Q2 2026 CVR Energy Inc Earnings Call

July 30, 2026

Operator: Thank you for standing by, welcome to the CVR Energy, Inc. Second Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number 1 on your telephone keypad. I would now like to turn the call over to Richard Roberts, Interim Chief Financial Officer and Vice President of FP&A and Investor Relations. Sir, please go ahead.

Operator: Thank you for standing by, welcome to the CVR Energy, Inc. Q2 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Richard Roberts, Interim Chief Financial Officer and Vice President of FP&A and Investor Relations. Sir, please go ahead.

Speaker #1: Welcome to the CVR Energy Inc. Q2 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Speaker #1: If you would like to ask a question during that time, simply press * then the number 1 on your telephone keypad. I would now like to turn the call over to Richard Roberts, Interim Chief Financial Officer and Vice President of FP&A and Investor Relations.

Speaker #1: Sir, please go ahead.

Speaker #2: Thank you. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy Q2 2026 earnings call. With me today are Dane Neumann, our Chief Executive Officer, Mike Wright, our Chief Operating Officer, and other members of management.

Richard Roberts: Thank you. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy Q2 2026 earnings call. With me today are Dane Neumann, our chief executive officer, Mike Wright, our chief operating officer, and other members of management. Prior to discussing our Q2 2026 results, let me remind you that this conference call may contain forward-looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements.

Richard Roberts: Thank you. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy Q2 2026 earnings call. With me today are Dane Neumann, our Chief Executive Officer, Mike Wright, our Chief Operating Officer, and other members of management. Prior to discussing our Q2 2026 results, let me remind you that this conference call may contain forward-looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements.

Speaker #2: Prior to discussing our Q2 2026 results, let me remind you that this conference call may contain forward-looking statements, as that term is defined under federal securities laws.

Speaker #2: For this purpose, any statements made during this call that are not statements of historical fact 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 the Securities and Exchange Commission and in our latest earnings release.

Speaker #2: As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except to the extent required by law.

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. 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 Q2 2026 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 Dane.

Speaker #2: 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 Q2 2026 earnings release that we filed with the SEC and Form 10-Q for the period and will be discussed during the call.

Speaker #2: With that said, I'll turn the call over to Dane.

Speaker #3: Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call. We posted another quarter of strong operating results, with crude utilization of 98% and ammonia plant utilization of 99%.

Dane Neumann: Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call. We posted another quarter of strong operating results with crude utilization of 98% and ammonia plant utilization of 99%. The ongoing global conflicts have created tightness across energy and fertilizer markets, which directly benefited our asset base during the Q2. We are pleased to announce the Q2 2026 dividend of $0.10 per share, and we believe current market conditions could present opportunities to reduce leverage and add value for our shareholders. Now let me turn the call over to Richard to discuss our financial highlights.

Speaker #3: The ongoing global conflicts have created tightness across energy and fertilizer markets, which directly benefited our asset base during the second quarter. We are pleased to announce the second quarter 2026 dividend of $0.10 per share, and we believe current market conditions could present opportunities to reduce leverage and add value for our shareholders.

Speaker #3: Now, let me turn the call over to Richard to discuss our financial highlights.

Speaker #2: Thank you, Dane, and good afternoon, everyone. For the second quarter of 2026, our consolidated net income was $46 million, loss per share was $0.03, and EBITDA was $161 million.

Richard Roberts: Thank you, Dane, and good afternoon, everyone. For the Q2 2026, our consolidated net income was $46 million. Losses per share were $0.03, EBITDA was $161 million. Our Q2 results include an unfavorable change in our RFS liability of $73 million, favorable inventory valuation impacts of $19 million, and unrealized derivative gains of $6 million. Excluding the above mentioned items, adjusted EBITDA for the quarter was $209 million, and adjusted earnings per share was $0.34. Adjusted EBITDA in the petroleum segment was $106 million for the Q2, compared to $38 million for the Q2 2025. Elevated Group 3 crack spreads and higher throughput volumes drove the majority of the increase from the prior year period, offset somewhat by higher rent expenses, significant backwardation in WTI, and realized derivative losses.

Speaker #2: Our second quarter results included an unfavorable change in our RFS liability of $73 million, favorable inventory valuation impacts of $19 million, and unrealized RIN gains of $6 million.

Speaker #2: Excluding the above-mentioned items, adjusted EBITDA for the quarter was $209 million, and adjusted earnings per share was $3.40. Adjusted EBITDA in the Petroleum segment was $106 million for the second quarter, compared to $38 million for the second quarter of 2025.

