CVI - Earnings call transcript Q3 2020

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Operator

Greetings, and welcome to the CVR Energy’s Third 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 [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Senior Manager, FP&A and Investor Relations. sir. you, Thank

begin. You may

Richard Roberts

Dave Kristine. you Good Energy very you, Financial today everyone. quarter Tracy Executive Jackson, our afternoon, us this appreciate Chief are me joining With CVR earnings much our afternoon Chief XXXX Officer; Thank Officer; term call. We Lamp, this and statements for third Dave third me let quarter Officer, of defined conference may Prior forward-looking other is that contain call our that securities Landreth, Commercial to federal management. as results, remind members Chief laws. discussing XXXX under you our our

this made of that For purpose, deemed this any may facts are statements to statements during not forward-looking statements. that are be be call historical

with cautioned be Commission statements may Exchange that earnings factors and affected in are our set these Securities our the latest and important You filings release. by forth in

result, the from except new undertake any extent As includes by result as differ or statements. results required to obligation a discussed operations various forward-looking to also a This may We or the law. measures. otherwise, publicly future update events financial forward-looking whether no results materially non-GAAP call the actual statements, information, in of

For including the directly included SEC be turn during and reconciliation I'll the GAAP the and non-GAAP such for most period, release are disclosures the third will Dave. said, in discussed financial filed to measures, quarter call XXXX with that the to comparable our call. earnings related we measures, over that to Form With XX-Q

Dave Lamp

light Delek preserving a prices by the in crack pandemic, of the presented the and all of and loss ongoing the everyone, In the quarter. $X.XX. a million. the in quarter remains our call. key quarter of balance decline spreads, our focus. Narrower to challenges reported business earnings negative Richard. million EBITDA third Good joining a $XX results elevated afternoon, loss net was Yesterday, our for impacted Thank thank investment and our share for for you you, per rim sheet consolidated we $XXX

third As in XXXX. project a board not returns the did the could thinks potential quarter of of shortly dividend for will diesel opportunities shareholders. acquisition Board result, better The offer discuss renewable the to Directors that I approve a Wynnewood

throughput to Across capabilities per was last barrels to petroleum as per compared 'XX. barrel third $X.XX to and was at over $X.XX quarter of per barrel. segment, barrel decline day TI weather the The the period. for in a approximately as quarter year third to in compared barrel to the WCS the light of rates deteriorated compared $XX.XX quarter experienced for barrel under differential in tight The the barrel in X XXX,XXX also averaged differential XXX,XXX very same WTI barrel modestly quarter quarter the throughput $XX compared the nearly by per naphtha related Group impacted the of prior $XX.XX a differential third running WTI crude quarter a 'XX. third the $X.XX in in per $X.XX per a throughput per averaged crude constrained of $X.XX third $X.XX compared Brent the outages the our slate. combined 'XX, the Cushing quarter. to some was For Midland was per total that the August for benchmark in barrel power day in third ago. TI as significantly board, period X-X-X quarter crack crack both have And facilities favored year. year We Total our from barrels spreads differentials differentials crude

crude on quarter oil product light process. yield for the Our was XX%

crude last approximately throughputs barrels same for the XXX,XXX the prior oil total, in period was of total third year In percentage day during a quarter Our compared the distillate gathered of XXX,XXX crude the approximately day XXXX period. as to year. as compared XX% of oil to per we in XX% barrels quarter per yield

Those in prices drop to barrel. volumes came our prices. the production back quickly second fell gathering Our a volumes recovered regions quarter around significantly $XX in as crude in the with

XXX,XXX Our current ammonia segment, barrels per In at and gathering strong facilities day. volumes XX% fertilizer utilization East had Dubuque. at Coffeyville are we over the both at of XX%

achieve both favorable. Partners our we I volumes Although also were CVR soft, demand nitrous a fertilizer solid CVR nitric cost fertilizer plants, for progress complete, two the emissions oxide conditions carbon highlight fall its over reducing emissions five made oxide in savings the first of remained facility and to emissions over been is UAN The has ammonia prices East like Between expect would abated million -- achievements the largely harvest initiatives. year-over-year ammonia recently. reduce per offset tons of its the additional past run. acid equivalent by And sales Coffeyville facility The metric at its with majority Partners the the announced one year. higher recently of plants. already environmental by we've for its and Weather credits for to have able carbon dioxide Dubuque some years. now certified

let Now, additional over to me to the financial Tracy highlights. call turn discuss

Tracy Jackson

Thank good Dave, you, and afternoon everyone.

