the 101 percent increase in the Group 3 2-1-1 crack spread caused by improved market demand for refined products in the fourth quarter 2021 compared to the economic downturn and demand destruction observed in the fourth quarter 2020. This was combined with a favorable inventory valuation impact of $17 million, or 85 cents per total throughout barrel, in the fourth quarter 2021 compared to a favorable inventory valuation impact of $15 million, or 76 cents per total throughput barrel, in the fourth quarter of 2020. The Petroleum Segment also recognized a fourth quarter 2021 derivative gain of $2 million, or 9 cents per total throughput barrel, compared to a fourth quarter 2020 derivative loss of $15 million, or 76 cents per total throughput barrel. Included in this derivative gain for the fourth quarter of 2021 was a nominal unrealized gain, compared to a fourth quarter 2020 $23 million unrealized loss. The costs to comply with the Renewable Fuel Standard (“RFS”) offset the improvements to refining margins resulting in expense of $100 million, or $4.89 per total throughput barrel, in the fourth quarter 2021, which included an additional $9 million revaluation of our RFS liability as of December 31, 2021, compared to an expense of $120 million, or $5.97 per total throughput barrel, in the fourth quarter 2020, which included a $66 million revaluation of our RFS liability as of December 31, 2020.
Fourth quarter 2021 combined total throughput was approximately 222,000 barrels per day (“bpd”), compared to approximately 219,000 bpd of combined total throughput for the fourth quarter 2020.
Full-year 2021 operating loss was $27 million, on net sales of $6.7 billion, compared to full-year 2020 operating loss of $281 million, on net sales of $3.6 billion.
The Petroleum Segment’s refining margin per total throughput barrel for 2021 was $8.14, compared to $4.44 for 2020. The increase in refining margin of $323 million was primarily driven by the 93 percent increase in the Group 3 2-1-1 crack spread caused by improved market demand for refined products in 2021 compared to the economic downturn and demand destruction observed in 2020. This was combined with favorable inventory valuation impacts totaling $127 million, or $1.66 per total throughput barrel, in 2021 driven by increased prices for crude oil and refined products in 2021 compared to 2020. The unfavorable inventory valuation impacts of $58 million in 2020 were driven by lower crude oil prices in the first half of 2020 with some offsetting increases observed through the end of 2020. Offsetting these improvements to refining margin, the Company recognized RINs expense of $435 million, or $5.70 per throughput barrel, and $190 million, or $2.84 per throughput barrel, for the years ended December 31, 2021 and 2020, respectively, reflecting its costs to comply with the RFS. This was combined with derivative losses of $44 million recognized during the year ended December 31, 2021, primarily a result of unfavorable crack spread swaps, compared to derivative gains of $55 million recognized during the year ended December 31, 2020, primarily resulting from WCS sales.
Combined total throughput for full-year 2021 improved to approximately 209,000 bpd, compared to approximately 183,000 bpd for full-year 2020.
Nitrogen Fertilizer
The Nitrogen Fertilizer Segment reported operating income of $72 million on net sales of $189 million for the fourth quarter of 2021, compared to an operating loss of $1 million on net sales of $90 million for the fourth quarter of 2020.
Fourth quarter 2021 average realized gate prices for urea ammonia nitrate (“UAN”) improved by 150 percent to $347 per ton and ammonia improved by 179 percent to $745 per ton when compared to the fourth quarter of 2020. Average realized gate prices for UAN and ammonia were $139 per ton and $267 per ton, respectively, for the fourth quarter of 2020.
CVR Partners’ fertilizer facilities produced a combined 197,000 tons of ammonia during the fourth quarter of 2021, of which 70,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 288,000 tons of UAN. During the fourth quarter 2020, the fertilizer facilities produced 220,000 tons of ammonia, of which 75,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 335,000 tons of UAN.
Full-year 2021 operating income was $134 million on net sales of $533 million, compared to an operating loss of $35 million on net sales of $350 million for full-year 2020.
The average realized gate prices for full-year 2021 for UAN improved by 74 percent to $264 per ton and for ammonia improved 92 percent to $544 per ton when compared to the year ended 2020. Average realized gate prices for UAN and ammonia were $152 per ton and $284 per ton, respectively, for full-year 2020.
