UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One) | ||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the quarterly period ended | ||||||||
| OR | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to | ||||||||
Commission file number: 001-33492
(Exact name of registrant as specified in its charter)
 | ||||||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) (Zip Code)
(281 ) 207-3200
(Registrant’s telephone number, including area code)
_____________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||
| Smaller reporting company | Emerging growth company | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
There were 100,530,599 shares of the registrant’s common stock outstanding at October 25, 2024.
TABLE OF CONTENTS
CVR Energy, Inc. - Quarterly Report on Form 10-Q
September 30, 2024
| PART I. Financial Information | PART II. Other Information | |||||||||||||||||||
Condensed Consolidated Balance Sheets - September 30, 2024 and December 31, 2023 (unaudited) | ||||||||||||||||||||
Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) | ||||||||||||||||||||
Condensed Consolidated Statements of Changes in Equity - Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) | ||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2024 and 2023 (unaudited) | ||||||||||||||||||||
| ||||||||||||||||||||
This Quarterly Report on Form 10-Q (including documents incorporated by reference herein) contains statements with respect to our expectations or beliefs as to future events. These types of statements are “forward-looking” and subject to uncertainties. See “Important Information Regarding Forward-Looking Statements” section of this filing.
September 30, 2024 | 2
Important Information Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, but not limited to, those under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than statements of historical fact, including without limitation, statements regarding future operations, financial position, estimated revenues and losses, growth, capital projects, stock or unit repurchases, impacts of legal proceedings, projected costs, prospects, plans and objectives of management are forward looking statements. The words “could”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “may”, “continue”, “predict”, “potential”, “project”, and similar terms and phrases are intended to identify forward-looking statements.
Although we believe our assumptions concerning future events are reasonable, a number of risks, uncertainties, and other factors could cause actual results and trends to differ materially from those projected or forward looking. Forward looking statements, as well as certain risks, contingencies or uncertainties that may impact our forward-looking statements, include but are not limited to the following:
•volatile margins in the refining industry and exposure to the risks associated with volatile crude oil, refined product and feedstock prices;
•the availability of adequate cash and other sources of liquidity for the capital, operating and other needs of our businesses;
•the effects of the Russia-Ukraine war and the conflict in the Middle East and any spread or expansion thereof, including with respect to impacts to commodity prices and other markets;
•the effects of changes in market conditions; market volatility; crude oil and other commodity prices; demand for those commodities, storage and transportation capacities and costs, inflation, and the impact of such changes on our operating results and financial condition;
•the ability to forecast our future financial condition, results of operations, revenues and expenses accurately or at all;
•the effects of transactions involving derivative instruments;
•changes in laws, regulations, rules and policies with respect to crude oil, refined products, other hydrocarbons or renewable feedstocks or products including, without limitation, the export, production, sale or transportation thereof and the actions of the Biden Administration or future administrations that impact oil and gas operations in the United States;
•political uncertainty in light of the upcoming November 2024 United States presidential election and impacts to the oil and gas industry and the United States economy generally as a result of actions taken by a new administration;
•interruption in pipelines supplying feedstocks or distributing the petroleum business’ products;
•competition in the petroleum and nitrogen fertilizer businesses, including potential impacts of domestic and global supply and demand and/or domestic or international duties, tariffs, or similar costs;
•capital expenditures;
•changes in our or our segments’ credit profiles and impacts thereof on cash needs or otherwise;
•the cyclical and seasonal nature of the petroleum and nitrogen fertilizer businesses;
•the supply, availability and price levels of raw materials and feedstocks;
•our production levels, including the risk of a material decline in those levels;
•accidents or other unscheduled shutdowns or interruptions affecting our facilities, machinery, or equipment, or those of our suppliers or customers;
•existing and future laws, regulations, policies, or rulings, including the reinterpretation or amplification thereof by regulators, and including but not limited to those relating to the environment, climate change, alternatively energy or fuel sources, electric vehicles, emissions, including tailpipe emission standards that could impact the future viability of internal combustion engines, renewables, safety, security and/or the transportation or production of hazardous chemicals like ammonia, including potential liabilities or capital requirements arising from such laws, regulations or rulings and the impacts thereof on macroeconomic factors, consumer activity or otherwise;
•erosion of demand for our products due to or other impacts of climate change and environmental, social and governance initiatives or other factors, whether from regulators, rating agencies, lenders, investors, litigants, customers, vendors, the public or others;
•potential operating hazards, downtime, and damage to our or our counterparties’ facilities and other assets from accidents, fire, severe weather, tornadoes, floods, or other natural disasters;
September 30, 2024 | 3