$X.XX favorable and Delek loss million. valuation per our to and million $XXX mark-to-market $XX of inventory loss net related a $XX impact diluted of of loss includes consolidated million in investment Our share

rate same our million been XX% the was prior was million to narrower impacts, crack year-over-year third by EBITDA significantly the quarter quarter lower have $X.XX. XXXX compared period. XXXX tax effective these throughput compared decline volumes. for $XXX in of year approximately loss XXXX per prices spreads, The The and segments elevated RINs was EBITDA diluted driven third for quarter ‘XX. $XX the XX% third for period would in The the petroleum Excluding share of to

This gains million current we upon approximately quarter third impact barrel RINs $XX.XX margin $X a RINs $X.XX XXXX derivative impacts same RINs plans, of valuation year-over-year in million. which expense XXXX increase from significant the barrel X and quarter of to In the product SG&A quarter refined segment’s expense XXXX. derivatives. million, Canadian was due The consolidated direct $XX in includes the reduced $X.XX valuation the $XX declined and $X.XX expense of compared inventory impacts third was $X.XX associated gains prior lower The per million In was period. of benefit been by inventory Total obligation barrel petroleum operating million XX%. compares the and same total crude $XX to for total million, was the of RINs recent ‘XX, and third gains. XXXX, operating prior quarter prices our efforts quarter unrealized that million impact $X quarter cash will have had the increase a XXXX, $XX excluding period million EBITDA RINs gains segment third quarter lower be approximately oiil expenses decline. in $XXX Based throughput to inventory prices petroleum during in expenses period. market compared negative positive of XX% our renewable impact we and for would petroleum Despite oil Excluding valuation of through quarter excluding in of increase crude per a per throughput, of of our our costs. third year now margins the prior with the the million, RINs barrel period quarter per during as rate of XXXX, $XXX in in prices, XX% barrel. last last of production year inventory year. totaled period our XXXX quarter the prices of rate of negative quarter $X included The in elevated Derivative refining the most at $XX as per generated the third quarter compared cash which approximately the to $X.XX which third a to the million XX% capture in volume to our XXXX. declined continued to due of estimate The of reduction the for year the item XXXX in the third for was segment’s to to impacting XXXX by year. unrealized third an same compared in

EBITDA and or per expenses, and to $X.XX and net unit EBITDA and offset prices $XX year-over-year ammonia $XX For segment common operating primarily for operating third due million improvement million. fertilizer per loss turnaround lower an or million EBITDA $XX units loss of quarter $X loss to net of XXXX of compared reported XXXX, $X.XX This and the lower operating quarter was UAM. and is of volumes higher the The losses of sales of by of million million. somewhat $X common million $XX and third of

total environmental segment. be fertilizer the is of and for $X and $XXX capital $XXX During diesel partnership in We $XX in to an million million the and not to approximately than liability. operations capital million spending capital the environmental XXXX comprise to $XX in $XX for million $XX $XXX segment for the approximately spending positive excludes Total quarter X.X consolidated million capitalized the third free Working of turnaround fertilizer $X.X of and for year-to-date is crude Total and $XX million. not million, just was million XXXX turnaround due $XX Of significant part of the to capital including million. approximately $XXX spending and capital flow to quarter, to the which to million turnaround expect was distribution estimate consolidated preparation accrued provided in payables repurchased units in petroleum maintenance million, in over from petroleum third CVR source million XXXX remainder of the spending in million for segment an this quarter total, includes and renewable segment. plan quarter less in $X of the million, planned of related to increase project the was currently turnaround was expected expenditures for XXXX. and which lease million. a $XX from We common the third in increase The do million capital the $XX million quarter spending be Cash for XXXX. is of million in Partners quarter Wynnewood. did the $XX its $XX declare $XX cash by XXXX XXXX at expenditures maintenance

strong times, approximately balance basis, September excluding sheet. and Turning consolidated in a month CVR EBITDA. at the of approximately net our debt On million the balance $XXX $XX million includes which CVI with on level was ended basis, the debt we a to X.X standalone quarter segment. EBITDA the XX XX, to At trailing Partners a cash fertilizer

cash, of securities we September which for under $XXX liquidity, CVR As availability had was excluding included $XXX of sale of million of of comprised available million and ADL base million of cash the XXth, the $XXX approximately approximately in of million. million $XXX Partners, less approximately barn $XXX

we expenses fourth total XXXX, between million $XX be to direct per the to $X our and to XXX,XXX estimate for quarter be and ahead Looking petroleum capital million. and between $XX approximately day, of throughput XXX,XXX spending $XX we total to expect segment, barrels range to operating total million million

XX% fertilizer between XXX%. be we our For the segment, estimate ammonia rate to utilization and

expenses We million spending operating which million. expect project should Wynnewood impact capital the $XX will investments $X to $XX other inventory is you. that expected back turn million be and to With be million. to $X and call diesel range spending, in the I between approximately $XX Corporate capital million, and $XX Dave, between includes and to renewable direct million total excluding

