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Press release from PR Newswire

CVR Energy Reports 2012 Second Quarter Results

Wednesday, August 01, 2012

CVR Energy Reports 2012 Second Quarter Results21:33 EDT Wednesday, August 01, 2012SUGAR LAND, Texas, Aug. 1, 2012 /PRNewswire/ -- CVR Energy, Inc. (NYSE: CVI), a refiner and marketer of petroleum fuels and the majority owner in nitrogen fertilizer manufacturer CVR Partners, LP (NYSE: UAN), today reported second quarter 2012 net income of $154.7 million, or $1.75 per fully diluted share, on net sales of $2,308.3 million, compared to second quarter 2011 net income of $124.9 million, or $1.42 per fully diluted share, on net sales of $1,447.7 million. (Logo:  http://photos.prnewswire.com/prnh/20071203/CVRLOGO )Second quarter 2012 adjusted net income, a non-GAAP financial measure, was $223.1 million, or $2.52 per diluted share, compared to $126.4 million, or $1.44 per diluted share, for the second quarter of 2011. Major items impacting the 2012 second quarter adjusted net income, all net of taxes, were an unfavorable impact from first-in, first-out (FIFO) accounting of $63.9 million; an unrealized gain on derivatives of $28.4 million; expenses associated with proxy matters of $17.8 million; and share-based compensation of $10.8 million.Year-to-date, the company reported net income of $129.5 million, or $1.46 per diluted share, on net sales of $4,276.9 million compared to net income of $170.7 million, or $1.94 per diluted share, on net sales of $2,615.0 million for the first six months of 2011. Strong operating results for the first six months of 2012 were negatively impacted by an unrealized loss before tax on derivatives of $81.3 million and an unfavorable impact from FIFO accounting of $95.0 million."Our solid second quarter results were driven by wide crack spreads, favorable crude differentials and strong operational performance from both of our refineries," said Jack Lipinski, CVR Energy's chief executive officer. "Following the completion of a scheduled turnaround in March, our Coffeyville plant has run exceptionally well. In fact, the refinery set a new crude throughput record of 125,900 barrels per day for the month of June. "Our continuing integration efforts are paying off handsomely at the Wynnewood refinery, as well," he said.  "Wynnewood posted $97.2 million of operating income for the quarter.  "Our results were also supported by our nitrogen fertilizer segment, which performed very well in the second quarter, reporting operating income of $36.1 million," Lipinski said.Petroleum BusinessThe petroleum business, which includes the Coffeyville and Wynnewood refineries, reported second quarter 2012 operating income of $248.9 million, and adjusted EBITDA, a non-GAAP financial measure, of $381.4 million, on net sales of $2,229.5 million, compared to operating income in the same quarter a year earlier of $183.5 million, and adjusted EBITDA of $208.4 million, on net sales of $1,376.7 million.  Second quarter 2012 throughput of crude oil and all other feedstocks and blendstocks totaled 199,501 barrels per day (bpd), compared to 116,459 bpd for the same period in 2011. Crude oil throughput for the second quarter 2012 averaged 190,372 bpd per day compared with 109,486 bpd for the same period in 2011. The year-over-year increase in throughput was mostly driven by the addition of the Wynnewood refinery. Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $20.98 in the second quarter 2012 compared to $25.49 during the same period in 2011. Gross profit per crude oil throughput barrel was $15.31 in the second quarter 2012, as compared to $19.36 during the same period in 2011. Direct operating expense per barrel sold, exclusive of depreciation and amortization, for the second quarter 2012 was $3.81, down from $4.09 in the second quarter 2011, driven by increased throughput at the Coffeyville refinery.Coffeyville RefineryThe Coffeyville refinery reported second quarter 2012 operating income of $151.9 million on net sales of $2,162.2 million, compared to $185.4 million of operating income on net sales of $1,376.6 million for the second quarter of 2011. Second quarter 2012 crude oil throughput totaled 121,325 bpd, compared to 109,486 bpd in the second quarter of 2011. Refining