CVR Energy (NYSE:CVI) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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The full earnings call is available at https://events.q4inc.com/attendee/598656914
Summary
CVR Energy reported a first-quarter 2026 consolidated net loss of $160 million, with losses per share at $1.91 and an EBITDA loss of $52 million, primarily due to unrealized derivative losses and changes in RFS liability.
The company announced a $0.10 per share dividend for the first quarter, reflecting a commitment to balanced debt reduction and shareholder returns.
Operational highlights included a crude utilization rate of 97% and ammonia plant utilization at 103%, with the company positioned to capture improved margins due to global supply chain disruptions.
Management emphasized a focus on deleveraging and indicated continued interest in M&A opportunities, while also navigating a volatile market environment.
Future guidance for the second quarter of 2026 includes expected throughput of 200,000 to 215,000 barrels per day in the petroleum segment and an ammonia utilization rate between 95% and 100% in the fertilizer segment.
Full Transcript
Regina (Conference Operator)
Hello and thank you for standing by. My name is Regina and I will be your conference operator today. At this time I’d like to welcome everyone to the first quarter 2026 CVR Energy Inc. Earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star then the number one on your telephone keypad. To withdraw your question, press Star one. Again, we ask that you please limit your questions to one and one follow-up I’d now like to turn the conference over to Richard Roberts, vice president of FP&A and Investor Relations. Please go ahead.
Richard Roberts (Vice President of FP&A and Investor Relations)
Good afternoon everyone. We very much appreciate you joining us this afternoon for our CVR Energy first quarter 2026 earnings call. With me today are Mark Pytosch, our Chief Executive Officer, Dane Newman, our Chief Financial Officer, Mike Wright, our Chief Operating Officer, Travis Capps, our Chief Commercial Officer and other members of management. Prior to discussing our 2026 first quarter results, let me remind you that this conference call may contain forward looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward looking statements. We undertake no obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. This call also includes various non GAAP financial measures. The disclosures related to such non GAAP measures, including a reconciliation to the most directly comparable GAAP financial measures, are included in our 2026 first quarter earnings release that we filed with the SEC and Form 10-Q for the period and will be discussed during the call. With that said, I’ll turn the call over to Mark.
Mark Pytosch (Chief Executive Officer)
Thank you Richard Good afternoon everyone and thank you for joining our earnings call. In the first quarter our operations performed well with crude utilization of 97% and ammonia plant utilization of 103%. Major geopolitical events drove volatility in energy and fertilizer markets which have set up attractive market opportunities for the balance of 2026. Given the disruptions in global supply chains with loss of production and lack of product movement for refined products and fertilizer, CVR Energy is well positioned to improve our margin capture for the balance of the year. We are pleased to announce the first quarter 2026 dividend of $0.10 per share and we believe our prospects should allow for balanced debt reduction and capital returns to shareholders as we move forward. Now let me turn the call over to Dane to discuss our financial highlights.
