CVR Refining, LP - FORM 8-K - EX-99.1

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8-K - 8-K - CVR Refining, LP	cvrr8-kxq12015earningsrele.htm

Exhibit 99.1

CVR Refining Reports 2015 First Quarter Results

And Announces Cash Distribution of 76 Cents

SUGAR LAND, Texas (April 30, 2015) - CVR Refining, LP (NYSE: CVRR), a refiner and marketer of petroleum fuels, today announced first quarter 2015 net income of $46.7 million on net sales of $1,304.4 million, compared to net income of $265.4 million on net sales of $2,375.3 million for the 2014 first quarter. Adjusted EBITDA, a non-GAAP financial measure, for the 2015 first quarter was $161.7 million compared to adjusted EBITDA of $194.1 million for the 2014 first quarter.

“CVR Refining posted solid results operationally and financially for the first quarter of 2015,” said Jack Lipinski, chief executive officer. “Group 3 refining margins, which were extremely poor at the beginning of the year, gradually improved and peaked at the end of February. Margins leveled off by the end of March, but continue to be favorable.”

Consolidated Operations

First quarter 2015 throughputs of crude oil and all other feedstocks and blendstocks for the Coffeyville and Wynnewood refineries totaled 215,023 barrels per day (bpd). Throughputs of crude oil and all other feedstocks and blendstocks for both refineries totaled 214,056 bpd for the same period in 2014.

Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $15.03 in the 2015 first quarter, compared to $15.98 for the same period in 2014. Direct operating expenses per barrel sold, exclusive of depreciation and amortization, for the 2015 first quarter was $4.44, compared to $5.08 in the first quarter of 2014.

Distributions

CVR Refining also announced today a first quarter 2015 distribution of 76 cents per common unit. The distribution, as set by the board of CVR Refining GP, LLC, the general partner of CVR Refining, will be paid on May 18, 2015, to unitholders of record on May 11, 2015.

CVR Refining, LP is a variable distribution master limited partnership. As a result, its quarterly distributions, if any, will vary from quarter to quarter due to several factors, including, but not limited to, its operating performance, fluctuations in the prices paid for crude oil and other feedstocks, as well as the prices received for finished products, and other cash reserves deemed necessary or appropriate by the board of directors of its general partner.

First Quarter 2015 Earnings Conference Call

CVR Refining previously announced that it will host its first quarter 2015 Earnings Conference Call for analysts and investors on Thursday, April 30, at 1 p.m. Eastern.

The Earnings Conference Call will be broadcast live over the Internet at http://www.videonewswire.com/event.asp?id=102102. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8289.

For those unable to listen live, the Webcast will be archived and available for 14 days at http://www.videonewswire.com/event.asp?id=102102. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13606918.

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This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of CVR Refining’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, CVR Refining’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.

Forward-Looking Statements

This news release contains forward-looking statements. You can generally identify forward-looking statements by our use of forward-looking terminology such as “outlook,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. For a discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings. These risks may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. CVR Refining disclaims any intention or obligation to update publicly or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

About CVR Refining, LP

Headquartered in Sugar Land, Texas, CVR Refining, LP is an independent downstream energy limited partnership that owns refining and related logistics assets in the Midcontinent United States. CVR Refining’s subsidiaries operate a complex full coking medium-sour crude oil refinery with a rated capacity of 115,000 barrels per calendar day (bpcd) in Coffeyville, Kansas, and a complex crude oil refinery with a rated capacity of 70,000 bpcd in Wynnewood, Oklahoma. CVR Refining’s subsidiaries also operate supporting logistics assets including approximately 336 miles of owned and leased pipelines, approximately 150 crude oil transports, a network of strategically located crude oil gathering tank farms, and more than six million barrels of owned and leased crude oil storage capacity.