margin per crude oil throughput barrel for the second quarter of 2012 was $20.61, compared to $25.46 for the same period in 2011. Gross profit per crude oil throughput barrel was $15.00 in the second quarter of 2012, compared to $19.40 for the 2011 second quarter. The refining margin adjusted for FIFO impact was $309.4 million for the 2012 second quarter, compared to $257.8 million for the same period in 2011. Direct operating expense per barrel sold for the 2012 second quarter was $3.62, compared to $4.09 for the 2011 second quarter. Wynnewood RefineryCVR Energy acquired the Wynnewood refinery in December 2011. The 2012 second quarter represents the refinery's second full quarter of production as a CVR Energy subsidiary.  For the second quarter of 2012, the refinery's crude oil throughput totaled 69,046 bpd. The refinery's second quarter 2012 operating income was $97.2 million on net sales of $782.3 million. The refining margin adjusted for FIFO impact in the second quarter 2012 was $158.5 million and direct operating expense per barrel sold for the quarter was $4.02. Nitrogen Fertilizers BusinessThe fertilizer business operated by CVR Partners, LP reported second quarter 2012 operating income of $36.1 million, and adjusted EBITDA, a non-GAAP financial measure, of $44.1 million, on net sales of $81.4 million, compared to operating income of $39.3 million, and adjusted EBITDA of $45.0 million, on net sales of $80.7 million for the 2011 second quarter.  CVR Partners produced 108,900 tons of ammonia during the second quarter of 2012, of which 34,900 net tons were available for sale while the rest was upgraded to 180,000 tons of more profitable urea ammonium nitrate (UAN).  In the 2011 second quarter, the plant produced 102,300 tons of ammonia with 28,200 net tons available for sale with the remainder upgraded to 179,400 tons of UAN. Second quarter 2012 average realized plant gate prices for ammonia and UAN were $568 per ton and $329 per ton, respectively, as compared to $574 per ton and $300 per ton, respectively, for the same period in 2011. Cash and DebtConsolidated cash and cash equivalents, which included $196.4 million for CVR Partners, increased to $692.6 million at the end of the 2012 second quarter, compared to $500.9 million at the end of the first quarter of 2012, primarily due to increased cash flows in the petroleum business.  Consolidated long-term debt at the end of the 2012 second quarter, which included $125.0 million for CVR Partners, remained nearly unchanged at $851.9 million.   Forward Looking StatementsThis news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  You can generally identify forward-looking statements by our use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "explore," "evaluate," "intend," "may," "might," "plan," "potential," "predict," "seek," "should," or "will," or the negative thereof or other variations thereon or comparable terminology.  These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control.  For a discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our Annual Report on Form 10-K for the year ended Dec. 31, 2011, and any subsequently filed quarterly reports on Form 10-Q.  These risks may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.  Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements.  The forward-looking statements included in this press release are made only as of the date hereof.  CVR Energy disclaims any intention or obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.About CVR Energy, Inc.Headquartered in Sugar Land, Texas, CVR Energy, Inc.'s subsidiary and affiliated businesses operate independent refining assets in Coffeyville, Kan., and Wynnewood, Okla., with more than 185,000 barrels per day of processing capacity, a marketing network for supplying high value transportation fuels to customers through tanker trucks and pipeline terminals, and a crude oil gathering system serving Kansas, Oklahoma, western Missouri, southwestern Nebraska and Texas.  