Q1 2025 CVR Energy Inc Earnings Call

Operator: Greetings, and welcome to the CVR Energy first quarter 2025 conference call. At this time, all participants are in a listen-only mode.

Greetings and welcome to the CVR Energy first quarter 2025 conference call.

At this time all participants are in a listen only mode.

Operator: 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.

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.

Richard Roberts: It is now my pleasure to introduce your host, Richard Roberts, Vice President in Financial Planning and Analysis and Investor Relations. Thank you, sir. You may begin. Thank you, Christine.

Speaker Change: It is now my pleasure to introduce your host Richard Roberts, Vice President financial planning and analysis and Investor Relations. Thank you Sir you may begin.

Richard Roberts: Thank you Christine good afternoon, everyone.

David Lamp: Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy First Quarter 2025 earnings.

Richard Roberts: We very much appreciate you joining us this afternoon for our CVR energy first quarter 2025 earnings call with me today are Dave lamp, our Chief Executive Officer, Dan Newman, Our Chief Financial Officer, and other members of management.

David Lamp: With me today are Dave Lamp, our Chief Executive Officer, Dane Neumann, our Chief Financial Officer, and other members of Manav's team.

David Lamp: Prior to discussing our 2025 first quarter results, let me remind you that this conference call may contain forward-looking statements, as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking. You are cautioned that these statements may be affected by important factors set forth in our Filing Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results made it from materially from the results discussed in the forward... 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 Roberts: In discussing our 2025 first quarter results.

Richard Roberts: And you that this conference call may contain forward looking statements as that term is defined under federal securities laws for this purpose any statements made during this call that are not statements of historical facts may be deemed to be forward looking statements.

Richard Roberts: You are cautioned that these statements may be affected by important factors set forth in our filings with Securities and Exchange Commission and our latest earnings release as a result actual operations or results may differ materially from the results discussed in the forward looking statements.

Richard Roberts: 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.

David Lamp: This call also includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures, are included in our 2025 first quarter earnings release that we filed with the SEC in Form 10-Q for the period, and will be discussed during the call.

Richard Roberts: This call also includes various non-GAAP financial measures the disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures are included in our 2025 first quarter earnings release that we filed with the SEC and Form 10-Q for the period and will be discussed during the call.

David Lamp: With that said, I'll turn the call over to Dave. Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call.

Richard Roberts: That said I'll turn the call over to Dave.

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

David Lamp: Yesterday, we reported a first quarter consolidated net loss of $105 million and a loss per share of $1.22. EBITDA was a loss of $61 million. Our results were impacted by the planned turnaround at Coffeyville, the Coffeyville refinery. Unplanned events in January and an unfavorable mark to market impact of our outstanding RFS obligation. in our petroleum side. combined total throughput for the first quarter of 2025 was approximately 125,000 barrels per day and light product yield was 95% on crude oil processing. The planned turnaround at Coffeyville began in late January following an incident at our naphtha hydrotreater during freezing weather conditions.

Dave Lamp: Yesterday, we reported first quarter consolidated net loss of $105 million.

Dave Lamp: The loss per share of $1 22, EBITDA was a loss of $61 million.

Dave Lamp: Our results were impacted by the planned turnaround at Coffeyville, the Coffeyville refinery.

Unplanned events in January and an unfavorable mark to market impact of our outstanding RFS obligation.

Dave Lamp: In our petroleum segment.

Dave Lamp: Combined total throughput for the first quarter of 2025 was approximately 125000 barrels per day and light product yield was 95% on crude cross crude oil process.

Dave Lamp: The planned turnaround at Coffeyville began in late January following an incident.

Dave Lamp: The hydro treater during freezing weather conditions.

David Lamp: Inefficiencies resulting from the incident including mobilizing contractors earlier than planned, among other factors, impacted the duration of the turnaround by approximately four weeks. Startup of the refinery is underway and we currently expect to ramp to full rates over the course of the second quarter as we draw down crude and intermediate emissions. For the duration of 2025 and 26, we do not currently have any additional turnarounds planned in the refining segment.

Dave Lamp: Inefficiencies, resulting from the incident, including mobilizing contractors earlier than planned among other factors impacted the duration of the turnaround by approximately four weeks.

Dave Lamp: <unk> hundred is underway and we currently expect to ramp to full rates over the course of the second quarter as we draw down on crude and intermediate inventories.

Dave Lamp: For the duration of 22025 and 26, we do not currently have any additional turnarounds planned in our refining segment.

David Lamp: with the next planned turnaround at Wynnywood scheduled for 2027. Group 3 211 benchmark cracks at average $17.65 per barrel for the first quarter of 2025 compared to $19.55 per barrel for the first quarter of last year. average rent prices in the first quarter of 2025 were approximately 84 cents on an RVO weighted basis an increase of over 25% from the previous year period. on a per barrel basis, RINs, were approximately $4.75 per barrel, or more than 25% of the Group 3 2-1-1 crack spread for the quarter. Regarding the RFS, we're pleased. with the first circuit granting the Winningwood refining company Refining Company's unopposed motion to stay its 2023 compliance obligations in March.

Dave Lamp: With the next planned turnaround at when he was scheduled for 2027.

Group 3211 benchmark cracks averaged $17 65 per barrel for the first quarter of 2025 compared to $19 55 per barrel for the first quarter of last year.

Dave Lamp: Average RIN prices in the first quarter of 2025 were approximately 84.

Dave Lamp: On an RVO weighted basis, an increase of over 25% from the previous year period.

Dave Lamp: On a per barrel basis rents were approximately $4 75 per barrel or more than 25% of the group 3211 crack spread for the quarter.

Dave Lamp: Regarding the RFS we were pleased.

Dave Lamp: With the first circuit granting the winning would refining company.

Dave Lamp: Refining companies unopposed motion to stay it's 2023 compliance obligations in March also in March the Supreme Court heard oral arguments on whether the venue.

David Lamp: Also in March, the Supreme Court heard oral arguments on whether the venue for challenges to the EPA's denial of small refinery exemptions lies exclusively within the D.C. Circuit. We currently expect a ruling on the Bennu case in the second quarter, although the ruling should make little difference in this case, since the D.C. Circuit, like the Fifth Circuit before it, also held EPA's denial of small refinery exemptions were arbitrary, capricious, and contrary to the law. The Woody Wood Refinery Company filed its 2024 petition for small refinery exemptions last year, but EPA once again missed its deadline to rule.

Dave Lamp: Whether venues where challenges to the epa's denial of small refinery exemptions lives exclusively within the D. C circuit.

Dave Lamp: We current expect a ruling on the venue case in the second quarter, although they're willing should make little difference in this case. So this is the D. C circuit light the fifth circuit before it.

Dave Lamp: Also held Epa's denials small refinery exemptions, where arbitrary capricious and contrary to the law.

Dave Lamp: But what are your one refinery company filed its 2024 petition for small refinery exemptions last year, but EPA once again missed its deadline to rule.

David Lamp: We urge EPA to meet with us as soon as possible or we'll be forced to file suit again. At this point, EPA is sitting on Winniwood's small refinery exemption petitions for 2019, 20, 21, 22, and 23. The prior administration only acted on our 23 petition when it denied it in January for ridiculous and we think illegal reasons. The rent market causes higher prices at the pump for all Americans, which EPA has admitted. As a reminder, we currently estimate the cost of RIN at $0.10 to $0.15 per gallon on all transportation. We believe that the EPA should be doing everything it can to keep fuel prices low.

Dave Lamp: We urge the EPA would meet to meet with us as soon as possible or would be forced to file suit again.

Dave Lamp: At this point EPA a city on when he was small refinery exemption petitions for 2019, 2021 'twenty two and 'twenty three.

Speaker Change: The prior administration only acted on our 23%.

Speaker Change: Petition when it denied it in January for ridiculous and we think illegal reasons.

Speaker Change: Their end market causes higher prices at the pump for all Americans, which EPA has admitted.

Speaker Change: As a reminder, we currently estimate the cost of Rins.

Speaker Change: Yes.