For further information, please contact:

Investor Contact:

Jay Finks

CVR Refining, LP

913-982-0481

IR@CVRRefining.com

Media Relations:

Angie Dasbach

CVR Refining, LP

281-207-3550

MediaRelations@CVRRefining.com

CVR Refining, LP

Financial and Operational Data (all information in this release is unaudited except as otherwise noted).



	Three Months Ended March 31,
	2015			2014
	(in millions, except per unit data)
Statement of Operations Data:
Net sales	$	1,304.4		$	2,375.3
Cost of product sold	1,056.1			2,063.3
Direct operating expenses	87.0			99.2
Selling, general and administrative expenses	18.1			18.7
Depreciation and amortization	34.0			29.5
Operating income	109.2			164.6
Interest expense and other financing costs	(11.3		)	(8.7		)
Interest income	0.1			0.1
Gain (loss) on derivatives, net	(51.4		)	109.4
Other income, net	0.1			—
Income before income tax expense	46.7			265.4
Income tax expense	—			—
Net income	$	46.7		$	265.4

Net income per common unit - basic	$	0.32		$	1.80
Net income per common unit - diluted	$	0.32		$	1.80

Adjusted EBITDA*	$	161.7		$	194.1
Available cash for distribution*	$	111.8		$	144.0

Weighted average, number of common units outstanding (in thousands):
Basic	147,600			147,600
Diluted	147,600			147,600

* See “Use of Non-GAAP Financial Measures” below.



	As of March 31, 2015		As of December 31, 2014
			(audited)
	(in millions)
Balance Sheet Data:
Cash and cash equivalents	$	422.1	$	370.2
Working capital	502.9		504.5
Total assets	2,419.5		2,417.8
Total debt, including current portion	581.1		581.4
Total partners’ capital	1,442.4		1,450.1



	Three Months Ended March 31,
	2015			2014
	(in millions)
Cash Flow Data:
Net cash flow provided by (used in):
Operating activities	$	148.5		$	258.2
Investing activities	(41.7		)	(57.9		)
Financing activities	(54.9		)	(66.7		)
Net cash flow	$	51.9		$	133.6

Capital expenditures for property, plant and equipment	$	41.7		$	57.9

Operating Data

The following tables set forth information about our consolidated operations and our Coffeyville and Wynnewood refineries. Reconciliations of certain non-GAAP financial measures are provided under “Use of Non-GAAP Financial Measures” below.



	Three Months Ended March 31,
	2015		2014
Key Operating Statistics:
Per crude oil throughput barrel:
Refining margin*	$	13.68	$	17.17
FIFO impact (favorable) unfavorable	1.35		(1.19		)
Refining margin adjusted for FIFO impact*	15.03		15.98
Gross profit*	7.02		10.09
Direct operating expenses	4.79		5.46
Direct operating expenses per barrel sold	$	4.44	$	5.08
Barrels sold (barrels per day)	217,686		217,186



	Three Months Ended March 31,
	2015				2014
Refining Throughput and Production Data (bpd):
Throughput:
Sweet	175,376		81.6	%	178,253		83.3	%
Medium	6,630		3.1	%	3,047		1.4	%
Heavy sour	19,658		9.1	%	20,602		9.6	%
Total crude oil throughput	201,664		93.8	%	201,902		94.3	%
All other feedstocks and blendstocks	13,359		6.2	%	12,154		5.7	%
Total throughput	215,023		100.0	%	214,056		100.0	%
Production:
Gasoline	109,096		50.2	%	104,452		48.5	%
Distillate	89,436		41.1	%	88,901		41.2	%
Other (excluding internally produced fuel)	18,857		8.7	%	22,093		10.3	%
Total refining production (excluding internally produced fuel)	217,389		100.0	%	215,446		100.0	%
Product price (dollars per gallon):
Gasoline	$	1.48			$	2.66
Distillate	1.69				3.00