Dane Newman (Chief Financial Officer)
Thank you Mark Good afternoon everyone. For the first quarter of 2026 our consolidated net loss was 160 million, losses per share were $1.91 and EBITDA was a loss of 52 million. Our first quarter results include unrealized derivative losses of 158 million, which primarily relate to NYMEX gasoline and diesel crack spread swaps entered into during the quarter against expected future production at a crack spread value of 447 million through 2027, which I will discuss further in our petroleum segment results. In addition, our results also include an unfavorable change in our RFS liability of 51 million and favorable inventory valuation impacts of 120 million. Excluding the above mentioned items, adjusted EBITDA for the quarter was 37 million and adjusted losses per share were $1.24. Adjusted EBITDA in the Petroleum segment was a loss of $50 million for the first quarter compared to a loss of $30 million for the first quarter of 2025. Increased rent expenses, higher operating costs and realized derivative losses drove the majority of the decrease from the prior year period. Combined total throughput for the first quarter of 2026 was approximately 214,000 barrels per day. Period utilization for the quarter was approximately 97% of nameplate capacity and light product yield was 93% on total throughput volumes. Benchmark cracks for the first quarter of 2026 increased from the prior year period, with the Group 3211 averaging $21.58 per barrel compared to $17.65 per barrel in the first quarter of 2025. Our first quarter realized margin adjusted for unrealized derivative losses, the change in RFS liability and inventory valuation was $4.72 per barrel, representing a 22% capture rate on the Group 3 211. Benchmark RIN prices increased significantly from the first quarter 2025 levels, more than doubling to almost $9.50 per barrel for the first quarter of 2026. Net RINs expense for the quarter excluding the change in RFS liability was 143 million or $7.37 per barrel, which negatively impacted our capture rate for the quarter by approximately 34%. EPA has repeatedly stated that the cost of RINs is ultimately passed through to consumers at the pump. The decision to establish the highest RVO in history through the recent set to rule has driven RIN prices significantly higher, which has in turn raised the price of gasoline. This is in direct conflict with the Administration’s stated goal of lowering fuel costs for American consumers. RIN prices have increased more than 75% since the beginning of the year, in addition to the 18% increase in the RVO, currently adding 25 to 30 cents to every gallon of fuel purchased in America. If the Administration is serious about lowering fuel prices, it should start with the rfs. The estimated accrued RFS obligation on the balance sheet was 204 million at March 31, representing 113 million RINs mark to market at an average price of $1.80. As EPA has not yet ruled on our pending 2025 petition, we’ll we will continue to recognize 100% of Wynnewood Refining Company’s RIN obligation in our financials, which for the first quarter of 2026 was approximately 52 million. Had Winniewood Refining Company received the 100% SRE we believe it is entitled to, our consolidated capture rate for the quarter would have improved by approximately 12%. Once again, EPA has missed a deadline on ruling on Wynnewood Refining Company’s 2025 SRE petition. Will the EPA ever meet a deadline? Our first quarter 2026 results included derivative losses totaling 182 million. As previously discussed, 158 million of this loss was the unrealized mark to market change in all of our open crack spread swap positions as of March 31, and our physical positions intended to offset are expected to be sold as the swap contracts expired through 2027. Given this disconnect, we do not view the impact of the unrealized loss as a detriment to the current period and, as we have done in the past, adjust the amount out for our adjusted EBITDA figures as we progress through the year. If these positions remain negative, we would anticipate these derivative losses to be more than offset by any gains on physical production. As we realize increased crack spreads on the remainder of our unhedged production. As of March 31, our total open crack swap positions included 9.9 million barrels of diesel and 2.4 million barrels of gasoline. Of this total, approximately 2.9 million barrels of diesel swaps are in 2027, with the remainder in 2026. This represents roughly 15% of our expected gasoline and diesel production volumes for 2026 and 4% for 2027. Since the end of the quarter, prompt NYMEX crack spreads have declined and we have seen Group three strengthen relative to the onset of the war. We will continue to actively monitor these positions and plan to be opportunistic in managing our exposure going forward, which could include closing out these positions or adding other positions depending on market conditions. Direct operating expenses in the petroleum segment were $6.10 per barrel for the first quarter compared to $8.58 per barrel in the first quarter of 2025. The decrease in direct operating expenses per barrel was primarily due to increased throughput volumes as the Coffeyville refinery was undergoing a Turnaround in the first quarter of 2025. Adjusted EBITDA on the fertilizer segment was 78 million for the first quarter compared to 53 million for the prior year period. Ammonia utilization rate was 103% with both plants running well and experiencing minimal downtime during the quarter. The Board of Directors of CBR Partners General Partner declared a distribution of $4 per common unit for the first quarter of 2026. As CVR Energy owns approximately 37% of CBR partners common units, we will receive a proportionate cash distribution of approximately 16 million. Cash flow from operations for the first quarter of 2026 was 64 million and free cash flow was 21 million, of which approximately 63 million was generated by the fertilizer segment. Significant uses of cash in the quarter included 47 million of capital spending, 40 million of cash interest, 15 million for the costs associated with the debt refinancing and 3 million paid for the non controlling interest portion of The CBR partners fourth quarter 2025 distribution total consolidated capital spending on an accrual basis was 44 million, which included 29 million in the petroleum segment and 14 million in the fertilizer segment. For the full year 2026 we estimate total consolidated capital spending to be approximately 200 to 240 million. Turning to the balance sheet, we ended the quarter with a consolidated cash balance of 512 million which includes 128 million of cash in the fertilizer segment. Total Liquidity as of March 31st excluding CBR partners was approximately 923 million, which was comprised primarily of 384 million of cash and availability under the ABL facility of 539 million. We remain committed to our deleveraging goal and plan to continue working towards a gross leverage target of $1 billion excluding debt at CBR Partners. Looking ahead to the second quarter of 2026 for our petroleum segment, we estimate total throughputs to be approximately 200 to 215,000 barrels per day, direct operating expenses to range between 110 and 120 million, and total capital spending to be between 35 and 40 million. For the fertilizer segment, we estimate our ammonia utilization rate to be between 95 and 100%, direct operating expenses excluding inventory and turnaround impacts to be between 57 and 62 million and total capital spending to be between 28 and 32 million. That mark I will turn it back over to you.