Dave Lamp

quarter The and reduction to to due XXXX. crude demand the of refined products continued pandemic on Tracy. oil product you, in in weigh heavily third the refined Thank ongoing

we to the do to difficult can everything continue this through We environment. business manage

safe prices our decline controlling near-term, continues the domestic In market strong tightened focus and Crude oil Our position. cautious crude as shale outlook in and a on considerably to maintaining balance reliable fundamentals we sheet as operating remains that our oil with costs fundamentals and -- be in liquidity a see. manner, production. market strong have the differentials

uncompleted for well, recovers. to now inventories likely production rise Inventory as a barrel. leisure fuel jet oil distillate with to need fuel inventories wells to levels. production to in jet US of while exports product of decline and wells expect and drilled fuel to of Crude up need likely of destruction prices average XX% until oil product under demand. are fuel to $XX inventories to depress. jet demand per for than see year more is We have depletion but permanent to demand cuts to refinery fuels. WTI we remain the differentials total new air run loss benefited mainly The jet of business prices due will crude for travel refined and/or transportation demand weak remains elevated, weak incentivize recover oil are pre-COVID additional We half Ultimately, shutdowns differentials at recover. to crack order total to made and will travel expected returning further for shale declines. within remain accounts Gasoline demand stem improve. five from need the primarily Commercial

profitability work we As these our at Cushing, to selling reduce and premium a in of and is maximum conditions, corporate maximize WCS to costs. crude generation operating continuing production, slate, plants running XXX% the our light CVI under maximizing RIN maximizing while

We our continue to diversify explore opportunities business. to

at diesel complete to Wynnewood and engineering work long detailed approval Board project equipment renewable have ordered received refinery. have lead the for the We

phase X to multi also renewable conversion hydrocracker the at maximum processing. production the the refinery for retool allow approach our in the With of will evaluating Phase diesel. X, an with are We be strategy, to for of renewable Wynnewood Phase we diesel existing currently condensate

agency XXXX providing Fuel applications final view credits Tax would the have diesel all May recoup optionality. and per can dollar the Credit early us production, we 'XX. generated unit Phase year We Standard Between Blenders RINs Carbon of receive Board for end 'XX. the Low and renewable is of is Credit, we could submitted believe by We the approval, a X X Blenders This environmental the approval, Pending of then gallon easily service market materially to months. feedstock that If XX significant unit state initial by costs. online fairly would State through and as have portion our return of Tax to July hydrocarbon months minimum final XX in us receive at as Oklahoma the to permits approval. have option of state we investment conditions change we to authorized with the currently of allow for

our would remain other the group government continue of if grow incentives attractive cracks hand, diesel in at like cooking X intensity lower an unit to process used oil, business renewable these us mix of we installation the Wynnewood additional three fats corn would be Phase phases. supportive, allow On low carbon oil. two pretreatment inedible to involve to and feedstocks, that animal a have projects and

excess the project at would Coffeyville Coffeyville currently we existing to Finally, pursue a the hydro renewable similar at if hydrogen an in project pressure refinery. X, we refinery Phase We approved, high the for diesel could that have at renewable capacity and similar Wynnewood. treater repurpose diesel production

the many into would expanding fuels and of market, needed part to be a consolidation have like we to addition that we in the is refining space In that renewable times stated further we process. believe

including potential number to While report interested stake new this opportunities, we at we don't a XX% time, in anything remain IV. Delek of potential and in PADD in our have nearly assets

ton. prices the with $XXX and $X.XX differential the per barrel quarter quarter-to-date averaged WTI. differential increased barrel $X.XX WTL ton, Ammonia WCS per $X.XX UAN a have cracks and Cushing will as at Cushing $X.XX of and fertilizer XX% per also per to has prices the prices $X.XX under under X spread of fourth WTI; $XXX WTI Brent-TI has believe to Midland Corn $XXX over are averaged have differential to have since at and the increased remain Looking barrel XXXX, X-X-X- $XXX per follows: averaged Group metrics while July prices by we soybean follow. of

versus of X and the under have barrel RINs refineries WCS many RINs environment, competitively where cost $X.XX were remain per the Quarter-to-date are peers. In curve per averaged WTI. all cracks competing TI and biodiesel the barrel, ethanol Group yesterday, our we positioned averaged on was $X.XX. of As $X.XX have $X.XX $X.XX Brent X-X-X- was this

basis. believe And represent with petitions year. GAAP While RINs We Circuit earlier refined exemptions vacate largest XXth remain it aside of before, I recent denial now when said crude three it product one ruled all have wrong compressed cost prices significantly this got small market single little the EPA's blanket refinery for of volatility, disappointed were with have been refineries the as by overpriced the and from oil. we to

review waived We believe Circuit serving rulings Congress we clearly refineries refinery intended national ruling policy, the Court, the of by rural redistribution as of have small from that, RVO. to misguided RFS Supreme this a the and exceeds for small that authority. this sets With XXth questions. regulation waiver especially would without and provision refinery financial operator, protect When regulation, RFS other we're ruling ready conflicts device RFS result the areas sought US XXth with the which was passed, Circuit

Operator

first Our Instructions] question comes Phil JPMorgan. of line with [Operator the Gresh from

Phil Gresh

just sounds quarter into the on follow-up the like I third Difficulty]… headwinds [Technical to it question, Obviously, want RIN First discussion. here

Dave Lamp

You're out, cutting Phil.