For the year ended 2021, our fertilizer facilities produced a combined 807,000 tons of ammonia, of which 275,000 tons were available for sale, while the rest was upgraded to other fertilizer products, including 1,208,000 tons of UAN. For the year ended 2020, the fertilizer facilities produced 852,000 tons of ammonia, of which 303,000 net tons were available for sale, while the remainder was upgraded to other fertilizer products, including 1,303,000 tons of UAN.
Corporate
The Company reported an income tax benefit of $8 million, or -12.4 percent of income before income taxes, for the year ended December 31, 2021, compared to an income tax benefit of $95 million, or 23.0 percent of loss before income taxes, for the year ended December 31, 2020. The fluctuation in income tax benefit was due primarily to changes in pretax earnings and pretax earnings attributable to noncontrolling interests between all periods presented. In addition, the change in the effective tax rate was due primarily to reductions in state income tax rates enacted during 2021, changes to pretax earnings attributable to noncontrolling interests and the impact of state income tax credits generated between all periods presented.
Cash, Debt and Dividend
Consolidated cash and cash equivalents was $510 million at December 31, 2021. Consolidated total debt and finance lease obligations was $1.7 billion at December 31, 2021, including $611 million held by the Nitrogen Fertilizer Segment.
During the year ended December 31, 2021, CVR Partners repurchased 24,378 of its common units on the open market pursuant to a repurchase program (the “Unit Repurchase Program”) approved by the board of directors of its general partner (the “UAN GP Board”) and in accordance with a repurchase agreement under Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended, at a cost of $1 million, inclusive of transaction costs, or an average price of $21.70 per common unit. During the year ended December 31, 2020, as adjusted to reflect the impact of the 1-for-10 reverse unit split of CVR Partners’ common units that was effective as of November 23, 2020, CVR Partners repurchased 623,177 common units, respectively, at a cost of $7 million, inclusive of transaction costs, or an average price of $11.35 per common unit. As of December 31, 2021, CVR Partners had $12 million in authority remaining under the Unit Repurchase Program. This Unit Repurchase Program does not obligate CVR Partners to acquire any common units and may be cancelled or terminated by the UAN GP Board at any time.
On September 23, 2021, and December 22, 2021, CVR Partners redeemed an additional $15 million and $15 million, respectively, in aggregate principal amount of its outstanding 9.25% Senior Secured Notes due June 2023 (the “2023 UAN Notes”) at par and settled accrued interest of less than $1 million through the date of redemptions. On February 7, 2022, CVR Partners delivered a notice of full redemption for the remaining balance of its 2023 UAN Notes at a par redemption price, plus accrued and unpaid interest on the redeemed portion of the 2023 UAN Notes, to be redeemed today, February 22, 2022. As of February 7, 2022, there was outstanding an aggregate principal amount of $65 million of the 2023 UAN Notes.
On September 30, 2021, CVR Partners entered into a new credit agreement with an aggregate principal amount of up to $35 million with a maturity date of September 30, 2024 (the “Nitrogen Fertilizer ABL”) and terminated its $35 million ABL Credit Agreement, dated as of September 30, 2016, as amended (the “UAN 2016 ABL Credit Agreement”). The Nitrogen Fertilizer ABL has substantially similar terms as the UAN 2016 ABL Credit Agreement. The proceeds of the Nitrogen Fertilizer ABL may be used to fund working capital, capital expenditures and for other general corporate purposes.
CVR Energy will not pay a cash dividend for the 2021 fourth quarter.
Today, CVR Partners announced that the UAN GP Board declared a fourth quarter 2021 cash distribution of $5.24 per common unit, which will be paid on March 14, 2022, to common unitholders of record as of March 7, 2022.
About CVR Energy, Inc.
Headquartered in Sugar Land, Texas, CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing business through its interest in CVR Refining and the nitrogen fertilizer manufacturing business through its interest in CVR Partners, LP. CVR Energy subsidiaries serve as the general partner and own 36 percent of the common units of CVR Partners.
Investors and others should note that CVR Energy may announce material information using SEC filings, press releases, public conference calls, webcasts and the Investor Relations page of its website. CVR Energy may use these channels to distribute material information about the Company and to communicate important information about the Company, corporate initiatives and other matters. Information that CVR Energy posts on its website could be deemed material; therefore, CVR Energy encourages investors, the media, its customers, business partners and others interested in the Company to review the information posted on its website.
