Close

Form 8-K CVR Refining, LP For: Jul 30

July 30, 2015 8:40 AM EDT




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

___________________________________

Date of Report (Date of earliest event reported): July 30, 2015

CVR REFINING, LP
(Exact name of registrant as specified in its charter)

Delaware
(State or other
jurisdiction of
incorporation)
001-35781
(Commission File Number)
37-1702463 
(I.R.S. Employer
Identification Number)
 

2277 Plaza Drive, Suite 500
Sugar Land, Texas 77479  
(Address of principal executive offices, including zip code)
 

Registrant's telephone number, including area code: (281) 207-3200

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02. Results of Operations and Financial Condition.

On July 30, 2015, CVR Refining, LP (the "Partnership") issued a press release announcing information regarding its results of operations and financial condition for the quarter and six months ended June 30, 2015, and announcing a cash distribution for the quarter ended June 30, 2015, the text of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being "furnished" and is not deemed "filed" by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor is it deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 7.01. Regulation FD Disclosure.

The information set forth under Item 2.02 is incorporated by reference as if fully set forth herein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following exhibit is being "furnished" as part of this Current Report on Form 8-K:

99.1    Press release.
 



2




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 30, 2015

    
CVR Refining, LP
By: CVR Refining GP, LLC, its general partner
 
 
By:
/s/ Susan M. Ball
 
Susan M. Ball,
 
Chief Financial Officer and Treasurer










3


Exhibit 99.1
CVR Refining Reports 2015 Second Quarter Results
And Announces Cash Distribution of 98 Cents

SUGAR LAND, Texas (July 30, 2015) - CVR Refining, LP (NYSE: CVRR), a refiner and marketer of petroleum fuels, today announced second quarter 2015 net income of $227.8 million on net sales of $1,547.5 million, compared to net income of $180.0 million on net sales of $2,466.3 million for the 2014 second quarter. Adjusted EBITDA, a non-GAAP financial measure, for the 2015 second quarter was $194.3 million, compared to adjusted EBITDA of $192.9 million for the 2014 second quarter.

For the first six months of 2015, net income was $274.5 million on net sales of $2,852.0 million, compared to net income of $445.4 million on net sales of $4,841.7 million for the comparable period a year earlier. Adjusted EBITDA for the first six months of 2015 was $356.0 million, compared to adjusted EBITDA of $387.0 million for the first six months of 2014.

“We are pleased with our 2015 second quarter results,” said Jack Lipinski, chief executive officer. “The Coffeyville and Wynnewood refineries ran well during the quarter, posting a combined crude throughput of 210,727 barrels per day (bpd). We also benefitted from favorable product margins during the quarter.”

Consolidated Operations

Second quarter 2015 throughputs of crude oil and all other feedstocks and blendstocks for the Coffeyville and Wynnewood refineries totaled 221,095 bpd. Throughputs of crude oil and all other feedstocks and blendstocks for both refineries totaled 221,469 bpd for the same period in 2014.

Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $17.22 in the 2015 second quarter, compared to $13.96 for the same period in 2014. Direct operating expenses, excluding major scheduled turnaround expenses, per crude oil throughput barrel, exclusive of depreciation and amortization, for the 2015 second quarter was $4.62, compared to $4.83 in the second quarter of 2014.

Distributions

CVR Refining also announced today a second quarter 2015 distribution of 98 cents per common unit. The distribution, as set by the board of CVR Refining GP, LLC, the general partner of CVR Refining, will be paid on Aug. 17, 2015, to unitholders of record on Aug. 10, 2015.

CVR Refining’s second quarter cash distribution brings the cumulative cash distributions paid or declared for the first six months of 2015 to $1.74 per common unit.

CVR Refining is a variable distribution master limited partnership. As a result, its quarterly distributions, if any, will vary from quarter to quarter due to several factors, including, but not limited to, its operating performance, fluctuations in the prices paid for crude oil and other feedstocks, as well as the prices received for finished products, and other cash reserves deemed necessary or appropriate by the board of directors of its general partner.