Phil Gresh

are XXXX With relative RINs viewing in provided? up headwind XXXX having the guidance into here potential you quarter, how prices the fourth gone the you to that

Dave Lamp

couple depending Well, an directions. a election could factors. on of those One results, RINs multiple I go think that, is

the on other longer-term there's them 'XX, of projects but sure of has I'm an to announced RINs the market. anybody gallons new several the billion number announced about very of to starting diesel thing of renewable is think I'd new in X million say 'XX now, renewable much, represents number but is analyzed in not really I up the and the the X that diesel this about of with market. process been RINs over astounding

and RINs the all But in So renewable that XXXX, term, RINs that them RINs, renewable even market for down. today. trend are the hitting see volume ethanol of than between you're selling than bring will that, the I think on are lower-priced the RINs future of parity further they and now will think and longer to forward starting even in I that are side diesel

Tracy Jackson

anticipate addition to I RDU we'll that we generate coming the that obligation add ourselves also. thing we with in what that have will of that offset portion that to only we RINs that already is online a would midyear, generate The

Phil Gresh

guess that when point what Brent-WTI spreads environment $X range? you I to you rate of And question, Is for an fair would just capture. mid in XX kind kind in where impact, clarify, are my percentage capture view a capture backed rate out second the as of XXs this

Dave Lamp

It's far Phil. from that, not off

comes the with heading I ultra-low narrowed to bit, now spread a were $X.XX premium. a the one which where hit season also Y-grade diesel, quite carries premium think into the And that's -- almost usually $X.XX number $X.XX we sulfur gallon. was we're in

So up, to the all would those bring moderate. levels, factors will think, it RINs bring back assuming I normal

Phil Gresh

question, guess you situation I little people think I Pony guys hypothetical, here with to Second move And I bit a with are on the White if think into administration, on barrels the it's extent. focused but Express and some Cliffs DAPL. risks Biden get shutdown we a

the So I get you into ability there's was how if Bakken, benefit just curious spread widening? -- we a much potentially difficult in capture those barrels if any situation do have to and any from

Dave Lamp

we Cushing-based. Well, are

systems that it little very although, we comes degree. out the have barrels of But So I should occur, gathering to off get gathering Cushing it to some in barrels Oklahoma we from think and crude our most would that systems somewhat light situation, we're have. White and immune the dry we Kansas Cliffs, of

think we're you, I would tell pretty to immune that impact. So I

Operator

Our of Gupta with next comes from Suisse. question Credit the Manav line

Manav Gupta

of kind I a to clarification. get just want

you'll And diesel. of your million first think renewable making diesel the up end I credit phase renewable get for probably You X.X RIN. you times DX gallons of with project, mentioned that XXX

XXX to actually terms plant is plant to is RINs renewable gallons, gallons short obligation online. what your does and and the running? in much million RIN be of that that up How RINs comes would trying once you RIN of just that where I'm current obligation So understand once

Dave Lamp

diesel throughput be a million about, RINs. renewable at gallon The XXX would what XXX million

Our neighborhood obligation today that and around XXX, in generate about is we XXX, internally XX%. somewhere XX%,

renewable we the So as I of will a segment. you math tell separate you much do there. diesel view can pretty from kind that

diesel of refining another as full credit account the will form amount credit. and as renewable -- for obligations RIN pay we to up show will have So of will to it its a

put We all incentive that diesel So the earns. keep that in on it renewable the mind.

Manav Gupta

So the I accounting. get

coming Is of saying So you're mid million next by gallons basically, what gets to mid-July year. is mitigated way RIN or of DX that XX% this obligation your the with in RINs think it? right XXX about of

Dave Lamp

Yes.

from across in whole XXX, going somewhere we're that net, think XXX it's net neighborhood to I -- company. about of nominally the down

Manav Gupta

you On trying all to or this $XX your how million [diesel] kind point time, security out II, with Phase in opportunities Phase which Phase with highlighted at I, little earnings, definitely the capital company this of Delek, point to about the a something XQ you earnings. spending III in back dragged is in marketing $XX figure associated getting at and renewable back you're in additional pulling thinking which investment losses pull versus interest just down million I'm your Delek. of

renewable versus to the putting understand getting expansion trying the diesel Delek? viewing how more So in you're opportunity capital in interest towards same