	Three Months Ended March 31,
	2015			2014
Market Indicators (dollars per barrel):
West Texas Intermediate (WTI) NYMEX	$	48.57		$	98.61
Crude Oil Differentials:
WTI less WTS (light/medium sour)	0.99			5.58
WTI less WCS (heavy sour)	13.62			20.87
NYMEX Crack Spreads:
Gasoline	18.54			18.12
Heating Oil	27.06			27.95
NYMEX 2-1-1 Crack Spread	22.80			23.04
PADD II Group 3 Basis:
Gasoline	(3.50		)	(4.87		)
Ultra Low Sulfur Diesel	(4.52		)	(1.94		)
PADD II Group 3 Product Crack Spread:
Gasoline	15.04			13.25
Ultra Low Sulfur Diesel	22.54			26.01
PADD II Group 3 2-1-1	18.79			19.63



	Three Months Ended March 31,
	2015		2014
	(in millions, except operating statistics)
Coffeyville Refinery Financial Results:
Net sales	$	851.7	$	1,572.3
Cost of product sold	700.9		1,358.8
Refining margin*	150.8		213.5
Direct operating expenses	50.4		53.3
Depreciation and amortization	19.4		18.0
Gross profit*	$	81.0	$	142.2

Refining margin adjusted for FIFO impact*	$	169.2	$	196.9

Coffeyville Refinery Key Operating Statistics:
Per crude oil throughput barrel:
Refining margin*	$	13.21	$	19.14
FIFO impact (favorable) unfavorable	1.61		(1.49		)
Refining margin adjusted for FIFO impact*	14.82		17.65
Gross profit*	7.10		12.75
Direct operating expenses	4.42		4.78
Direct operating expenses per barrel sold	$	3.97	$	4.26
Barrels sold (barrels per day)	140,974		139,016



	Three Months Ended March 31,
	2015			2014
Coffeyville Refinery Throughput and Production Data (bpd):
Throughput:
Sweet	100,532	73.4	%	101,856	76.3	%
Medium	6,630	4.8	%	1,495	1.1	%
Heavy sour	19,658	14.3	%	20,602	15.4	%
Total crude oil throughput	126,820	92.5	%	123,953	92.8	%
All other feedstocks and blendstocks	10,227	7.5	%	9,670	7.2	%
Total throughput	137,047	100.0	%	133,623	100.0	%
Production:
Gasoline	67,853	48.3	%	66,316	48.4	%
Distillate	59,415	42.3	%	57,825	42.2	%
Other (excluding internally produced fuel)	13,228	9.4	%	12,776	9.4	%
Total refining production (excluding internally produced fuel)	140,496	100.0	%	136,917	100.0	%



	Three Months Ended March 31,
	2015		2014
	(in millions, except operating statistics)
Wynnewood Refinery Financial Results:
Net sales	$	451.7	$	802.0
Cost of product sold	355.6		704.5
Refining margin*	96.1		97.5
Direct operating expenses	36.6		45.6
Depreciation and amortization	12.5		10.0
Gross profit*	$	47.0	$	41.9

Refining margin adjusted for FIFO impact*	$	102.2	$	92.5

Wynnewood Refinery Key Operating Statistics:
Per crude oil throughput barrel:
Refining margin*	$	14.27	$	13.89
FIFO impact (favorable) unfavorable	0.91		(0.72		)
Refining margin adjusted for FIFO impact*	15.18		13.17
Gross profit*	6.98		5.97
Direct operating expenses	5.43		6.49
Direct operating expenses per barrel sold	$	5.30	$	6.48
Barrels sold (barrels per day)	76,712		78,170



	Three Months Ended March 31,
	2015			2014
Wynnewood Refinery Throughput and Production Data (bpd):
Throughput:
Sweet	74,844	96.0	%	76,397	95.0	%
Medium	—	—	%	1,552	1.9	%
Heavy sour	—	—	%	—	—	%
Total crude oil throughput	74,844	96.0	%	77,949	96.9	%
All other feedstocks and blendstocks	3,132	4.0	%	2,484	3.1	%
Total throughput	77,976	100.0	%	80,433	100.0	%
Production:
Gasoline	41,243	53.7	%	38,136	48.6	%
Distillate	30,021	39.0	%	31,076	39.6	%
Other (excluding internally produced fuel)	5,629	7.3	%	9,317	11.8	%
Total refining production (excluding internally produced fuel)	76,893	100.0	%	78,529	100.0	%

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Cost of product sold, direct operating expenses and selling, general and administrative expenses are all reflected exclusive of depreciation and amortization.