In addition, CVR Energy subsidiaries own a majority interest in and serve as the general partner of CVR Partners, LP, a producer of ammonia and urea ammonium nitrate, or UAN, fertilizers.For further information, please contact:Investor Relations:Jay FinksCVR Energy, Inc.281-207-3588InvestorRelations@CVREnergy.com               Media Relations:Angie DasbachCVR Energy, Inc. 913-982-0482MediaRelations@CVREnergy.com CVR Energy, IncFinancial and Operational Data (all information in this release is unaudited unless noted otherwise)Three Months Ended             June 30,                Change from 2011    20122011  Change    Percent  (in millions, except per share data)Consolidated Statement of Operations Data:Net sales$   2,308.3$   1,447.7$      860.659.4%Cost of product sold1,874.21,123.4750.866.8Direct operating expenses94.166.227.942.1Insurance recovery ? business interruption????Selling, general and administrative expenses72.018.253.8295.6Depreciation and amortization32.222.010.246.4Operating income235.8217.917.98.2Interest expense and other financing costs(19.0)(14.2)(4.8)33.8Gain (loss) on derivatives, netRealized(8.1)0.5(8.6)(1,720.0)Unrealized46.96.440.5632.8Loss on extinguishment of debt?(0.2)0.2?Other income, net0.80.50.360.0Income before income tax expense256.4210.945.521.6Income tax expense91.176.714.418.8Net income165.3134.231.123.2Net income attributable to noncontrolling interest10.69.31.314.0Net income attributable to CVR Energy stockholders$      154.7$      124.9$        29.823.9%_______________Basic earnings per share$         1.78$        1.44$        0.3423.6%Diluted earnings per share$         1.75$        1.42$        0.3323.2%Adjusted net income$      223.1$      126.4$         96.776.5%Adjusted net income, per diluted share$         2.52$        1.44$         1.0875.0%Weighted-average common shares outstanding:   Basic86.886.40.40.5%   Diluted88.587.80.60.7%  Six Months Ended             June 30,                Change from 2011    20122011  Change    Percent  (in millions, except per share data)Consolidated Statement of Operations Data:Net sales$   4,276.9$   2,615.0$    1,661.963.6%Cost of product sold3,509.42,060.21,449.270.3Direct operating expenses209.6134.675.055.7Insurance recovery ? business interruption?(2.9)2.9?Selling, general and administrative expenses117.351.565.8127.8Depreciation and amortization64.344.120.245.8Operating income376.3327.548.814.9Interest expense and other financing costs(38.2)(27.4)(10.8)39.4Gain (loss) on derivatives, netRealized(27.2)(18.4)(8.8)47.8Unrealized(81.3)3.2(84.5)(2,640.6)Loss on extinguishment of debt?(2.1)2.1?Other income, net1.11.1??Income before income tax expense230.7283.9(53.2)(18.7)Income tax expense81.4103.9(22.5)(21.7)Net income149.3180.0(30.7)(17.1)Net income attributable to noncontrolling interest19.89.310.5112.9Net income attributable to CVR Energy stockholders$      129.5$      170.7$       (41.2)(24.1)%_____________Basic earnings per share$         1.49$         1.97$        (0.48)(24.4)%Diluted earnings per share$         1.46$         1.94$        (0.48)(24.7)%Adjusted net income$      295.7$      175.6$        120.168.4%Adjusted net income, per diluted share$        3.34$        2.00$          1.3467.0%Weighted-average common shares outstanding:   Basic86.886.40.40.5%   Diluted88.587.80.70.8% _______________ As of June 30,As of December 31,20122011(audited)(in millions)Balance Sheet Data:Cash and cash equivalents$       692.6$        388.3Working capital904.5769.2Total assets3,284.73,119.3Long-term debt851.9853.9Total CVR stockholders' equity1,276.51,151.6 Three Months Ended            June 30,            Six Months Ended            June 30,            2012201120122011(in millions)Cash Flow DataNet cash flow provided by (used in):Operating activities$ 249.6$ 178.6$ 435.9$ 162.6Investing activities(45.4)(13.6)(104.8)(20.7)Financing activities(12.4)417.1(26.8)406.0Net cash flow$ 191.8$ 582.1$ 304.3$ 547.9Segment InformationOur operations are organized into two reportable segments, Petroleum and Nitrogen Fertilizer. Our operations that are not included in the Petroleum and Nitrogen Fertilizer segments are included in Corporate and Other segment (along with elimination of intersegment transactions). The Petroleum segment includes the operations of our Coffeyville, Kansas and Wynnewood, Oklahoma refineries along with our crude oil gathering and pipeline systems. The Nitrogen Fertilizer segment is operated by CVR Partners, LP, ("CVR Partners") of which we own a majority interest and serve as general partner. It consists of a nitrogen fertilizer manufacturing facility that utilizes a pet coke gasification process in producing nitrogen fertilizer.  