•the impact of weather on commodity supply and/or pricing and on the nitrogen fertilizer business including our ability to produce, market or sell fertilizer products profitability or at all;
•rulings, judgments or settlements in litigation, tax or other legal or regulatory matters;
•the dependence of the nitrogen fertilizer business on customers and distributors including to transport goods and equipment and providers of feedstocks;
•the reliance on, or the ability to procure economically or at all, petroleum coke (“pet coke”) our nitrogen fertilizer business purchases from our subsidiaries and third-party suppliers or the natural gas, electricity, oxygen, nitrogen, sulfur processing and compressed dry air and other products purchased from third parties by the nitrogen fertilizer and petroleum businesses;
•risks associated with third-party operation of or control over important facilities necessary for operation of our refineries and nitrogen fertilizer facilities;
•risks of terrorism, cybersecurity attacks, and the security of chemical manufacturing facilities and other matters beyond our control;
•our lack of diversification of assets or operating and supply areas;
•the petroleum business’ and nitrogen fertilizer business’ dependence on significant customers and the creditworthiness and performance by counterparties;
•the potential loss of the nitrogen fertilizer business’ transportation cost advantage over its competitors;
•the potential inability to successfully implement our business strategies at all or on time and within our anticipated budgets, including significant capital programs or projects, turnarounds or renewable or carbon reduction initiatives at our refineries and fertilizer facilities, including pretreater, carbon sequestration, segregation of our renewables business and other projects;
•our ability to continue to license the technology used for our operations;
•our petroleum business’ purchase of, or ability to purchase, renewable identification numbers (“RINs”) on a timely and cost effective basis or at all;
•the impact of refined product demand and declining inventories on refined product prices and crack spreads;
•Organization of Petroleum Exporting Countries’ and its allies’ production levels and pricing;
•the impact of RINs pricing, our blending and purchasing activities and governmental actions, including by the U.S. Environmental Protection Agency (the “EPA”) on our RIN obligation, open RINs positions, small refinery exemptions, and our estimated consolidated cost to comply with our Renewable Fuel Standard (“RFS”) obligations;
•our accounting policies and treatment, including of our RFS obligations;
•operational upsets or changes in laws that could impact the amount and receipt of credits (if any) under Section 45Q of the Internal Revenue Code of 1986, as amended;
•our ability to meet certain carbon oxide capture and sequestration milestones;
•our businesses’ ability to obtain, retain or renew environmental and other governmental permits, licenses or authorizations necessary for the operation of its business;
•impact of potential runoff of water containing nitrogen based fertilizer into waterways and regulatory or legal actions in response thereto;
•our ability to issue securities, obtain financing or sell assets on terms at favorable to us or at all;
•bank failures or other events affecting financial institutions;
•existing and future regulations related to the end-use of our products or the application of fertilizers;
•refinery and nitrogen fertilizer facilities’ operating hazards and interruptions, including unscheduled maintenance or downtime and the availability of adequate insurance coverage;
•risks related to services provided by or competition among our subsidiaries, including conflicts of interests and control of CVR Partners, LP’s general partner, and control of CVR Energy, Inc. by its controlling shareholder;
•risks related to potential strategic transactions involving CVR Energy, Inc. including but not limited to these in which its controlling shareholder or others may participate or direct (including by providing financing to CVR Energy, Inc. or otherwise) and potential strategic transactions involving CVR Partners, LP in which CVR Energy, Inc. and/or its controlling shareholder or others may participate, including in each case the process of exploring any such transaction and potentially completing any such transaction, including the costs thereof and the risk that any such transaction may not achieve any or all of any anticipated benefits;
•instability and volatility in the capital and credit markets;
•restrictions in our debt agreements;
•our ability to refinance our debt on acceptable terms or at all;
•asset impairments and impacts thereof;
•the outcome of any legal proceedings involving or investigations of our controlling shareholder or his affiliates;
September 30, 2024 | 4
•our controlling shareholder’s intentions regarding ownership of our common stock, including any acquisitions, dispositions or transactions relating to our common stock;
•the impact of any future pandemic or breakout of infectious disease, and of businesses’ and governments’ responses to such pandemic on our operations, personnel, commercial activity, and supply and demand across our and our customers’ and suppliers’ business;
•the variable nature of CVR Partners, LP’s distributions, including the ability of its general partner to modify or revoke its distribution policy, or to cease making cash distributions on its common units;
•changes in tax and other laws, regulations and policies, including, without limitation, actions of the Biden Administration or future administrations that impact conventional fuel operations or favor renewable energy projects in the United States.;
•changes in CVR Partners, LP’s treatment as a partnership for U.S. federal income or state tax purposes;
•our ability to procure or recover under our insurance policies for damages or losses in full or at all;
•labor supply shortages, labor difficulties, labor disputes or strikes and the impacts thereof;
•impacts of any decision to return a unit back to hydrocarbon processing following renewable conversion; and
•the factors described in greater detail under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and our other filings with the U.S. Securities and Exchange Commission (“SEC”).