Speaker Change: 10 to 15 per gallon on all transportation fuels.

Speaker Change: We believe that the EPA should be doing everything it can to keep fuel prices low at a minimum.

David Lamp: At a minimum, EPA should immediately hit the easy button and apply the same alternative compliance Strategy used in 2017 and 2018 for all historical SREs. from 2019 to 2024. All these compliance periods are in the past. This harms no one and could save small refineries from the risk of closure due to the crushing weight of RFS. despite EPA's continued lack of action. We are encouraged by the administration's statement that they are reassessing their position on SRE.

Speaker Change: Should immediately hit the easy button and apply the same alternative compliance.

Speaker Change: Strategy it used in 2017 and 18 for all historical Sras.

Speaker Change: 2019 to 2024.

Speaker Change: All of these compliance periods or in the past this harms no one.

Speaker Change: It could save small refineries from risk of closure to the crushing weight of RFS.

Speaker Change: Despite EPA has continued lack of action.

Speaker Change: We are encouraged by the administration's statement that they are reassessing the position on their position on <unk>.

David Lamp: I'm confident under President Trump's leadership, the EPA will see the critical role small refineries like ours play in supporting rural communities across America, exactly why Congress included small refinery exemptions in the Renewable Fuels legislation.

Speaker Change: I am confident under the under President Trump's leadership, the EPA will see the critical role small refineries like ours play in supporting Rural Commission communities across America exactly why Congress included small refining refinery exemptions in the renewable fuels legislation.

David Lamp: for the first quarter of 2025. We processed approximately 14 million gallons of vegetable fuel oil in our renewable diesel unit at Winnie Wood. Gross margin was approximately $1.13 per gallon for the first quarter of 2025, compared to $0.65 per gallon for the first quarter of 2024. Blender's tax credit expired at the end of 2024. and we did not recognize any clean fuel production credit. in the quarter as the final rules have not been issued. Despite the loss of the BTC, we generated positive adjusted EBITDA in the renewable section driven primarily driven by increased RIN prices and reduced feedstock base.

Speaker Change: For the first quarter of 2025.

Speaker Change: We processed approximately 14 million gallons of vegetable fuel oil and our renewable diesel unit at <unk>.

Speaker Change: Gross margin was approximately $1 13 per gallon for the first quarter of 2025 compared to <unk> 65.

Speaker Change: Per gallon for the first quarter of 2024.

Speaker Change: The blenders tax credit expired at the end of 2024.

Speaker Change: We did not recognize any clean fuel production credits and.

Speaker Change: In the quarter as.

Speaker Change: Final rules have not been issued.

Speaker Change: Despite the loss of the BTC, we generated positive adjusted EBITDA in the renewable section drilling.

Speaker Change: Primarily driven by.

Speaker Change: Increased RIN prices and reduced feedstock basis.

David Lamp: In the fertilizer segment, both facilities ran well during the quarter with a consolidated ammonia utilization rate of 101%.

Speaker Change: In the fertilizer segment, both facilities ran well during the quarter with a consolidated ammonia utilization rate of 101%.

David Lamp: Nitrogen fertilizer prices in the first quarter of 2025 were higher for ammonia and slightly lower for UAN compared to the first quarter of 2024. And we continue to see strong demand for both products as we head into the spring plan.

Speaker Change: Nitrogen fertilizer prices in the first quarter of 2025 were higher for ammonia and slightly lower for UAS compared to the first quarter of 2024.

Speaker Change: And we continue to see strong demand for both products as we head into the spring planting season.

Dane Neumann: Now, let me turn the call over to Dane to discuss our financial highlights. Thank you, Dave. And good afternoon, everyone.

Speaker Change: Now, let me turn the call over to Dave to discuss our financial highlights. Thank you, Dave and good afternoon, everyone.

Dane Neumann: For the first quarter of 2025, our consolidated net loss was 105 million. Losses per share were $1 in and Eva Dahl with a loss of $60,000. Our first quarter results include a negative mark-to-market impact on our outstanding RFS obligation of $112 million. Favorable Inventory Valuation Impact, $24 million, and Unrealized Derivative Gains. Excluding the above-mentioned items, adjusted EBITDA for the quarter was $24 million and adjusted loss per share was $58 million. Adjusted EBITDA on the petroleum segment with a loss of $30 million for the first quarter, with the decline from the prior year period driven by reduced throughput volumes due to the planned and unplanned downtime at Coffeyville, along with lower product cracks.

Dave Lamp: For the first quarter of 2025, our consolidated net loss was $105 million losses per share from $1 22 and.

Speaker Change: And EBITDA was a loss of $61 million.

Speaker Change: Our first quarter results include a negative mark to market impact on our outstanding RFS obligation of $112 million, a favorable inventory valuation impact of $24 million in unrealized derivative gains of $3 million.

Speaker Change: Excluding the above mentioned items adjusted EBITDA for the quarter was $24 million and adjusted loss per share was <unk> 58.

Speaker Change: Adjusted EBITDA in the Petroleum segment was a loss of $30 million for the first quarter with the decline from the prior year period, driven by reduced throughput volumes due to the planned and unplanned downtime at Coffeyville, along with lower product cracks in group III.

Speaker Change: Our first quarter realized margin adjustments.

Dane Neumann: Brand Marked Market Impacts, Inventory Valuation, and Unrealized Relative Gains was $7.72 per barrel, representing a 44% capture rate on the Group 3 2-1-1. That RIN's expense for the quarter, excluding the market impact, was $27 million, or $2.47 per barrel, which negatively impacted our capture rate for the quarter by approximately $4 million. The estimated accrued RFS obligation on the balance sheet was $438 million at March 31st, representing $488 million RINs marked to market at an average price of $1.2 billion. Reminder, our estimated outstanding RIN obligation excludes the impact of any small refinery Direct operating expenses in the petroleum segment were $8.58 per barrel for the first quarter, compared to $5.78 per barrel in the first quarter of 2020.

Speaker Change: And mark to market impacts inventory valuation and unrealized derivative gains was $7 72 per barrel, representing a 44% capture rate on the group 3211 benchmark.

Speaker Change: Net <unk> expense for the quarter, excluding the mark to market impact was $27 million or $2 47 per barrel, which negatively impacted our capture rate for the quarter by approximately 14%.

Speaker Change: The estimated accrued RFS obligation on the balance sheet was $438 million at March 31, representing 488 million Rins Mark to market at an average price of 90.

Speaker Change: As a reminder, our estimated outstanding rent obligation excludes the impact of any small refinery exemptions.

Speaker Change: Direct operating expenses in the petroleum segment were $8 58 per barrel for the first quarter compared to $5 78 per barrel in the first quarter of 2020 for the.

Dane Neumann: The increase in direct operating expense per barrel was primarily driven by lower through Adjusted EBITDA on the Renewables segment was $3 million for the first quarter. Improvement from the first quarter of 2024 adjusted EBITDA of negative $5 million. The increase in adjusted EBITDA was driven by a combination of higher throughput volumes, increased rinse prices, and reduced feedstock base. partially offset by the expiration. Adjusted EBITDA on the fertilizer segment was $53 million for the first quarter with higher UAN sales volume. higher ammonia sales prices driving the increase relative to the prior year.

Speaker Change: The increase in direct operating expense per barrel was primarily driven by lower throughput volumes.

Speaker Change: Adjusted EBITDA in the renewable segment was $3 million for the first quarter an improvement from the first quarter of 2024, adjusted EBITDA of negative $5 million.

Speaker Change: The increase in adjusted EBITDA was driven by a combination of higher throughput volumes increased rinse prices and reduced feedstock basis, partially offset by the exploration of the BTC.

Speaker Change: Adjusted EBITDA in the fertilizer segment was $53 million for the first quarter with higher UAS sales volumes and higher ammonia sales prices driving the increase relative to the prior year period.