Second Quarter 2015 Earnings Conference Call

CVR Refining previously announced that it will host its second quarter 2015 Earnings Conference Call for analysts and investors on Thursday, July 30, at 1 p.m. Eastern. The Earnings Conference Call may also include discussion of company developments, forward-looking information and other material information about business and financial matters.


1





The Earnings Conference Call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1005/9508. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8289.

For those unable to listen live, the Webcast will be archived and available for 14 days at https://www.webcaster4.com/Webcast/Page/1005/9508. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13614224.

###

This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of CVR Refining’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, CVR Refining’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.

Forward-Looking Statements
This news release contains forward-looking statements. You can generally identify forward-looking statements by our use of forward-looking terminology such as “outlook,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “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 most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings. 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 Refining disclaims any intention or obligation to update publicly or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

About CVR Refining, LP
Headquartered in Sugar Land, Texas, CVR Refining, LP is an independent downstream energy limited partnership that owns refining and related logistics assets in the Midcontinent United States. CVR Refining’s subsidiaries operate a complex full coking medium-sour crude oil refinery with a rated capacity of 115,000 barrels per calendar day (bpcd) in Coffeyville, Kansas, and a complex crude oil refinery with a rated capacity of 70,000 bpcd in Wynnewood, Oklahoma. CVR Refining’s subsidiaries also operate supporting logistics assets including approximately 336 miles of active owned and leased pipelines, approximately 150 crude oil transports, a network of strategically located crude oil gathering tank farms, and more than six million barrels of owned and leased crude oil storage capacity.

For further information, please contact:

Investor Contact:
Jay Finks
CVR Refining, LP
(281) 207-3588

Media Relations:
Angie Dasbach
CVR Refining, LP
(281) 207-3550


2





CVR Refining, LP

Financial and Operational Data (all information in this release is unaudited except as otherwise noted).

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions, except per unit data)
Statement of Operations Data:
 
 
 
 
 
 
 
Net sales
$
1,547.5

 
$
2,466.3

 
$
2,852.0

 
$
4,841.7

Cost of product sold
1,180.9

 
2,172.6

 
2,237.1

 
4,236.0

Direct operating expenses
90.3

 
93.2

 
177.3

 
192.4

Flood insurance recovery
(27.3
)
 

 
(27.3
)
 

Selling, general and administrative expenses
18.6

 
17.9

 
36.7

 
36.6

Depreciation and amortization
34.2

 
30.7

 
68.2

 
60.2

Operating income
250.8

 
151.9

 
360.0

 
316.5

Interest expense and other financing costs
(10.4
)
 
(7.9
)
 
(21.7
)
 
(16.6
)
Interest income
0.1

 
0.1

 
0.2

 
0.2

Gain (loss) on derivatives, net
(12.6
)
 
35.9

 
(64.0
)
 
145.3

Other expense, net
(0.1
)
 

 

 

Income before income tax expense
227.8

 
180.0

 
274.5

 
445.4

Income tax expense

 

 

 

Net income
$
227.8

 
$
180.0

 
$
274.5

 
$
445.4

 
 
 
 
 
 
 
 
Net income per common unit - basic
$
1.54

 
$
1.22

 
$
1.86

 
$
3.02

Net income per common unit - diluted
$
1.54

 
$
1.22

 
$
1.86

 
$
3.02

 
 
 
 
 
 
 
 
Adjusted EBITDA*
$
194.3

 
$
192.9

 
$
356.0

 
$
387.0

Available cash for distribution*
$
144.2

 
$
142.8

 
$
256.0

 
$
286.8

 
 
 
 
 
 
 
 
Weighted average, number of common units outstanding (in thousands):
 
 
 
 
 
 
 
Basic
147,600

 
147,600

 
147,600

 
147,600

Diluted
147,600

 
147,600

 
147,600

 
147,600


*    See “Use of Non-GAAP Financial Measures” below.