All forward-looking statements contained in this Report only speak as of the date of this Report. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that occur after the date of this Report, or to reflect the occurrence of unanticipated events, except to the extent required by law.
Information About Us
Investors should note that we make available, free of charge on our website at www.CVREnergy.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent news releases. We may use the Investor Relations section of our website to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. Documents and information on our website are not incorporated by reference herein.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.
September 30, 2024 | 5
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CVR ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
Cash and cash equivalents (including $ | $ | $ | |||||||||
| Reserved funds for debt payment | |||||||||||
Accounts receivable, net (including $ | |||||||||||
Inventories (including $ | |||||||||||
Prepaid expenses (including $ | |||||||||||
Other current assets (including $ | |||||||||||
| Total current assets | |||||||||||
Property, plant, and equipment, net (including $ | |||||||||||
Other long-term assets (including $ | |||||||||||
| Total assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
Current portion of long-term debt and finance lease obligations | $ | $ | |||||||||
Accounts payable (including $ | |||||||||||
Other current liabilities (including $ | |||||||||||
| Total current liabilities | |||||||||||
| Long-term liabilities: | |||||||||||
Long-term debt and finance lease obligations, net of current portion (including $ | |||||||||||
| Deferred income taxes | |||||||||||
Other long-term liabilities (including $ | |||||||||||
| Total long-term liabilities | |||||||||||
Commitments and contingencies (See Note 13) | |||||||||||
| CVR Energy stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in-capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
Treasury stock, | ( | ( | |||||||||
Total CVR stockholders’ equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
September 30, 2024 | 6
CVR ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, except per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
Cost of materials and other | |||||||||||||||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Selling, general and administrative expenses (exclusive of depreciation and amortization) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
| Loss on asset disposal | |||||||||||||||||||||||
| Operating (loss) income | ( | ||||||||||||||||||||||
Other (expense) income: | |||||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| (Loss) income before income tax benefit | ( | ( | |||||||||||||||||||||
| Income tax (benefit) expense | ( | ( | |||||||||||||||||||||
| Net (loss) income | ( | ||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interest | |||||||||||||||||||||||
| Net (loss) income attributable to CVR Energy stockholders | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Basic and diluted (loss) earnings per share | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
September 30, 2024 | 7
CVR ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited)
| Common Stockholders | |||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except share data) | Shares Issued | $ Value Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total CVR Stockholders’ Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to CVR Energy stockholders | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Distributions from CVR Partners to its public unitholders | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to CVR Energy stockholders | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Distributions from CVR Partners to its public unitholders | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net (loss) income | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Dividends paid to CVR Energy stockholders | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Distributions from CVR Partners to its public unitholders | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Common Stockholders | |||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except share data) | Shares Issued | $ Value Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total CVR Stockholders’ Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to CVR Energy stockholders | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Distributions from CVR Partners to its public unitholders | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to CVR Energy stockholders | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Distributions from CVR Partners to its public unitholders | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Dividends paid to CVR Energy stockholders | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Distributions from CVR Partners to its public unitholders | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
September 30, 2024 | 8
CVR ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| (in millions) | 2024 | 2023 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net (loss) income | $ | $ | |||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Share-based compensation | |||||||||||
| Unrealized loss on derivatives, net | |||||||||||
Income from equity method investments | ( | ( | |||||||||
| Return from equity method investment earnings | |||||||||||
| Other items | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Current assets and liabilities | ( | ||||||||||
| Other long-term assets and liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Turnaround expenditures | ( | ( | |||||||||
| Return of equity method investment | |||||||||||