Detailed operating results for the Nitrogen Fertilizer segment for the quarter ended June 30, 2012 are included in CVR Partners' press release dated August 1, 2012.   PetroleumNitrogenFertilizer(CVR Partners) Corporateand Other  Consolidated(in millions)Three months ended June 30, 2012Net sales$      2,229.5$            81.4$             (2.6)$      2,308.3Cost of product sold1,866.110.7(2.6)1,874.2Direct operating expenses (1)69.122.40.191.6Major scheduled turnaround expense2.5??2.5Selling, general & administrative16.37.048.772.0Depreciation and amortization26.65.20.432.2Operating income (loss)$          248.9$            36.1$           (49.2)$          235.8Capital expenditures$            27.0$            16.9$              1.7$            45.6Six months ended June 30, 2012Net sales$      4,128.0$          159.7$           (10.8)$      4,276.9Cost of product sold3,496.823.3(10.7)3,509.4Direct operating expenses (1)140.845.3?186.1Major scheduled turnaround expense23.5??23.5Selling, general & administrative30.213.074.0117.3Depreciation and amortization52.910.60.864.3Operating income (loss)$          383.8$            67.5$           (74.9)$          376.3Capital expenditures$            62.4$            39.2$              3.6$          105.2   PetroleumNitrogenFertilizer(CVR Partners) Corporateand Other  Consolidated(in millions)Three months ended June 30, 2011Net sales$      1,376.7$            80.7$             (9.7)$      1,447.7Cost of product sold1,122.89.7(9.1)1,123.4Direct operating expenses (1)44.022.3(0.1)66.2Major scheduled turnaround expense????Insurance recovery ? business interruption????Selling, general & administrative9.44.74.118.2Depreciation and amortization17.04.70.322.0Operating income (loss)$          183.5$            39.3$             (4.9)$          217.9Capital expenditures$              8.6$              4.0$              1.0$            13.6Six months ended June 30, 2011Net sales$      2,487.9$          138.1$           (11.0)$      2,615.0Cost of product sold2,053.017.2(10.0)2,060.2Direct operating expenses (1)89.545.3(0.2)134.6Major scheduled turnaround expense????Insurance recovery ? business interruption?(2.9)?(2.9)Selling, general & administrative22.313.116.151.5Depreciation and amortization33.99.30.944.1Operating income (loss)$          289.2$            56.1$           (17.8)$          327.5Capital expenditures$            13.2$              6.0$              1.8$            21.0____________________(1)   Excluding turnaround expenses.   PetroleumNitrogenFertilizer(CVR Partners) Corporateand Other  Consolidated(in millions)June 30, 2012Cash and cash equivalents (1)$           ?$          196.4$        496.2$        692.6Total assets2,540.0639.7105.03,284.7Long-term debt (1)?125.0726.9851.9December 31, 2011Cash and cash equivalents (1)$           ?$          237.0$        151.3$        388.3Total assets2,322.1659.3137.93,119.3Long-term debt (1)?125.0728.9853.9_________________(1)   Corporate and Other is inclusive of the Petroleum segment's cash and cash equivalents and long-term debt. Petroleum Segment Operating DataThe following tables set forth information about our consolidated Petroleum segment operations and our Coffeyville and Wynnewood refineries. Reconciliations of certain non-GAAP financial measures are provided under "Use of Non-GAAP Financial Measures" below. Three Months Ended               June 30,               Six Months Ended               June 30,               2012201120122011(in millions, except operating statistics)Petroleum Segment Summary Financial Results:Net sales$     2,229.5$   1,376.7$   4,128.0$   2,487.9Cost of product sold1,866.11,122.83,496.82,053.0Refining margin*363.4253.9631.2434.9Direct operating expenses69.144.0140.889.5Major scheduled turnaround expense2.5?23.5?Depreciation and amortization26.617.052.933.9Gross profit265.2192.9414.0311.5Selling, general and administrative expenses16.39.430.222.3Operating income$        248.9$      183.5$      383.8$      289.2Refining margin adjusted for FIFO impact*$        468.8$      258.0$    726.2$      413.6Adjusted Petroleum EBITDA*$        381.4$      208.4$    535.2$      296.6Petroleum Segment