 
As of June 30, 2015
 
As of December 31, 2014
 
 
 
(audited)
 
(in millions)
Balance Sheet Data:
 
 
 
Cash and cash equivalents
$
433.2

 
$
370.2

Working capital
622.3

 
504.5

Total assets
2,516.3

 
2,417.8

Total debt, including current portion
580.7

 
581.4

Total partners’ capital
1,558.0

 
1,450.1



3





 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Cash Flow Data:
 
 
 
 
 
 
 
Net cash flow provided by (used in):
 
 
 
 
 
 
 
Operating activities
$
160.0

 
$
199.2

 
$
308.5

 
$
457.4

Investing activities
(36.4
)
 
(47.4
)
 
(78.1
)
 
(105.3
)
Financing activities
(112.5
)
 
(145.2
)
 
(167.4
)
 
(211.9
)
Net cash flow
$
11.1

 
$
6.6

 
$
63.0

 
$
140.2

 
 
 
 
 
 
 
 
Capital expenditures for property, plant and equipment
$
36.4

 
$
47.4

 
$
78.1

 
$
105.3


Operating Data

The following tables set forth information about our consolidated 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,
 
2015
 
2014
 
2015
 
2014
Key Operating Statistics:
 
 
 
 
 
 
 
Per crude oil throughput barrel:
 
 
 
 
 
 
 
Refining margin*
$
19.12

 
$
15.22

 
$
16.47

 
$
16.17

FIFO impact (favorable) unfavorable
(1.90
)
 
(1.26
)
 
(0.32
)
 
(1.22
)
Refining margin adjusted for FIFO impact*
17.22

 
13.96

 
16.15

 
14.95

Gross profit*
14.05

 
8.80

 
10.63

 
9.42

Gross profit excluding flood insurance recovery*
12.63

 
8.80

 
9.90

 
9.42

Direct operating expenses and major scheduled turnaround expenses
4.71

 
4.83

 
4.75

 
5.14

Direct operating expenses excluding major scheduled turnaround expenses
4.62

 
4.83

 
4.71

 
5.14

Direct operating expenses and major scheduled turnaround expenses per barrel sold
$
4.43

 
$
4.57

 
$
4.43

 
$
4.82

Barrels sold (barrels per day)
224,031

 
224,295

 
220,876

 
220,760






4





 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Refining Throughput and Production Data (bpd):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Throughput:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sweet
192,691

 
87.1
%
 
193,032

 
87.2
%
 
184,082

 
84.4
%
 
185,412

 
85.2
%
Medium
1,082

 
0.5
%
 
1

 
%
 
3,841

 
1.8
%
 
1,789

 
0.8
%
Heavy sour
16,954

 
7.7
%
 
19,014

 
8.6
%
 
18,298

 
8.4
%
 
19,803

 
9.1
%
Total crude oil throughput
210,727

 
95.3
%
 
212,047

 
95.8
%
 
206,221

 
94.6
%
 
207,004

 
95.1
%
All other feedstocks and blendstocks
10,368

 
4.7
%
 
9,422

 
4.2
%
 
11,855

 
5.4
%
 
10,780

 
4.9
%
Total throughput
221,095

 
100.0
%
 
221,469

 
100.0
%
 
218,076

 
100.0
%
 
217,784

 
100.0
%
Production:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gasoline
107,439

 
48.3
%
 
108,977

 
48.8
%
 
108,263

 
49.3
%
 
106,727

 
48.7
%
Distillate
95,881

 
43.1
%
 
94,931

 
42.6
%
 
92,675

 
42.1
%
 
91,933

 
41.9
%
Other (excluding internally produced fuel)
19,160

 
8.6
%
 
19,255

 
8.6
%
 
19,011

 
8.6
%
 
20,665

 
9.4
%
Total refining production (excluding internally produced fuel)
222,480

 
100.0
%
 
223,163

 
100.0
%
 
219,949

 
100.0
%
 
219,325

 
100.0
%
Product price (dollars per gallon):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gasoline
$
1.87

 
 
 
$
2.87

 
 
 
$
1.67

 
 
 
$
2.77

 
 