Dane Neumann: Partnership declared a distribution of $2.26 per common unit for the first quarter of 2020. CVR Energy owns approximately 37% of CVR Partners' common units, will receive a proportionate cash distribution of approximately Cash consumed by operations for the first quarter of 2025 was $195 million. Free Cash Flow was a use of $280,000. Significant uses of cash in the quarter include $94 million of capital in turnarounds. $47 million for cash interest, $12 million paid for the non-controlling interest portion of the CVR Partners 4th Quarter 2024 Distribution. cash use from working capital of approximately $113 billion. partially associated with inventories being built during the Total consolidated capital spending on an accrual basis was $55 million, which included $49 million in the petroleum segment, $6 million in the fertilizer segment, and less than $1 million in the real world.

Speaker Change: The partnership declared a distribution of $2 26 per common unit for the first quarter of 2025.

Speaker Change: CVR energy owns approximately 37% of CVR partners common units, we will receive a proportionate cash distribution of approximately $9 million.

Speaker Change: Cash consumed by operations for the first quarter of 2025 was $195 million and free cash flow was a use of $285 million Cigna.

Speaker Change: Significant uses of cash in the quarter includes $94 million of capital and turnaround spending of 47 million for cash interest 12 million paid for the Noncontrolling interest portion of the CVR partners fourth quarter, 2024 distribution and a cash use from working capital of approximately $113 million, partially associated with inventories being built during the coffeyville turnaround.

Speaker Change: Total consolidated capital spending on an accrual basis was 55 million, which included 49 million in the petroleum segment 6 million in the fertilizer segment and less than $1 million in the renewable segment.

Dane Neumann: turnaround spending on an accrual basis in the first quarter was approximately 100 For the full year of 2025, we estimate total consolidated capital spending to be approximately $180 to $210 million. and Turnaround Spending to be approximately $180,000 to $200,000. Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $695,000. includes $122 million of cash in the fertilizer. Total liquidity as of March 31st, excluding CVR partners, was approximately $894 million. comprised primarily of $573 million of cash and availability under the ABL facility of $321 million. While we ended the quarter above our targeted minimum cash balances, I want to highlight that the majority of the cash spend associated with the coffee bill turnaround will be incurred in the second quarter, which should be partially offset by a drawdown of inventories built during the period.

Speaker Change: Turnaround spending on an accrual basis in the first quarter was approximately $166 million.

Speaker Change: For the full year 2025, we estimate total consolidated capital spending to be approximately $180 million to $210 million and turnaround spending to be approximately $180 million to $200 million.

Speaker Change: Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $695 million, which includes $122 million of cash in the fertilizer segment.

Speaker Change: Liquidity as of March 31, excluding CVR partners was approximately $894 million, which was comprised primarily of $573 million of cash and availability under the ABL facility of $321 million.

Speaker Change: While we ended the quarter above our targeted minimum cash balances I want to highlight that the majority of the cash spend associated with the coffeyville turnaround will be incurred in the second quarter, which should be partially offset by a drawdown of inventories built during the turnaround.

Speaker Change: Looking ahead to the second quarter of 2025 for our Petroleum segment, we estimate total throughput to be approximately 160 to 180000 barrels per day.

Dane Neumann: Looking ahead to the second quarter of 2025, for our petroleum segment, we estimate total throughputs to be approximately 160,000 to 180,000 barrels per day. Direct Operating Expenses to range between $105,000 and $115,000. Total capital spending to be between $35,000 and $40,000. The Fertilizer Segment, we estimate our ammonia utilization rate to be between 93% and 97%, with some downtime planned at East Dubuque. We expect direct operating expenses, excluding inventory impacts, to be between $57,000 and and Total Capital Spending. The Renewable Segment, we estimate second quarter 2025 total throughput to be approximately 20 Million Gallons, Direct Operating Expenses to Range.

Speaker Change: Direct operating expenses to range between 105, and $115 million and total capital spending to be between $35 million to $40 million.

Speaker Change: For the fertilizer segment, we estimate our ammonia utilization rate to be between 93%, 97% with some downtime planned at east Dubuque in the quarter we.

Speaker Change: We expect direct operating expenses, excluding inventory impacts to be between 57% and 62 million and total capital spending to be between 18 and $22 million.

Speaker Change: For the renewable segment, we estimate second quarter 2025, total throughput to be approximately 16 to 20 million gallons direct operating expenses to range between eight and $10 million and total capital spending to be between two and $4 million, but.

Dane Neumann: and Total Capital Spending to be between $2.00 and $4.00.

David Lamp: With that, Dave, I'll turn it back over to you. Thanks, Dane. Refunding market conditions began to improve in the first quarter due, in part, to heavy spring maintenance. and the closure of one U.S. refinery. Several more closures have been announced in the US and in Europe for 2025. Recent data from EIA indicates days of gasoline supply are 12% below the five-year average, while diesel is currently 17% below. Within the MidCon where we operate, days of supply are currently, for gasoline supply, are currently 8% below the five-year average, and diesel is nearly 13%.

Speaker Change: David I'll turn it back over to you. Thanks, Dan.

Dave Lamp: Refining market conditions began to improve in the first quarter due in.

Dan Newman: In part to a heavy spring maintenance season, and the closure of one U S refinery.

Dan Newman: Several more closures have been announced in the U S and in Europe for 'twenty five 'twenty six.

Dan Newman: Recent data from a.

Dan Newman: Hey indicates days of gasoline supply are 12% below the five year average while diesel is currently 17% below.

Dan Newman: Within the mid Con, where we operate days of supply are currently for gasoline supply are currently eight <unk>.

Dan Newman: 8% below the five year average and diesel is nearly 13% below.

David Lamp: Given the improvement in supply and demand fundamentals and the increase in rent price We are surprised that cracks are not higher. In the near term, the evolving tariff environment and associated concerns in the market around potential demand impacts will likely weigh on the market to some degree. As it relates to tariffs in our refining assets, we are relatively well positioned given our location at Midcon and our limited exposure to Canadian crude oil. Unlike other refiners in pad two that are more dependent on heavy Canadian crude oil, we typically only run a few 1000 barrels per day of WCS at Coffeyville.

Dan Newman: Given the improvement in supply and demand fundamentals and the increase in Brent prices. We are surprised that cracks are not higher.

In the near term the evolving tariff environment and associated concerns in the market around potential demand impacts will likely weigh on the market to some degree.

Dan Newman: As it relates to tariffs and our refining assets, we are relatively well positioned given our location at the mid con and our limited exposure to Canadian crude oil.

Dan Newman: Unlike other refiners in pad two or more dependent on heavy Canadian crude oil would typically only run a few thousand barrels per day of WCS at Coffeyville and.

David Lamp: and sell the remainder at Cushman. If those barrels are ultimately not economic, we can run the Coffeeville refinery at full rates with no Canadian crude oil at all. during the turnaround at Coffeyville. We completed tie-ins for the initial phase of the distillate recovery project. This project should give us the ability to increase Coffeeville's distillate yield by approximately 2%. And we have a similar project planned at Wynnywood that has already received board approval. Over the next few months, we plan to install some additional piping and revamp some of our tankage at Coffeeville, which should enable us to make up to 9,000 barrels a day of jet by the end of the third quarter.

Dan Newman: And so the remainder at Cushing.

Dan Newman: If those barrels are ultimately not economic we can run the coffee coffeyville refinery at full rates with no Canadian crude oil at all.

Dan Newman: During the turnaround at Coffeyville.

Dan Newman: We completed tie ins for the initial phase of the distillate recovery project. This project should gives us the ability to increased coffee builds distillate yield by approximately 2% and we have a similar project planned at when he would that has already been received board approval.

Dan Newman: Over the next few months, we plan to install some additional piping and revamped some of our tankage at Coffeyville. It should enable us to make up to 9000 barrels a day of jet by the end of the third quarter.

David Lamp: You also have. have the potential to increase capacity further with additional investment. We believe the opportunity to shift barrels to the West will continue to grow over the next several years, and with jet fuel being a likely important part of the mix. As a reminder, jet fuel production is not subject to an RVO, and shifting production from diesel to jet fuel would reduce our annual RIN obligation. We also continue to make progress on the Wynnewood Alcalation Project that, when completed, would eliminate use. HF acid and provide a margin capture improvement opportunities through increased production of premium gas.

