Jay Finks - VP Finance Jack Lipinski - CEO Susan Ball - CFO.

Neil Mehta - Goldman Sachs.

Greetings, and welcome to the CVR Energy Third Quarter 2015 Conference Call. At this time all participants are in listen-only mode. A 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, Vice President of Finance for CVR Energy. Please go ahead, Jay..

Thank you, Kevin and good afternoon everyone. We very much appreciate you joining us this afternoon for CVR Energy third quarter 2015 earnings call. With me are Jack Lipinski, our Chief Executive Officer; and Susan Ball, our Chief Financial Officer.

Prior to discussing our 2015 third 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, without limiting the foregoing, the words outlook, believes, anticipates, plans, expects and similar expressions are intended to identify 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 reconciliations to the most directly comparable GAAP financial measures are included in our 2015 third quarter 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?.

Thanks, Jay. Good afternoon everyone and thank you for joining our earnings call. Hopefully, you had the opportunity to listen to the CVR Partners and CVR Refining third quarter earnings calls earlier today.

This morning we reported CVR Energy’s third quarter consolidated adjusted net income of $82.4 million or $0.95 per diluted share and that compares to $37 million or $0.43 per diluted share in the third quarter year ago. Susan will provide you more details on the financials reported this morning.

We also announce today a quarterly cash dividend of $0.50 per share which will be paid on November 16, to stockholders of record on November 9. Let me speak a little bit about our business segments. On the Petroleum side, CVR Refining’s 2015 third quarter adjusted EBITDA was $229.6 million, as compared to $129.9 million a year ago.

CVR Refining also declared a third quarter distribution of $1.01 per common unit. CVR Energy owns approximately 66% of common units of CVR Refining and therefore received a proportion amount of distributions from CVR Refining. CVR Refining’s total crude throughput to the third quarter was approximately 200,000 barrels a day.

Coffeyville processed approximately 119,000 barrels a day of crude and Wynnewood processed approximately 81,000 barrels a day of crude. In our fertilizer segment, CVR Partners announced a 2015 third quarter adjusted EBITDA of $3.8 million as compared to $21.1 million in the third quarter of 2014.

CVR Partners does not declare a 2015 third quarter cash distribution. Impacting CVR Partner's results for this year's third quarter was its previously scheduled 18 day major plan turnaround.

The turnaround went well including the installation of new equipment that has resulted in ammonia production rates over the last several weeks that are highest in the facilities history. While the turnaround was completely within the anticipated timeframe and the plant running well.

Following the turnaround, the facility experienced more than two weeks of additional downtime caused by three separate outages at Linde’s air separation unit. This unit provides CVR Partners, the CVR Partners plant, oxygen and nitrogen that are necessary for production.

At this point, I’ll turn it over the call to Susan so she could discuss the financials in more details.

Susan?.

Thank you, jack and good afternoon everyone. Net income attributable to CVR Energy stockholders was 57.9 million in the third quarter 2015 as compared to 7.9 million in the third quarter of last year.

The net income attributable to non-controlling interest was 41 million for the third quarter 2015 as compared to 13.4 million in the same period a year ago. Adjusted net income for the 2015 third quarter was $82.4 million or $0.95 per diluted share as compared to $37 million or $0.43 per diluted share in the third quarter of 2014.

We believe adjusted net income is a meaningful metric for analyzing our performance as it does eliminate the impact of non-cash and other unusual items inherent in our business and provides a more transparent view as to the market expectations.

The adjustments to net income during the 2015 third quarter to derive adjusted net income or adjustments related to the unfavorable impacts as a result of our accounting under first-in first-out or the FIFO inventory account method of $45.6 million.

Major schedule turnaround expenses of $22.2 million which included 15.6 million for the petroleum segment and 6.6 million for the fertilizer segment. Gains on derivatives not settled during the period of $11 million, share based compensation of $3.2 million and expenses associated with the Rentech Nitrogen merger of $1.5 million.

The adjustments for the 2014 third quarter were unfavorable FIFO impact of $52 million, losses on derivatives not settled during the period of 12.5 million, major scheduled turnaround expenses of 5.5 million and share-based compensation of 2 million.

These gross adjustments to net income are reduced for the portion that’s attributable to the non-controlling interest and further reduced then for the net tax impacts associated with them. The third quarter of 2015 effective tax rate was approximately 19% as compared to 17% in the third quarter of 2014.

I will now turn to the specific performance of our two business segments impacting our overall quarterly results. As Jack mentioned earlier CVR Refining’s adjusted EBITDA for the 2015 third quarter was 229.6 million as compared to 129.9 million in the same period in 2014.

The refineries ran approximately 200,000 barrels per day of crude for the third quarter of 2015 as compared to approximately 176,000 barrels per day in the third quarter of 2014. The higher crude throughput in 2015 attributed to the improvement of the adjusted EBITDA.

Additionally, in the third quarter 2015, CVR Refining’s realized refining margin adjusted for FIFO was $18.65 per barrel as compared to $13.16 in the same quarter of 2014. This increase was primarily driven by the significantly higher Group 3 gasoline crack spread and decreased liquid volume loss due to the lower crude prices.