Mark Pytosch (Chief Executive Officer)
Thank you Dane. In summary, despite a slow start to the year and the refining segment, market fundamentals have changed quickly over the past few months and we believe the outlook is constructive for both of our businesses. Two areas of the economy that are among the most impacted by the ongoing conflicts in the Middle east are energy and fertilizers. Starting with the refining segment, global inventories of crude oil and refined products have tightened considerably over the past few months with the effective closure of the Strait of Hormuz. While the extent of the damage to refining capacity is still unclear at this point, the larger impact in global refined product markets has been availability of crude oil supplies and the need to curtail refinery runs as a result. Fortunately, the US Refining fleet has largely been unimpacted so far, although refined product inventories in the US have also been declining partly due to increased product exports. Gasoline and diesel inventories in the Mid continent were elevated at the beginning of the year driven by higher than average refinery utilization levels that weighed on crack spreads, particularly gasoline cracks. This has changed significantly over the past month with gasoline inventories declining by 17% and diesel inventories declining 20% compared to the beginning of the year. Demand trends have improved as well for both gasoline and distillate in the midcon on a day to supply basis, Gasoline supply is sitting at the low end of the five year range while distillate supply is below the five year average. This improvement in midcon supply and demand fundamentals over the first quarter as tightened refined product basis in the mid con relative to other regions of the country accessing higher demand regions outside the Mid Continent also remains one of our key strategic initiatives as we work to improve margin capture in the refining segment. We have stepped up these efforts and recently began utilizing the rail loading facility at Winnie Wood that was repurposed after the reversion of the renewable diesel unit. We remain optimistic that basis has room to improve further over the intermediate term, with the new product pipeline from Kansas to Denver scheduled to come online later this year. Other pipelines under development over the next few years, including the Western Gateway pipeline, should offer additional outlets from the mid Con and the Gulf coast as well. In the fertilizer segment, the spring planting season is underway and it’s going well so far this year. The USDA is currently estimating approximately 95 million acres of corn will be planted in 2026. While this is a decline from the record levels of 2025, 95 million acres is well above the average level of corn plantings over the last five years. Nitrogen fertilizer inventory levels at the beginning of the year were tight across the industry after the large planting seasons in the US and Brazil in 2025 and the ongoing conflicts in Russia and Ukraine, the recent events in the Middle east have caused fertilizer markets to tighten even further. Roughly 30% of nitrogen fertilizer production typically transits through the Strait of Hormuz, and multiple nitrogen fertilizer production facilities across the Middle east have been damaged or curtailed production over the past few months due to limited natural gas supplies. While it remains unclear how long these issues in the Middle east will persist, we will continue to focus on safely and reliably running our plants at high utilization levels to meet the needs of our customers during the challenging time in our industry. Looking at quarter to date pricing Metrics for the second quarter of 2026, Group 2 1.1cracks have averaged $38.36 per barrel, with the Brent WTI spread at $3.81 per barrel and the WCS differential at $15 for $0.46 per barrel. Under WTI prop, fertilizer prices are $950 per ton for ammonia and $525 per ton for UAN. In closing, I would like to thank our employees for their excellent execution, safely achieving 97% crude utilization and 103% ammonia utilization for the first quarter. Strong operating performance along with the improvements in crack spreads and the progress we have made so far in reducing debt. Having enabled us to announce a dividend of $0.10 per share for the first quarter 2026, we intend to continue our deleveraging strategy as we look to return to a billion dollars of gross debt on the balance sheet. In addition, we will continue to work to improve margin capture in our base business while we seek opportunities to add scale and geographic diversity to our portfolio. With that operator, we’re ready to take questions.