Distillate
1.81

 
 
 
2.97

 
 
 
1.75

 
 
 
2.98

 
 

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Market Indicators (dollars per barrel):
 
 
 
 
 
 
 
West Texas Intermediate (WTI) NYMEX
$
57.95

 
$
102.99

 
$
53.34

 
$
100.84

Crude Oil Differentials:
 
 
 
 
 
 
 
WTI less WTS (light/medium sour)
(0.71
)
 
7.15

 
0.12

 
6.38

WTI less WCS (heavy sour)
9.57

 
19.22

 
11.60

 
20.05

NYMEX Crack Spreads:
 
 
 
 
 
 
 
Gasoline
26.02

 
23.20

 
22.34

 
20.70

Heating Oil
21.69

 
20.90

 
24.33

 
24.37

NYMEX 2-1-1 Crack Spread
23.85

 
22.05

 
23.33

 
22.53

PADD II Group 3 Basis:
 
 
 
 
 
 
 
Gasoline
(6.19
)
 
(7.06
)
 
(4.87
)
 
(5.98
)
Ultra Low Sulfur Diesel
(3.69
)
 
0.23

 
(4.10
)
 
(0.84
)
PADD II Group 3 Product Crack Spread:
 
 
 
 
 
 
 
Gasoline
19.83

 
16.14

 
17.47

 
14.72

Ultra Low Sulfur Diesel
18.00

 
21.13

 
20.23

 
23.53

PADD II Group 3 2-1-1
18.91

 
18.64

 
18.85

 
19.13


5





 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions, except operating statistics)
Coffeyville Refinery Financial Results:
 
 
 
 
 
 
 
Net sales
$
1,006.3

 
$
1,585.5

 
$
1,858.0

 
$
3,157.8

Cost of product sold
764.8

 
1,398.5

 
1,465.7

 
2,757.2

Refining margin*
241.5

 
187.0

 
392.3

 
400.6

Direct operating expenses
51.2

 
53.7

 
101.5

 
107.1

Major scheduled turnaround expenses
1.7

 

 
1.7

 

Flood insurance recovery
(27.3
)
 

 
(27.3
)
 

Depreciation and amortization
19.5

 
18.8

 
38.9

 
36.8

Gross profit*
$
196.4

 
$
114.5

 
$
277.5

 
$
256.7

 
 
 
 
 
 
 
 
Refining margin adjusted for FIFO impact*
$
212.4

 
$
167.7

 
$
381.7

 
$
364.7

 
 
 
 
 
 
 
 
Coffeyville Refinery Key Operating Statistics:
 
 
 
 
 
 
 
Per crude oil throughput barrel:
 
 
 
 
 
 
 
Refining margin*
$
20.27

 
$
15.61

 
$
16.82

 
$
17.31

FIFO impact (favorable) unfavorable
(2.44
)
 
(1.61
)
 
(0.46
)
 
(1.55
)
Refining margin adjusted for FIFO impact*
17.83

 
14.00

 
16.36

 
15.76

Gross profit*
16.49

 
9.55

 
11.89

 
11.09

Gross profit excluding flood insurance recovery*
14.20

 
9.55

 
10.72

 
11.09

Direct operating expenses and major scheduled turnaround expenses
4.43

 
4.48

 
4.43

 
4.63

Direct operating expenses excluding major scheduled turnaround expenses
4.29

 
4.48

 
4.35

 
4.63

Direct operating expenses and major scheduled turnaround expenses per barrel sold
$
4.03

 
$
4.12

 
$
4.00

 
$
4.19

Barrels sold (barrels per day)
144,183

 
143,412

 
142,587

 
141,226

 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Coffeyville Refinery Throughput and Production Data (bpd):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Throughput:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sweet
112,867