Dave Lamp

cost. I that companies we're drive Typically the separate is everyone. business, commodity of the And associated fixed enemy fixed that interested. maintaining mentioned We just private scenario. with that a cost as believe more cost public consolidate the in have needs Well, out industry significant to to

then at prices. in to time. more investment continue it anything to stock in IV, appropriate and make And still really Delek that said, getting interesting day it's And like that's -- think interesting pretty consolidation every even what made And the don't we the current proposition, a market more PADD this is. we the fleet the to we the and more with at participate a and decision our to the efficient we alternatives the look that in do point. other So have happens, plans That watch start. at we'll have we'd any

Manav Gupta

to soya oil. the X used capacity. question. part the oil bean diesel a renewable going feedstocks some the at Phase but Is change plan XXX still cooking maybe X basically is what unit other expansion of you're animal pretreatment One fat, for It of more versus Phase expansion? doesn't last million, and remains The total is that do that use

Dave Lamp

Yes.

of a of up today. I this drive on think inedible because corn probably we'll will of oils for cooking focus transportation I are seen. intensity is think it after we'd a an gather be earn used some -- edible be and in to more and oil lot oil available mostly CI spoken And and lower that's it, being to But carbon that material the just a is material, really lot makes yet what will able end corn but California. we're you credits

from I thing prepared other it, remarks if is build we may substantially in at permitting the we're do a Coffeyville, did Wynnewood some trying other well do a that whatever need any this or or do location. and consider even in The at way actually at mention we is as larger standpoint whether And efficient at And to the Coffeyville, will we where we cost standpoint, pretreater. sized pretreatment. as of most rallying pretreater we a

Manav Gupta

as of on look David, more that future hitting diesel renewable to July sound phase details of the the those as Phase we phases getting well Phase very on. first Thank you. two exciting, X and X forward the you project, and mark

Operator

from comes Rao Citigroup. Prashant next with of Our line question the

Prashant Rao

environment. consolidation to could a talk wanted Alberta Maybe about this quotas There's WCS, thinking production IV WCS some about a in moving specifically with if angle, barrels, parts we're the and there and PADD I opportunities approach about talk tight your long from we the lifted. industry being Dave. non-Delek

anyway. were However, economic cuts what quotas below the were

that as arguable be. might it's to what impact So

each a about a and is that wanted terms capital you're PADD other relates how Wynnewood. IV investment. view other in have -- portfolio WCS you versus the I to Thanks. on play potential those follow-up your And bid-ask you of how that thinking how position I to the have then asset, that spread two So where with in get have opportunities the on maybe

Dave Lamp

I think, again, the there's in money to consolidation be had play.

to that I'll IV really IV of market PADD think EBITDA drive ways. status which you or WCS, around to advantage these a the -- you're we Our in $X lot little only a compared your somewhat RIN because And associated allows that A to are delivery with have most come to we $X $X because to to And you bit them a lot in, to similar RINs does get there's a generate. Cushing. a barrel in where what and or Western main And form marketing of diversification fashion what call, the with a earn of niche to of Hardisty of it. PADD portion in competitive is to Canada. assets, with cost proximity of is some today a

all our kind Keystone portfolio XX,XXX quite the play of really tariff date, those to secured the one we have been that pipeline We've rate successful and So our other recouping on in barrels into [Multiple Speakers] happening time as million day about Canada, Spearhead. of And far there's capacity a up, last of think I in -- was X.X it it as what's pipeline added I out Canada. well.

not WCS date. to has much been haven't Canada that -- We producing

pipeline and that tariffs fact a related thought result and the because about available. Coast make up is WCS, to than on should mine the under pricing today we're Canada selling difference. should mechanism at big there's -- to in it against diluent WCS should landing at low Gulf the production so really at about Cushing, to $X.XX that be With cash the $X. Coast going in cost to assuming competes rail the prices being in the will even it removed, back we these and Gulf that it's go WTI for incremental curtailment more in is But

be still near very it's term… the probably with that way competitive for will it and mine So

Prashant Rao

sort gets and a more back? dictate, maybe based more time nonengineering dummies analysts. aspect guess, renewable renewable or question elaborate what mechanical within window on the done to a take for that bit market traditional on get project, diesel production Wynnewood I short and specific for the you But of, that would is I Just a something a mechanical to make that on bit and If turnaround? Could by mentioned ability a little you one What's production. that it's a to switch bit the of wanted question. then And switch the that on. dynamics more fossil between fuel color

bit Thanks. If you that more could us color, be helpful. give would a

Dave Lamp

difference you It's even then the the basically bit basic unit, metallurgy in between some the same. different. a speak. up, though The so metallurgy is catalyst And metaled upgrade to just hydrocracker -- unit is

catalyst, switch change outage to is back XX-day really hydrocarbon service, just to basically So period. a it which the you

more that with standard would can RIN rapid that and what carbon low matters you it. the do into game, credit. rather happens are And it's opt here prices blenders conditions fuel the what do real the So is states