Dan Newman: You also have.

Have the potential to increase capacity further with additional investment.

Dan Newman: We believe the opportunity to ship barrels to the west continue to grow over the next several years and with jet fuel being a likely an important part of the mix.

Dan Newman: As a reminder, jet fuel production is not subject to an RVO and shifting production from diesel to jet fuel would reduce our annual <unk>.

RIN obligations.

Dan Newman: We also continue to make process progress on when he would alkylation project that when completed will eliminate usage.

Dan Newman: HFF asset and provide a margin capture improvement opportunities through increased production of premium gasoline.

David Lamp: In the renewable segment, we completed a catalyst change in January, and we continue to run the unit at 5000 barrels per day in an effort to optimize yield. and Catalyst Live. Rim prices have increased over the past few months and do due in part to the significant decline in D4 rim generation after the expiration. to Blender's tax credit at the end of 2024. As we continue to evaluate whether the renewable business makes sense, we currently intend to operate the renewable diesel. at similar rates while we wait clarity on the BTC and or see the final rules on the PTC.

Dan Newman: In the renewable segment, we completed a catalyst change in January and we continue to run the unit at 5000 barrels per day in an effort to optimize yield and.

Dan Newman: Catalyst life.

Dan Newman: RIN prices have increased over the past few months and do due in part to the hunton.

Dan Newman: The significant decline in D for RIN generation after the expiration of the.

Dan Newman: The blenders tax credit at the end of 2024.

Dan Newman: As we continue to evaluate where the renewable business makes sense. We currently intend to operate the renewable diesel unit.

Dan Newman: At similar rates, while we wait for clarity on the BTC or see the <unk> see the final rules on the PTC.

David Lamp: As we stated in our last earnings call, we remain fully willing to participate in the renewable space, but cannot invest additional time and capital without further assurance the government will support the businesses it created. In the fertilizer segment, recent USDA estimates are calling for an inventory carryout level. for corn and soybeans at 10% or less. Spring planning season is well underway and the weather has been favorable. With the USDA estimating 95 million acres of corn planted this year, we expect to see strong fertilizer demand. for the spring and prices have been increasing over the past few months.

Dan Newman: As we stated on our last earnings call, we remain fully willing to participate in the renewable space, but cannot invest additional time and capital without further assurance the government will support the businesses create businesses it created.

Dan Newman: In the fertilizer segment recent USDA estimates are calling for an inventory carryout levels.

Dan Newman: For corn and soybeans at 10% or less.

Dan Newman: The spring 10.

Dan Newman: The spring planting season is well underway and the weather has been favorable.

Dan Newman: With the USDA estimated 95 million acres of corn planted this year, we expect to see strong fertilizer demand.

Dan Newman: For the spring and prices have been increasing over the past few months.

David Lamp: Looking at the second quarter of 2025 quarter to date metrics are as follows. Group 211 cracks of average of $24.67 per barrel. With the Brent TI spread at $3.39 per barrel and the WCS differential at $9.55 per barrel under WTI. The hobo spread is averaged a negative $1.47 per gallon. As of yesterday, Group 3 2-1-1 cracks were $27.15, Brent TI was $3.65, and WCS was $9.60 under WTI. The hobo spread was a negative $1.62 per gallon, and RINs were approximately $6.42 per barrel. Prompt fertilizer prices are approximately $600 a ton for ammonia and $380 per ton for UAM.

Dan Newman: Looking at the second quarter of 2025 quarter to date metrics are as follows group 211 cracks have averaged.

Dan Newman: $24 67 per barrel.

Dan Newman: With the Brent Ti spread at $3 39 per barrel and the WCS differential at $9 55 per barrel under WTO.

Dan Newman: <unk> spread has averaged a negative $1 47 per gallon.

Dan Newman: As of yesterday group 3211 cracks were $27 15.

Dan Newman: T G I.

Dan Newman: $3 65, and WCS was $9 60 under WTO.

Dan Newman: The hobo spread was a negative $1 62 per gallon and wins rens were approximately $6 42 per barrel.

Dan Newman: Prompt fertilizer prices are approximately $600 a ton for ammonia and $3 80 per ton for uhm.

David Lamp: With the large turnaround at Coffeyville behind us, we are well positioned to capitalize on any and all continued improvements in the refining sector as we approach the summer driving and we look forward to the remainder of 2025 and 26 with no additional plant refinery. In addition to our constant focus on safe, reliable operations at our facilities, we will prioritize efforts to reduce debt and restore our balance sheet to targeted leverage ratios as soon as we can, subject to market and other conditions. We also continue to look for ways to improve capture, reduce costs, and ultimately grow our business profit.

Dan Newman: With the large turnaround at Coffeyville behind US, we are well positioned to capitalize on any and all continued improvements in the refining sector as we approach the summer driving season, and we look forward to the remainder of 2025 and 26% with no additional plant and refinery turnarounds.

Dan Newman: In addition to our constant focus on safe reliable operations at our facilities, we will prioritize efforts to reduce debt and restore our balance sheet to target targeted leverage ratios as soon as we can subject to market to market and other conditions.

Dan Newman: We also continue to look for ways to improve capture reduce costs and ultimately grow our business profitably.

David Lamp: With that, we're ready for questions. Thank you.

Dan Newman: With that we're ready for questions operator.

Speaker Change: Thank you we will now be conducting a question and answer session.

Operator: 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. One moment please while we poll for questions.

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Operator: Thank you.

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

Manav Gupta: Our first question comes from Manav Gupta with UBS. Please proceed with your question. Good morning, guys. I wanted to understand a little bit more on the refining macro. On one hand, you are indicating that you actually believe that market conditions did improve, and if it was not for the tariffs, you believe the cracks would be higher. So I'm just trying to understand, do you see a pretty strong demand or at least resilient demand in the regions in which you are operating versus a possibility of a recession, which could actually mean significantly lower demand? So help us understand what you're seeing in terms of refined product demand out there in the markets you operate.

Manav Gupta: Good morning, guys.

Manav Gupta: I'm, just kind of a little bit more on the refining macro.

Manav Gupta: One hand, you are indicating that you actually believe that.

Manav Gupta: Market conditions did improve and if it does not prevent that if you believe the tax would be higher so I'm just trying to understand do you see a pretty strong demand or at least resilient demand in the regions in which you are operating well.

Manav Gupta: A possibility youll pay any attention could actually mean significantly lower demand. So help us understand what youre seeing in terms of refined product demand out there in the market to opening.

David Lamp: Well, Manav, I think, as I mentioned in the prepared remarks, the days of supply have shrunk quite a bit compared to the five-year average, which indicates to us that the supply-demand balance is correcting itself. And some of that may be due to the heavy turnaround season for the spring. But in general, I think it shows a little bit more discipline in the market. And, you know, as that wears off, it'll be interesting to see what demand does. in the summer season and how much of an uptick we get in gas. Diesel is still a little bit slow, but inventories are telling me that it's, the cracks probably a little bit low from where it should be.

Well Manav I think as I mentioned in the prepared remarks, the days of supply have.

Manav Gupta: Shrunk quite a bit compared to the five year average, which indicates to us that the supply demand balances as correcting itself.

Manav Gupta: Some of that may be due to the heavy turnaround season in the for the spring.

Manav Gupta: But in general I think it shows a little bit more discipline in the market.

Manav Gupta: <unk>.

Manav Gupta: Is that is that wears off it will be interesting to see what demand does in that in the summer season, and how much of the up tick we get into gasoline.

Manav Gupta: Diesel is still a little bit slow, but inventories are telling me that it's at.

Manav Gupta: The cracks probably a little bit low from where it should be.

David Lamp: And of course, offsetting at all is this increase in the in the RVO. and the rent price that, you know, that accelerated almost $2 in the quarter.

Manav Gupta: And of course offsetting at all is this increase in the in the RVO.

Manav Gupta: The RIN price.

Manav Gupta: That accelerated almost $2 in the quarter.

