CVR Energy Inc.

Greetings and welcome to the CVR Energy, Inc. fourth quarter 2020 conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Senior Manager of Financial Planning and Analysis and Investor Relations. Thank you, sir. You may begin.

Thank you, Christine. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CBR Energy Fourth Quarter 2020 Earnings Call. With me today are Dave Lamp, our Chief Executive Officer, Tracy Jackson, our Chief Financial Officer, and other members of management. Prior to discussing our 2020 Fourth 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, whether as a result of new information, future events, or otherwise, except to the extent required by law. Let me also remind you that CVR Partners completed a 1 for 10 reverse split of its common units on November 23, 2020. Any per-unit references made on this call are on a split-adjusted basis. This call also includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures, are included in our 2020 fourth quarter earnings release that we filed with the SEC in Form 10-K for the period and will be discussed during the call. With that said, I'll turn the call over to Dave.

Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call. I'd like to begin today's call with a brief discussion of our accomplishments in 2020, then discuss our operating performance for the quarter as well as for the year. 2020 was a challenging year for the United States, our industry, and our company. As the pandemic shut down the country and reduced demand for refined products, we were forced to adjust our strategy and adapt to the conditions we were presented. Despite these challenges of the year, we have a number of accomplishments worth highlighting. We maintained safe, reliable operations and back office functions during the COVID crisis. We successfully completed a billion-dollar notes offering in January of 2020, which provided us with additional cash and liquidity at attractive rates. We completed a major planned turnaround at our Coffeyville refinery during the beginning of the COVID crisis and deferred turnarounds at Winnie Wood and bulk fertilizer plants. We completed an ERP modernization project on time and on budget. We realigned our business strategy with a focus towards sustainability. With the board-approved renewable diesel project at Winneywood, we plan to reduce refining capacity and retool for renewable diesel production, while also transitioning to a lighter-gravity gathered crude at our refinery. While we intend to maintain our current capabilities in refining, we are focusing new investments towards growing our renewable diesel business and reducing our carbon footprint. We achieved significant reductions in SG&A operating costs, capital expenditures company-wide, exceeding our goal of $50 million annual reduction in SG&A and operating expenses. We announced the acquisition of Blue Knight Energies crude oil pipeline assets in Oklahoma, which closed in early February and expands our crude gathering reach at the wellhead. We evaluated multiple acquisitions in Pad 4, but maintained our capital discipline and refused to overpay for assets when we felt the bid-ask spread was still too wide. In our trucking business, we began hauling LPGs to our plants to reduce costs. We appealed the misguided Tenth Circuit court ruling to the Supreme Court, which has agreed to review the case. Earlier today, CVR Partners CEO Mark Pythos announced the following accomplishments for a fertilizer segment in 2020. Record ammonia production of 852,000 tons between the two plants, posting a combined utilization of 95% for the year. Certification of CVR Partners' first-ever carbon offset credits as a result of nitrous oxide abatement efforts. And our long-term air separation contract with Messer was renewed with favorable conditions, including the addition of a new oxygen surge tank which will further improve reliability of our gas supplier at Coffinville. Yesterday, we reported CBR Energy's full year and fourth quarter results. For the full year of 2020, we reported a net loss of $320 million and a loss of $2.54 per share. For the fourth quarter, we reported a net loss of $78 million and a loss per share of 67 cents. EBITDA for the year was a negative 7 million, and for the quarter was a positive million. Weaker crack spreads as a result of demand destruction from the pandemic, and dramatically higher RIN prices weighed heavy on our results for the full year and the quarter. The market remains volatile and uncertain. particularly in regard to RIN prices, which currently consume a significant portion of the refining margin available in the market. As a result, the Board of Directors did not approve a dividend for the fourth quarter of 2020. On the last few earning calls, I have discussed our focus on preserving our balance sheet and liquidity position in light of the ongoing pandemic, as well as potential acquisition opportunities that we were evaluating. Although we got far down the path on the number of acquisitions that we viewed as attractive, ultimately the bid-ask spread proved to be too wide. At this time, there are no active discussions on these potential transactions. We have also made it clear that we do not currently have any interest in acquiring Delit. although as its largest shareholder, we continue to see the stock as undervalued and have some suggested actions DELIC should take to improve its business. We also notified DELIC of our intent to nominate three directors for election to DELIC's board at its upcoming annual meeting. As we get more visibility into the sustained rebound of the refining market, We continue our discussions with the board around the appropriate level of cash return to shareholders and in what form. At current trading levels, there could be more value in buying back our own shares. For the petroleum segment, the combined total throughput for the fourth quarter of 2020 was approximately 219,000 barrels per day as compared to 213,000 barrels per day for the fourth quarter of 2019. Both the facilities ran well during the quarter, although the total throughput remained constrained by light naphtha processing capabilities as narrow crude differentials continued to favor running very light crude slate. Across the board, benchmark cracks and crude differentials deteriorated significantly from the year ago. Group 3 2-1-1 crack spreads averaged $8.44 per barrel in the fourth quarter of 2020. However, RINs consumed 40% of that at approximately $3.50 per barrel. The Group 3-211 averaged $16.65 per barrel in the fourth quarter of 2019, when RINs were only $1.15 per barrel. The Brent TI differential averaged $2.49 per barrel in the fourth quarter compared to $5.55 in the prior year period. The Midland to Cushing differential was $0.37 over WTI in the quarter compared to $0.94 over WTI in the fourth quarter of 2019. And the WCS to WTI crude differential was $11.44 per barrel compared to $18.89 per barrel in the same period last year. White product yield for the quarter was 103% on crude oil processed. Our distillate yield as a percentage of total crude oil throughputs was 44% in the fourth quarter of 2020, consistent with the prior year period. In total, we gathered approximately 117,000 barrels per day during the fourth quarter of 2020, as compared to 148,000 barrels per day for the same period last year. Our current gathering volumes are approximately 130,000 barrels per day, the volumes on the pipelines we have recently acquired from Blue Knight. In the fertilizer segment, we had a strong ammonia utilization at both of our facilities during the quarter, at 99% at Coffeyville and 103% at East Dubuque. Although fertilizer prices remained soft in the fourth quarter, year-over-year production and sales volumes were higher for both UAN and ammonia. With the rally in crop prices over the past few months, farmer economics have improved considerably, and this has driven higher demand for crop inputs. As a result, UAN and ammonia prices have increased significantly since the beginning of the year, and the outlook for spring planting currently looks favorable. Now let me turn the call over to Tracy to discuss our financial highlights.