And paint this wrong We best, whatever scenarios and can we jump is harvest back all and as quickly whatever most CVI can those view You just for considering would where makes the forth factors. an the all way. go can option. money and the fairly

say is within, services. month, So back between one XX what that's forth can it the it's that's two it when let's you say, and days, option switch I an really

Prashant Rao

go you some about And would of optionality well be -- similar that? be thinking able with would with you forward sort Coffeyville if you as

Dave Lamp

a in It's bigger million, million even And hydrogen range the more XXX bigger it's actually scenario. a XXX the plant. higher than exact unit probably same much I've because the is Coffeyville capacity it's mentioned much probably this and

Operator

Mehta Neil Goldman Our from line with of next Sachs. question comes the

Neil Mehta

we function a the and -- playing for are kind the want David, pretty And you have historically refining it of too. weeks. the managing you The sector, first question think burn. an viewed be hard But sheets that see the one of of last I off historically, a And comfortable the has flow period? I market technical have business I of one give talk seen the sell of how lot cash might balance is to getting the guys I having you, dynamics are credit and couple as think stronger of just tougher about way over this out, you the guys about how are liquidity, sheet through you balance opportunity to here in

Dave Lamp

That's markets cost in the and we consider and probably I focus Protecting we assets And survive is possible. safe time end, to to opportunities. want reduce that be reliable its for we very environment. it primary and to much our some levels cash it's on rear position the takes spending great to we important in have the that sheet Well, to think as capital run seen. this the our have buying consider and is us frankly, as balance when what to maintaining frankly, to operations never what

cut that kind cash I that to done a the mentioned Tracy doing. a So quarter, that $XX those we'll close, amount I we've in a basis, don't money of barrel this we're can little but the we million are on date, approaching out the of do too. $X And we're and know a we've quarter-over-quarter of quarter. cost-cutting rate side SG&A less significant you or cost. amount actually operating run fourth equally quickly repeat you think The activities generated of see

away. competitive facilities, anyway, are do which and they think defer by competitiveness those we that's maintenance crudes don't don't way kind obligated we go frankly, of safe, make a be. in configuration stay any for We're They pretty around we needed sure that we're the improving for to I and our government operations So or process. any considering while. trying to of run or our whatever reliable things the But can the really are

So I'm looking sure not got I Neil, you were for, what to but…

Neil Mehta

No, it's directionally helpful. very

that just a that it is maintain as environment? there both forward in level? and you think cash then think who curve were do still lot recognizing spending, you safe you us that needed, XXXX to And you at capital Brent-WTI I curve about that numbers where skeptical cash and that flow do But as margins, to, are still burn neutrality, as just think minimize can thoughts right. the reliable the put early. around you I on for think But you flow any can forward So about it, look down you refining it's know think and some if flex of

Dave Lamp

in Yes. to we best field, I we think we that buying the directly we'll do we some and can buying We'll optionality crudes with the on Well, coupled hedging which have around others lot that think value, forward advantageous. do there crude highest can since are a the all of cracks to we're immediately do we kind discounting the for those don't 'XX drive year. planned sustaining we trying include on drive levels really And trying don't turnarounds have But capital. budget R&D at That have. we're our project. any below doesn't have $XX of this don't our yet, we're -- million to done next but

different I easily forward of we we to any start already that think my other of and jet lot even decisions. I about a and ride form. But actually to us, end math cutting think a same and earlier, a when been then Coffeyville cost R&D, or it's but mothballed of million really would some without for fuel we number liking. right, the those the that for shutdowns. If And in enough facilities. As not which I until the actually they what this both the other reduces 'XX demand way. virus impaired If happen in Wynnewood, the did at reconfiguring barrels actual refineries Tracy crude. will. problem. point, at can with -- at mentioned, even happens still includes contango environment downgrading making crude somewhat that is And curve X.X that's be as do we see, a little in we we're we're bit operations we're or more we're There's on the all slate that some day mentioned need And the in hinges

a of lot haven't lot a to there's turned. So and knobs we still come

Operator

next Cheng Howard of Our the with Weil. question comes Scotia from Paul line

Paul Cheng

the of Phase what Dave, X can the is plan? you CapEx for that remind renewable preliminary the me

Dave Lamp

targeting Phase are X. $XXX million for We

Paul Cheng

you million said decide, XXX gallons. feedstock $XXX to for the going be And soybean million oil? will you

Dave Lamp

Yes. It's washed, refined oil. bleached and soybean

Paul Cheng

change? me to be is product how throughput can much And I But by, and said reduced yield the how remind you you have Wynnewood will is that think just going that.