| Proceeds from sale of assets | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Principal payments on senior secured notes | ( | ||||||||||
| Dividends to CVR Energy’s stockholders | ( | ( | |||||||||
| Distributions to CVR Partners’ noncontrolling interest holders | ( | ( | |||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net (decrease) increase in cash, cash equivalents, reserved funds and restricted cash | ( | ||||||||||
| Cash, cash equivalents, reserved funds and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
September 30, 2024 | 9
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Organization and Nature of Business
Organization
CVR Energy, Inc. (“CVR Energy”, “CVR”, “we”, “us”, “our”, or the “Company”) is a diversified holding company primarily engaged in the petroleum refining and marketing industry (the “Petroleum Segment”) and the nitrogen fertilizer manufacturing industry through its interest in CVR Partners, LP, a publicly traded limited partnership (the “Nitrogen Fertilizer Segment” or “CVR Partners”). The Petroleum Segment refines and markets high value transportation fuels primarily in the form of gasoline and diesel fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (“UAN”) and ammonia. We also produce and market renewable diesel. CVR’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “CVI”. Icahn Enterprises L.P. and its affiliates (“IEP”) owned approximately 66 % of the Company’s outstanding common stock as of September 30, 2024.
CVR Partners, LP
Interest Holders - As of September 30, 2024, public common unitholders held approximately 63 % of CVR Partners’ outstanding common units and CVR Services, LLC (“CVR Services”), a wholly owned subsidiary of CVR Energy, held the remaining approximately 37 % of CVR Partners’ outstanding common units. In addition, CVR Services held 100 % of the interest in CVR Partners’ general partner, CVR GP, LLC, which held a non-economic general partner interest in CVR Partners as of September 30, 2024. The noncontrolling interest reflected on the Condensed Consolidated Balance Sheets of CVR is only impacted by the results of and distributions from CVR Partners.
Subsequent Events
The Company evaluated subsequent events, if any, that would require an adjustment to the Company’s condensed consolidated financial statements or require disclosure in the notes to the condensed consolidated financial statements through the date of issuance of the condensed consolidated financial statements. Where applicable, the notes to these condensed consolidated financial statements have been updated to discuss all significant subsequent events which have occurred.
(2) Basis of Presentation
The accompanying condensed consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), include the accounts of the Company and its majority-owned direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. Certain notes and other information have been condensed or omitted from the condensed consolidated financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the December 31, 2023 audited consolidated financial statements and notes thereto included in CVR Energy’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).
Our condensed consolidated financial statements include the consolidated results of CVR Partners, which is defined as a variable interest entity (“VIE”). As the 100 % owner of the general partner of CVR Partners, the Company has the sole ability to direct the activities that most significantly impact the economic performance of CVR Partners and is considered the primary beneficiary.
In the opinion of the Company’s management, the accompanying condensed consolidated financial statements reflect all adjustments that are necessary for fair presentation of the financial position and results of operations of the Company for the periods presented. Such adjustments are of a normal recurring nature, unless otherwise disclosed.
The condensed consolidated financial statements are prepared in conformity with GAAP, which requires management to make certain estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Results of operations and cash flows for the interim periods presented are not necessarily indicative of the results that will be realized for the year ending December 31, 2024 or any other interim or annual period.
September 30, 2024 | 10
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Recent Accounting Pronouncements - Accounting Standards Issued But Not Yet Implemented
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures that reflect how operations and related tax risks, as well as how tax planning and operational opportunities, affect the tax rate and prospects for future cash flows. This standard is effective for the Company’s annual period beginning January 1, 2025 with early adoption permitted. While the Company does not expect adoption will have a material impact on its consolidated financial statements, it currently expects additional disclosures will be included for its annual and interim reporting periods beginning December 31, 2025. The Company does not intend to early adopt this ASU.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which includes requirements for more robust disclosures about significant segment expenses and information used in assessing segment performance on an annual and interim basis. This standard is effective for the Company’s annual period beginning January 1, 2024 and interim periods beginning January 1, 2025 and should be applied retrospectively to all comparative periods. Early adoption is permitted. While the Company continues to evaluate the effects of adopting this new accounting guidance, it currently expects additional disclosures will be included for its annual and interim reporting periods beginning December 31, 2024.