Key Operating Statistics:Per crude oil throughput barrel:Refining margin*$        20.98$      25.49$       20.58$      23.08FIFO impact (favorable) unfavorable6.090.413.10(1.13)Refining margin adjusted for FIFO impact*27.0725.9023.6821.95Gross profit15.3119.3613.5016.53Direct operating expenses4.134.425.364.74Direct operating expenses per barrel sold$          3.81$         4.09$         4.69$        4.45Barrels sold (barrels per day)206,606118,435190,319110,860  Three Months Ended                         June 30,                         Six Months Ended                         June 30,                         2012201120122011Petroleum Segment Summary Refining Throughput and Production Data:(barrels per day)Throughput:Sweet148,91274.6%84,65472.6%129,78173.1%82,30274.1%Light/medium sour20,48810.3%1980.2%22,72812.8%3970.4%Heavy sour20,97210.5%24,63421.2%16,0069.0%21,41619.3%Total crude oil throughput190,37295.4%109,48694.0%168,51594.9%104,11593.8%All other feedstocks andblendstocks9,1294.6%6,9736.0%8,9295.1%6,9236.2%Total throughput199,501100.0%116,459100.0%174,444100.0%111,038100.0%Production:Gasoline96,97248.7%53,49545.5%89,13150.4%51,56446.2%Distillate82,07541.3%48,95941.6%72,20240.9%45,93441.1%Other (excluding internally produced fuel) 19,910 10.0% 15,106 12.9% 15,396 8.7% 14,158 12.7%Total refining production (excluding internally produced fuel) 198,957 100.0% 117,560 100.0% 176,729 100.0% 111,656 100.0%Product price (dollars per gallon):Gasoline$     2.89$    3.07$    2.88$    2.86Distillate2.953.143.033.03  Three Months Ended                June 30,                Six Months Ended                June 30,                2012201120122011Market Indicators (dollars per barrel):West Texas Intermediate (WTI) NYMEX$  93.35$          102.34$      98.15$      98.50Crude Oil Differentials:WTI less WTS (light/medium sour)5.282.514.483.30WTI less WCS (heavy sour)20.4517.6123.7919.76NYMEX Crack Spreads:Gasoline30.4227.8527.9522.98Heating Oil28.1325.5628.8724.76NYMEX 2-1-1 Crack Spread29.2726.7128.4123.87PADD II Group 3 Basis:Gasoline(3.24)(1.59)(5.00)(1.82)Ultra Low Sulfur Diesel2.163.240.282.21PADD II Group 3 Product Crack:Gasoline27.1826.2622.9521.16Ultra Low Sulfur Diesel30.2928.8129.1426.97PADD II Group 3 2-1-128.7427.5326.0524.06  Three Months Ended            June 30,            Six Months Ended            June 30,            2012201120122011(in millions, except operating statistics)Coffeyville Refinery Financial Results:Net sales$   2,162.2$   1,376.6$   3,457.9$   2,487.7Cost of product sold1,934.61,122.93,070.92,053.1Refining margin*227.6253.7387.0434.6Direct operating expenses43.643.087.485.2Turnaround expenses0.91.121.04.3Depreciation and amortization17.416.334.732.6Gross profit165.7193.3243.9312.5Selling, general and administrative expenses13.87.924.220.7Operating income$      151.9$      185.4$      219.7$      291.8Refining margin adjusted for FIFO impact*$      309.4$      257.8$      455.8$      413.3Coffeyville Refinery Key Operating Statistics:Per crude oil throughput barrel:Refining margin*$      20.61$      25.46$      20.27$      23.06FIFO impact (favorable) unfavorable7.410.413.61(1.13)Refining margin adjusted for FIFO impact*28.0225.8723.8821.93Gross profit15.0019.4012.7816.59Direct operating expenses4.034.425.684.74Direct operating expenses per barrel sold$        3.62$        4.09$        5.02$        4.45Barrels sold (barrels per day)135,062118,435118,569110,860 Three Months Ended                         June 30,                         Six Months Ended                         June 30,                         2012201120122011Coffeyville Refinery Throughput and Production Data:(barrels per day)Throughput:Sweet100,16678.4%84,65472.6%86,04177.7%82,30274.1%Light/medium sour1870.1%1980.2%2,8172.5%3970.4%Heavy sour20,97216.4%24,63421.2%16,00614.4%21,41619.3%Total crude oil throughput121,32594.9109,48694.0%104,86494.6%104,11593.8%All other feedstocks and blendstocks6,5005.1%6,9736.0%5,9345.4%6,9236.2%Total throughput127,825100.0%116,459100.0%110,798100.0%111,038100.0%Production:Gasoline62,35147.9%53,49545.5%56,31050.1%51,56446.2%Distillate54,93342.3%48,95941.6%48,00442.7%45,93441.1%Other (excluding internally produced   fuel) 12,753 9.8% 15,106 12.9% 8,123 7.2% 14,158 12.7%Total refining production (excluding   