Dave Lamp

around condensate what out retooled taking we reformer is hydrocracker refinery processing, equipment basically full and that really the that. Paul. -- keep for Well, fuels probably just our little rate less goes that shift. make cracker gasoline, more similar directionally but diesel, a on not lot, we means up, CAC yields, type but And our more we processing puts means And a the it the of

Paul Cheng

the will throughput total what And by? be changed is

Dave Lamp

will Total between under barrels and a day, a little go barrels a today XX,XXX and XX,XXX about throughput to day, about XX,XXX. XX,XXX is that

Paul Cheng

XX between barrel in… So somewhere barrels drop per to -- it million day XX XX,XXX by will

Dave Lamp

mode. when we're R&D in right, That's

Paul Cheng

I on wrong the math. this get maybe And

exposure the down will I drop XXX on think about from is going assume your to win you're X in? XXX, Phase saying XXX, that stream, net

Dave Lamp

you RVO. Yes, of forgot No. close, internally you're our produced but XX%, our XX%, RINs, which XX% is about

So those million. are XX

Paul Cheng

that the XXX XXX… will renewable XX% XX will be diesel to right? thought XX%, about I because XX% XX, be your RIN So XXX, to and plan be obligation would is

Dave Lamp

Right.

Paul Cheng

be And XX exposure? down only to on your net we should so

Dave Lamp

That's pretty close.

Let's see.

Something XXX less million. than

Paul Cheng

I number. saying because Yes, I that thought you higher heard as a

sure I'm So not thought I I that did…

Dave Lamp

cut with goes I the think crude the I said rate too, down XXX. remember. But RVO

the you've to both numbers, and number. number adjust the bottom top So got

Paul Cheng

you're throughput But that about total -- at per XX% your dropped by barrels for I mean because by that XX,XXX company on only about at obligation, that theory, only in running drop the XX% will has day. given your

be So we talking about will XXX.

should more So should that in if it anything, like in still be be It be less XX. -- should of your should obligation. XX, the it be less that terms than even

Dave Lamp

but up came think XX with I numbers. think, I right on Yes, I XX, Paul, the you're --

Paul Cheng

not and the CVR $X we given M&A, curious of get somewhere when MLP you're or that? forward? the low that, can the that about the that is Partner, it already? And back think possibility some at just you MLP have would current per when one is you that that a that less consolidation you how valuation that make share the Yes, close structure, going that sense the option as value indicate that you are you and I I on actually, to Dave, the you that talking on can because for should price given CVR confused benefit buy how Does And believes the or And that equity Board you that least you -- Or per that outlook than say unit for look or is the the also the just buying so hand, still else attractive. price? it's to at at is anyway essentially structure eliminate buy XXX. that value is stock, better Partner imagine

and it, out, have so it it fund you can have And saving take the so why that not just report patronize you if unit? don't the that that's a separate on case, some as to regulatory

Dave Lamp

you out Well, there, Paul. a pretty case good laid

right all continue time. time all to know an at And We but is something times. for the do. look evaluate now at it's don't that it We the that to we is option us

in what debt to we 'XX that that’s expiring see in the we up I 'XX. with guess level that's in of think doing if 'XX, end that in I want kind

fertilizer And for it a performer side of on year make view that's the it's of of And it's shows the been business, frankly. kind sense. that this So we value way can great the the diversified table. the -- portfolio us

depending thing MLPs the I'd up again bit, that favor taxes the say Now in may too. who if go come offset may back elected that a gets lot, on a

So who knows.

all the idea. it's though, time, evaluate we good a So it

Paul Cheng

asset, what there's curious is just if to? fit asset asset a the And good you're to or right you with the go that that maximum willing leverage

Dave Lamp

like forma looking change the do major I always it -- something basis, acquisition a did on you And would we're if you'd at Well, that, a pro that. do think which terms know in anything above in, numbers is bit. we're of anything that right our of kind now that two But is EBITDA And a there on I interested don't basis. leverage.

Paul Cheng

debt-to-EBITDA X net So times? is that maximum

Dave Lamp

think goes anybody space go On it don't that. in I much don't above purpose. I much above this meant. on purpose,

Paul Cheng

that's for maybe how second the to quarter question final to unique third it's the third you quarter A year or expect an item refund And for take for future Act? quarter the much expect that forecast, cost next the consideration? need we tax whether Tracy one-off be into adjustment it? or the good used that a also you or Do to me, CARES baseline is from in receive

Tracy Jackson

I expecting. with we're corporate part loss average. whatever that for you're question, look first that a the our from production year a second question, or you proxy would full apply the and use you percentage XX% just to is return to anticipate good full expect So carryback net curves we our the should I year of like and loss a that Can and look rate would it, to get what restate your number cash gain be number, what our your corporate at please? predicting going

Paul Cheng

level we into plus a as that's reasonable Is to consideration unit For one-off that can your is the need into cost items a forecast third that future, whether take or very to quarter, the or low. we use that minuses adjustment. and baseline

Tracy Jackson

that cost I that for can us And at we will run the rate operating to look new that cost to bring economic back current point. reliable some safe at projects for painting need level, not are will operations to to short see an think return. that look hold to a now, be right don't But we do deferring we you and tanks. normal term. we're our We be we certainly, should related have