(3) Inventories
Inventories consisted of the following:
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
| Finished goods | $ | $ | |||||||||
| Raw materials | |||||||||||
| In-process inventories | |||||||||||
| Parts, supplies and other | |||||||||||
| Total inventories | $ | $ | |||||||||
(4) Property, Plant, and Equipment
Property, plant, and equipment consisted of the following:
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
| Machinery and equipment | $ | $ | |||||||||
| Buildings and improvements | |||||||||||
| Land and improvements | |||||||||||
| Furniture and fixtures | |||||||||||
| Construction in progress | |||||||||||
| Other | |||||||||||
| Less: Accumulated depreciation and amortization | ( | ( | |||||||||
| Total property, plant, and equipment, net | $ | $ | |||||||||
For the three and nine months ended September 30, 2024, depreciation and amortization expense related to property, plant, and equipment was $63 million and $177 million, respectively, compared to $59 million and $165 million for the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2024, capitalized interest was $2 million and $5 million, respectively, compared to $2 million and $6 million for the three and nine months ended September 30, 2023, respectively.
September 30, 2024 | 11
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
(5) Equity Method Investments
We have variable interest in certain entities for which we have applied the VIE model under FASB ASC Topic 810, Consolidation and determined that these entities are variable interest entities. While we concluded we are not the primary beneficiary of these entities, we do have significant influence over their operating and financial policies and, therefore, applied the equity method of accounting for the respective investments. These investments are presented within Other long-term assets on our condensed consolidated financial statements:
•CVR-CapturePoint Parent, LLC (“CVRP JV”) - As part of a series of agreements entered into by our subsidiaries with unaffiliated parties with the objective to monetize certain tax credits under Section 45Q of the Internal Revenue Code of 1986 (“45Q Transaction”), we received a 50 % interest in CVRP JV in connection with a modification to a carbon oxide contract (“CO Contract”) with a customer.
•Enable South Central Pipeline, LLC (“Enable JV”) - Through our subsidiaries, we own a 40 % interest in Enable JV, which operates a 12 -inch 26 -mile crude oil pipeline with a capacity of approximately 80,000 barrels per day that is connected to the Wynnewood Refinery. The remaining interest in Enable JV is owned by Energy Transfer LP.
•Midway Pipeline, LLC (“Midway JV”) - Through our subsidiaries, we own a 50 % interest in Midway JV, which operates a 16 -inch 99 -mile crude oil pipeline with a capacity of approximately 131,000 barrels per day which connects the Coffeyville Refinery to the Cushing, Oklahoma oil hub. The remaining interest in Midway JV is owned by Plains Pipeline, L.P.
| (in millions) | CVRP JV | Enable JV | Midway JV | Total | |||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | |||||||||||||||||||
Cash distributions (1) | ( | ( | ( | ( | |||||||||||||||||||
| Equity income | |||||||||||||||||||||||
| Balance at March 31, 2024 | |||||||||||||||||||||||
| Cash distributions | ( | ( | ( | ( | |||||||||||||||||||
| Equity income | |||||||||||||||||||||||
| Balance at June 30, 2024 | |||||||||||||||||||||||
| Cash distributions | ( | ( | ( | ( | |||||||||||||||||||
| Equity income | |||||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | |||||||||||||||||||
(1)Includes a $2 million distribution to CVR Partners subsidiaries related to CVRP JV exceeding certain carbon oxide capture and sequestration milestones during 2023.