Speaker #2: Elevated Group 3 crack spreads and higher throughput volumes drove the majority of the increase from the prior-year period, offset somewhat by higher rent expenses, significant backwardation in WTI, and realized RINs losses.

Speaker #2: Combined total throughput for the second quarter of 2026 was approximately 213,000 barrels per day. Crude utilization for the quarter was approximately 98% of nameplate capacity, and light product yield was 92% on total throughput volumes.

Richard Roberts: Combined total throughput for Q2 2026 was approximately 213,000 barrels per day. Crude utilization for the quarter was approximately 98% of nameplate capacity, and light product yield was 92% on total throughput volumes. Benchmark cracks for Q2 2026 increased from the prior year period, with the Group 3 2-1-1 averaging $44.91 per barrel compared to $24.02 per barrel in Q2 2025. Our Q2 realized margin, adjusted for the change in RFS liability, inventory valuation, and unrealized derivative gains, was $12.43 per barrel, representing a 28% capture rate on the Group 3 2-1-1 benchmark. RIN prices increased significantly from Q2 2025 levels, up over 125% to average nearly $14 per barrel for Q2 2026.

Speaker #2: Benchmark cracks for the second quarter of 2026 increased from the prior year period, with the Group 3 2-1-1 averaging $44.91 per barrel compared to $24.02 per barrel in the second quarter of 2025.

Speaker #2: Our second quarter realized margin, adjusted for the change in RFS liability, inventory valuation, and unrealized RIN gains, was $12.43 per barrel, representing a 28% capture rate on the Group 3 2-1-1 benchmark.

Speaker #2: Rent prices increased significantly from second quarter 2025 levels, up over 125% to average nearly $14 per barrel for the second quarter of 2026. Net rent expense for the quarter, excluding the change in RFS liability, was $216 million, or $11.16 per barrel, which negatively impacted our capture rate for the quarter by approximately 25%.

Richard Roberts: Net RINs expense for the quarter, excluding the change in RFS liability, was $216 million, or $11.16 per barrel, which negatively impacted our capture rate for the quarter by approximately 25%. The estimated accrued RFS obligation on the balance sheet was $408 million at 30 June, representing 169 million RINs, mark to market at an average price of $2.41. EPA has still not ruled on our pending 2025 petition, and as such, we will continue to recognize 100% of Wynnewood Refining Company's RIN obligation in our financials, which for Q2 2026 was approximately $77 million. Had Wynnewood Refining Company received the 100% SRE we believe it is entitled to, our consolidated capture rate for the quarter would've been improved by approximately 9%. EPA is now nine months delinquent in ruling on Wynnewood Refining Company's 2025 SRE petition.

Speaker #2: The estimated accrued RFS obligation on the balance sheet was $408 million at June 30, representing $169 million RINs, mark-to-market at an average price of $2.41.

Speaker #2: EPA has still not ruled on our pending 2025 petition, and as such, we will continue to recognize 100% of Winniwetter Finance Company's rent obligation in our financials, which, for the second quarter of 2026, was approximately $77 million.

Speaker #2: Had Winniwetter Finance Company received the 100% SRE we believe it is entitled to, our consolidated capture rate for the quarter would have been improved by approximately 9%.

Speaker #2: EPA is now nine months delinquent in ruling on Winniwetter Finance Company's 2025 SRE petition. The current compliance date for 2025 is approximately one month away, and we still do not know what our compliance obligation will be.

Richard Roberts: The current compliance date for 2025 is approximately one month away, and we still do not know what our compliance obligation will be. RIN prices have gotten completely out of hand due to the blending obligations EPA established in Set 2, effectively creating a short market that will require imported biofuels in order to potentially meet the required obligations, the complete opposite of the stated intent of the RFS. Meanwhile, RIN prices are adding nearly $0.40 a gallon to the price of gasoline in the US, and RFS compliance costs are more than twice all the other combined operating costs for many refineries. As we have stated numerous times, if the administration is serious about lowering fuel prices, it should start with the RFS. Our Q2 2026 results included derivative losses totaling $75 million, comprised of an $81 million realized loss and a $6 million unrealized gain.

Speaker #2: Rent prices have gotten completely out of hand due to the blending obligations EPA established in Set 2, effectively creating a short market that will require imported biofuels in order to potentially meet the required obligations.