Use of Non-GAAP Financial Measures

To supplement our actual results in accordance with GAAP for the applicable periods, the Partnership also uses the non-GAAP financial measures noted above, which are reconciled to our GAAP-based results below. These non-GAAP financial measures should not be considered an alternative for GAAP results. The adjustments are provided to enhance an overall understanding of the Partnership’s financial performance for the applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods.

Refining margin per crude oil throughput barrel is a measurement calculated as the difference between net sales and cost of product sold (exclusive of depreciation and amortization). Refining margin is a non-GAAP measure that we believe is important to investors in evaluating our refineries’ performance as a general indication of the amount above our cost of product sold at which we are able to sell refined products. Each of the components used in this calculation (net sales and cost of product sold exclusive of depreciation and amortization) can be taken directly from our Statements of Operations. Our calculation of refining margin may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. In order to derive the refining margin per crude oil throughput barrel, we utilize the total dollar figures for refining margin as derived above and divide by the applicable number of crude oil throughput barrels for the period. We believe that refining margin is important to enable investors to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance.

Refining margin per crude oil throughput barrel adjusted for FIFO impact is a measurement calculated as the difference between net sales and cost of product sold (exclusive of depreciation and amortization) adjusted for FIFO impacts. Refining margin adjusted for FIFO impact is a non-GAAP measure that we believe is important to investors in evaluating our refineries’ performance as a general indication of the amount above our cost of product sold (taking into account the impact of our utilization of FIFO) at which we are able to sell refined products. Our calculation of refining margin adjusted for FIFO impact may differ from calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. Under our FIFO accounting method, changes in crude oil prices can cause fluctuations in the inventory valuation of our crude oil, work in process and finished goods, thereby resulting in favorable FIFO impacts when crude oil prices increase and unfavorable FIFO impacts when crude oil prices decrease.

Gross profit is calculated as the difference between net sales, cost of product sold (exclusive of depreciation and amortization), direct operating expenses (exclusive of depreciation and amortization), major scheduled turnaround expenses and depreciation and amortization. Gross profit per crude throughput barrel is calculated as gross profit as derived above divided by our refineries’ crude oil throughput volumes for the respective periods presented. Gross profit is a non-GAAP measure that should not be substituted for operating income. Management believes it is important to investors in evaluating our refineries’ performance and our ongoing operating results. Our calculation of gross profit may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.

EBITDA and Adjusted EBITDA. EBITDA represents net income before (i) interest expense and other financing costs, net of interest income, (ii) income tax expense and (iii) depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for (i) FIFO impacts (favorable) unfavorable; (ii) share-based compensation, non-cash; (iii) loss on extinguishment of debt; (iv) major scheduled turnaround expenses; (v) (gain) loss on derivatives, net and (vi) current period settlements on derivative contracts. We present Adjusted EBITDA because it is the starting point for our calculation of available cash for distribution. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be substituted for net income or cash flow from operations. Management believes that EBITDA and Adjusted EBITDA enable investors to better understand our ability to make distributions to our common unitholders, help investors evaluate our ongoing operating results and allow for greater transparency in reviewing our overall financial, operational and economic performance. EBITDA and Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently. Below is a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the three months ended March 31, 2015 and 2014:



