CVR Refining, LP (CVRR)

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CVR Refining, LP (CVRR)

Q4 2012 Earnings Results Conference

March 12, 2013 11:00 AM ET


John J. Lipinski - CEO and President

Susan M. Ball - CFO and Treasurer

Stanley A. Riemann - Chief Operating Officer

Jay Finks - Director of Finance


Mohit Bhardwaj - Citigroup Inc, Research Division



Greetings and welcome to the CVR Refining, LP Fourth Quarter 2012 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 Jay Finks, Director of Finance. Thank you, Mr. Finks. You may now begin.

Jay Finks

Thank you, Jessie. Good morning, everyone. We very much appreciate you joining us this morning for CVR Refining year-end 2012 earnings call. With me are Jack Lipinski, our Chief Executive Officer; Susan Ball, our Chief Financial Officer; and Stan Riemann, our Chief Operating Officer.

Prior to discussing our 2012 fourth quarter and full-year results, let me remind you this conference call may contain forward-looking statements, as that term is defined under Federal Securities Laws. For this purpose, any statements made during this call that are not statements of historical facts, maybe deemed to be forward-looking statements, without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements.

You’re cautioned that these statements maybe affected by important factors set forth in our filings with the Securities and Exchange Commission and are related to this earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

This call also includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measure are included in our 2012 fourth quarter and full-year earnings release that we filed with the SEC this morning prior to the opening of the market.

With that said, I'll turn the call over to Jack Lipinski, our Chief Executive Officer. Jack?

John J. Lipinski

Thank you, Jay, and good morning everyone, and thanks for joining us. We reported that CVR Refining for the first time and these results were reported as if CVR Refining was in place for the entire year 2012.

As I always do, I will provide a recap of the fourth quarter and full-year results and operational related impacts. Susan will then provide more detail around the numbers reported this morning, and I will finish with some closing remarks.

Firstly, before I get to our results, there are some key milestones we achieved during the year. In October, we issued $500 million of new notes to refinance our first lien senior secured notes, which were fully redeemed in November. In December, we entered into the Amended and Restated ABL Facility to the Company. On January 23rd, we closed our initial public offering of CVR Refining, LP. This was the largest IPO of a master limited partnership to-date.

I would like to take some time to thank our employees for the countless hours and tremendous effort they spent over the months making this happen. I'm also proud to report the strong earnings for both the fourth quarter and full-year. For the fourth quarter, consolidated adjusted EBITDA was $196.2 million versus $44.3 million in the fourth quarter of 2011. For the full-year 2012, our adjusted EBITDA was $1.2 billion versus $577 million during the full-year 2011. Some of the drivers of our earnings were strong crack spreads, our access to price-advantaged crudes and high operating throughputs.

In the fourth quarter of 2012, the NYMEX 2-1-1 Crack Spread averaged $33.32 a barrel. With the Brent WTI spread averaging $22.09 over the quarter. For the year, the NYMEX 2-1-1 Crack Spread averaged $30.75 per barrel and Brent WTI averaged about $17.35. In the fourth quarter we realized seasonally weaker product basis in the group, the PADD II Group 3 product basis was a negative $1.13 a barrel as compared to a positive $0.05 a barrel in the same quarter last year.

Our overall realized refining margin adjusted for FIFO was $25.93 a barrel compared to $11.05 a barrel in the same quarter last year. On an operational basis, we completed the major scheduled turnaround at our Wynnewood Refinery in December. During the quarter, our turnaround expenses totaled approximately $89 million. The total cost for the Wynnewood turnaround was about a $102.5 million.

Overall, CVR Refining incurred approximately $124 million in turnaround expenses for the entire year, which included the completion of the Coffeyville bifurcated turnaround in the first quarter of 2012.

In the fourth quarter we ran 147,800 barrels per day of crude. That's roughly a 125,000 -- 124,600 barrels at Coffeyville and 23,250 barrels at Wynnewood. Our actual results were below – just below the low end of our guidance that I provided at our last earnings call and it was directly due to the extended turnaround lasting into December.

Like most mid-continent refiners, we continue to benefit from attractively priced crudes. At Coffeyville our purchased crude oil to discount for the fourth quarter was a $1.74 per barrel as compared to a $1.92 a barrel in the fourth quarter of 2011. For the full-year 2012, Coffeyville’s purchased crude discount WTI was $2.36 per barrel as compared to $3.95 per barrel in ’11.

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