Speaker #2: This is the complete opposite of the stated intent of the RFS. Meanwhile, RIN prices are adding nearly $0.40 a gallon to the price of gasoline in the U.S., and RFS compliance costs are more than twice all the other combined operating costs for many refineries.

Speaker #2: As we have stated numerous times, if the administration is serious about lowering fuel prices, it should start with the RFS. Our second quarter 2026 results included the root of losses totaling $75 million, comprised of an $81 million realized loss and a $6 million unrealized gain.

Speaker #2: The realized loss for the quarter was related to the crack spread swaps that we discussed on the first quarter call. We settled approximately 4.4 million barrels of crack spread swap positions during the second quarter, leaving open positions totaling approximately 8.2 million barrels.

Richard Roberts: The realized loss for the quarter was related to the crack spread swaps that we discussed on the Q1 call. We settled approximately 4.4 million barrels of crack spread swap positions during Q2, leaving open positions totaling approximately 8.2 million barrels. For the remainder of 2026, there were approximately 4.6 million barrels of diesel hedged and 400,000 barrels of gasoline hedged, with the diesel exposure fairly split between Q3 and Q4, and all of the gasoline exposure in Q3. The total notional value of the open crack spread swaps for Q3 is approximately $102 million. For 2027, we have approximately 3.2 million barrels of diesel hedged fairly ratably across the year.

Speaker #2: For the remainder of 2026, there were approximately 4.6 million barrels of diesel hedged and 400,000 barrels of gasoline hedged, with the diesel exposure fairly split between the third and fourth quarters, and all of the gasoline exposure in the third quarter.

Speaker #2: The total notional value of the open crack spread swaps for the third quarter is approximately $102 million. For 2027, we are approximately 3.2 million barrels of diesel hedged, fairly ratably across the year.

Speaker #2: We continue to actively monitor these positions and plan to be opportunistic in managing our exposure going forward, which could include closing out these positions or adding other positions depending on market conditions.

Richard Roberts: We'll continue to actively monitor these positions and plan to be opportunistic in managing our exposure going forward, which could include closing out these positions or adding other positions, depending on market conditions. Direct operating expenses in the Petroleum segment were $5.93 per barrel for Q2, compared to $6.45 per barrel in Q2 2025. The decrease in direct operating expenses per barrel was primarily due to increased throughput volumes, as the Coffeyville refinery was coming out of turnaround in Q2 2025. Adjusted EBITDA in the Fertilizer segment was $107 million for Q2, compared to $67 million for the prior year period. Ammonia utilization rate was 99%, with both plants running well and experiencing minimal downtime during the quarter.

Speaker #2: Direct operating expenses in the Petroleum segment were $5.93 per barrel for the second quarter, compared to $6.45 per barrel in the second quarter of 2025.

Speaker #2: The decrease in direct operating expenses per barrel was primarily due to increased throughput volumes, as the cost of the refinery was coming out of turnaround in the second quarter of 2025.

Speaker #2: Adjusted EBITDA on the Fertilizer segment was $107 million for the second quarter, compared to $67 million for the prior year period. Ammonia utilization rate was 99 percent, with both plants running well and experiencing minimal downtime during the quarter.

Speaker #2: The Board of Directors of CVR Partners' General Partner declared a distribution of $6.08 per common unit for the second quarter of 2026. As CVR Energy owns approximately 37% of CVR Partners' common units, we will receive a proportionate cash distribution of approximately $24 million.

Richard Roberts: The board of directors of CVR Partners, general partner, declared a distribution of $6.08 per common unit for Q2 2026. As CVR Energy owns approximately 37% of CVR Partners common units, we will receive a proportionate cash distribution of approximately $24 million. Cash flow from operations for Q2 2026 was $307 million, and free cash flow was $264 million. Significant uses of cash in the quarter included $43 million of capital spending, $27 million paid for the non-controlling interest portion of the CVR Partners Q1 2026 distribution, $20 million for cash interest, and $10 million for dividends. Total consolidated capital spending on an accrual basis was $46 million, which included $29 million in the Petroleum segment and $17 million in the Fertilizer segment. For the full year 2026, we estimate total consolidated capital spending to be approximately $215 to 240 million.

Speaker #2: Cash flow from operations for the second quarter of 2026 was $307 million, and free cash flow was $264 million. Significant uses of cash in the quarter included $43 million of capital spending, $27 million paid for the non-petroleum interest portion of the CVR Partners' first quarter 2026 distribution, $20 million for cash interest, and $10 million for dividends.