Manav Gupta: Perfect guys, a quick question here on the RVO and SRE side. I mean Trump administration last time in office understood the importance of SREs, so that's one. The other that we are hearing out there is they actually want to raise the RVO on the D4 side with the, you know, multiple participants being involved in the discussion.

Manav Gupta: Perfect guys.

Manav Gupta: A quick question here.

Manav Gupta: RVO and SRT side, I mean camp administration last time in office understood the importance of Saudis. So that's.

Manav Gupta: And that's one that we are handing out there is that we wanted to raise Dod wheel on the deepwater side.

Manav Gupta: <unk>.

Manav Gupta: Multiple participants being involved in the discussion so how do you see this playing out in your opinion is the right way to decouple before in these things and let them operate separately.

David Lamp: So how do you see this playing out and in your opinion is the right way to decouple D4 and D6 and let them operate separately? Help us understand what would be the best solution in your opinion. Thank you. Well, this is, as you know, is a highly controversial issue. But, you know, we do believe decoupling force from sixes is an important move. And the only way it can really happen is if the D6 mandate is lowered or is something below, um, an E10 that would really, um, and, and it's really adjusted for volume because we're, you know, having it fixed at 15 billion, which by the way, is the majority of the 22 billion, 23 billion, um, mandate.

Manav Gupta: Help us understand what would be the best solution and yacht opinion. Thank.

Manav Gupta: Thank you.

Manav Gupta: Well. This is as you know is a highly <unk>.

Speaker Change: Controversial issue.

Speaker Change: But we do believe decoupling fours from sixes is an important move and the only way it can really happen.

Speaker Change: The <unk> mandate is lowered or something below.

Speaker Change: E 10 that really.

Speaker Change: It's really adjusted for volume because we are having it fixed at $15 billion, which by the way is the majority of the 22 billion $23 billion mandate.

Speaker Change: Mandate.

David Lamp: really just drives D4s into having to make it up because the volumes are not there. All that said, you know, again, the government created these businesses. And, you know, what they did with the RVO that was issued three years ago was just cut the legs out from under. and generate a lot of excess D4s and just kind of messed the whole thing up. And then the BTC expired, which is, which automatically increases the RIN price. So who suffers out of all this? Well, it's the driving public, the American citizen, that is the hardworking men and women who really depend on low-cost fuel to really drive the economy.

Speaker Change: Really just drives D force them to having to make it up because the volumes are not there.

Speaker Change: All that said.

Speaker Change: No.

Speaker Change: Again, the government created these businesses and.

Speaker Change: What they did with the RVO that was issued three years ago was just cut the legs out from under it.

Speaker Change: And generate a lot of excess D force and just kind of missed the whole thing up.

Speaker Change: And then the BTC expired, which is which automatically increases the RIN price.

Speaker Change: So you know who suffers that all this well it's the driving public the American citizen that as the hard working.

Speaker Change: Men and women, who are who really depend on.

Speaker Change: Low cost fuel that really drive the economy.

David Lamp: So, you know, I think the government's got a lot of thinking to do. And in our minds, what the what they should do is do everything they can to minimize rent prices just because it affects the driving public. That said, on the other hand, they should set production on renewable diesel and biodiesel to what the production capabilities are, which they have not done. And the law kind of implies that's what should be.

Speaker Change: So I think the.

Speaker Change: <unk> got a lot of thinking to do in our minds, what the what they should do is do everything they can to minimize RIN prices just because it affects the driving public.

That said on the other hand, they should set production on the on the renewal on renewable diesel and biodiesel to what the production capabilities are which they have not done in.

Speaker Change: And the law.

Speaker Change: <unk> us what should be done.

David Lamp: So as I've said many times, this RFS was poorly conceived, poorly written, poorly implemented, and poorly managed. And I don't see that changing.

Speaker Change: So as I've said many times.

Speaker Change: First was poorly conceived poorly written poorly implemented and poorly managed and Idaho.

Speaker Change: See that changing.

Speaker Change: Thank you Sir.

Speaker Change: Sure.

Matthew Blair: Our next question comes from the line of Matthew Blair with Tudor Pickering. Please proceed with your question. Hey, good morning, Dave, and congrats on the positive RD EBITDA result in the first quarter, even without the 45Z. Could you talk about how things are progressing so far in the second quarter? Do you still expect to be EBITDA positive in Q2? And then, you know, some of your peers have been recording the 45Z benefit.

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

Matthew Blair: Hey, Yeah, good morning, Dave.

Matthew Blair: Congrats on the positive R&D EBITDA result in the first quarter, even without the 45 C. Could you talk about how things are progressing so far in the second quarter do you still expect to be EBIT positive in Q2, and then some of your peers have been recording a 45 is the benefit so could you talk.

David Lamp: So could you talk about what you need to see to get more comfortable in recording the 45Z for CVI? Sure, well, you know, I don't know that we see much changing other than RINs going up in the second quarter, and that obviously is helping our margins in renewable diesel. Bean oil has also gone up, and HOBO, as I mentioned, has gone more negative than ever. So you know, all those offsets, it all depends on what Basis does, as well as our hedging strategy on the feedstocks and the product.

Matthew Blair: About what you need to see to get more comfortable and recording a 45 Z for CVI.

Matthew Blair: Sure.

I don't know that we see much changing other than resins going up in the second quarter.

Matthew Blair: That obviously is helping our margins in renewable diesel.

Matthew Blair: Bean oil has also gone up and the <unk>.

Matthew Blair: As I mentioned has gotten more negative than.

Matthew Blair: Than ever so all of those offsets all depends on what basis does as well as our hedging strategy on on the feedstocks and the <unk>.

Matthew Blair: Product.

Dane Neumann: So that's kind of where we sit today.

Matthew Blair: So that's kind of where we sit today.

Dane Neumann: As far as the PTC and recognizing that, Dane, you want to address that? Yeah, Matt. You know, the notice that the IRS put out in January just left a number of questions as to what specifically counts as a qualifying sale. We just wanted to get a little more comfort and clarity around the qualifying sale provisions that are out before we go ahead and book anything. In addition to that, you know, there's still a lot of talk around what the actual PTC credit value could be. Just for reference, you could ballpark the number we didn't book, you know, around $2 million.

Speaker Change: As far as the PTC and recognizing that Dan you want to address yes, Matt.

I noticed that the IRS put out in January just left a number of questions as to what specifically counts as a qualifying sale.

Speaker Change: We just wanted to get a little more comfort and clarity around the qualifying sale provisions that are out before we go ahead and book anything.

Speaker Change: In addition to that there is still a lot of talk around what the actual PTC credit value could be.

Speaker Change: Just for reference that you could ballpark the number we didn't book around $2 million.

Matthew Blair: And we don't lose the ability to book that going forward, it's just we want more certainty before we take it. So a little bit of a conservative position while things shake out. Thanks, that's helpful.

Speaker Change: And we don't lose the ability to book that going forward. It's just we want more certainty before we take it so a little bit of a conservative position, while things shake out.

Speaker Change: Thanks, That's helpful. And then my follow up is around refiner, M&A and the potential for industry consolidation.

Matthew Blair: And then my follow-up is around refiner M&A and the potential for industry consolidation. So if we look back over the past 10 years, which I think covers a range of environments, there's been pretty significant outperformance by the large-cap refiners. And if we look forward, you know, futures curves on the product side are a little weaker. Futures curves on crude differentials are relatively tight for inland barrels. It really seems like the benefits of economies of scale would be even greater going forward. And so my question is, you know, do you agree with this assessment? And, you know, do you think that small refiners need to get bigger?

Speaker Change: If we look back over the past 10 years, which I think covers a range of environments.

Speaker Change: Pretty significant outperformance by the large cap refiners and if we look forward futures curves on the product side, a little weaker futures curves on crude differentials are relatively tight for inland barrels. It really seems like the benefits of economies of scale would be even greater going forward.

Speaker Change: My question is do you agree with this assessment and do.

Speaker Change: Do you think that small refiners need to get bigger.

David Lamp: And if so, do you think it'll actually happen?

Speaker Change: And.