The NYMEX 211 crack spread averaged $21.14 per barrel in the third quarter of 2015 as compared to $19.85 per barrel in the same period of 2014. The PADD II Group 3 211 crack spread averaged $21.59 per barrel in the third quarter of 2015 as compared to $18.21 in the third quarter of 2014.

As discussed earlier, CVR Refining announced a 2015 third quarter distribution of $1.01 per common unit with 98.3 million to be paid to CVR Energy and the remaining 50.8 million to be paid to public unitholders of CVR Refining.

Now turning to our fertilizer segment, as was mentioned earlier CVR Partners third quarter adjusted EBITDA was 3.8 million as compared to 21.1 million in the same period last year.

The decrease in adjusted EBITDA over the periods was primarily driven by reduced UAN sales volumes associated with the schedule turnaround during the 2015 third quarter as well as the unplanned downtime in August and September resulting from the Linde shutdown. Additionally, there was lower pricing in the third quarter 2015.

Our financial position remain strong as we ended the quarter with cash and cash equivalents of approximately 1 billion on a consolidated basis, including approximately 33 million held at CVR Partners and approximately 501 million at CVR Refining. CVR Energy held cash of approximately 478 million as September 30, 2015.

CVR Energy has no debt exclusive of the debt that resides with CVR Refining and CVR Partners. Total consolidated debt including current portions as of September 30 was approximately 674 million. With that Jack, I will turn the call back to you..

Thank you, Susan. Again I hope all the listeners had an opportunity to hear the earlier calls. Operator we are ready to take questions..

Thank you. At this time will we be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Neil Mehta from Goldman Sachs. Please proceed with your question..

I think we entered a lot of these questions during the CVRs call, but one thing I want to talk about was to special dividend and I realize that this is ultimately the preview of the board here.

But how do you think about that, it's been a fantastic year for refining margins, is there a role for a special dividend at the CVI level for shareholder?.

Well, Neil obviously we did bill more cash than the dividends we will pay out, it becomes the subject of board discussions and some of it has to do with what potentially could CVI do with the money, if there were something to acquire or otherwise investments versus distributing the cash.

It's always an open question and I wish I could give you more clarity, but it's something that we always look at..

And there is no regular timing on that right, it is an ongoing process?.

It is. If you go back and look at when there were special dividends, it's when CVI picks using [ph] would accumulate cash or larger pieces of cash and then it would say that it was time to pass it on to our shareholder. Right now again we've had a good run, we’ve reduced our dividend a year ago now I guess.

So we have been building cash, but there is no set answer. There is always that possibility..

Makes sense.

And then you talked about this a little bit Jack earlier, but on the M&A point we’re starting to finally see the consolidation that you've been talking about for years in the midcontinent, do you see -- invasion in midcontinent a couple of years from now, with just a handful players as opposed to the fragmented market that we see today?.

I do believe there is going to be some assets that come up that will be attractive to us and those of us that know, we look at everything in the market.

It's no surprise, it's no secret, if somebody is willing to sell something we’re willing to see if we could do it better or if it fits our bill, does it help us generate incremental cash flow for our shareholders.

I do believe that some point in time these opportunities will arise and I will say that we are uniquely positioned where we are, not only having CVRR and UAN, one of the examples -- a perfect example is the merger with Rentech, having a parent that’s supportive of this made that much easier to do. Same things at CVRR or CVI.

Everybody should know and if they don’t know, we are fully consolidated into Icon Interpretation LP [ph]. So that does not necessarily means that there is a cash registered there. But if there is a good deal for CVI being part of IEP gives us reach to the vast resources in IEP.

I think I've said it before, we are not limited to acquisitions smaller than us, it could be acquisitions larger than we are..

Thanks Jack. Last question from me. CapEx next year at the different segments, any flavor would be helpful..

What we have is, we have the plan, and it’s pretty much planed out.

As far as growth capital and Susan has all the details on that, but for sustaining and environmental CapEx we had a program that we begin when we went public we pre-funded I believe 160 or more million dollars at the time, we have a reserve quarterly for both environmental and sustaining.

We don’t see -- we will see change over time as cost escalate and we have a reserve for turnaround, but as far as the big capital projects we pretty much announced the large CapEx I notice some of my peers mentioned the smaller projects that they’re doing and the like.

We are doing several million dollars of growth CapEx projects at Coffeyville, as a matter of fact they are being completed right now as we’re ready to find our way out at a turnaround for upgrading yields on our Cat cracker and another units, we just don’t speak to the smaller ones, we only speak to the larger ones, but our big capital numbers are all out there.

There are no surprises, as soon as we will enter into something we'll mention it. Again we're under a letter of intent on this Oklahoma pipeline system. We're not done with the negotiation yet, they're still ongoing. When we finally come to an agreement we’ll make it public, what our participation will be.

But there are projects always going no big numbers, the last big number was $122 million for the hydrogen plant at Coffeyville, which we think is even at lower crude prices still has a remarkable return for us. .

Thanks Jack, Susan, Jay. I appreciate. .

Thank you. We have reached at the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comment. .

Thank you, Kevin. Again I would like to thank everyone for joining us today. As a reminder, the conference call will be available for the next 14 days. You can visit any of the three websites we have for additional information and feel free to contact me as well. Thank you..

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today..