 
81.2
%
 
112,670

 
80.6
%
 
106,734

 
77.3
%
 
107,294

 
78.5
%
Medium
1,082

 
0.8
%
 
1

 
%
 
3,841

 
2.8
%
 
744

 
0.5
%
Heavy sour
16,954

 
12.2
%
 
19,014

 
13.6
%
 
18,298

 
13.3
%
 
19,803

 
14.5
%
Total crude oil throughput
130,903

 
94.2
%
 
131,685

 
94.2
%
 
128,873

 
93.4
%
 
127,841

 
93.5
%
All other feedstocks and blendstocks
8,122

 
5.8
%
 
8,133

 
5.8
%
 
9,168

 
6.6
%
 
8,897

 
6.5
%
Total throughput
139,025

 
100.0
%
 
139,818

 
100.0
%
 
138,041

 
100.0
%
 
136,738

 
100.0
%
Production:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gasoline
66,374

 
46.6
%
 
68,348

 
47.9
%
 
67,110

 
47.5
%
 
67,338

 
48.2
%
Distillate
62,257

 
43.7
%
 
61,403

 
43.0
%
 
60,843

 
43.0
%
 
59,624

 
42.6
%
Other (excluding internally produced fuel)
13,722

 
9.7
%
 
13,023

 
9.1
%
 
13,477

 
9.5
%
 
12,899

 
9.2
%
Total refining production (excluding internally produced fuel)
142,353

 
100.0
%
 
142,774

 
100.0
%
 
141,430

 
100.0
%
 
139,861

 
100.0
%

6





 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions, except operating statistics)
Wynnewood Refinery Financial Results:
 
 
 
 
 
 
 
Net sales
$
540.1

 
$
879.7

 
$
991.8

 
$
1,681.7

Cost of product sold
415.9

 
774.2

 
771.4

 
1,478.7

Refining margin*
124.2

 
105.5

 
220.4

 
203.0

Direct operating expenses
37.5

 
39.8

 
74.1

 
85.4

Major scheduled turnaround expenses

 

 

 

Depreciation and amortization
12.5

 
10.1

 
25.1

 
20.1

Gross profit*
$
74.2

 
$
55.6

 
$
121.2

 
$
97.5

 
 
 
 
 
 
 
 
Refining margin adjusted for FIFO impact*
$
116.9

 
$
100.6

 
$
219.1

 
$
193.0

 
 
 
 
 
 
 
 
Wynnewood Refinery Key Operating Statistics:
 
 
 
 
 
 
 
Per crude oil throughput barrel:
 
 
 
 
 
 
 
Refining margin*
$
17.10

 
$
14.42

 
$
15.74

 
$
14.16

FIFO impact (favorable) unfavorable
(1.01
)
 
(0.68
)
 
(0.09
)
 
(0.70
)
Refining margin adjusted for FIFO impact*
16.09

 
13.74

 
15.65

 
13.46

Gross profit*
10.21

 
7.60

 
8.66

 
6.80

Direct operating expenses and major scheduled turnaround expenses
5.16

 
5.44

 
5.29

 
5.96

Direct operating expenses excluding major scheduled turnaround expenses
5.16

 
5.44

 
5.29

 
5.96

Direct operating expenses and major scheduled turnaround expenses per barrel sold
$
5.16

 
$
5.41

 
$
5.23

 
$
5.93

Barrels sold (barrels per day)
79,848

 
80,883

 
78,289

 
79,534


 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Wynnewood Refinery Throughput and Production Data (bpd):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Throughput:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sweet
79,824

 
97.3
%
 
80,362

 
98.4
%
 
77,348

 
96.6
%
 
78,118

 
96.4
%
Medium

 
%
 

 
%
 

 
%
 
1,045

 
1.3
%
Heavy sour

 
%
 

 
%
 

 
%
 

 
%
Total crude oil throughput
79,824

 
97.3
%
 
80,362

 
98.4
%
 
77,348

 
96.6
%
 
79,163

 
97.7
%
All other feedstocks and blendstocks
2,246

 
2.7
%
 
1,289

 
1.6
%
 
2,687

 
3.4
%
 
1,883

 
2.3
%
Total throughput
82,070

 
100.0
%
 
81,651

 
100.0
%
 
80,035

 
100.0
%
 
81,046

 
100.0
%
Production:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gasoline
41,065