internally produced fuel) 130,037 100.0% 117,560 100.0% 112,437 100.0% 111,656 100.0%Product price (dollars per gallon):Gasoline$    2.89$    3.07$   2.89$    2.86Distillate2.943.143.003.03  Three Months Ended         June 30, 2012       Six Months Ended        June 30, 2012      (in millions, except operating statistics)Wynnewood Refinery Financial Results:Net sales$           782.3$       1,607.8Cost of product sold647.51,365.0Refining margin*134.8242.8Direct operating expenses25.553.4Turnaround expenses1.62.5Depreciation and amortization8.416.7Gross profit99.3170.2Selling, general and administrative expenses2.15.5Operating income$             97.2$          164.7Refining margin adjusted for FIFO impact*$           158.5$          269.0Wynnewood Refinery Key Operating Statistics:Per crude oil throughput barrel:Refining margin*$          21.47$          20.97FIFO impact (favorable) unfavorable3.762.25Refining margin adjusted for FIFO impact*25.2323.22Gross profit15.8214.70Direct operating expenses4.304.83Direct operating expenses per barrel sold$             4.02$             4.15Barrels sold (barrels per day)74,07273,996  Three Months Ended         June 30, 2012          Six Months Ended          June 30, 2012         %%Wynnewood Refinery Throughput and Production Data:   (barrels per day)Throughput:Sweet48,74568.0%43,74065.6%Light/medium sour20,30128.3%19,91129.9%Heavy sour??%??%Total crude oil throughput69,04696.3%63,65195.5%All other feedstocks and blendstocks2,6293.7%2,9954.5%Total throughput71,675100.0%66,646100.0%Production:Gasoline34,62150.2%32,82151.0%Distillate27,14239.4%24,19837.6%Other (excluding internally produced fuel)7,15710.4%7,27311.4%Total refining production (excluding internally produced fuel)68,920100.0%64,292100.0%Product price (dollars per gallon):Gasoline$    2.88$    2.90Distillate2.953.06 Nitrogen Fertilizer Segment Operating DataThe following tables set forth information about the Nitrogen Fertilizer segment operated by CVR Partners, of which we own a majority interest and serve as general partner. Reconciliations of certain non-GAAP financial measures are provided under "Use of Non-GAAP Financial Measures" below. Additional discussion of operating results for the Nitrogen Fertilizer segment for the quarter ended June 30, 2012 are included in CVR Partners' press release dated August 1, 2012.Three Months Ended            June 30,            Six Months Ended            June 30,            2012201120122011(in millions, except as noted)Nitrogen Fertilizer Segment Financial Results:Net sales$       81.4$       80.7$    159.7$    138.1Cost of product sold10.79.723.317.2Direct operating expenses22.422.345.345.3Insurance recovery ? business interruption???(2.9)Selling, general and administrative expenses7.04.713.013.1Depreciation and amortization5.24.710.69.3Operating income$       36.1$       39.3$       67.5$       56.1Adjusted Nitrogen Fertilizer EBITDA*$       44.1$       45.0$       82.1$       70.9 Three Months Ended            June 30,            Six Months Ended            June 30,            2012201120122011(in millions, except as noted)Nitrogen Fertilizer Segment Key Operating Statistics:Production (thousand tons):Ammonia (gross produced) (1)108.9102.3198.2207.6Ammonia (net available for sale) (1)34.928.259.963.4UAN180.0179.4334.6350.0Petroleum coke consumed (thousand tons)130.2135.8250.7259.9Petroleum coke (cost per ton)$  31$  30$  36$   23Sales (thousand tons):Ammonia29.433.659.360.9UAN177.2166.1335.5345.4Product pricing (plant gate) (dollars per ton) (2):Ammonia$ 568$ 574$ 591$ 570UAN$ 329$ 300$ 322$ 252On-stream factors (3):Gasification99.2%99.3%96.2%99.6%Ammonia98.0%98.5%94.7%97.6%UAN96.7%97.6%90.1%95.4%Market Indicators:Ammonia ? Southern Plains (dollars per ton)$ 585$ 604$ 585$ 605UAN ? Mid Cornbelt (dollars per ton)$ 417$ 366$ 380$ 358_______________* See Use of Non-GAAP Financial Measures below.(1)Gross tons produced for ammonia represent the total ammonia produced, including ammonia produced that was upgraded into UAN. The net tons available for sale represent the ammonia available for sale that was not upgraded into UAN.(2)Plant gate sales per ton represent net sales less freight and hydrogen revenue divided by product sales volume in tons in the reporting period and is shown in order to provide a pricing measure that is comparable across the fertilizer industry.