Speaker #2: Total consolidated capital spending on an accrual basis was $46 million, which included $29 million in the Petroleum segment and $17 million in the Fertilizer segment.

Speaker #2: For the full year 2026, we estimate total consolidated capital spending to be approximately $215 million to $240 million. Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $737 million, which includes $137 million of cash in the Fertilizer segment.

Richard Roberts: Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $737 million, which includes $137 million of cash in the Fertilizer segment. Total liquidity as of 30 June, excluding CVR Partners, was approximately $1.1 billion, which was comprised primarily of $600 million of cash and availability under the ABL facility of $540 million. We remain committed to our deleveraging goal and plan to continue working towards a gross leverage target of $1 billion, excluding debt at CVR Partners. Looking ahead to Q3 2026, for our Petroleum segment, we estimate total throughput to be approximately 205,000 to 220,000 barrels per day, direct operating expenses to range between $110 and 120 million, and total capital spending to be between $41 and 50 million.

Speaker #2: Total liquidity as of June 30, excluding CVR Partners, was approximately $1.1 billion, which was comprised primarily of $600 million of cash and availability under the ABL facility of $540 million.

Speaker #2: We remain committed to our deleveraging goal and plan to continue working towards a gross leverage target of $1 billion, excluding debt at CVR Partners.

Speaker #2: Looking ahead to the third quarter of 2026, for our petroleum segment, we estimate total throughput to be approximately 205,000 to 220,000 barrels per day, direct operating expenses to be $— million, and total capital spending to be between $41 million and $50 million.

Speaker #2: For the fertilizer segment, we estimate our ammonia utilization rate to be between 75% and 80%, which will be impacted by the upcoming planned turnaround at the East Dubuque facility.

Richard Roberts: For the Fertilizer segment, we estimate our ammonia utilization rate to be between 75% and 80%, which will be impacted by the upcoming planned turnaround at the East Dubuque facility. We estimate direct operating expenses, excluding inventory and turnaround impacts, to be between $57 and 62 million, turnaround expenses to be between $30 and 35 million, and total capital spending to be between $40 and 49 million. With that, Dane, I'll turn it back over to you.

Speaker #2: We estimate direct operating expenses, excluding inventory and turnaround impacts, to be between $57 million and $62 million, turnaround expenses to be between $30 million and $35 million, and total capital spending to be between $40 million and $49 million.

Speaker #2: With that, Dane, I'll turn it back over to you.

Speaker #1: Thank you, Richard. In summary, we had another good quarter of operations in our refining and fertilizer businesses. We are optimistic about the near-term outlook for both segments and believe we could remain above mid-cycle conditions well into 2027.

Dane Neumann: Thank you, Richard. In summary, we had another good quarter of operations in our Refining and Fertilizer businesses. We are optimistic about the near-term outlook for both segments and believe we could remain above mid-cycle conditions well into 2027. The ongoing geopolitical conflicts across the globe continue to create volatility. The US has remained fairly insulated and able to benefit from these conditions with its relatively abundant supplies of available crude oil, natural gas, and critical refining infrastructure. Starting with the Refining segment, the ongoing conflicts in the Middle East have so far been more impactful for refined products than crude oil. In addition to reduced flows of crude oil from the closure of the Strait of Hormuz, a number of refineries in the Middle East have been damaged and the status of those repairs and timelines on potential restarts remains unknown.

Speaker #1: The ongoing geopolitical conflicts across the globe continue to create volatility. However, the U.S. has remained fairly insulated and able to benefit from these conditions with its relatively abundant supplies of available crude oil, natural gas, and critical refining infrastructure.

Speaker #1: Starting with the refining segment, the ongoing conflicts in the Middle East have so far been more impactful for refined products than crude oil. In addition to reduced flows of crude oil from the closure of the Strait of Hormuz, a number of refineries in the Middle East have been damaged, and the status of those repairs and timelines on potential restarts remain unknown.

Speaker #1: Outside of the Middle East, Ukraine has stepped up its attacks on Russian refineries over the past few months, with reports estimating that a third to nearly half of Russia's refining capacity could be offline.

Dane Neumann: Outside of the Middle East, Ukraine has stepped up its attacks on Russian refineries over the past few months, with reports estimating a third to nearly half of Russia's refining capacity could be offline. Refined product exports from Russia have been effectively shut off, while China has also halted refined product exports for several months. Looking at the US, the tightness in global refined product supply has created opportunities for increased refined product exports. Year-to-date exports of gasoline, diesel, and jet fuel have increased 16% compared to the same period last year to over 2.6 million barrels per day on average. Meanwhile, US demand for refined products has remained resilient, driving gasoline and diesel inventories near or below five-year lows on a days of supply basis.