 
51.2
%
 
40,629

 
50.5
%
 
41,153

 
52.4
%
 
39,389

 
49.6
%
Distillate
33,624

 
42.0
%
 
33,528

 
41.7
%
 
31,832

 
40.5
%
 
32,309

 
40.6
%
Other (excluding internally produced fuel)
5,438

 
6.8
%
 
6,232

 
7.8
%
 
5,534

 
7.1
%
 
7,766

 
9.8
%
Total refining production (excluding internally produced fuel)
80,127

 
100.0
%
 
80,389

 
100.0
%
 
78,519

 
100.0
%
 
79,464

 
100.0
%

7





________________________________

Cost of product sold, direct operating expenses and selling, general and administrative expenses are all reflected exclusive of depreciation and amortization.

Use of Non-GAAP Financial Measures

To supplement our actual results in accordance with GAAP for the applicable periods, the Partnership also uses the non-GAAP financial measures noted above, which are reconciled to our GAAP-based results below. These non-GAAP financial measures should not be considered an alternative for GAAP results. The adjustments are provided to enhance an overall understanding of the Partnership’s financial performance for the applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods.

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 refineries’ performance as a general indication of the amount above our cost of product sold at which 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 Statements 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 refineries’ performance as a general indication of the amount above our cost of product sold (taking into account the impact of our utilization of FIFO) at which 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.

Gross profit is calculated as the difference between net sales, cost of product sold (exclusive of depreciation and amortization), direct operating expenses (exclusive of depreciation and amortization), major scheduled turnaround expenses, flood insurance recovery and depreciation and amortization. Gross profit per crude throughput barrel is calculated as gross profit as derived above divided by our refineries’ crude oil throughput volumes for the respective periods presented. Gross profit is a non-GAAP measure that should not be substituted for operating income. Management believes it is important to investors in evaluating our refineries’ performance and our ongoing operating results. Our calculation of gross profit may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure.


8





EBITDA and Adjusted EBITDA. EBITDA represents net income before (i) interest expense and other financing costs, net of interest income, (ii) income tax expense and (iii) depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for (i) FIFO impacts (favorable) unfavorable; (ii) share-based compensation, non-cash; (iii) loss on extinguishment of debt; (iv) major scheduled turnaround expenses; (v) (gain) loss on derivatives, net, (vi) current period settlements on derivative contracts and (vii) flood insurance recovery. We present Adjusted EBITDA because it is the starting point for our calculation of available cash for distribution. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be substituted for net income or cash flow from operations. Management believes that EBITDA and Adjusted EBITDA enable investors to better understand our ability to make distributions to our common unitholders, help investors evaluate our ongoing operating results and allow for greater transparency in reviewing our overall financial, operational and economic performance. EBITDA and Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently. Below is a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the three and six months ended June 30, 2015 and 2014:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Net income
$
227.8

 
$
180.0

 
$
274.5

 
$
445.4

Add:
 
 
 
 
 
 
 
Interest expense and other financing costs, net of interest income
10.3

 
7.8

 
21.5

 
16.4

Income tax expense

 

 

 

Depreciation and amortization
34.2

 
30.7

 
68.2

 
60.2

EBITDA
272.3

 
218.5

 
364.2

 
522.0

Add:
 
 
 
 
 
 
 
FIFO impacts (favorable) unfavorable
(36.4
)
 
(24.3
)
 
(11.9
)
 
(45.9
)
Share-based compensation, non-cash
(0.1
)
 
0.7

 
0.1

 
1.2

Major scheduled turnaround expenses
1.7

 

 
1.7

 

(Gain) loss on derivatives, net
12.6

 
(35.9
)
 
64.0

 
(145.3
)
Current period settlements on derivative contracts(a)
(28.5
)
 
33.9

 
(34.8
)
 
55.0

Flood insurance recovery
(27.3
)
 

 
(27.3
)
 

Adjusted EBITDA
$
194.3

 
$
192.9

 
$
356.0

 
$
387.0

_________________________

(a)
Represents the portion of gain (loss) on derivatives, net related to contracts that matured during the respective periods and settled with counterparties. There are no premiums paid or received at inception of the derivative contracts and upon settlement, there is no cost recovery associated with these contracts.