	Three Months Ended March 31,
	2015			2014
	(in millions)
Net income	$	46.7		$	265.4
Add:
Interest expense and other financing costs, net of interest income	11.2			8.6
Income tax expense	—			—
Depreciation and amortization	34.0			29.5
EBITDA	91.9			303.5
Add:
FIFO impacts (favorable) unfavorable	24.5			(21.6		)
Share-based compensation, non-cash	0.2			0.5
(Gain) loss on derivatives, net	51.4			(109.4		)
Current period settlements on derivative contracts(a)	(6.3		)	21.1
Adjusted EBITDA	$	161.7		$	194.1

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(a)	Represents the portion of gain (loss) on derivatives, net related to contracts that matured during the respective periods and settled with counterparties. There are no premiums paid or received at inception of the derivative contracts and upon settlement, there is no cost recovery associated with these contracts.

Available cash for distribution is not a recognized term under GAAP. Available cash should not be considered in isolation or as an alternative to net income or operating income as a measure of operating performance. In addition, available cash for distribution is not presented as, and should not be considered, an alternative to cash flows from operations or as a measure of liquidity. Available cash as reported by the Partnership may not be comparable to similarly titled measures of other entities, thereby limiting its usefulness as a comparative measure.

The Partnership announced a cash distribution of $0.76 per common unit for the first quarter of 2015. The distribution was based on the Partnership’s available cash, which equaled Adjusted EBITDA reduced for cash needed for (i) debt service; (ii) reserves for environmental and maintenance capital expenditures; (iii) reserves for future major scheduled turnaround expenses and, to the extent applicable, (iv) reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate, if any. Available cash for distribution may be increased by the release of previously established cash reserves, if any, and other excess cash, at the discretion of the board of directors of our general partner. Actual distributions are set by the board of directors of our general partner. The board of directors of our general partner may modify our cash distribution policy at any time, and our partnership agreement does not require us to make distributions at all.



	Three Months Ended March 31, 2015
	(in millions, except per unit data)
Reconciliation of Adjusted EBITDA to Available cash for distribution
Adjusted EBITDA	$	161.7
Adjustments:
Less:
Cash needs for debt service	(10.0		)
Reserves for environmental and maintenance capital expenditures	(31.2		)
Reserves for future turnarounds	(8.7		)
Available cash for distribution	$	111.8

Available cash for distribution, per unit	$	0.76
Common units outstanding (in thousands)	147,600

Derivatives Summary. The Partnership enters into commodity swap contracts through crack spread swap agreements with financial counterparties to fix the spread risk between the crude oil the Partnership purchases and the refined products the refineries produce for sale. Through these swaps, the Partnership will sell a fixed differential for the value between the selected refined product benchmark and the benchmark crude oil price, thereby locking in a margin for a portion of the refineries’ production. The physical volumes are not exchanged and these contracts are net settled with cash. From time to time, the Partnership holds various NYMEX positions through a third-party clearing house.

The table below summarizes our open commodity swap positions as of March 31, 2015. The positions are primarily in the form of crack spread swap agreements with financial counterparties, wherein the Partnership has locked in differentials at the fixed prices noted below. As of March 31, 2015, the open commodity swap positions below were comprised of approximately 65.1% for distillate crack swaps and 34.9% for gasoline crack swaps.



Commodity Swaps	Barrels	Fixed Price⁽¹⁾
Second Quarter 2015	8,850,000	$	20.67
Third Quarter 2015	3,200,000	22.09
Fourth Quarter 2015	450,000	30.05

First Quarter 2016	615,000	29.01
Second Quarter 2016	615,000	29.01
Third Quarter 2016	615,000	29.01
Fourth Quarter 2016	615,000	29.01

Total	14,960,000	$	22.63

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(1)	Weighted-average price of all positions for period indicated.

Q2 2015 Outlook. The table below summarizes our outlook for certain refining statistics for the second quarter of 2015. See "forward looking statements."



	Q2 2015
	Low	High
Refinery Statistics:
Total crude oil throughput (bpd)	195,000	205,000
Total refining production (bpd)	210,000	220,000

CVR Refining, LP - FORM 8-K - EX-99.1 - April 30, 2015

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