Speaker #1: As a result, refined product exports from Russia have been effectively shut off, while China has also halted refined product exports for several months. Looking at the U.S., the tightness in global refined product supply has created opportunities for increased refined product exports.

Speaker #1: Even today, exports of gasoline, diesel, and jet fuel have increased 16% compared to the same period last year, to over 2.6 million barrels per day on average.

Speaker #1: Meanwhile, U.S. demand for refined products has remained resilient, driving gasoline and diesel inventories near or below five-year lows on a days-of-supply basis.

Speaker #1: In the Mid-Con, where we operate, we are seeing similar trends, with days of supply hovering near five-year lows for the past several months. While cracks were strong in the second quarter, quarter-to-date cracks have increased further, and we should see some improvements to capture as crude oil backwardation narrows in the third quarter.

Dane Neumann: In the MidCon, where we operate, we are seeing similar trends, with days of supply hovering near five-year lows for the past several months. While cracks were strong in the Q2, quarter-to-date cracks have increased further, and we should see some improvements to capture as crude oil backwardation narrows in the Q3. In the Fertilizer segment, the spring planting season went well and demand for nitrogen was strong overall. Grain prices have increased some recently, with expectations for lower carry-out inventories driven by a combination of hot and dry conditions across the Western Corn Belt, increased export demand, and a smaller-than-expected corn crop in Argentina. Summer fill and fall prepay for ammonia occurred in late June, and UAN fill was completed in early July.

Speaker #1: In the fertilizer segment, the spring planting season went well, and demand for nitrogen was strong overall. Grain prices have increased some recently, with expectations for lower carryout inventories driven by a combination of hot and dry conditions across the western Corn Belt, increased export demand, and a smaller-than-expected corn crop in Argentina.

Speaker #1: Summer fill and fall prepay for ammonia occurred in late June, and UAN fill was completed in early July. Overall, we saw strong demand for both products, and we were able to secure a solid book of business for the second half of 2026 at attractive pricing.

Dane Neumann: Overall, we saw strong demand for both products, and we were able to secure a solid book of business for the H2 2026 at attractive pricing. We expect to start the planned turnaround at East Dubuque in late August, during which we intend to complete the brownfield capacity expansion, which we believe should increase its ammonia production capacity by approximately 5%. We also expect to finalize a detailed design and construction plan this year intended to allow the plant to utilize natural gas as an alternative feedstock to third-party petcoke. Looking at quarter-date pricing metrics for the Q3 2026, Group 3 2-1-1 cracks have averaged $58.70 per barrel, with the Brent WTI spread at $4.82 per barrel and the WCS differential at $14.04 per barrel under WTI. Prompt fertilizer prices are $650 to $700 per ton for ammonia and $325 to $350 per ton for UAN.

Speaker #1: We expect to start the planned turnaround at East Dubuque in late August, during which we intend to complete the Brownfield capacity expansion, which we believe should increase its ammonia production capacity by approximately 5%.

Speaker #1: We also expect to finalize a detailed design and construction plan this year, intended to allow the plant to utilize natural gas as an alternative feedstock to third-party petcoke.

Speaker #1: Looking at quarter-day pricing metrics for the third quarter of 2026, Group 3 2-1-1 cracks have averaged $58.70 per barrel, with the Brent-WTI spread at $4.82 per barrel and the WCS differential at $14.04 per barrel under WTI.

Speaker #1: Prompt fertilizer prices are $650 to $700 per ton for ammonia, and $325 to $350 per ton for UAN. After eight years at the company, I have seen the benefits of focusing on safety, reliability, cost management, and prudent capital allocation.

Dane Neumann: After eight years at the company, I have seen the benefits of focusing on safety, reliability, cost management, and prudent capital allocation. We have a strong team in place, and I look forward to continue executing on the strategy we laid out earlier this year. In addition to our constant focus on safe and reliable operations, we remain committed to working to improve margin capture in our base business, and we are laser-focused on pursuing accretive growth opportunities that would add value for our shareholders. With that, operator, we are ready for questions.

Speaker #1: We have a strong team in place, and I look forward to continuing to execute on the strategy we laid out earlier this year. In addition to our constant focus on safe and reliable operations, we remain committed to working to improve margin capture in our base business, and we are laser-focused on pursuing accretive growth opportunities that would add value for our shareholders.