9





Available cash for distribution is not a recognized term under GAAP. Available cash should not be considered in isolation or as an alternative to net income or operating income as a measure of operating performance. In addition, available cash for distribution is not presented as, and should not be considered, an alternative to cash flows from operations or as a measure of liquidity. Available cash as reported by the Partnership may not be comparable to similarly titled measures of other entities, thereby limiting its usefulness as a comparative measure.

The Partnership announced a cash distribution of $0.98 per common unit for the second quarter of 2015. The distribution was based on the Partnership’s available cash, which equaled Adjusted EBITDA reduced for cash needed for (i) debt service; (ii) reserves for environmental and maintenance capital expenditures; (iii) reserves for future major scheduled turnaround expenses and, to the extent applicable, (iv) reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate, if any. Available cash for distribution may be increased by the release of previously established cash reserves, if any, and other excess cash, at the discretion of the board of directors of our general partner. Actual distributions are set by the board of directors of our general partner. The board of directors of our general partner may modify our cash distribution policy at any time, and our partnership agreement does not require us to make distributions at all.
 
Three Months Ended 
 June 30, 2015
 
Six Months Ended 
 June 30, 2015
 
(in millions, except per unit data)
Reconciliation of Adjusted EBITDA to Available cash for distribution
 
 
 
Adjusted EBITDA
$
194.3

 
$
356.0

Adjustments:
 
 
 
Less:
 
 
 
Cash needs for debt service
(10.0
)
 
(20.0
)
Reserves for environmental and maintenance capital expenditures
(31.3
)
 
(62.5
)
Reserves for future turnarounds
(8.8
)
 
(17.5
)
Available cash for distribution
$
144.2

 
$
256.0

 
 
 
 
Available cash for distribution, per unit
$
0.98

 
$
1.74

Common units outstanding (in thousands)
147,600

 
147,600



10





Derivatives Summary. The Partnership enters into commodity swap contracts through crack spread swap agreements with financial counterparties to fix the spread risk between the crude oil the Partnership purchases and the refined products the refineries produce for sale. Through these swaps, the Partnership will sell a fixed differential for the value between the selected refined product benchmark and the benchmark crude oil price, thereby locking in a margin for a portion of the refineries’ production. The physical volumes are not exchanged and these contracts are net settled with cash. From time to time, the Partnership holds various NYMEX positions through a third-party clearing house.

The table below summarizes our open commodity swap positions as of June 30, 2015. The positions are primarily in the form of crack spread swap agreements with financial counterparties, wherein the Partnership has locked in differentials at the fixed prices noted below. As of June 30, 2015, the open commodity swap positions for 2015 were comprised of approximately 59.5% for distillate crack swaps and 40.5% for gasoline crack swaps while 100.0% of the open commodity swap positions for 2016 were comprised of distillate crack swaps.

Commodity Swaps
 
Barrels
 
Fixed Price(1)
Third Quarter 2015
 
5,075,000

 
$
21.83

Fourth Quarter 2015
 
600,000

 
28.48

 
 
 
 
 
First Quarter 2016
 
615,000

 
29.01

Second Quarter 2016
 
615,000

 
29.01

Third Quarter 2016
 
615,000

 
29.01

Fourth Quarter 2016
 
615,000

 
29.01

 
 
 
 
 
Total
 
8,135,000

 
$
24.49

____________________

(1)
Weighted-average price of all positions for period indicated.

Q3 2015 Outlook. The table below summarizes our outlook for certain refining statistics for the third quarter of 2015. See “forward looking statements.”
 
Q3 2015
 
Low
 
High
Refinery Statistics:
 
 
 
Total crude oil throughput (bpd)
175,000

 
190,000

Total refining production (bpd)
190,000

 
200,000



11




Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings