Q1 2024 CVR Energy Inc Earnings Call

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A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Richard Roberts, Vice President P&A in Investor Relations. Thank you Sir you may begin.

Thank you Christine good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR energy first quarter 2024 earnings call with me today are Dave lamp, our Chief Executive Officer, Dave Newman, Our Chief Financial Officer, and other members of management.

Prior to discussing our 2024 first quarter results. Let me remind you that this conference call may contain forward looking statements that term is defined under federal securities laws for this purpose any statements made during this call that are not statements of historical facts may be deemed to be forward looking statements.

You are cautioned that these statements may be affected by important factors set forth in our filings with Securities and Exchange Commission and in our latest earnings release.

As a result actual operations and 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 2024 first quarter earnings release that we filed with the SEC and Form 10-Q for the period and will be discussed during the call that said I'll turn the call over to Dave.

Thank you Richard Good afternoon, everyone and thank you for joining our earnings call.

Before I discuss our results for the quarter I want to address an incident when he wouldn't refinery that occurred over the weekend early Sunday morning during severe weather in the area.

When you wouldn't refinery experienced a fire that was later extinguished later that morning.

No employees or contractors were injured and we are beginning in the beginning part of the process of restarting portions of the refinery.

We are still assessing the extent of the damage and we expect to provide additional details when they are available.

Turning to our results yesterday, we reported a first quarter <unk>.

Consolidated net income of $19 million and earnings per share of 81, EBITA was $203 million.

Our solid results for the quarter were driven by continued declines in the prices of brands and increased crude oil and refined product prices in the quarter offset by lower crack spreads and fertilizer prices were.

Relative to our prior periods.

We are pleased to announce that our board of directors authorized a first quarter regular dividend of <unk> 50 per share, which will be paid on may 20th to shareholders of record at the close of the market on May 13.

Our annualized dividend yield of approximately 6% yesterday based on yesterday's closing price remains best in class among independent refiners.

In our petroleum segment.

Combined total throughput for the first quarter of 2024 was approximately 196000 barrels per day and light product yield was 101% on crude oil processed.

During the quarter, we completed the planned turnaround of when you would refinery.

We currently do not have any different any additional turnarounds planned until coffeyville turnaround on a crude unit cat cracker and.

And alky and other associated units currently scheduled for the spring of 2024 25.

[noise] benchmark cracks softened during the first quarter.

With the <unk> group. So the group 3211 averaged $19 55 per barrel compared to $23 66 per barrel for the fourth quarter of 'twenty three.

First quarter average RIN prices declined from fourth quarter.

And ended the quarter at approximately 68.

On an RVO weighted basis.

While we're thrilled with the fifth circuit's decision in November vacating EPA is denial of but when you woods small refinery exemption petitions for 2000 2017 through 2021 and recommended those petitions back to EPA.

Z egregious conduct continues.

They still have not acted on when he was smaller small refinery exemption petitions for 2017 through 2021.

Through the 90 days have passed since the issuance of the fifth circuit mandate nor.

Nor has EPA ruled on EPA small refinery exemptions petition for <unk>.

2023 do last month.

We will continue to push for a court ruling to force EPA to do its job and follow the law.

The D C Corp Court of Appeals heard oral arguments.

And the small refinery exemption denial cases for a few other small refineries a few weeks ago.

We expect a ruling will take some time, we were pleased with how the hearing win.

You also continue to wait for a response from the EPA regarding our petition for rule, making related to our the RFS. We believe the law is clear that only obligated parties, who over comply with the RFS obligations can generate excess friends.

And that they may sell those those brands only to other obligated parties, who need the rigs for compliance.

That EPA allows non obligated parties to exploit the RIN market for profit is just wrong.

It's not just wrong it violates the law is written.

If the EPA does not respond to our petition once again, we will see them in court.

For the first quarter of 2024, we processed processed approximately 7 million gallons of vegetable.

Oil feedstocks that are winning with renewable diesel unit.

Throughput in the quarter impacted by a planned catalyst change.

The hobo spread improved from the fourth quarter of 'twenty three.

Lower soybean oil prices, although prices for these four rigs remain depressed as a result of the Epa's continued mismanagement of the RFS program.

As a reminder, our renewable diesel business is currently reported in our corporate and other segment.

In the fertilizer segment, we achieved consolidated ammonia plant utilization of 90%, which was also impacted by some planned downtime in the quarter at our Coffeyville facility.

Nitrogen fertilizer prices in the first quarter of 2024 remained fairly steady for the fourth quarter of 2000.

With fourth quarter 2023 pricing.

And we are straws saw strong demand for ammonia with favorable weather conditions during the quarter.

Now, let me turn the call over to Dave to discuss our financial highlights.

Thank you, Dave and good afternoon, everyone.

For the first quarter of 2024, our consolidated net income was $90 million earnings per share was <unk> 81 and.

And EBITDA was $203 million.

Our first quarter results include a reduction in our quarterly <unk> expense due to a mark to market impact on our estimated outstanding RFS obligation of $91 million favorable inventory valuation impact of 37 million and unrealized derivative losses of $24 million.

Excluding the above mentioned items adjusted EBITDA for the quarter was $99 million and adjusted earnings per share was <unk> <unk>.

Adjusted EBITDA in the Petroleum segment was 67 million for the first quarter with the decline from the prior year period, primarily driven by lower product cracks in group III.

Our first quarter realized margin adjusted for inventory valuation unrealized derivative losses and rent mark to market impacts was $10 46 per barrel, representing a 54% capture rate on the group 3211 benchmark.

<unk> expense for the quarter, excluding the mark to market impact was $45 million or $2 52 per barrel, which negatively impacted our capture rate for the quarter by approximately 13%.

The estimated accrued RFS obligation on the balance sheet was 294 million at March 31, representing 449 million Rins Mark to market at an average price of 66.

As a reminder, our estimated outstanding ran obligation excludes the impact of any small refinery exemptions.

Direct operating expenses in the petroleum segment were $5 78 per barrel for the first quarter compared to $5 90 per barrel in the first quarter of 2023.

The decrease in direct operating expenses was primarily due to lower natural gas and electricity prices.

On a per barrel basis, our direct operating expenses were elevated in the first quarter of 2024 and the prior year period due to lower throughput rates as a result of planned turnarounds.

Adjusted EBITDA in the fertilizer segment was $40 million for the first quarter with lower feedstock costs and direct operating expenses somewhat offsetting the decline in prices relative to the prior year period.

The partnership declared a distribution of $1 92 per common unit for the first quarter of 2024.

CVR energy owns approximately 37% of CVR partners common units, we will receive a proportionate cash distribution of approximately $7 million.

Cash provided by operations for the first quarter of 2024, it was $177 million and free cash flow was $121 million.

Significant uses of cash in the quarter included $61 million for cash taxes, and interest $59 million of capital and turnaround spending.

$50 million for the fourth quarter 2023 regular dividend and 11 million paid for the Noncontrolling interest portion of the CVR partners fourth quarter 2023 distribution.

Total consolidated capital spending was $51 million, which included 36 million in the petroleum segment $5 million in the fertilizer segment and $8 million for the RT you primarily related to the pretreatment unit.

Turnaround spending in the first quarter was approximately $39 million.

For the full year 2024, we estimate total consolidated capital spending to be approximately $225 million to $250 million and turnaround spending to be approximately $55 million to $65 million.

Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $644 million, which includes $65 million of cash in the fertilizer segment.

Total liquidity as of March 31, excluding CVR partners was approximately $831 million, which was comprised primarily of $580 million of cash and availability under the ABL facility of $251 million.

Looking ahead to the second quarter of 2024, as Dave mentioned, we're still assessing the extent of the damage from the firewall anyway.

We'll provide an updated outlook for the petroleum segment and the renewable diesel unit once the impact of the incident is determined.

Coffeyville refinery continues to operate as planned.

For the fertilizer segment, we estimate our second quarter 2020 for ammonia utilization rate to be between 95 and 100%.

Direct operating expenses to be approximately $50 million to $55 million excluding inventory impacts.

Total capital spending to be between 15% and $20 million.

That Dave I'll turn it back over to you. Thank.

Thank you. Thank you Dan in summary market conditions were challenging for much of the first quarter, particularly in the petroleum segment as refined product inventories were elevated coming into 2024, and distillate demand has been weak with a warm winter and depressed industrial activity.

We would characterize current crack spreads is just above mid cycle.

Starting with refining elevated maintenance activity and unplanned downtime in the United States over the past few months help clean up inventories with gasoline and diesel inventories, both near or below five year averages.

We believe there is additional maintenance work yet to be completed in the United States, Europe, and Asia and the impact to global refining supply from recent drone attacks on the Russian refineries remains a wildcard.

We also continue to monitor the startup of new global refining capacity expected this year, which could offset some of the supply impacts just discussed on demand side of the equation gasoline demand in the U S remains steady and is trending.

The five year average levels recently well.

While distillate demand remains soft.

Looking more specifically at the mid Con.

<unk> product demand in group III has remained steady although inventory levels are elevated relative to the U S as a whole.

As a result the <unk>.

<unk> in the group three is unusually wide for gasoline and we have been increasing our fueled by rail shipments to the west through our new trans load facility at Coffeyville.

The Brent Ti differential has averaged $5 nearly $5 per barrel. So far this year supported by crude oil export volumes, averaging over 4 million barrels a day.

With crude prices in the $85 per barrel range. We expect continued strengthen in shallow production volumes, which should be supportive of our crude oil gathering business.

For the first quarter, our crude oil gathering volumes.

Approximately 130000.

30000.

Barrels per day.

This is an important part of our strategy given the uplift, we usually experienced but bringing a neat barrels to the to the refinery gates.

I am pleased to announce that the board recently approved a distillate yield product.

Yield improvement project when you would refinery.

Through some modifications to the vacuum tower and our diesel Hydro <unk> unit. We will we will believe we believe we will be able to increase distillate production at the <unk> refinery by approximately 2500 barrels per day.

We completed tie in work for the project during the during many words recent turnaround project and.

We currently expect final completion in the first half of 2025 at a capital cost of less than $15 million.

We are also studying a similar project at Coffeyville, which if approved by the board and successfully and successfully implemented could be completed in 2026.

Turning to the fertilizer segment, we had good ammonia sales in the first quarter with favorable weather conditions, allowing farmers to apply ammonia earlier in the year.

We expect strong demand for spring planting expectations currently at 90 million acres for corn and 87 million acres for soybeans.

We currently do not have any additional downtime planned for either fertilizer facilities until 2025.

The pre treat or for the renewable diesel unit began operations in the first quarter and.

And we expect to reap planned production rates during the second quarter.

We are optimistic with the combination of new catalysts load in the Rd unit.

Plus the PTU went operational.

What does it result in improved.

And improvements in our renewable diesel product yield catalyst life, and resulting economics, we continue.

Continue to explore opportunities in the renewable space and are currently in discussions related to the potential conversion of the <unk> renewable diesel unit up to 100% Saf.

As we have discussed previously our focuses and exploring this project would be the structure of the off take agreements such.

That would significantly derisk, a margin that could justify the capital we need to invest.

On the larger potential projects at Coffeyville, we expect to have the project scope cost and development plan ready to take to the market by the end of the year.

We still believe there will be a market for renewable diesel and sustainable aviation going forward. Despite epa's continues mismanagement of the RFS regulation.

Finally in March we issued a form 8-K announcing that we were we were routinely consider.

And currently considering potential strategic action transactions, both in refining and potentially related to CVR partners.

Well, we have nothing to disclose and certainly provide no assurances that we could successfully close any such transactions. There are some very interesting and tram transformative opportunities out there for both our refining business and CVR partners.

Looking at the second quarter of 2024 quarter to date metrics are as follows group 211 cracks have averaged.

$20 67 per barrel in Brent Ti spread.

$4 48 per barrel and the Midland differential of $1 42, overdub UTI prompt fertilizer prices are approximately $600 per ton for ammonia and $300 $300 ton per ton for uhm.

As of yesterday proved 3211 cracks were $21.01 per barrel, Brent Ti spread was $5 77 per barrel and WCS was $13 21 under W. T.

Returns were approximately six or $3 <unk> per barrel.

As always we continue to strive to operate our plants in a safe reliable unfair environmentally responsible manner and to explore opportunities to grow our renewables business.

We will continue to focus on maximizing free cash flow, which underpins our peer leading dividend yield.

With that operator, we're ready for questions.

Thank you we will now.

Ill be conducting a question and answer session.

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Please while we poll for questions.

Thank you. Our first question comes from the line of Manav Gupta with UBS. Please proceed with your question.

Good morning, guys, considering a <unk> printer.

We're still evaluating what happened over the weekend, but help us understand a little bit what does it go bad debt related event exactly what happened what went wrong over the weekend of each caused some of the issues that Jesse.

Well, we don't know exactly.

All effects, yet manav, but.

It appears like we've got hit by likely in one of our process areas.

And that likely cause.

And pending fire and then that that spread a little bit is it.

As it got hot.

I think our response was excellent to us from a community standpoint, our employee standpoint, and a contractor standpoint.

But it is an unfortunate event.

We're sometimes exposed to if you recall the town of sulfur, which is probably I don't know 15 miles from us.

<unk> experienced a very bad tornado and.

The storms were really bad at night Lightning was flying all over the place.

We think we took a direct hit but you never can be sure that happened so fast.

So.

Nothing yogurt I've done a biotech so I guess I was trying to make sure and my second.

And it looks like <unk> is now going to be up and running it is running at CAD IV facility help us understand how big a lithium.

From you know and you find soybean oil.

And so every night.

Some dialogue and stuff.

And do you think that does make a material difference to our renewable diesel profitability.

Well Theres no doubt that we have been catalysts starved with the unit without a pizza you.

We've had pretty short runs and poor yields I'll call it of actual renewable diesel.

We're very encouraged with the even even buying treated feed or.

Refined the motorized and <unk> feed was still had a lot of impurities in it in the forms of metals and phosphorus and other things.

The results of the pre treater look really good at this point and we're starting this run with a pre trade are up and the catalyst performance is already looking very good yields of 90 plus percent.

On renewable diesel.

Much less byproducts.

We hadn't seen before that so I'm really optimistic that we will pick up.

Not only our ability to run untreated corn oil and soybean oil but.

Maybe.

Some other options for some other things, but right now we're really focused on the corn oil as a substitute for the soybean oil.

And we think that the margin on that right now is probably in the 80 range per gallon.

On a pre treated basis.

So.

If we look at the first quarter. We ended we still we had a margin of about 65 cents a gallon.

Which if we could have run more barrels we would've probably show a profit profit on that unit.

As it is we were just kind of breakeven.

Thank you very helpful. Thank you.

Youre welcome.

Our next question comes from the line of Matthew Blair with Tudor Pickering Holt. Please proceed with your question.

Thank you and good afternoon, Dave.

Operator: At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Vice President of FP&A and Investor Relations. Thank you, sir. You may begin.

Operator: To follow up on your comments regarding I think you mentioned something about railing gasoline to the west coast. So just wanted to confirm that that you are railing gasoline to California, and capitalizing on the higher margins in that in that space.

Richard J. Roberts: Thank you, Christine. Good afternoon, everyone.

Richard J. Roberts: We very much appreciate you joining us this afternoon for our CVR Energy First Quarter 2024 earnings call. With me today are Dave Lamp, our Chief Executive Officer; Dane Neumann, our Chief Financial Officer; and other members of management. Prior to discussing our 2024 first quarter results, let me remind you that this conference call may contain forward-looking statements, as that term is defined under federal securities law. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements.

Richard J. Roberts: And also just curious can you make that carb stack or is that a blended spec.

Richard J. Roberts: 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 statement. 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.

Richard J. Roberts: And what kind of volumes are we talking about here.

Richard J. Roberts: Sure.

Richard J. Roberts: I mentioned, I said to the west not necessarily to California, but.

Richard J. Roberts: But no we have we put in a trans loading facility ahead of third party put it at and we're underwriting it with the with tariffs.

Richard J. Roberts: But our plan is to be able to load up to a 120000 barrels per month.

Richard J. Roberts: And that's our capability of the trends loader, but will go probably wherever the margins are the best.

Richard J. Roberts: As far as making car, we really haven't looked at that much although I, probably should pretty sure we could make some of it to some degree if we have disaggregated tankage.

Richard J. Roberts: This call also includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliation of the most directly comparable GAAP financial measures, are included in our 2024 first quarter earnings release that we filed with the SEC in Form 10-Q for the period and will be discussed during the call. With that said, I'll turn the call over to David.

David: But we havent gone that far yet.

David: If California continues to get shorter and shorter it might be an attractive move, but the arbs open to other areas.

David L. Lamp: Thank you, Richard. Good afternoon, everyone, and thank you for joining us on our earnings call. Before I discuss our results for the quarter, I want to address an incident at the Winnie Wood refinery that occurred over the weekend, early Sunday morning, during severe weather in the area. The Winniwood refinery experienced a fire that was later extinguished later that morning. No employees or contractors were injured, and we are in the beginning of the process of restarting portions of the refinery. We are still assessing the extent of the damage, and we expect to provide additional details when they're available.

David L. Lamp: Such as Grand Junction.

David L. Lamp: Even Denver occasionally and in other places like like.

David L. Lamp: Like Salt Lake City and.

David L. Lamp:

David L. Lamp: Phoenix on occasion so.

David L. Lamp: Therefore, we're focused on mostly.

David L. Lamp: Is there a good rule of thumb for the.

David L. Lamp: The rail cost associated with that like maybe 30 or 40 <unk> per barrel or sorry, a gallon.

David L. Lamp: Well you know normally you'd anytime you move anything by rail it's six to eight bucks per barrel. So that's a good rule of thumb depends on how far you go and where you go so.

David L. Lamp: Turning to our results, yesterday we reported a first quarter consolidated net income of $90 million and earnings per share of $0.81. EBITDA was $203 million. Our solid results for the quarter were driven by continued declines in the prices of RINs and increased crude oil and refined product prices in the quarter, offset by lower crack spreads and fertilizer prices relative to the prior period. We are pleased to announce that our Board of Directors has authorized a first quarter regular dividend of $0.50 per share, which will be paid on May 20th to shareholders of record at the close of the market on May 13th. Our annualized dividend yield of approximately 6% yesterday, based on yesterday's closing price, remains best in class among the independent refiners.

David L. Lamp: Then you'd have a loading fees in loading fees on it.

David L. Lamp: On the front side so.

David L. Lamp: But that's a good rule of thumb.

David L. Lamp: Sounds good and then.

David L. Lamp: Follow up do you think anything will change on your WCS exposure as <unk> ramps or do you expect to receive the same volumes on.

David L. Lamp: I think it's at least the express pipeline there might be one other and we've noticed that the WCS futures curve.

David L. Lamp: It widens out to about $15 a barrel by the end of this year.

David L. Lamp: Is that just from expectations of continuing.

David L. Lamp: Production growth in Canada.

Speaker Change: Yeah, and I think mostly what you're seeing right now is the landfill, which is taking what $4 5 million barrels off the market permanently.

David L. Lamp: And that's what that's what brings it down to the $13 range or is that today.

David L. Lamp: In our petroleum segment, combined total throughput for the first quarter of 2024 was approximately 196,000 barrels per day, and late product yield was 101% for crude oil processing. During the quarter, we completed the planned turnaround on the Woody Wood refinery. We currently do not have any additional turnarounds planned until coffee bills turn around on a crew unit catcracker, and ALKI and other associated units are currently scheduled for the spring of 2025. Benchmark cracks softened during the first quarter, with a Group 3 2-1-1 averaging $19.55 per barrel compared to $23.66 per barrel for the fourth quarter of 2023. First quarter average RIN prices declined from the fourth quarter and ended the quarter at approximately 68 cents on an RVO-weighted basis.

David L. Lamp: I would expect it to widen back out a little bit once the line fill is complete.

Speaker Change: And I don't think I think most of the barrels that are that are going to be replaced or are the ones that were going offshore.

David L. Lamp: All of the Gulf of Mexico.

Speaker Change: So I'm not anticipating any any problems getting barrels.

Speaker Change: You know we don't run all we can all we can move on the pipe. So we ended up selling quite a bit and cushy.

David L. Lamp: And we can we plan to continue that effort I don't see any reason why it wouldn't continue.

Speaker Change: Where the production is today I think the real benefit of <unk> is really the for the future. However.

Speaker Change: It gives the Canadian producers an outlet that they didn't have before and unfortunately, Keystone got cancelled which would have a.

Speaker Change: Do you have them that capacity to the United States, rather than shipping to the to the west.

David L. Lamp: The rest of the world but.

David L. Lamp: While we're thrilled with the 5th Circuit's decision in November vacating EPA's denial of Winnie Woods, small refinery exemption petitions for 2017-2021 and reprimanding those petitions back to EPA, EPA's egregious conduct continues. They still have not acted on Winnie Wood's small refinery exemption petitions for 2017 through 2021, though 90 days have passed since the issuance of the 5th Circuit mandate, nor has EPA ruled on small refinery exemption petitions for 2023, due last month.

David L. Lamp: I think still it's the effect will be there and that means more Canadian crude in the future.

Speaker Change: Great. Thanks, Dave.

David L. Lamp: Welcome.

David L. Lamp: Our next question comes from the line of John Royall with Jpmorgan. Please proceed with your question.

David L. Lamp: Hi, good afternoon, Thanks for taking my question.

David L. Lamp: So I was hoping for some additional color on refining M&A in weight of the 8-K and.

David L. Lamp: Could that impact some of the things you would otherwise do on the organic side, particularly thinking about the bigger projects, you're considering with R&D is it sort of an either or with M&A or.

David L. Lamp: Or it could both be done at the same time.

Speaker Change: Well, John remember that the larger R&D project, our Saf project, However, you want to call it.

David L. Lamp: We will continue to push for a court ruling to force EPA to do its job and follow the law. The D.C. Court of Appeals heard oral arguments in the small refinery exemption denial cases for a few other small refineries a few weeks ago. While we expect it really will take some time, we were pleased with how the hearing went. We also continue to wait for a response from the EPA regarding our petition for rulemaking related to the RFS.

David L. Lamp: Is really banked on our contribution be in our <unk> operation.

David L. Lamp: Renewable diesel or say yeah.

David L. Lamp: What we are doing is sweat equity or providing.

David L. Lamp: You know the location the land.

David L. Lamp: The permits the design.

David L. Lamp: All the rest will operated four for whatever but we will not do the project without a partner that is strategic in nature and.

David L. Lamp: Interested in the space.

David L. Lamp: We believe the law is clear that only obligated parties who over-comply with their RFS obligations can generate excess FRIMs, and that they may sell those RINs only to other obligated parties who need the RINs for compliance. That EPA allows non-obligated parties to exploit the rent market for profit is just wrong. It is not just wrong; it violates the law as written. If EPA does not respond to our petition, once again, we will see them in court.

David L. Lamp: With the idea that we would IPO that company out of eventual eventual exit strategy.

David L. Lamp: As far as other M&A, there's just some very intriguing deals out there that are transformative for our company as well as others.

David L. Lamp: <unk>.

David L. Lamp: Think.

David L. Lamp: As we've always said, we look at everything and we continue to look at everything.

David L. Lamp: Like I said, some unique opportunities in the refining space that.

David L. Lamp: Really made us pick up our pencil again and look at it again so.

David L. Lamp: In the first quarter of 2024, we processed approximately 7 million gallons of vegetable oil feedstocks at our Winnewood Renewable Diesel Unit, with throughput in the quarter impacted by a planned catalyst change. The hobo spread improved from the fourth quarter of 23 due to lower soybean oil prices, although prices for D4 RENs remain depressed as a result of EPA's continued mismanagement of the RFS program. As a reminder, our renewable diesel business is currently reported in our corporate and other segments.

Speaker Change: You know more to come on that.

Speaker Change: Great and then a follow up sticking with the 8-K.

David L. Lamp: On the on the potential strategic options for you and I know this is something you worked at about maybe about a year ago.

David L. Lamp: Now it looks like the opportunity.

David L. Lamp: Idea of potentially separating U a N is back on the docket can you.

David L. Lamp: I'm talking about the type of transaction that could potentially take place there and whats changed between then and now in terms of being back and looking at the sum of the parts for fertilizer or is it just the equity coming back a little bit or are there other drivers.

David L. Lamp: In the fertilizer segment, we achieved consolidated ammonia plant utilization of 90%, which was also impacted by some planned downtime in the quarter at our Coffeyville facility. Nitrogen fertilizer prices in the first quarter of 2024 will remain fairly steady for the fourth quarter of 2000 with fourth quarter 2023 prices, and we saw strong demand for ammonia with favorable weather conditions during the quarter. Now, let me turn the call over to Dane to discuss our financial highlights.

Dane: Well I think you've probably heard about the recent transaction that's occurred.

Dane: With Oh, it hasn't hasn't closed yet, but it has been proposed for.

Dane: For the Wever plant with OCI.

Dane: That kind of mark to market.

Dane: Big value.

Dane: Pretty much twice the value of what you have is today. So that's what's kind of sparked the.

Dane: The interest in it.

Dane: We're just exploring opportunities that that might incur going forward.

Dane: Okay. Thank you.

Dane J. Neumann: Thank you, Dave, and good afternoon, everyone. For the first quarter of 2024, our consolidated net income was $90 million. Earnings per share was $0.81, and EBITDA was $203 million. Our first quarter results include a reduction to quarterly RIMS expense due to a marked market impact on our estimated outstanding RFS obligation of $91 million, a favorable inventory valuation impact of $37 million, and unrealized derivative losses of $24 million. Excluding the above-mentioned items, adjusted EBITDA for the quarter was $99 million, and adjusted earnings per share was $0.04.

Dane: Youre welcome.

Dane J. Neumann: Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.

Dane J. Neumann: Thanks.

Dane J. Neumann: Dave.

Speaker Change: Just building on the comments that you have made and then they pay.

Speaker Change: Are there characteristics that you would say define what would be a successful M&A transaction for you on the refining side, whether it's a specific regions.

Speaker Change: As you think about potential M&A do you have a preference for packages versus single assets, just trying to get a context of the framework by which you evaluate success.

Dane J. Neumann: Adjusted EBITDA on the petroleum segment was $67 million for the first quarter, with the decline from the prior year period primarily driven by lower product cracks in Group 3. Our first quarter realized margin, adjusted for inventory valuation, unrealized derivative losses, and RIN mark-to-market impacts, was $10.46 per barrel, representing a 54% capture rate on the Group 3 2-1-1 benchmark. RIN's expense for the quarter, excluding the marked market impact, was $45 million, or $2.52 per barrel, which negatively impacted our capture rate for the quarter by approximately 13 percent.

Speaker Change: As you consider different options, yes sure Neal.

Speaker Change: You know one of our biggest impediment.

Speaker Change: Impediments to our stock price I think is a lack of diversification.

Speaker Change: So you know we've we've in the past have pointed to total to the west is our desired area, but.

Speaker Change: I think what we need is size and scale and diversity of our R. R.

Dane J. Neumann: Our refining fleet and.

Dane J. Neumann: Any of the any of these actions.

Dane J. Neumann: And the available transactions with the scratch that edge so.

Dane J. Neumann: The estimated accrued RFS obligation on the balance sheet was 294 million at March 31st, representing 449 million RINs marked to market at an average price of 66 cents. As a reminder, our estimated outstanding RIN obligation excludes the impact of any small refinery exemption.

Speaker Change: I think that's mainly what we're looking for you know what when you sit here in the mid Con and that's that's all you got.

Dane J. Neumann: Actually group three.

Speaker Change: You're subject to to the ones of the math of the market with nothing to offset it other than fertilizer. So.

Dane J. Neumann: Direct operating expenses in the petroleum segment were $5.78 per barrel for the first quarter compared to $5.90 per barrel in the first quarter of 2023. The decrease in direct operating expenses was primarily due to lower natural gas and electricity prices. On a per barrel basis, our direct operating expenses were elevated in the first quarter of 2024 and the prior year period due to lower throughput rates as a result of the planned turnaround.

Speaker Change: You know if you look at the size of our fertilizer business compared to the rest of it it's a relatively small so.

Speaker Change: Any diversification, we can do there is a benefit to the stock and the shareholders is my point of view.

Speaker Change: Yes, it's nice to have and then the follow up is just that distillate.

Dane J. Neumann: Have a distillate.

Dane J. Neumann: Heavy mix here, which has been a huge tailwind over the last couple of years. It has softened a little bit here more recently.

Dane J. Neumann: Part of that does seem to be seasonal but has anything changed in your structurally bullish distillate or diesel CEO and are you seeing anything real time that would say that.

Dane J. Neumann: Adjusted EBITDA on the fertilizer segment was $40 million for the first quarter, with lower feedstock costs and direct operating expenses, somewhat upsetting the decline in prices relative to the prior year period. The partnership declared a distribution of $1.92 per common unit for the first quarter of 2024. As CVR Energy owns approximately 37% of CVR Partners' common units, we will receive a proportionate cash distribution of approximately $7 million. Cash provided by operations for the first quarter of 2024 was $177 million, and free cash flow was $121 million.

Dane J. Neumann: And should turn more positive as we work our way through the summer.

Speaker Change: Well, we had we came off of two very mild winters frankly.

Speaker Change: Some people say it was the mildest winter ever in those states I don't know because we had some some severe weather in our markets.

Speaker Change: It makes me wonder if that how much the climate is really changing but.

Dane J. Neumann: That said.

Dane J. Neumann: Significant uses of cash in the quarter included $61 million for cash taxes and interest, and $59 million for capital and turnaround spending. 50 million for the fourth quarter 2023 regular dividend and 11 million paid for the non-controlling interest portion of the CVR partner's fourth quarter 2023 distribution. Total consolidated capital spending was $51 million, which included $36 million in the petroleum segment, $5 million in the fertilizer segment, and $8 million for the RDU, primarily related to the pretreatment unit.

Speaker Change: I think the bigger impact.

Speaker Change: It is really the industrial activity and just the movement of goods around the country as has just been kind of anemic.

Speaker Change: That said you know if you just look at.

Speaker Change: The other thing I'd add to it you know we're up to almost 5% now of renewable diesel in the pool.

Dane J. Neumann: That was less than 1% a year and a half ago. So.

Dane J. Neumann: It's really come on and it's a it's certainly is changing the California market.

Dane J. Neumann: Turnaround spending in the first quarter was approximately $39 million. For the full year 2024, we estimate total consolidated capital spending to be approximately 225 to 250 million and turnaround spending to be approximately 55 to 65 million. Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $644 million, which included $65 million of cash in the fertilizer segment. Total liquidity as of March 31st, excluding CVR partners, was approximately $831 million, which was comprised primarily of $580 million of cash and availability under the AVL facility of $251 million.

Dane J. Neumann: But it's probably affecting everywhere to some degree.

Dane J. Neumann: Now that said all of that said you know if.

Dane J. Neumann: If you look at the practicality of Evs.

Dane J. Neumann: Heavy oil in the heavy trucking industry is.

Dane J. Neumann: Poor at best in renewable diesel is by far a better solution.

Speaker Change: So you know I don't I don't think.

Speaker Change: The market can't handle that.

Dane J. Neumann: You know if we have a little bit of industrial any kind of manufacturing and industrial activity diesel demand will pick right back up.

Dane J. Neumann: And that's kind of our view.

Speaker Change: Okay very helpful. Thanks, Dave.

Dane J. Neumann: Looking ahead to the second quarter of 2024, as Dave mentioned, we are still assessing the extent of the damage from the fire at Winnewood, and we will provide an updated outlook for the petroleum segment and the renewable diesel unit once the impact of the incident is determined. The Coffee Grill Refinery continues to operate as planned. For the fertilizer segment, we estimate our second quarter 2024 ammonia utilization rate to be between 95 and 100 percent. Direct operating expenses are expected to be approximately $50 to $55 million, excluding inventory impacts.

Speaker Change: Youre welcome.

Dane J. Neumann: Our next question comes from the line of Paul Cheng with Scotiabank. Please proceed with your question.

Speaker Change: Good afternoon guys.

Speaker Change: Dave or Dan.

Speaker Change: At <unk>, yes, that's a good transaction.

Dane J. Neumann: Mining.

Dane J. Neumann: How much of that no you wouldn't be willing to put on in terms of the partnership.

Speaker Change: I mean, how should we look at it.

Speaker Change: Could you repeat that again Paul.

Dane J. Neumann: That's a good.

Dane J. Neumann: Churn session that they.

Dane J. Neumann: A acquisition pocket that you're seeing is really good for you.

David L. Lamp: Thank you, thank you, Dane. In summary, market conditions were challenging for much of the first quarter, particularly in the petroleum segment, as we found product inventories were elevated coming into 2024. And, because distal demand has been weak with a warm winter and depressed industrial activity, we would characterize current crack spreads as just above mid-cycle. Starting with refining, elevated maintenance activity, and unplanned downtime in the United States over the past few months helped clean up inventory, with gasoline and diesel inventories both near or below the five-year average.

Speaker Change: How far do you would be willing to stretch your balance sheet.

Dane: Yeah Paul.

David L. Lamp: Obviously depend on the target and what the earnings power of that target would be we've always kind of said were comparable between the one and two times levered ratio. So depending on the target you know I don't think we'd want to change our debt profile materially long term. So I would still use that as a benchmark over the long haul and we did.

David L. Lamp: Want to use our equity to some degree Paul so right, but I mean that Dan I understand you're on long time. They finished hakan you haven't changed but in terms of the short term how.

David L. Lamp: How far you're willing to call.

David L. Lamp: We believe there's additional maintenance work yet to be completed in the United States, Europe, and Asia, and the impacts on global refining supply from recent drone attacks on Russian refineries remain wild. We also have continued to monitor the startup of new global refining capacity expected this year, which could offset some of the supply impacts just discussed. On the demand side of the equation, gasoline demand in the U.S. remains steady and is trending above the five-year average level. While desolate, the man remained soft.

David L. Lamp: What is that.

Speaker Change: That's helpful.

Speaker Change: Fill up that.

David L. Lamp: In the 12 months after you close the deal.

David L. Lamp: I'll ever off what Dave said, it really would depend on the depth of the equity market.

David L. Lamp: Is there a scenario, where we would potentially stretch if there was a very clear path of delevering, yes, but probably not to aggressively beyond what our current targets are.

Speaker Change: Okay second question, Dan can you tell us that what's your.

David L. Lamp: Looking more specifically at the MidCon, refined product demand in Group 3 has remained steady, although inventory levels are elevated relative to the U.S. as a whole. As a result, the basis in Group 3 is unusually wide for gasoline, and we have been increasing our fuel-by-rail shipments to the west through our new transload facility at Coffee Point. The Brent TI differential has averaged nearly $5 per barrel so far this year, supported by crude oil export volumes averaging over 4 million barrels a day.

David L. Lamp: We mainly hedging position for the rest of the year.

David L. Lamp: And also Dave when you talk about the second quarter at the Audi would be reaching the cap.

Speaker Change: Are you talking about witching.

David L. Lamp: Run at 100% because previously I think you've been talking about running maybe more like in the 70%. So I just wanted to make sure I understand your comment on that.

Speaker Change: Yeah, Paul on on the R&D side of it as you know we're planning to run this run at 5000 barrels per day, which is about 75 of renewable diesel caregiver compared to our nameplate of 100.

David L. Lamp: With crude prices in the $85 per barrel range, we expect continued strength and shallow production volumes, which should be supportive of our crude oil gathering business. For the first quarter, our crude oil gathering volumes were approximately 130,000 barrels per day. This is an important part of our strategy, given the uplift we usually experience by bringing in neat barrels to the refinery gate. I'm pleased to announce that the board recently approved a distillate yield product, yield improvement project at the Winney Wood Refinery.

David L. Lamp: So you know, we're probably a little higher than the numbers, you said that oh right in that angle and what we're trying to explore here as catalyst life and find the optimum and that and.

Speaker Change: Well, we'll sneak up on that.

David L. Lamp: The next load.

David L. Lamp: Increasing it to maybe 6000 and then we'll go from there.

David L. Lamp: Your other question, yes on an open derivative positions Paul so for 'twenty four.

David L. Lamp: We're at about 8% of gasoline and diesel production. The only thing I want to caveat is that production rate does assume a full run rate of when he would so we have to once we know more we will be able to appropriately adjust what that would look like with with any downtime that's associated with the fire and then for 'twenty five where are we.

David L. Lamp: Through some modifications to the vacuum tower and our diesel hydrotreating unit, we believe we'll be able to increase insulate production at the Wynnewood refinery by approximately 2,500 barrels per day. We completed tie-in work for the project during Winnie Woods' recent turnaround project, and we currently expect final completion in the first half of 2025 at a capital cost of less than $15 million. We are also studying a similar project at Coffeyville which, if approved by the board and successfully implemented, could be completed in 2026.

David L. Lamp: We're about 4% of total gasoline diesel production and that's a 100% of ads of diesel production from 9% on diesel production for 25.

Speaker Change: Got it thank you say, 4% in <unk>.

David L. Lamp: And 4% in gasoline and diesel but that because he is Oregon diesel so, yes, 9% <unk> zero again gasoline.

David L. Lamp: Yeah, that's correct.

David L. Lamp: And yes they are.

Speaker Change: Yes, the position for the second quarter, why not making money or losing money.

David L. Lamp: Turning to the fertilizer segment, we had good ammonia sales in the first quarter with favorable weather conditions allowing farmers to apply ammonia earlier in the year. We expect strong demand for spring with planting expectations currently at 90 million acres for corn and 87 million acres for soybeans.

David L. Lamp: Making money.

David L. Lamp: For the second half here.

David L. Lamp: For the second quarter right now.

David L. Lamp: Ask your positioning in the second quarter, just making money or losing money.

Speaker Change: Yes, it's in the money right now Paul.

Speaker Change: With you. Thank you.

Speaker Change: Youre welcome.

David L. Lamp: We currently do not have any additional downtime planned for either fertilizer facility until 2025. The pretrader for the renewable diesel unit began operations in the first quarter, and we expect to re-plan production rates during the second quarter. We are optimistic about the combination of the new catalyst load in the RD unit plus the PTU when operational, would it result in improved... and improvements in our renewable diesel product yield, catalyst life, and resulting economics. We continue to explore opportunities in the renewable space and are currently in discussions related to the potential conversion of the Wynnewood Renewable Diesel Unit up to a hundred percent SAF.

Speaker Change: Thank you we have no further questions at this time I would like to turn the floor back over to management for closing comments.

Speaker Change: To get in and like to thank you all for your interest in CVR energy. Additionally, I'd like to thank our employees for their hard work and commitment towards safe reliable and environmentally responsible operations.

David L. Lamp: We look forward to reviewing our second quarter 2024 results in our next earnings call. Thank.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

David L. Lamp: As we have discussed previously, our focus in exploring this project would be to structure the off-ticket agreements such as that would significantly de-risk a margin that could justify the capital we need to invest. On the larger potential project at Coffeyville, we expect to have the project scope, cost, and development plan ready to take to the market by the end of the year. We still believe there will be a market for renewable diesel and sustainable aviation going forward, despite EPA's continued mismanagement of the RFS regulations.

David L. Lamp: Finally, in March, we issued a Form 8K announcing that we were routinely considered for, and currently considering potential strategic transactions both in refining and potentially related to CVR partners. However, we have nothing to disclose and certainly provide no assurances that we could successfully close any such transaction.

David L. Lamp: There are some very interesting and transformative opportunities out there for both our refining business and CVR partners. Looking at the second quarter of 2024, the quarter-to-date metrics are as follows. Group 2-1-1 cracks have averaged $20.67 per barrel, and Brent TI spread at $4.48 per barrel, and the Midland differential of $1.42 over WTI. Prompt fertilizer prices are approximately $600 per ton for ammonia and $300 per ton for UAM.

David L. Lamp: As of yesterday, Group 3 2-on-1 cracks were $21.01 per barrel, and Brent TI spread was $5.77 per barrel. And WCS was $13.21 under WTI, and rends were approximately $3.06 per barrel. As always, we continue to strive to operate our plants in a safe, reliable, and environmentally responsible manner and to explore opportunities to grow our renewable business. We'll continue to focus on maximizing free cash flow, which underpins our peer-leading dividend yield. With that, operator, we're ready for questions. Thank you.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Manav Gupta with UBS. Please proceed with your question.

Manav Gupta: Good morning guys. You are considered a good and safe operator and I understand you're still evaluating what happened over the weekend, but help us understand a little bit, is it a weather-related event exactly what happened, and what went wrong over the weekend which caused some of the issues that you're seeing.

David L. Lamp: Well, we don't know exactly all the facts yet, Manav, but it appears like we got hit by lightning in one of our process areas, and that lightning caused the impending fire, and then that spread a little bit as it got hot. You know, I think our response to it was excellent from the community standpoint, our employees' standpoint, and our contractors' standpoint. But it's an unfortunate event that we're sometimes exposed to. If you recall, the town of Sulphur, which is probably, I don't know, 15 miles from us, experienced a very bad tornado, and you know that the storms were really bad that night and lightning was flying all over the place. We think we took a direct hit, but you never can be sure that it happened so fast.

Manav Gupta: Right, so there's literally nothing you could have done about it. I just was trying to make sure. And my second question is, looks like your PTU is now going to be up and running, is running at your RD facility. Help us understand how it, what are you looking to transform from, you know, refined soybean oil to unrefined soybean oil? Are you looking to do some tallow and stuff? And do you think that does make a material difference to your renewable diesel profitability? Well,

David L. Lamp: Well, there's no doubt that we've been catalyst starved with a unit without a PTU. We've had pretty short runs and poor yields, I'll call it, on actual renewable diesel. We're very encouraged that even buying treated feed or refined deodorized and de-gummed feed still had a lot of impurities in it in the forms of metals and phosphorus and other things.

David L. Lamp: And the results of the pre-treater look really good at this point. And, you know, we're starting this run with the pre-treater up. And the catalyst performance is already looking very good, yielding yields of 90-plus percent on renewable diesel and much less byproducts than we had seen before that. So I'm really optimistic that we'll pick up not only the ability to run untreated corn oil and soybean oil but maybe some other options for some other things.

David L. Lamp: Right now, we're really focused on corn oil as a substitute for soybean oil. And we think that, you know, the margin on that right now is probably in the 80 cent range per gallon on a pre-treated basis. So, you know, if we look at the first quarter, we still had a margin of about 65 cents a gallon, which, if we could have run more barrels, we would have probably shown a profit on that unit. As it is, we were just kind of breakeven.

Manav Gupta: Thank you; very helpful. Thank you.

Operator: Our next question comes from the line of Matthew Blair with Tudor Pickering Holt. Please proceed with your question.

Matthew Robert Lovseth Blair: Thank you and good afternoon, Dave. I want to pull up on your comments regarding railing gasoline to the West Coast. I think you mentioned something about railing gasoline to California and capitalizing on the higher margins in that space. And also, just curious, can you make that CARB spec, or is it a blended spec, and what kind of volumes are we talking about here?

David L. Lamp: Sure, as I mentioned, I said to the West, not necessarily to California, but no, we put in a transloading facility. I had a third party put it in, and we're underwriting it with tariffs. But our plan is to be able to load up to 120,000 barrels per month. And that's our capability with the transloader, but we'll probably go probably wherever the margins are the best. As far as making carb, we really haven't looked at that much, although I'm probably pretty sure we could make some of it to some degree if we had the segregated tankage.

Matthew Robert Lovseth Blair: But, you know, we haven't gone that far yet. If California continues to get shorter and shorter, it might be an attractive move. But the ARB is open to other areas, such as Grand Junction, even Denver occasionally, and other places like Salt Lake City and Phoenix on occasion. So that's where we're focused mostly.

David L. Lamp: Is there a good rule of thumb for the rail costs associated with that, like maybe 30 or 40 cents a barrel or, sorry, a gallon?

Matthew Robert Lovseth Blair: Well, you know, normally, anytime you move anything by rail, it's six to eight bucks per barrel. So that's a good rule of thumb. Depends on how far you go and where you go. Then you have unloading fees and loading fees on the front side. But that's a good rule of thumb.

David L. Lamp: Sounds good. And then my follow-up question, do you think anything will change on your WCS exposure as TMX ramps up, or do you expect to receive, you know, the same volumes on, I think it's at least the express pipeline? There might be one other. And, you know, we've noticed that the WCS futures curve widens out to about $15 a barrel by the end of this year. Is that just from expectations of continuing production growth in Canada? Thanks. Yeah, I think mostly of what you're seeing right now.

David L. Lamp: Yeah, I think mostly what you're seeing right now is the line fill, which is taking, what, four and a half million barrels off the market permanently. And that's what brings it down to the $13 range that it's at today.

David L. Lamp: I would expect it to widen back out a little bit once the line fill is complete. And, you know, I don't think, you know, I think most of the barrels that are going to be replaced are the ones that were going offshore out of the Gulf of Mexico. So I'm not anticipating any problems getting barrels. You know, we don't run all we can move on the pipes, so we end up selling quite a bit in Cushy.

David L. Lamp: And we plan to continue that effort. I don't see any reason why it wouldn't continue where the production is today. I think the real benefit of TMX is for the future, however. It gives Canadian producers an outlet that they didn't have before. And unfortunately, Keystone got canceled, which would have given them that capacity in the United States. I think the effect will still be there, and that means more Canadian crude in the future.

Operator: Our next question comes from the line of John Royall with J.P. Morgan. Please proceed with your question.

John Macalister Royall: Hi, good afternoon. Thanks for taking my question. So I was hoping for some additional color on refining M&A in light of the 8k. And could that impact some of the things you would otherwise do on the organic side, particularly thinking about the bigger projects you're considering with R&D? Is it sort of an either or with M&A? Or could both be done at the same time?

David L. Lamp: Well, John, remember that our larger RD project or SAF project, whatever you want to call it, is really banked on our contribution being our Winnewood operation of renewable diesel or SAF. What we are doing is what equity we're providing, you know, the location, the land, the permits, the design, you know, all the rest; we'll operate it for whatever, but we will not do the project without a partner that is strategic in nature and is interested in the space, with the idea that we would IPO that company out as an eventual exit strategy.

David L. Lamp: As far as other M&A, there are some very intriguing deals out there that are transformative for our company as well as others. I think, as we've always said, we look at everything and we continue to look at everything. Like I said, there are some unique opportunities in the refining space that really made us pick up our pencil again and look at it again.

John Macalister Royall: Great, and then follow up, sticking with the 8K, on the potential strategic options for UAN. I know this was something you looked at maybe about a year ago, and now it looks like the opportunity, the idea of potentially separating UAN is back on the docket. Can you talk about the type of transaction that could potentially take place there?

David L. Lamp: And what's changed between then and now in terms of being back and looking at some of the parts for fertilizer? Is it just the equity coming back a little bit, or are there other drivers? Well, I think you've probably heard about the recent trend.

David L. Lamp: Well, I think you've probably heard about the recent transaction that's occurred, or hasn't closed yet, but it's been proposed for the Weaver plant with OCI, that kind of marked the market for a pretty big value, pretty much twice the value of what UAN is today. So that's what kind of sparked the interest in it. And we're just exploring opportunities that that might involve going forward.

Operator: Our next question comes from Neil Mehta with Goldman Sachs. Please proceed with your question.

Neil Singhvi Mehta: Thanks. Dave, just building on the M&A comments that you made in the 8K, are there characteristics that you would say define what would be a successful M&A transaction for you on the refining side, whether it's specific regions? And as you think about potential M&A, do you have a preference for packages versus single assets? Just trying to get a context of the framework by which you evaluate success as you consider different options.

David L. Lamp: Sure, Neil. I think one of our biggest impediments to our stock price is our lack of diversification. So, you know, we've in the past pointed to the West as our desired area, but, you know, I don't. I think what we need is size, scale, and diversity of our refining fleet, and any of these actions and the available transactions would scratch that surface. I think, you know, that's mainly what we're looking for.

Neil Singhvi Mehta: You know, when you sit here in the mid-con and that's all you've got, particularly in group three, you're subject to the whims of the market with nothing to offset it other than fertilizer. So, you know, if you look at the size of our fertilizer business compared to the rest of it, it's relatively small. Any diversification we can do there is a benefit to the stock and the shareholders, is my point. Yeah, thanks, David.

David L. Lamp: The follow-up is just distillate. You have a distillate-heavy mix here, which has been a huge tailwind over the last couple of years. It has softened a little bit here more recently, and, you know, part of that does seem to be seasonal. But has anything changed in your structurally bullish distillate and diesel view? And are you seeing anything in real time that would say that things should turn more positive as we work our way through the summer? Well, you know, we had what we came out with.

David L. Lamp: Well, you know, we came off of two very mild winters. Frankly, some people say it was the mildest winter ever in the States.

David L. Lamp: I don't know, because we had some severe weather in our markets that makes me wonder how much the climate is really changing. But that said, you know, I think the bigger impact is really industrial activity. And just the movement of goods around the country has just been kind of anemic. That said, you know, the other thing I'd add to it. We're up to almost 5% now of renewable diesel in the pool, that was less than 1% a year and a half ago.

David L. Lamp: So it's really come on, and it certainly is changing the California market, but it's probably affecting everywhere to some degree. Now, all that said, if you look at the practicality of EVs in the heavy trucking industry... It's poor at best, and renewable diesel is by far a better solution. So, you know, I don't think that the market can't handle that. It's just, you know, if we have a little bit of industrial, any kind of manufacturing industrial activity, diesel demand will pick right back up, and that's our view.

Operator: Our next question comes from the line of Paul Cheng with Scotiabank. Please proceed with your question.

Paul Cheng: Good morning, good afternoon guys. Dave or Dane, in the event that there's a good transition in refining, how much of the debt flow would you be willing to put on in terms of the balance sheet? I mean, how should we look at it?

Paul Cheng: Can you repeat that again, Paul?

Paul Cheng: If that's a good transition, an acquisition target that you think is really good for you, how far will you be willing to stretch your boundaries?

David L. Lamp: Yeah, Paul, it would obviously depend on the target and what the earnings power of that target would be. You know, we've always kind of said we're comfortable between the one and two times levered ratio. So depending on the target, I you know, I don't think we want to change our debt profile materially over the long term. So I still use that as a benchmark over the long haul. And we want to use our equity to some degree, Paul. Bye. But I mean that

Paul Cheng: Right, but I mean that Dane, I understand your long-term leakage target you haven't changed, but in terms of the short term, how far are you willing to go? What is within an acceptable level of that? within the 12 months after you posted.

Dane J. Neumann: I'll borrow from what Dave said; it really would depend on the depth of the equity market. Is there a scenario where we could potentially stretch if there was a very clear path of delevering? Yes, but probably not too aggressively beyond what our current targets are.

Paul Cheng: Okay. Second question, Dane, can you tell us what your remaining hedging position is for the rest of the year? (inaudible)

Dane J. Neumann: Yeah, Paul, on the RD side of it is, you know, we're planning to run this run at 5,000 barrels per day, which is about 75 percent renewable diesel compared to our nameplate of 100. So we're probably a little higher than the numbers you said, but right on that angle. And what we're trying to explore here is catalyst life and find the optimum in that. And we'll sneak up on that probably with the next load, increasing it to maybe 6,000. And then we'll go from there with your other questions. Yeah, on open derivative positions, Paul.

Dane J. Neumann: So for 24, we're at about 8% of gasoline and diesel production. The only thing I want to caveat is that production rate does assume a full run rate of Winnewood. So we have to, once we know more, we'll be able to appropriately adjust what that would look like with any downtime that's associated with the fire.

Dane J. Neumann: And then for 25, we're about 4% of total gasoline-diesel production. That's 100% of that is diesel production. So 9% of diesel production for 25. Then you say 4%.

Paul Cheng: Then you say 4% in... told in 4% in gasoline and diesel, but that's because it's all diesel, so it's 9% in diesel and 0 in gasoline, right? Yeah, that's correct.

Dane J. Neumann: And is the position for the second quarter, whether it's making money or losing money? make money, for the second half, for the second quarter right now. Is your derivative position for the second quarter making money or losing money? Yeah, we'll make good money. It's in the money right now, Paul. Okay. Thank you.

David L. Lamp: Thank you. We have no further questions at this time. I would like to turn the floor back over to management for closing comments.

David L. Lamp: Again, I'd like to thank you all for your interest in CVR Energy. Additionally, I'd like to thank our employees for their hard work and commitment towards safe, reliable, and environmentally responsible operations. We look forward to reviewing our second quarter 2024 results on our next earnings call.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.