Speaker #1: With that, operator, we are ready for questions.

Speaker #3: At this time, if you would like to ask a question, please press star, then the number 1 on your telephone keypad. To withdraw your question, simply press star 1 again.

Operator: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. We kindly ask that you limit your questions to one and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Manav Gupta with UBS. Please go ahead.

Speaker #3: We kindly ask that you limit your questions to one, and one follow-up, for today's call. We will pause for just a moment to compile the Q&A roster.

Speaker #3: Your first question comes from the line of Manop Gupta with UBS. Please go ahead.

Speaker #4: Good morning. Congratulations on a very strong quarter. You provided some outlook on the macro, which was pretty constructive, and I'm just trying to understand—based on everything you said, you could be building a lot of cash. And again, coming back to your vision of expanding your refining footprint, I'm just trying to go back and understand: is that still a goal for you, to have higher refining capacity?

Manav Gupta: Good morning. Congratulations on a very strong quarter. You provided some outlook on macro, which was pretty constructive. I'm just trying to understand, based on everything you said, you could be building a lot of cash. Again, coming back to your vision of expanding your refining footprints, I'm just trying to go back and understand, is that still a goal for you to have higher refining capacity? If that is the case, how will you plan to fund it, including the surplus cash that probably you will accumulate because margins are well above mid-cycle?

Speaker #4: And if that is the case, how do you plan to fund it, including the surplus cash that you will probably accumulate? Because margins are well above mid-cycle.

Speaker #2: Yes, thanks, Manop. Yeah, so, you know, our strategy is, obviously, we still believe that CVI needs to grow in barrels and diversify from its core region of the southern Mid-Con.

Dane Neumann: Yeah. Thanks, Manav. Our strategy is obviously we still believe that CVI needs to grow in barrels and diversify from its core region of the southern MidCon. As it relates to the growing cash balances, obviously we want to continue to focus on reducing the debt levels of CVI to our base business. Also, as we continue to look at commercial opportunities, we're mindful that we may come across a couple smaller, call it immaterial opportunities to advance our logistics footprint. I don't really consider the cash at this time as potentially being a meaningful impact to any M&A. If there's an opportunity out there, we do believe the capital markets are open. Obviously, I think the world's learned a very valuable lesson on the value of the US refining complex. Frankly, we're going backwards in capacity when we should be going forward.

Speaker #2: As you know, as it relates to the growing cash balances, obviously we want to continue to focus on reducing the debt levels at CVI to our base business.

Speaker #2: And also, you know, as we continue to look at commercial opportunities, we're mindful that we may come across a couple of smaller—call it immaterial—opportunities to advance our logistics footprint.

Speaker #2: I don't really consider the cash at this time as, you know, potentially being a meaningful impact to any M&A. You know, if there is an opportunity out there, we do believe the capital markets are open.

Speaker #2: Obviously, I think the world’s learned a very valuable lesson on the value of the U.S. refining complex. And, frankly, we’re going backwards in capacity when we should be going forward.

Speaker #2: So I kind of consider them separate topics, and would look to fund alternatively, other than using cash on the balance sheet.

Dane Neumann: I kind of consider them separate topics and would look to fund alternatively other than using cash on the balance sheet.

Speaker #4: Thank you. And a quick one again on your hedging strategy. This is somewhat unique—most of your peers don’t hedge as much, or don’t admit to hedging that much.

Manav Gupta: Thank you. A quick one again on your hedging strategy. This is somewhat unique. Most of your peers don't hedge as much or don't admit to hedging that much. Can you walk us through some of the hedging strategy that you have in place for the next few quarters and the next year? Thank you.

Speaker #4: So can you walk us through some of the hedging strategy that you have in place for the next few quarters and the next year?

Speaker #4: Thank you.

Speaker #2: Yeah, sure. So, Manop, historically, we would get board authorization to target around 30% of our production, and usually for around a calendar year. I would say, historically, when opportunities have presented themselves, we would layer into the market, and we'd often miss the timing of it and kind of not get the hedges on that we wanted.

Dane Neumann: Yeah, sure. Manav, historically, we'd get board authorization to target around 30% of our production, and usually for around a calendar year. I would say historically, when opportunities have presented themselves, we would layer into the market, we'd often miss the timing of it and kind of not get the hedges on that we wanted. Unfortunately, this time around, we learned from the past, went really, really fast. The conflict, obviously, is still ongoing. A great example of past performance, not indicative of future results. As we look forward, I think for our book for the rest of the year, we're satisfied with where the levels are at. 2027 is a much smaller amount. If we did look at any closures, it'd be looking at the 2027 area. Obviously no action that we've taken and just discussing it.