(6) Leases
Balance Sheet Summary as of September 30, 2024 and December 31, 2023
The following tables summarize the right-of-use (“ROU”) asset and lease liability balances for the Company’s operating and finance leases at September 30, 2024 and December 31, 2023:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| (in millions) | Operating Leases | Finance Leases | Operating Leases | Finance Leases | |||||||||||||||||||
| ROU assets, net | |||||||||||||||||||||||
| Pipelines and storage | $ | $ | $ | $ | |||||||||||||||||||
| Railcars | |||||||||||||||||||||||
| Real estate and other | |||||||||||||||||||||||
| Lease liability | |||||||||||||||||||||||
| Pipelines and storage | |||||||||||||||||||||||
| Railcars | |||||||||||||||||||||||
| Real estate and other | |||||||||||||||||||||||
September 30, 2024 | 12
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Lease Expense Summary for the Three and Nine Months Ended September 30, 2024 and 2023
We recognize operating lease expense on a straight-line basis over the lease term within Direct operating expenses (exclusive of depreciation and amortization) and Cost of materials and other and finance lease expense on a straight-line basis over the lease term within Depreciation and amortization. For the three and nine months ended September 30, 2024 and 2023, we recognized lease expense comprised of the following components:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | |||||||||||||||||||
| Finance lease expense: | |||||||||||||||||||||||
| Amortization of ROU asset | |||||||||||||||||||||||
| Interest expense on lease liability | |||||||||||||||||||||||
| Short-term lease expense | |||||||||||||||||||||||
Lease Commitments Not Yet Commenced
Coffeyville Resources Nitrogen Fertilizer, LLC (“CRNF”), a subsidiary of CVR Partners, is party to an On-Site Product Supply Agreement with Messer LLC. Based on terms outlined in this agreement, the Company expects this contract to be recorded as a finance lease with approximately $21 million being capitalized upon lease commencement when the item is placed in service, which is currently expected to occur in the fourth quarter of 2024. Refer to Part II, Item 8, Note 6 (“Leases”) of our 2023 Form 10-K for further information.
(7) Other Current Liabilities
Other current liabilities were as follows:
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
| Accrued Renewable Fuel Standard (“RFS”) obligation | $ | $ | |||||||||
| Personnel accruals | |||||||||||
| Accrued taxes other than income taxes | |||||||||||
| Deferred revenue | |||||||||||
| Accrued interest | |||||||||||
| Share-based compensation | |||||||||||
| Accrued income taxes | |||||||||||
| Other accrued expenses and liabilities | |||||||||||
| Total other current liabilities | $ | $ | |||||||||
September 30, 2024 | 13
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
(8) Long-Term Debt and Finance Lease Obligations
Long-term debt and finance lease obligations consisted of the following:
| (in millions) | September 30, 2024 | December 31, 2023 | |||||||||
| CVR Energy: | |||||||||||
| $ | $ | ||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||
| Total CVR Energy debt | |||||||||||
Petroleum Segment: | |||||||||||
Total Petroleum Segment finance lease obligations, net of current portion | |||||||||||
Nitrogen Fertilizer Segment: | |||||||||||
| Unamortized debt issuance costs | ( | ( | |||||||||
Total Nitrogen Fertilizer Segment debt | |||||||||||
| Total long-term debt and finance lease obligations, net of current portion | |||||||||||
| Current portion of long-term debt and finance lease obligations | |||||||||||
| Total long-term debt and finance lease obligations, including current portion | $ | $ | |||||||||
Credit Agreements
| (in millions) | Total Available Borrowing Capacity | Amount Borrowed as of September 30, 2024 | Outstanding Letters of Credit | Available Capacity as of September 30, 2024 | Maturity Date | ||||||||||||||||||||||||
CVR Energy: | |||||||||||||||||||||||||||||
CVR Energy’s Amended and Restated ABL Credit Agreement (“CVR Energy ABL”) (1) | $ | $ | $ | $ | June 30, 2027 | ||||||||||||||||||||||||
Nitrogen Fertilizer Segment: | |||||||||||||||||||||||||||||
CVR Partners’ Credit Agreement (“CVR Partners ABL”) | $ | $ | $ | $ | September 26, 2028 | ||||||||||||||||||||||||
(1)As permitted under the CVR Energy ABL, certain subsidiaries of the Company entered into an Incremental Commitment Agreement on September 25, 2024 for an amount of $70 million, which increased the total aggregate principal amount available under the CVR Energy ABL from $275 million to $345 million.