Speaker Change: If so do you think it will actually happen. Thank you.

David Lamp: Thank you. Well, a lot a lot in that question, Matt. You know, I think we would definitely agree with you economies of scale are the only way to survive these days. And, you know, some of our problems is that we're highly concentrated in the mid-con only. Anything we can do to diversify that is helpful as long as it's profitable. So I do think there's potential out there for some more consolidation, although it's getting pretty thin on the counterparties that can even make any sense. But we definitely agree with your approach.

Speaker Change: Well a lot in that question Matt.

Speaker Change: We would definitely agree with your economies of scale or is the only way to survive. These days.

Speaker Change: Are some of our problem is that we're highly concentrated in the mid con only.

Speaker Change: Anything we can do to diversify that as helpful. As long as it's profitable. So I do think there's potential out there for some more consolidation, although it's getting it's getting pretty thin.

Speaker Change: The counterparties that can even make any sense.

Speaker Change: But we definitely agree with the with your approach on that.

Matthew Blair: Great, thank you.

Speaker Change: Great. Thank you.

Operator: Thank you.

Speaker Change: Thank you.

Neil Mehta: Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question. All right, Dave and team. Thanks for taking the time.

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

Neil Mehta: Alright, Dave and team thanks for taking the time.

Neil Mehta: My first question is on Coffeeville. Congratulations on getting that asset up and running. I know the turnaround took a little bit longer and extended into Q2.

Neil Mehta: First question just on the Coffeyville, congratulations on getting that asset up and running I know the turnaround took a little bit longer and extend into Q2, but can you just talk about you know.

David Lamp: But, you know, just talk about, you know, what you achieved during that, you know, the time to the next turnaround, and thoughts on the ability to start up stay up. Yeah, Neil, I guess I would tell you this is not the way to do a turnaround. Having to come down early like we did, I mean, losing Anetha on the meter really, really hurt us. And that was in the dead of winter, of course, which didn't help either. And we, you know, we had a pretty cool, I'll call it cool, not necessarily cold, winter. And when you get out of sequence, you know, all kinds of things happen.

Neil Mehta: What you achieved during that.

Neil Mehta: The timing the next turnaround.

Neil Mehta: And thoughts on the ability to to startups down.

Neil Mehta: Yes, Neil I guess.

Neil Mehta: I would tell you this is not the way to do a turnaround.

Neil Mehta: Having to come down early like we did I mean listen our Napa, Peter really really hurt us.

Neil Mehta: And that was in the dead of winter of course, which didn't help either and we you know we had a pretty cool I'll call it cool not necessarily cold.

Neil Mehta: Winter.

Neil Mehta: And when you get out of sequence all kinds of things happen you get different you know you've got a different team that may have been occupied somewhere else on your contractors.

David Lamp: You get different, you know, you get a different team that may have been occupied somewhere else on your contractors. Just about anything that can go wrong went wrong for us in this turnaround. And, you know, it shows in the duration was extended. You know, whether or not we have an insurance claim to do, we're still contemplating, but it looks like, to me, that there's a good chance there could be something just because of the delays that hit us and the lack of productivity during the weather events and the other factors that happened. that was out of our control.

Neil Mehta: Just just about anything that can go wrong went wrong for us in this turnaround in.

Neil Mehta: It shows in the and the duration was extended.

Neil Mehta: You know whether or not we have.

Neil Mehta: An insurance claim to do we're still contemplating but.

Neil Mehta: But it looks like to me that there's a good chance there could be something just because of the the delays that hit us and the lack of productivity during the weather events in the other other factors that happen.

Neil Mehta: That was out of our control you know when you hit the 45000 man hours achieved pre turnaround work that you needed to complete that.

David Lamp: You know, when you hit 45,000 man hours of pre-turnaround work that you needed to complete before you start the turnaround and shove that into the turnaround, you can see how it is very disruptive.

Neil Mehta: Before you start the turnaround and shoved that into the turnaround you can you can see how it is very disruptive.

David Lamp: But, you know, I think we're through it, largely, and, you know, we're going to recover strong. We're looking forward to improved margins. It's been a bit of a drought since we've had the kind of margins we're seeing right now. And, you know, obviously, even despite RINs being elevated. We are in prop probability should be improved. make sense.

Neil Mehta: But you know I think we're through it largely.

We're gonna recover stronger we're looking forward to improve.

Neil Mehta: Improved margins.

Neil Mehta: <unk> been a bit of a drought since we've had the kind of margins, we're seeing right now and.

Neil Mehta: Uh huh.

Neil Mehta: Obviously.

Neil Mehta: Despite <unk> being elevated.

Neil Mehta: Elevated.

Neil Mehta: We are in profitability should be improved.

Neil Mehta: Yes makes sense and then.

David Lamp: And then, as assuming margins start to come back a little bit, how do you think about How do you think about the potential to return the dividends? It's been a big part of the CVI story for a long time. So I was curious on that and I have a couple other questions, I'll cue back. Yeah, you've you've heard me say many times we're, we're a dividend machine. We have we have taken a siesta on that a little bit here just because of where margins were for most of 24. But, you know, our goal, as I mentioned in our prepared remarks, is to pay down this additional debt that we took on, get back to normal, and start dividend at that time.

Neil Mehta: Yes.

Neil Mehta: Human margins start to come back a little bit how do you think about.

Neil Mehta: How do you think about the potential to return to dividend.

Neil Mehta: A big part of the CPI story for a long time, so just curious on that and I have a couple of others.

Neil Mehta: <unk>.

Neil Mehta: You've heard me say, many times, where we're a dividend machine.

Neil Mehta: We have taken.

Neil Mehta: A siesta on that a little bit here, just because of where margins were for most of 'twenty four.

Neil Mehta: But you know our goal as I mentioned in our prepared remarks is to pay down this additional debt we took on.

Neil Mehta: Get back to normal and start to start the dividend at that time of course, the board looks at it every every month or every quarter.

Neil Mehta: Of course, the board looks at it every month or every quarter, and I think they'll continue to do that. And if margins stay where they're at, we'll be looking at a dividend in the future. Okay, I'll cue back in. Thanks.

Neil Mehta: And I think they'll continue to do that and then as if margins stay where they are at will.

Neil Mehta: If you look at a dividend in the future.

Speaker Change: Okay I'll come back to you thanks, Dave.

John Royall: Our next question comes from the line of John Royall with J.P. Morgan. Please proceed with your question. Hi, good afternoon. Thanks for taking my question.

Speaker Change: Our next question comes from the line of John Royall with Jpmorgan. Please proceed with your question.

John Royall: Hi, good afternoon, Thanks for taking my question.

John Royall: So my first question is on the jet expansion at Coffeeville. When you spoke about that in 4Q, you mentioned at the time, you know, one big constraint to think about or one big challenge to think about was building a book of customers to buy jet. Is there any update you can give on those efforts? Do you think that the demand will be there by the time you're ready to start producing? Well, I think it will be done. I mean, where we're at right now is, you know, a lot of the major airlines are on three year bid contracts, and those are coming up for at least two of them in the in the in 25.

John Royall: So my first question is on the jet expansion at Coffeyville.

John Royall: When you spoke about that in for Q.

John Royall: You mentioned that at the time, one big constraint to think about it one big challenge to think about who is building a book of customers to buy jet.

John Royall: Is there any update you can give on those efforts do you think that the demand will be there by the time you are ready to start the weekend.

John Royall: Well I think it will be done being where we're at right. Now is a lot of the major airlines are on three year bid contracts and those are coming up for at least two of them in the 25. So we're anticipating that we'll achieve some of that business.

David Lamp: So we're anticipating that we'll, we'll achieve some of that that business. So that's probably our greatest look. We also have our fuel by rail, you know, that we have, that if the ARBs open to the west, we can move jet that way. And, you know, I don't think it's going to be a big problem, but it's going to take a little time to build a book of business.

John Royall: That's our probably our greatest look we also have our fueled by rail.

John Royall: That we have that if the arb is open to the west we can we can move jet that way.

John Royall: And.