Paul Cheng

you Tracy, say about Is million Are or nominal? that, you per is XXX unit on are that So we on XX absolute talking about reasonable barrel? a baseline. baseline per an when or talking it basis reasonable

Tracy Jackson

reasonable a baseline. is a XXX barrel

Dave Lamp

we like to can saving more cost standpoint. and we're in said, think belt we need a some drift, more, to do from towards going I ammo more I should X Paul, we fire have that our

in there already a a I reduction and go to cash. things the $X we've done quite But had because really few level conserve force, doable. don't really we is think So want to

Paul Cheng

quarter we conditions? will And market given the is Dave, than much third expect there be in fourth the quarter the should any throughput reason different your

Dave Lamp

on can having running other all is which not do. And constraints. basically about a XX% We're product No. or we light of trouble we're any slate, capacity moving any

stay the same to plan we So at rates.

Operator

the Our Holt. Tudor Blair from comes Matthew next Pickering question line with of

Matthew Blair

already talk making you a expect bit about possible to here. mentioned you're light it X%. that? the more of changes Is It QX? up do Could in you QX? benefit little crude like to slate your slate, up into looks And Dave, XX% to a to reconfiguration. Condensate quantify you the slate some pretty run WTL

Dave Lamp

was WTI. under $X.XX in spread condensate Cushing the Well, approximately

wider at look you gathering our system, that's when that. So actually than

So what there. is yield really you volume our but significant diesel gasoline percentage of of great is a makes with has a we're after kind high the yield. can condensates, And tell on still and configuration,

it's all the way win-win So just around. for us

Matthew Blair

the about ask to wanted also I BTC. then And

get assuming talk There's hard it modeling, what away pretty XXXX something you go obviously, internal and your XXXX? down to some So forecast. But completely. into phased for might that it or BTC like are might in

you you what make think assuming? in election would difference that? And a So the do are results

Dave Lamp

but other has two of history that it mean just this of things, industries, Tax the for Congress to abandon the biodiesel, bipartisan what been on now a One $X eliminate two part. state and think a they pressure production at way, And industry, there some see I look years. been issue as do it it's Credit, happened back when It's much. And at to two the to and large delayed years it. renewable don't for ethanol those with Blenders an deficit you I long the created creates reduce actually as retroactive is it. ethanol going industries. them. it it level. RFS that always is on can't and If but diesel top on one changing created on to I of put

will than industry that. biodiesel, diesel you to way happen, it they're the it. to I I forces see of should the that going created more force towards have kind I think it market think. they around The So think naturally will But some because renewable and an gravitating support somehow

Operator

of question comes next from the Your line Matt with Vittorioso Jefferies.

Matt Vittorioso

flow. cash just asked. been fourth quickly it's quarter of Most Maybe on

you got mentioned You a big in quarter, boost working the capital. from third

expenses. fourth reverse the Some and or expect big Do in working in to quarter quarter? for any that of the payables capital accrued fourth movements that was you

Tracy Jackson

capital be really cash the for on the provision to cash. capital source want us. quarter. But likely net specifically, the working a working don't to a I in fourth comment for will to be fourth We position of of do continue And quarter expect cash

Dave Lamp

know. don't to degree, depends over. those We until cracks all some its It on and we won't know

Matt Vittorioso

that fourth quarter. here here, industry just benchmark you're And Are movements How any on think quarter. are or in early today. margin, the refining should fourth Based where of then in know I but the generic market in third how same the there? differentials and big say the -- in gone you quarter we $X.XX you've seeing of through maybe did the can at markers about much we some don't just kind sort of what level you

Dave Lamp

We on these haven't sustainable that change, are and will for much seen they're both price frankly, where But numbers where I not the world, no. crude just cracks. say at

You're again, too, sitting turnaround, big to like will on say have we're accrued these cost most that, you competing you're road. at the Because decision is a here at these you numbers. really turnaround say, to is There's a I and people curve when not way costs. again, tend and your rubber just basically, numbers, -- when no recouping hits not the -- the make

fact to have or on or give it's Supply So that because you something demand way back margins production. it. will increase either is have round, either cut other around just just on economic demand to no there's going an to come

Operator

We for have now reached turn the the session. I would like comments. end of the to question-and-answer to over floor back management closing

Dave Lamp

to you I'd interest Energy. like your Again, CVR for thank in all

I'd to reviewing good hard look extra call, their Additionally, really environmentally job operations our and under to running keeping forward quarter virus done we towards our fourth reliable, our our And of day, strain with results work for safe, the commitment have and responsible a everyone. and good earnings and They successful. at all like thank employees been operations. next

Operator

gentlemen, this teleconference. today's conclude does Ladies and

a and wonderful time. your disconnect have Thank your may for day. at You participation, this lines you

CVR Energy (CVI) 3 Nov 202020 Q3 Earnings call transcript