CVR Energy Inc.

Greetings and welcome to the CVR Energy Inc. second quarter 2021 conference call. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the conference over to your host, Mr. Richard Roberts, Senior Manager of FP&A and Investor Relations for CVR Energy. Thank you. You may begin.

Thank you, Melissa. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy second quarter 2021 earnings call. With me today are Dave Lant, our chief executive officer, Tracy Jackson, our chief financial officer, and other members of management. Prior to discussing our 2021 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. Your caution 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 2021 second quarter earnings release that we filed with the SEC in Form 10Q for the period and will be discussed during the call. With that, I'll turn the call over to Dave.

Thank you, Richard. Good afternoon, everyone. Thank you for joining our earnings call. Yesterday, we reported the second quarter consolidated net loss of $2 million and a loss per share of $0.06. Adjusted EBITDA for the quarter was $66 million. Our facilities ran well during the quarter, with both the petroleum and fertilizer segments posting increased adjusted EBITDA year over year. Once again, rising RIN prices were considerable headwinds to our results, including a $58 million non-cash mark-to-market on our estimated outstanding RIN obligation. In May, our Board of Directors approved a special dividend totaling $492 million, comprised of a combination of cash and our interest in Dellick U.S. Holdings. As I have stated over the past few quarters, absent any material acquisitions, We had too much cash on the balance sheet that wasn't earning a return. When we completed the senior notes offering in January of 20, we were evaluating a number of acquisitions at the opportunities at the time and elected to raise additional cash to fund a potential transaction. Since that time, the market has changed significantly. The bid-ask spread for refinery acquisitions remained too wide. The U.S. and Europe are now in a position of excess refining capacity, and we believe more refinery closures are needed. And we are shifting our strategy to focus more on renewables. As a result, in accordance with the provisions of the senior notes, the Board elected to distribute the excess cash proceeds. In addition to providing shareholders with nearly $5 per share of cash and a DELIC stock, this structure also allowed us to recognize a net gain of $87 million that we made on our DELIC investment while providing us with an efficient exit. With the continued uncertainties around RINs and small refinery exemptions, the Board has elected not to reinstate the regular dividends. We'll continue our discussions with the board around the best uses of our cash and the appropriate level of cash to return to our shareholders. For our petroleum segment, the combined total throughput for the second quarter of 2021 was approximately 217,000 barrels per day as compared to 156,000 barrels per day in the second quarter of 2020, which was impacted by a planned turnaround at Coffeyville. Both refineries ran well during the quarter, and we resumed processing WCS at Coffeyville due to the weak WCS prices in Cushing. Benchmark cracks have increased since the beginning of the year. However, elevated RIN prices continue to consume much of that increase in cracks. The Group 3 2-1-1 crack averaged $19.15 per barrel in the second quarter as compared to $8.75 in the second quarter of 2020. On a 2020 RVO basis, RIN prices averaged approximately $8.15 per barrel in the second quarter, a 267% increase from the second quarter of 2020. The Brent TI differential averaged $2.91 per barrel in the second quarter as compared to $5.39 in the prior year period. The Midland Cushing differential was $0.24 over WTI in the quarter as compared to $0.40 per barrel over WTI in the second quarter of 2020. And the WCS to WTI differential was $12.84 compared to $9.45 in the same period last year. Light product yield for the quarter was 99% on crude processed. We optimized crude runs to ensure maximum capture via maximizing premium gasoline production, light product yield, LPG recovery, and rinse generation. In total, we gathered approximately 118,000 barrels a day of crude oil during the second quarter of 2021, compared to 82,000 barrels per day in the same period last year, when production levels were disrupted by low crude oil prices at the onset of the COVID pandemic. We have seen some declines in production of production across our system due to limited drilling activity, although additional rigs were added in both Oklahoma and Kansas during the second quarter. In the fertilizer segment, both plants ran well during the quarter, with consolidated ammonia utilization of 98%. The rally in crop prices has driven a significant increase in prices for nitrogen fertilizers this year, and prices have remained firm through the spring planting season and into summer. Domestic fertilizer inventories are low following the shutdown from winter storm Uri earlier this year, and deferred turnaround activity from 2020 is now taking place. USDA estimates for corn planting and yields continues to imply one of the lowest inventory carryouts in the last 10 years. With low fertilizer inventories and continued strong demand for crop inputs, the setup remains positive. for fertilizer demand as well as pricing. Now let me turn the call over to Tracy to discuss some additional financial highlights.