John Royall: I think I don't think it's going to be a big problem, but it's going to take a little time to build the build a book of business. If we if you look at what we've done at winning what we've made just there for years and most of it was through.

John Royall: If we, if you look at what we've done at Winnie, what we've made jet there for years, and most of it was through military contract. We lost that last year, and we've still been successful in moving jet out of the plant. I don't think it is going to be a big problem. Great, thank you.

John Royall: Military contract.

John Royall: We lost that last year and we've still been.

John Royall: Been successful in moving that out of the out of the plant so I.

John Royall: I don't think that is going to be a big problem.

Mike: Okay. Thank you and then Mike.

John Royall: And then my follow ups on the renewable side, you talked about needing further assurance to get to a positive investment decision on a project within renewables today. Can you, can you talk about what would give you that type of assurance? Is it just finalizing the PTC rules and the LCFS plan and getting the RFS complete? Or would you need some sort of longer term assurance? Is it more than just, you know, the near term rules?

John Royall: And my follow ups on the renewable side you talked about.

John Royall: Meeting further assurance to get to a positive investment decision on.

John Royall: Our project within renewables today can you can you talk about what would give you that type of event.

John Royall: Sure it could be just finalizing the PTC rules and you'll see the first plan and getting your first complete or would you need some sort of longer term insurance more than just a.

John Royall: The near term rules.

David Lamp: Well, there's one thing we've learned in the renewable diesel business is that you can't count on credits. They change the government, you know, administrations change, you get different philosophies. And the approach we've taken is largely we're willing to do SAF if somebody's willing to take the credit risk. We'll give them the credits that are there, but we're not going to take it ourselves. And that's just kind of kind of summarizes renewable diesel and SAF to me. across the board.

John Royall: Well, if there's one thing we've learned in the renewable diesel businesses that you can't count on credits.

John Royall: They change the government administrations change you get different philosophies.

John Royall: And the approach we've taken is largely we're willing to do Seth if somebody is willing to take the credit risk we will give them. The credits that are there, but we're not going to take it ourselves.

John Royall: That's just kind of kind of summarizes renewable diesel and SaaS to me.

John Royall: Across the board, we have a larger project at Coffeyville that we've put together and designed and have a cost estimate on it and but.

David Lamp: We have a larger project at Coffeyville that we've put together and designed and have a cost estimate done on it. But it's a 500 million gallon a year plant, and it's costly. But if SAF's really needed and renewable diesel, we could design that for 100% SAF if we wanted to. We sit in the middle of the ag area. Certainly for corn oil, we're advantaged. And that's a low-CI feedstock, so. You know, there's there's there's a lot we can do, but we're not going to do it if we can't trust the government to provide a steady stream of credits that that when you're taking a four or five dollar oil and trying to shove it into a two dollar market, it just doesn't work.

John Royall: It's a 500 million gallon a year plant and it's a costly but.

John Royall: If SaaS really needed.

John Royall: Renewable diesel and we could we could design that for 100% SaaS, if we wanted to.

John Royall: We sit in the middle of the AG.

John Royall: The area certainly for corn oil we're advantaged.

John Royall: And Thats, a low Ci feedstocks so.

There's a there's a lot we can do but we're not going to do it you can't trust the government to provide a steady stream of credits that are that when you have taken a four or $5 oil and trying to shove it into a $2 market.

John Royall: It just doesn't work.

John Royall: Thank you.

John Royall: Thank you.

John Royall: You're welcome.

John Royall: Youre welcome.

Paul Cheng: Our next question comes from Paul Cheng with Scotiabank. Please proceed with your question. Dane, maybe you can help me. I still couldn't understand why the renewable result is so good. In the fourth quarter, your gross margin is $1.13. And in the first quarter, you're $1.15. And in the first quarter, you are doing about $0.93. But you lost BTC, that's a dollar per gallon. So I mean, what else is in there?

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

Paul Cheng: Hey, guys. Good morning, good afternoon.

John Royall: Dan.

Speaker Change: David maybe you can help me I still couldn't understand why the renewable we saw was so good.

Speaker Change: Again, the fourth quarter your gross margin is $1 13.

Speaker Change: <unk>.

Speaker Change: First quarter U S dollar.

Speaker Change: <unk> in the first quarter you are doing about 90 93 things.

Speaker Change: But you lost a beat.

Speaker Change: See thats the ball up again, and so I mean, what else you're seeing that in other words that you used the first quarter, we need as a good baseline or that there's something.

Dane Neumann: In other words, that is the first quarter, it really is a good baseline, or that there's something related to your hedging program, or that the way how you count the inventory, and as a result, that that's not a totally good baseline. Yeah, well, I think you hit one of them on the head there, there was about a 14 cent per gallon, favorable realized hedge in place just associated with the inventory. In addition to that, you know, the elevated rinse price picked up another call it dime 15 cents a gallon. So those those two just gave us a lift right away, there were some inventory impacts, you know, maybe another dime to 15 cents, something like that.

Speaker Change: We need to you know our hedging program or that the way how you time.

Speaker Change: The inventory and Thats, what we saw with that that's not a total liquid baseline.

Paul Cheng: Yes, Paul.

Paul Cheng: You hit one of them on that had there was about a <unk> 14 per gallon favorable realized hedge in place just associated with the inventory.

Paul Cheng: In addition to that the elevated rents price picked up another call. It <unk> 15 cents a gallon so.

Paul Cheng: Those two just gave us a lift right away there were some inventory impacts maybe another dime to 15 something like that.

Dane Neumann: So, you know, to say, to say it's a good baseline, there were some items that were you call it maybe exceptional for the period, we'll of course keep deploying the same strategy we have and see what results come out of it in the volatile market of renewable diesel. The one thing that was different that is probably more baseline is just our feedstock basis was was much improved. One of what are really one of our highest cost feedstocks was lower than our lowest cost feedstock in the prior period, which is really a testament to, you know, having the pretreater on getting into that getting better yields and running more reliably.

Paul Cheng: No.

Paul Cheng: To say it is a good baseline there were some items that were call. It may be exceptional for the period, we'll of course keep deploying the same strategy, we have and see what results come out of it and the volatile market of renewable diesel.

Paul Cheng: The one thing that was different that is probably more baseline is just our feedstock basis was was much improved.

Paul Cheng: One what are really one of our highest cost feedstocks was lower than our lowest cost feedstock in the prior period, which is really a testament to if we are.

Paul Cheng: Having the pre treater on getting into that feed getting better yields and running more reliably so from that.

Dane Neumann: So from that component, I would say you could you could baseline there that we've improved that.

Paul Cheng: And I would say you could baseline there that we've improved that but as far as some of the other items go I wouldn't want to say that as a permanent fixture in a volatile market that rds and <unk>.

Dane Neumann: But as far as some of the other items go, I wouldn't want to say that's a permanent fixture in the volatile market that RD is. And yield was up too, Paul. So I mean, don't underestimate that 5% yield improvement goes a long way. Well, I'm trying to say, okay, I mean, if you report 93 cents based on Dane, what you say about those three items is roughly about 45 cents. So is that a good baseline that we can use to project forward? It's assuming somewhere in the 45 cents and that's not including PTC at all.

Paul Cheng: Yield was up two Paul so don't underestimate that 5% rate improvement goes a long way.

Paul Cheng: Well, Sean to say, Okay. I mean, if you report 93 based on what you say about those three items is roughly about 45. So is that a good baseline that we can use to put get full with yes, assuming some way in the 45 and that montney, including PTC at all.

Dane Neumann: That seems like it's a phenomenal number comparing to some of your larger competitors that what they report. So I guess I would say, Paul, if you're referencing an adjusted margin, it was $0.85 4Q, $0.93 in 1Q. That takes out that inventory benefit that I referenced. Yeah. So the $0.08 improvement, I mean, you got $0.15 from hedging, you've got another dime or so. So if you take out that $0.20, you'd be in the $0.70 range. You know, that is excluding PTC, which would be an incremental kicker.

Paul Cheng: That same thing, it's a phenomenon number comparing to some of your larger competitors that what they report.