Speaker #2: Unfortunately, this time around, we learned from the past, went really, really fast, and the conflict obviously is still ongoing. So, you know, a great example of past performance not being indicative of future results.

Speaker #2: As we look forward, I think, for our book for the rest of the year, we're satisfied with where the levels are at.

Speaker #2: 2027 is a much smaller amount. If we did look at any closures, it'd be, you know, looking at the 2027 area. Obviously, nothing—with no action that we've taken, we're just discussing it.

Speaker #2: Going forward, you know, I think that we will probably look to lower what type of authorizations we get. Thirty percent may be a little high on a go-forward basis.

Dane Neumann: Going forward, I think that we will probably look to lower what type of authorizations we get. 30% may be a little high on a go-forward basis, just continue to assess as we go forward, then be a little more cautious as we layer in.

Speaker #2: And we'll just continue to assess as we go forward and, you know, be a little more cautious as we layer in.

Speaker #4: Thank you so much, and congrats on your new role.

Manav Gupta: Thank you so much, and congrats on your new role.

Speaker #2: Thank you, sir.

Dane Neumann: Thank you, sir.

Speaker #3: Your next question comes from the line of Matthew Blair with TPH. Please go ahead.

Operator: Your next question comes from the line of Matthew Blair with TPH. Please go ahead.

Speaker #5: Thanks, and good morning. Maybe to stick on the hedging side—if I heard correctly, it sounded like the realized hedge loss in the quarter was $81 million, which I think shakes out to about $4.20 per barrel.

Matthew Blair: Thanks, and good morning. Maybe to stick on the hedging side. If I heard correctly, it sounded like the realized hedge loss in the quarter was $81 million, which I think shakes out to about $4.20 a barrel as a headwind. Is that how you look at it as well? Do you have an estimate on what the mark-to-market hedging impact would look like in Q3? Would that be something around $100 to 120 million? Thank you.

Speaker #5: As a headwind, is that how you look at it as well? And do you have an estimate on what the mark-to-market hedging impact would look like in Q3?

Speaker #5: Would that be something around $100 million to $120 million? Thank you.

Speaker #2: Hey Matthew, it's Richard. And you're right on the Q2 impact. So it was $81 million of a realized loss, which was about $4.16 a barrel, and that was about a 9% hit to capture.

Richard Roberts: Hey, Matthew, it's Richard. You're right on the Q2 impact. It was $81 million of a realized loss, which was about $4.16 a barrel, and that was about a 9% hit to capture. We did say in the prepared remarks, Q2 was the largest volume exposure that we had of all the hedges that we had in place. That's behind us now, which is nice. We stepped down in Q3, we stepped down again in Q4, and then for 2027, it's a lot smaller. For Q3, total exposure's about 2.7 million barrels, and the notional value of that position right now is $102 million, as I mentioned earlier. If you want to try to back into it

Speaker #2: We did say in the prepared remarks, so Q2 was the largest volume exposure that we had of all the hedges that we had in place.

Speaker #2: So that's behind us now, which is nice. We stepped down in Q3. We stepped down again in Q4. And then for '27, it's a lot smaller.

Speaker #2: For Q3, total exposure is about 2.7 million barrels, and the notional value of that position right now is $102 million, as I mentioned earlier.

Speaker #2: So if you want to try to back into it, you know, we I think we talked about it last quarter. We put these hedges on pretty early when the Iran conflict started, you know, call it late February, early March.

Dane Neumann: I think we talked about it last quarter. We put these hedges on pretty early when the Ukraine conflict started, call it late February, early March. If you wanted to look at where were Q3, Q4, NYMEX diesel cracks trading around that time, you can probably get a sense of where we would've locked in to try to get order of magnitude of where we are versus where we enter into.

Speaker #2: So, if you wanted to look at, you know, where were 3Q, 4Q, 9x diesel cracks trading around that time, you can probably get a sense of where we would have locked in.

Speaker #2: To try to get, you know, an order of magnitude of where we are versus where we entered into.

Speaker #5: Okay, thanks. That's helpful. And then, do you have any concerns on 2026 RIN compliance? Any concerns that there simply might not be enough RINs in the market?