CVR Energy
2029 Notes - On December 21, 2023, CVR Energy completed the issuance of $600 million in aggregate principal amount of 8.50 % Senior Notes, due 2029 (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually in arrears on February 15 and August 15 each year, commencing on February 15, 2024. The 2029 Notes mature on January 15, 2029, unless earlier redeemed or purchased. See Part II, Item 8 of the 2023 Form 10-K for further details of the 2029 Notes.
In relation to the issuance of the 2029 Notes, the Company received $598 million of net cash proceeds, net of underwriting fees and certain other third-party fees and expenses associated with the offering. These proceeds were reserved for the payment of the Company’s 5.25 % Senior Notes, due 2025 (the “2025 Notes”) on February 15, 2024, and were presented in Reserved funds for debt payment on our Condensed Consolidated Balance Sheet as of December 31, 2023.
2025 Notes - On December 21, 2023, the Company delivered a notice of redemption to the holders of its 2025 Notes that all outstanding amounts of the 2025 Notes, plus any accrued and unpaid interest to the redemption date, would be redeemed on
September 30, 2024 | 14
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
February 15, 2024. As such, the outstanding balance of the $600 million principal amount of the 2025 Notes was classified as short-term as of December 31, 2023. On February 15, 2024, CVR Energy redeemed all of the outstanding 2025 Notes, at par, and settled accrued interest of approximately $16 million through the date of redemption. As a result of this transaction, the Company recognized in Interest expense, net a $1 million loss on extinguishment of debt on our Condensed Consolidated Statements of Operations for the nine months ended September 30, 2024, which consisted of the write-off of unamortized deferred financing costs.
Covenant Compliance
The Company and its subsidiaries were in compliance with all covenants under their respective debt instruments as of September 30, 2024.
(9) Revenue
The following tables present the Company’s revenue disaggregated by major product, which include a reconciliation of the disaggregated revenue by the Company’s reportable segments:
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Petroleum Segment (1) | Nitrogen Fertilizer Segment | Other / Elimination | Consolidated | Petroleum Segment (1) | Nitrogen Fertilizer Segment | Other / Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||
| Gasoline | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Distillates (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Ammonia | |||||||||||||||||||||||||||||||||||||||||||||||
| UAN | |||||||||||||||||||||||||||||||||||||||||||||||
| Urea products | |||||||||||||||||||||||||||||||||||||||||||||||
Freight revenue (3) | |||||||||||||||||||||||||||||||||||||||||||||||
Other products (4) | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from product sales | |||||||||||||||||||||||||||||||||||||||||||||||
| Crude oil sales | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
September 30, 2024 | 15
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Petroleum Segment (1) | Nitrogen Fertilizer Segment | Other / Elimination | Consolidated | Petroleum Segment (1) | Nitrogen Fertilizer Segment | Other / Elimination | Consolidated | |||||||||||||||||||||||||||||||||||||||
| Gasoline | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Distillates (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Ammonia | |||||||||||||||||||||||||||||||||||||||||||||||
| UAN | |||||||||||||||||||||||||||||||||||||||||||||||
| Urea products | |||||||||||||||||||||||||||||||||||||||||||||||
Freight revenue (3) | |||||||||||||||||||||||||||||||||||||||||||||||
Other products (4) | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from product sales | |||||||||||||||||||||||||||||||||||||||||||||||
| Crude oil sales | |||||||||||||||||||||||||||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
(1)The Petroleum Segment may incur broker commissions or transportation costs in connection with certain sales. The broker costs are expensed since the contract durations are less than one year. Transportation costs are accounted for as fulfillment costs and are expensed as incurred.
(2)Distillates consist primarily of diesel fuel, kerosene, jet fuel, and renewable fuels.
(3)Freight revenue recognized by the Petroleum Segment is primarily tariff and line loss charges rebilled to customers to reimburse the Petroleum Segment for expenses incurred from a pipeline operator. Freight revenue recognized by the Nitrogen Fertilizer Segment represents the pass-through finished goods delivery costs incurred prior to customer acceptance and are reimbursed by customers. An offsetting expense for freight is included in Cost of materials and other.