(3)On-stream factor is the total number of hours operated divided by the total number of hours in the reporting period and is included as a measure of operating efficiency. Use of Non-GAAP Financial MeasuresTo supplement the actual results in accordance with GAAP for the applicable periods, the Company also uses non-GAAP measures as discussed below, which are adjusted for GAAP-based results. The use of non-GAAP adjustments are not in accordance with or an alternative for GAAP. The adjustments are provided to enhance an overall understanding of the Company's financial performance for the applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods.|Adjusted net income is not a recognized term under GAAP and should not be substituted for net income (loss) as a measure of our performance but rather should be utilized as a supplemental measure of financial performance in evaluating our business. Management believes that adjusted net income provides relevant and useful information that enables external users of our financial statements, such as industry analysts, investors, lenders and rating agencies to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance.Adjusted net income is not a recognized term under GAAP and should not be substituted for net income (loss) as a measure of our performance but rather should be utilized as a supplemental measure of financial performance in evaluating our business. Management believes that adjusted net income provides relevant and useful information that enables external users of our financial statements, such as industry analysts, investors, lenders and rating agencies to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance.Three Months Ended            June 30,            Six Months Ended            June 30,            2012201120122011(in millions, except  per share data)Reconciliation of Net Income to Adjusted Net Income:Net Income attributable to CVR Energy stockholders$        154.7$    124.9$        129.5$    170.7Adjustments (all net of taxes):FIFO impact (favorable) unfavorable63.92.557.6(12.9)Share-based compensation10.81.313.315.0Loss on extinguishment of debt?0.1?1.3Major scheduled turnaround expense1.50.614.22.5Loss on disposition of fixed assets?0.9?0.9Unrealized (gain) loss on derivatives(28.4)(3.9)49.3(1.9)Expenses associated with proxy matters17.8?26.8?Expenses associated with the acquisition of Gary-Williams (1)2.8?5.0?Adjusted net income$        223.1$    126.4$        295.7$    175.6Adjusted net income per diluted share$         2.52$       1.44$         3.34$       2.00_______________(1) Legal, professional and integration expenses related to acquisition of Gary-Williams in December 2011. Refining margin per crude oil throughput barrel is a measurement calculated as the difference between net sales and cost of product sold (exclusive of depreciation and amortization). Refining margin is a non-GAAP measure that we believe is important to investors in evaluating our refinery's performance as a general indication of the amount above our cost of product sold that we are able to sell refined products. Each of the components used in this calculation (net sales and cost of product sold exclusive of depreciation and amortization) can be taken directly from our Statement of Operations. Our calculation of refining margin may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. In order to derive the refining margin per crude oil throughput barrel, we utilize the total dollar figures for refining margin as derived above and divide by the applicable number of crude oil throughput barrels for the period. We believe that refining margin is important to enable investors to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance.Refining margin per crude oil throughput barrel adjusted for FIFO impact is a measurement calculated as the difference between net sales and cost of product sold (exclusive of depreciation and amortization) adjusted for FIFO impacts. Refining margin adjusted for FIFO impact is a non-GAAP measure that we believe is important to investors in evaluating our refinery's performance as a general indication of the amount above our cost of product sold (taking into account the