CVR Energy Inc.

Greetings and welcome to the CVR Energy, Inc. second quarter 2022 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, Vice President of FP&A and IR for CVR Energy, Inc. Thank you. You may begin.

Thank you, Melissa. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CBR Energy Second Quarter 2022 Earnings Call. With me today are Dave Lant, our Chief Executive Officer, Dane Newman, our Chief Financial Officer, and other members of management. Prior to discussing our 2022 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, 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 the 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 2022 second quarter earnings release that we filed with the SEC and Form 10-Q 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. Thank you for joining our earnings call. Yesterday, we reported our second quarter consolidated net income of $239 million and earnings per share of $1.64. EBITDA for the quarter was $401 million. Fundamentals in refining and fertilizer sector continued to improve during the second quarter, and once again, we posted improved results in both segments on a year-over-year basis, though this was offset by a legal accrual in our corporate segment. We are pleased to announce, in addition to the second quarter regular dividend of $0.40 per share, the Board has also authorized a special dividend of $2.60 per share, both of which will be paid on August 22 to shareholders of record at the close of the market on August 12. At yesterday's closing price, the combined annual dividend of $1.60 per share and the special dividend of $2.60 per share represents a dividend yield of nearly 13%, which is currently almost four times the average dividend yield among independent refiners. For our petroleum segment, the combined total throughput for the second quarter of 2022 was approximately 201,000 barrels per day, with Winningwood completing its planned turnaround on time and on budget in early April. This compares to 217,000 barrels per day in the second quarter of 2021. With the hydrocracker conversion at Winneywood to renewable diesel service, we expect crude throughput at Winneywood to be reduced by approximately 5,000 barrels per day going forward. Benchmark cracks increased throughout the quarter. The Group 211 crack spread averaged $48.50 per barrel in the second quarter as compared to $19.15 in the second quarter of 2021. Based on 2021 and 2022 RVO levels that were finalized in June, RIN prices averaged approximately $7.58 per barrel in the second quarter, a decrease of 7% from the second quarter of 2021. The Brent TI differential averaged $3.38 per barrel in the second quarter compared to $2.91 per barrel in the prior year period. Light product yield for the quarter was 98% on crude oil processed. Our distillate yield as percentage of total crude oil throughput was 43%. Despite the conversion of the hydrocracker at Winnie Wood to renewable diesel service, we have lightened our crude slate at Winnie Wood, and we have not seen a material decline in our distillate yield. We continue to operate our refineries in max distillate mode. In total, we gathered approximately 126,000 barrels of crude oil during the second quarter of 2022, compared to 118,000 barrels per day for the same period last year. Our crude oil gathering rates have increased on both a quarter-over-quarter and a year-over-year basis, and we are encouraged to see producers start to ramp up activity in the Anarcho Basin. The Renewable Diesel Unit at Winneywood began operations in mid-April, and is processing and processed approximately 3,100 barrels per day of vegetable oil feedstocks during the quarter. We have been gradually increasing the rate over the past few months. The hobo spread averaged a negative $1.95 per gallon for the second quarter, but increased to a negative $1.33 per gallon in June. With the increases in diesel prices and the improvement in the hobo spread recently, we're seeing positive economics from the renewable diesel unit. In the fertilizer segment, we faced some unplanned downtime at both plants during the quarter, with consolidated ammonia utilization coming in at approximately 89%. Sales volume for the second quarters of 22 were impacted by a late start to the spring planting, along with some demand destruction as a result of higher fertilizer price environment. Lower sales volumes were more than offset, however, by increased price realizations. which drove strong results for the quarter. Global supply of nitrogen fertilizer remains tight, and with continued upward pressure on energy prices in Europe, we believe high fertilizer price environment could continue into 2023. Now let me turn the call over to Dane to discuss additional financial highlights.