Paul Cheng: So I guess I would say Paul for that if you're referencing like an adjusted margin. It was 85 <unk> 93.

Paul Cheng: And <unk>.

Paul Cheng: That takes out that inventory benefit that I referenced right.

Paul Cheng: So so the <unk> improvement I mean, you've got 15 from hedging you've got another dime or so so if you take out that 20, <unk> and the 70% range.

Paul Cheng: That is excluding PTC, which would be an incremental kicker.

Dane Neumann: But again, I think the market's so volatile that I wouldn't want to set a baseline of expectations for how much these markers move around. Right, understand.

Paul Cheng: But again I think the markets are volatile, but I wouldn't want to set a baseline of expectations for how much these markers move around.

Paul Cheng: Right I understand and then.

Dane Neumann: And then yes, the hatching, that the $0.14 benefit from the hatching, we continue going to see that into the second and third quarter, or that the hatching benefit will just disappear, or the reverse. Yeah, so, Paul, that hedging is really around price exposed inventory or excess inventory. So we'll take a protective position or short position on any excess inventories. So from that perspective, again, subject to what the market does and how our feed performs. I see.

Paul Cheng: Hedging.

Paul Cheng: Got that.

Paul Cheng: <unk> 14 benefit from the hedging.

Paul Cheng: We continue we're going to see that into the second and third quarter or that the hedging benefit.

Paul Cheng: Or that would be worse.

Paul Cheng: Yes.

Paul Cheng: All of that hedging is really around price exposed inventory or excess inventory. So we'll take it a protective position a short position on any excess inventories so from that perspective again subject to what the market does and how our fee performance.

Paul Cheng: I see.

David Lamp: And Dave, you, I think in the past that, and you say it here again, about the economy of scale, the desire that for diversification beyond your current footprint, where are we in that whole exercise at this point? Are we essentially, say, just waiting for other people that come to you, or that is still being actively pursued? Or that is, is there any colors that you can you can share? Well, nothing I can really share, Paul, you know, as we've said before, we really, we look at everything that comes on the market. try to screen through our, our, our picture, you know, historically, to date, it's been the bid ask been too wide for us.

Speaker Change: And Dave you I think in the past that.

Paul Cheng: Say it again.

Speaker Change: About the economy of scale.

Paul Cheng: That the sign yet that fall.

Paul Cheng: Diversification beyond your current footprint.

Paul Cheng: Where are we in that whole exercise at this point.

Paul Cheng: We essentially say just waiting for other people with that to come to you or that is still being actively pursue or what that is is there any covenants that you can you can share.

Paul Cheng: Well nothing I can really share Paul.

Paul Cheng: We've said before we really we look at everything that comes on the market.

Paul Cheng: Try to screen through our our our picture it.

Paul Cheng: Historically today, that's been bid ask Ben too wide for us and thank goodness because.

David Lamp: And thank goodness, because, you know, the market really took a hit in 2024, come off a record year and in 23, and go to a just a record low year in 24. I think we're pretty conservative, I won't say we're bottom fishers, but we're pretty close to that, and we're not going to overpay for an asset.

Paul Cheng: The market really took a hit in 2024.

Paul Cheng: Come off a record year in 'twenty.

Paul Cheng: 23, and go to just a record low year in 'twenty for so.

Paul Cheng: You know I think we're pretty conservative we want.

I won't say, we are bottom fishers, but we're pretty close to that.

Paul Cheng: And we're not going to overpay for an asset.

Paul Cheng: And can I just make some one clarification, I think Dane you earlier say that two million for the PTC, if you will be able to fully book it for the quarter, is that, do I get the number right? That is correct. And as I mentioned, there's there's ongoing debate around what the value of the PTC is based on your feed. And there's some questions out there. So that that number, I wouldn't say is is final. But based on some of the rumors we've heard, or some of the conversations are going on, that could be a conservative number could be double that.

Paul Cheng: And can I just make one.

Paul Cheng: That's the case and I think you earlier say that $2 million for the PTC, if you would be able to <unk> 44.

Paul Cheng: For the quarter.

Paul Cheng: Is that.

Paul Cheng: Do I get the number right.

Paul Cheng: That is correct and as I mentioned, there is ongoing debate around what the value of the PTC is based on your feet and there's some questions out there so that that number I wouldn't say is final.

Paul Cheng: But based on some of the rumors we've heard of some of the conversations that are going on that could be a conservative number could be double that.

Paul Cheng: Okay, will do. Thank you. You're welcome, Paul.

Paul Cheng: Okay. Thank you.

Paul Cheng: Youre welcome Paul.

Neil Mehta: Our next question is a follow-up from Neil Mehta with Goldman Sachs. Please proceed with your question. Two quick ones. Dave, you always have great perspective on on US shale. I mean, TI is pushing on $60 at this point. What's your perspective on US oil growth? And what what are the pricing levels that you think activity changes? Well, you know, I think I've said many times is, you know, I think we're, we're We're in a, you know, it depends on the company you're talking about, but, you know, a lot of them are, you know, break evens are being approached with the, with the numbers we're at, or just slightly, you know, break even slightly below that.

Speaker Change: Our next question is a follow up from Neil Mehta with Goldman Sachs. Please proceed with your question.

Neil Mehta: Just two quick ones, Steve you always have great perspective on U S shale I mean, pushing on $60 at this point, what's your perspective on U S oil growth at what what are the pricing levels that can take activity changes.

Speaker Change: Well.

Speaker Change: I think I've said, many times is I think where we're.

Speaker Change: We're it.

Speaker Change: It depends on the company, you're talking about but you know.

Speaker Change: A lot of them are break evens are being approached with the with the numbers, we're at or just slightly breakeven slightly below that very much depends on the region. You're in obviously Permian is probably the lowest in the air.

David Lamp: Very much depends on the region you're in. Obviously, Permian's probably the lowest in the, in ARCO or DJ Basin, or some of those others are probably the higher, or Bakken too. So, it really depends on where you're at and, you know, rigs are falling, I expect that to continue. And we've had in our basin, the Antarctica had really probably pretty big growth, but it's really one player. What they're going to go do from here on out, we really don't know. Our gathering volumes are still pretty strong. But I'm anticipating they're going to fall off a little bit.

Speaker Change: Arco or D J basin or some of those others are probably the higher.

Speaker Change: Our Bakken too.

So it really depends on where you're at.

Speaker Change: The rigs are falling.

Speaker Change: I expect that to continue.

Speaker Change: And we've had in our basin.

Speaker Change: Article had really probably pretty big growth, but its really one player.

Speaker Change: What theyre going to go do from here on out we really don't know.

Speaker Change: Our gathering volumes are still pretty strong.

Speaker Change: But I'm anticipating they're going to fall off a little bit.

Neil Mehta: All right. Well, we'll keep on watching.

Alright, well keep on watching the other ones are electric.

Neil Mehta: The other one's a little trickier. I think a lot of the investment community is a little confused about all the insider activity at the company. I don't know if anything you can comment around that. It's just, it's unusual. Yeah, we probably can't comment much on that. You'd probably have to ask them themselves. Thanks, I figured. Thanks, Dick. You're welcome.

Speaker Change: I think a lot of the investment community's look confused about all the insider activity at the company.

Speaker Change: I don't know if anything you can comment around that.

Speaker Change: Okay unusual.

Speaker Change: We probably can't comment much on that.

Speaker Change: You'd probably have to ask them themselves.

Speaker Change: Thanks, Hey, great. Thanks, Dan.

Speaker Change: Youre welcome.

David Lamp: We have reached the end of the question and answer session.

Speaker Change: We have reached the end of the question and answer session I would now like to turn the floor back over to management for closing comments.

David Lamp: I would now like to turn the floor back over to management for closing comments. 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 to our safe, reliable, and environmentally responsible operations. We look forward to reviewing our second quarter 2025 results and our next earnings. Thank you very much.

Speaker Change: 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 environmentally responsible operations.

Speaker Change: We look forward to reviewing our second quarter 2025 results on our next earnings call.

Speaker Change: Thank you very much.

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.

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.