impact of our utilization of FIFO) that we are able to sell refined products. Our calculation of refining margin adjusted for FIFO impact may differ from calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. Under our FIFO accounting method, changes in crude oil prices can cause fluctuations in the inventory valuation of our crude oil, work in process and finished goods, thereby resulting in favorable FIFO impacts when crude oil prices increase and unfavorable FIFO impacts when crude oil prices decrease.Adjusted Petroleum and Nitrogen Fertilizer EBITDA represents operating income adjusted for FIFO impacts (favorable) unfavorable, share-based compensation, major scheduled turnaround expenses, realized gain (loss) on derivatives, net, loss on disposition of fixed assets, depreciation and amortization and other income (expense). Adjusted EBITDA by operating segment results from operating income by segment adjusted for items that we believe are needed in order to evaluate results in a more comparative analysis from period to period. Adjusted EBITDA by operating segment is not a recognized term under GAAP and should not be substituted for operating income as a measure of performance but should be utilized as a supplemental measure of performance in evaluating our business. Management believes that adjusted EBITDA by operating segment provides relevant and useful information that enables investors to better understand and evaluate our ongoing operating results and allows for greater transparency in the reviewing of our overall financial, operational and economic performance. Below is a reconciliation of operating income to adjusted EBITDA for the petroleum and nitrogen fertilizer segments for the three and six months ended June 30, 2012 and 2011: Three Months Ended            June 30,            Six Months Ended            June 30,            2012201120122011(in millions)Petroleum:Petroleum operating income$    248.9$    183.5$    383.8$    289.2    FIFO impacts (favorable) unfavorable105.44.195.0(21.3)    Share-based compensation5.40.56.47.1    Major scheduled turnaround expenses2.51.123.54.3    Loss on disposition of fixed assets?1.5?1.5    Realized gain (loss) on derivatives, net(8.1)0.5(27.2)(18.4)    Depreciation and amortization26.617.052.933.9    Other income0.70.20.80.3Adjusted Petroleum EBITDA$    381.4$    208.4$    535.2$    296.6Three Months Ended            June 30,            Six Months Ended            June 30,            2012201120122011(in millions)Nitrogen Fertilizer:Nitrogen Fertilizer operating income$       36.1$       39.3$       67.5$       56.1    Share-based compensation2.80.94.05.5    Depreciation and amortization5.24.710.69.3    Other income, net?0.1??Adjusted Nitrogen Fertilizer EBITDA$       44.1$       45.0$       82.1$       70.9Derivatives Summary. To reduce the basis risk between the price of products for Group 3 and that of the NYMEX associated with selling forward derivative contracts for NYMEX crack spreads, we may enter into basis swap positions to lock the price difference. If the difference between the price of products on the NYMEX and Group 3 (or some other price benchmark as we may deem appropriate) is different than the value contracted in the swap, then we will receive from or owe to the counterparty the difference on each unit of product contracted in the swap, thereby completing the locking of our margin. From time to time our petroleum segment holds various NYMEX positions through a third-party clearing house. In addition, the Company enters into commodity swap contracts. The physical volumes are not exchanged and these contracts are net settled with cash.  The table below summarizes our open commodity derivatives positions as of June 30, 2012.  The positions are primarily in the form of 'crack spread' swap agreements with financial counterparties, wherein the Company will receive the fixed prices noted below. Commodity Swaps   Barrels   Fixed Price(1)Third Quarter  20124,950,000$ 23.62Fourth Quarter 20123,075,00020.54First Quarter 20132,100,00024.31Second Quarter 20131,125,00024.85Third Quarter  20131,125,00023.86Fourth Quarter 20131,125,00022.51Total13,500,000$ 23.06____________________(1)  Weighted-average price of all positions for period indicated.  SOURCE CVR Energy, Inc.