(4)Other products for the Petroleum Segment consists primarily of (i) feedstock, heavy oils, and liquified petroleum gas sales, (ii) sulfur credits, and (iii) pipeline and processing fees. For the Nitrogen Fertilizer Segment, other products consists of sales of (i) nitric acid and (ii) carbon oxide, including sales made in connection with the 45Q Transaction and the noncash consideration received, which is recognized as the performance obligation associated with the CO Contract is satisfied over its term through April 2030. Revenue, if any, from the CO Contract is recognized over time based on carbon oxide volumes measured at delivery. The Other/Elimination columns include certain credits related to renewable fuel activity and eliminations of intercompany transactions.
Remaining Performance Obligations
We have spot and term contracts with customers and the transaction prices are either fixed or based on market indices (variable consideration). We do not disclose remaining performance obligations for contracts that have terms of one year or less and for contracts where the variable consideration was entirely allocated to an unsatisfied performance obligation. As of September 30, 2024, these contracts have a remaining duration of less than one year .
As of September 30, 2024, the Nitrogen Fertilizer Segment had approximately $9 million of remaining performance obligations for contracts with an original expected duration of more than one year. The Nitrogen Fertilizer Segment expects to recognize $1 million of these performance obligations as revenue by the end of 2024, $4 million during 2025, an additional $3 million in 2026, and the remaining balance in 2027.
September 30, 2024 | 16
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Contract Balances
The following table provides the balance sheet location and amounts of deferred revenue from contracts with customers for the Nitrogen Fertilizer Segment:
| Contract Balance Type | Balance Sheet Location | September 30, 2024 | December 31, 2023 | |||||||||||||||||
| Deferred revenue | Other current liabilities | $ | $ | |||||||||||||||||
| Long-term deferred revenue | Other long-term liabilities | |||||||||||||||||||
During the nine months ended September 30, 2024 and 2023, the Company recognized revenue of $14 million and $46 million, respectively, that was included in the deferred revenue balances as of December 31, 2023 and December 31, 2022, respectively.
(10) Derivative Financial Instruments
The following outlines the net notional buy (sell) position of our commodity derivative instruments held as of September 30, 2024 and December 31, 2023:
| (in thousands of barrels) | Commodity | September 30, 2024 | December 31, 2023 | ||||||||||||||
| Forwards | Crude | ||||||||||||||||
| Swaps | NYMEX Diesel Cracks (1) | ( | |||||||||||||||
| Swaps | NYMEX RBOB Cracks | ( | |||||||||||||||
| Swaps | NYMEX 2-1-1 Cracks | ( | |||||||||||||||
| Futures | Soybean Oil | ( | |||||||||||||||
(1)As of September 30, 2024, the Company held offsetting NYMEX Diesel Crack commodity buy and sell positions of approximately 4 million barrels.
The following outlines the balances of our commodity derivative instruments after the effects of contract netting and allocation of collateral and their classifications on our Condensed Consolidated Balance Sheets. Refer to Note 11 (“Fair Value Measurements”) for the gross amounts of the commodity derivative instruments (before the effects of contract netting and allocation of collateral):
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| (in millions) | Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||
Other current assets | $ | $ | $ | $ | |||||||||||||||||||
Other long-term assets | |||||||||||||||||||||||
Other current liabilities | |||||||||||||||||||||||
The following table represents CVR Energy’s incurred realized and unrealized net gains (losses) from derivative activities, recorded in Cost of materials and other on the Condensed Consolidated Statements of Operations:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Commodity derivative instruments | $ | $ | ( | $ | $ | ( | |||||||||||||||||
September 30, 2024 | 17
CVR ENERGY, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
(11) Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis
The following tables set forth information about the assets and liabilities measured at fair value on a recurring basis, by input level, as of September 30, 2024 and December 31, 2023. Such amounts are presented on a gross basis, before the effects of netting and allocation of collateral. The Company elected to offset the fair value amounts recognized for derivative assets and liabilities executed with the same counterparty under a master netting arrangement, including fair value amounts recognized for the right to reclaim or the obligation to return cash collateral.
| September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | Total gross fair value | Contract netting | Collateral netting (1) | Net value | |||||||||||||||||||||||||||||||||||||
| (in millions) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||
| Commodity derivative instruments | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||
| Commodity derivative instruments | ( | ||||||||||||||||||||||||||||||||||||||||
| RFS | |||||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
| Fair Value Hierarchy | Total gross fair value | Contract netting | Collateral netting (1) | Net value | |||||||||||||||||||||||||||||||||||||
| (in millions) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||