OPERATOR
We will now begin the question and answer session. To ask a question, press star, then the number one on your telephone keypad. We ask that you please limit your questions to one and one follow up and then re enter the queue for any additional questions you may have. Our first question will come from the line of Matthew Blair with tph. Please go ahead.
Matthew Blair
Great, thank you and good afternoon. Something you could talk a little bit about your increase in exposure to WCS at Hardesty. I think your disclosures show roughly an 8% yield or sorry crude slate exposure to WCS in Q1 versus, you know, basically zero in Q4. You know, why are you making that change and what advantages does that offer to CVR here?
Mark Pytosch (Chief Executive Officer)
Matthew, it’s Mark. Good afternoon. When you know, when the activity. When the actions were taken in Venezuela in early January, we saw almost an immediate change in the values for Western Canadian and the differential backed up by about $3 a barrel. And when we looked at it, ran our models, we saw that had more value than our other alternatives. And so we’ve been running a lot more in western Canadian around 18,000 barrels a day. And so we’ll continue to do that if the differentials hold in there. They’ve been good so far and you know, we’re almost four months into it. So good value in that crude.
Matthew Blair
Sounds good. And then could I just confirm a few things on your derivative exposure. So for the first quarter was the realized impact that that rolled through your numbers approximately a headwind of about 37 million or about $2 a barrel. I’m getting that based on your total impact of 195 the 158 of unrealized. And then secondly for the second quarter, if there was a mark to market today, do you have an approximate impact that these derivatives would have in Q2? That. Thank you.
Dane Newman (Chief Financial Officer)
Yeah, Matt, this is Dan. Good afternoon. Just to summarize on the first quarter. Yeah, so we did as you saw in our 10-K we did have some crack swap positions on the realized loss on Those was about 25 million really due to positions that were put on lower losses. January and February. And then with March they got exacerbated the remainder of that the losses associated with really inventory hedging as the prices ran up on crude, particularly in the month of March as it relates to the second quarter, we won’t give any specifics but we did give out kind of the notional amounts of our hedges and also the effectively the447 representing the amount of volume at a strike price. You can kind of calculate an average from that. I’ll remind you that we did put on those positions early on, early at the outset of the conflict and the market was pretty Heavily backwardated at that time. So I wouldn’t assume that average applies over the entire strip. Great, thank you. You got it.
OPERATOR
Our next question comes from the line of Manav Gupta with ubs, please go ahead.
Manav Gupta
Hey, good morning. I just want to understand if you could talk a little bit about the macro as in mid con as to what you’re seeing out there in terms of supply, demand cracks. And how long do you expect some of these cracks to remain elevated even if the Strait of Hormuz opens straight of hormuz opens? Because there are view out there that could take like two months for flows to normalize. But on top of that, you know, there are, there are people who don’t have crude globally. So cracks could remain well elevated. So from your perspective where you’re sitting, can you talk a little bit about the refining macro?
