CVR ENERGY INC

CVR Energy, Inc. - Quarterly Report on Form 10-Q

September 30, 2024

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.

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;

•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;

•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.

PART I. FINANCIAL INFORMATION