Mark Pytosch (Chief Executive Officer)
Sure. Thank you, Manav. So you know, what we experienced is and typical for the midcon, there was a lag. So when the conflict broke out, the coastal markets adjusted faster than our market did. But over the course of March we, you know, we started to close the gap between the mid-continent and the Gulf Coast in particular, which is, you know, our closest market but also the other western markets. And yeah, cracks of you know, our differentials or our basis is really, I’d say gotten closer to normal there between where we are. So our cracks have elevated faster than the others and we’ve been able to move product into other markets and that’s drawing the other markets are drawing out of the mid-continent. We’ve had a big drop in inventories the last three weeks and so our market is I’d say adjusted now to the conflict. And so if these markets, we agree with you, we tend to think this is going to go longer than maybe people expect a snapback. But our market’s already set up with the other markets and I think we will benefit without the spread in basis, which it took us three or four weeks for that to fall into place. So we’re enjoying a lot better cracks in April and the markets have settled in and we are, the markets are drawing out of the mid-continent at this point and we expect that as long as this conflict is in place, it will continue.
Manav Gupta
Perfect. My quick follow up here is I think I know the answer, but I just want to make sure the dividend that has been reinstated, that’s not a variable dividend, right. That’s your path to a normal dividend which will be there and maybe grow from here. Is that the right way to think about it? That’s correct. Okay. It’s not a very. Our fertilizer business is a variable. This is not meant to be a variable. Dividend Manav. Thank you so much.
OPERATOR
As a reminder to ask a question, press star one on your telephone keypad and our next question comes from the line of Alexa Petrick with Goldman Sachs. Please go ahead.
Alexa Petrick
Hey, good morning team and thank you for taking our question. We just wanted to ask a follow up on the hedges announced during the quarter. Can you talk a little bit about what drove the decision to add those hedges? Is there any strategy there that we should expect to continue? You or any color on that would be helpful.
Mark Pytosch (Chief Executive Officer)
Yeah, thanks Alexa. So, you know, historically we put hedges on when we’ve seen market levels above mid-cycle. You know, we’ve done that over the past couple of years as some downside protection. As the war broke out and we saw things elevate quickly. We wanted to make not knowing if the market was going to correct itself quickly or not. We wanted to get in the market and capture some of those, those higher values. As we see this is dragging on longer and you know, a little slower might have been better, but we are where we are and as we said in the prepared remarks, you know, look, I think we’re going to continue to monitor, you know, we don’t like to hedge over roughly 30% of our production just to make sure that we’re covered between our two refineries and that’s on gas or diesel independently. So we’ve got a pretty healthy book on right now that we’ll continue to monitor and then if anything look to try to lock in any basis positions as we see improvement from there.
Alexa Petrick
Okay, that’s helpful. And then our follow up is just on capital allocation priorities. You’ve outlined that 1 billion gross leverage target. We’ve now got the dividend. Can you talk about how you’re balancing the two? And then you’ve also previously discussed potentially having interest for M and A. So any color on those, on those different pieces would be helpful.
Mark Pytosch (Chief Executive Officer)
Sure. You know, and I, I will separate the two on capital allocation. I think, you know, with the change in the market dynamics and opportunities there, we feel like we can continue on the path we’ve been on from a deleveraging but also paying dividends going forward. And with our out, you know, what we see for economics for the rest of the year, we feel like we can do both. And so, you know, that’s why we were comfortable bringing the dividend back this quarter is that we, we just feel like we can achieve what we wanted to achieve and also return some capital to our shareholders on M and A. We continue to be, you know, that continues to be a priority for us. I would say the last couple months have been one where maybe everybody’s focused on all the volatility. So not, you know, that hasn’t been our highest priority the last two months. But, you know, as things settle down, we will, we will be back and looking for opportunities and, and in discussions with folks. But the volatility is certainly, that’s our number one priority right now is managing the base business and positioning the company to do well in a very volatile market, but with much more attractive economics than we had two months ago.
Alexa Petrick
Okay, that’s helpful. I’ll turn it over. Thank you.
Mark Pytosch (Chief Executive Officer)
Thank you.
OPERATOR
This concludes our question and answer session. I’ll hand the call back over to Mark for closing comments.
Mark Pytosch (Chief Executive Officer)
Okay, well, thanks, everybody. We appreciate you joining our call today and we look forward to discussing our second quarter results in late July. Thank you very much. and have a good day.
OPERATOR
That concludes our call today. Thank you all for joining. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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