Matthew Blair: Okay, thanks. That's helpful. Then do you have any concerns on 2026 RIN compliance? Any concerns that there simply might not be enough RINs in the market? If so, are you adjusting your RIN purchase strategy or are you buying any extra RINs now to avoid potential shortage later in the year?

Speaker #5: And if so, are you adjusting your RIN purchase strategy, or are you buying any extra RINs now to avoid, you know, a potential shortage later in the year?

Dane Neumann: That's a great question, Matt. I think just in general, I have concerns about the 2026 RVO and I'll avoid the soapbox, but just in brief, we've mismanaged a program. We are not helping farmers, we are harming consumers, and we are just not giving any clarity on how to plan businesses as it relates to EPA and their waivers, deadlines, et cetera. I don't know how the EPA could let the RIN bank go short. They're forcing us to comply with something, they will have to take some level of action. It's just untenable that they could do what they've done or let it get worse. As it relates to RIN buying, our plan is always ratable.

Speaker #2: That's a great question, Matt. Yeah, I think just in general, I have concerns about the 2026 RVO, and I'll avoid the soapbox, but just in brief, we've mismanaged a program.

Speaker #2: We are not helping farmers. We are harming consumers. And we are just not giving any clarity on how to plan businesses as it relates to the EPA and their waivers, deadlines, et cetera.

Speaker #2: So yeah, I don't know how the EPA could let the RIN bank go short. Like, they're forcing us to comply with something—they will have to take some level of action.

Speaker #2: It's just untenable that they could do what they've done or let it get worse. As it relates to RIN buying, you know, our plan is always ratable.

Speaker #2: I think when, in Q2 here, when the price really started to get out of control, we slowed down a little bit, just because we think the EPA has to take some action here.

Dane Neumann: I think in Q2 here, when the prices really started to get out of control, we slowed down a little bit, just because we think the EPA has to take some action here. That strategy's paid off a little bit as we've seen some softness in RINs the last few days. We'll continue to focus on ratable buying and with a little bit of catch up here in Q3.

Speaker #2: That strategy has paid off a little bit, as we've seen some softness in RINs the last few days. And we'll continue to focus on ratable buying, with a little bit of catch-up here in the third quarter.

Speaker #5: Okay. And can I just clarify, for Winnie Wood, are you currently buying 50% of your expected 2026 obligation?

Matthew Blair: Okay. Can I just clarify for Wynnewood, are you currently buying 50% of your expected 2026 obligation?

Speaker #2: Yes. So, we are intending on buying 50% of the obligation for Winnie Wood, although we still intend—and have proven out, using the DOE scoring methodology—that we deserve a 100% waiver at Winnie Wood.

Dane Neumann: Yes. We are intending on buying 50% of the obligation for Wynnewood, although we still intend and have proven out using the DOE scoring methodology that we deserve a 100% waiver at Wynnewood.

Speaker #5: Great.

Matthew Blair: Great. Thanks so much.

Speaker #2: Got it.

Dane Neumann: Got it.

Speaker #3: Your next question comes from the line of Alexa Bruno with Goldman Sachs. Please go ahead.

Operator: Your next question comes from the line of Alexa Breeno with Goldman Sachs. Please go ahead.

Operator: Your next question comes from the line of Alexa Bruno with Goldman Sachs. Please go ahead.

Speaker #4: Hey, team, and thanks for taking our question. First of all, congratulations, Dane and Richard, on your new roles—well deserved. Can you guys talk about what you’re focused on in these new seats, and then how the leadership transition is going?

Alexa Breeno: Hey, team, thanks for taking our question. First of all, congratulations, Dane and Richard, on your new roles. Well deserved. Can you guys talk about what you're focused on in these new seats? How's the leadership transition going?

Alexa Bruno: Hey, team, thanks for taking our question. First of all, congratulations, Dane and Richard, on your new roles. Well deserved. Can you guys talk about what you're focused on in these new seats? How's the leadership transition going?

Speaker #2: Yeah, thank you. You know, the leadership transition has been great. You know, we have a really strong team in place. You know, obviously I've been at the company a long time, and as of a number of other senior leaders, the team I had in the CFO organization is very, very strong.

Dane Neumann: Yeah, thank you. The leadership transition's been great. We have a really strong team in place. I've obviously been at the company a long time and as have a number of other senior leaders. The team I had in the CFO organization is very, very strong. Obviously, bringing Richard up to help us out here has been, I think, a great move. I don't really feel like we missed a beat. The team I have is capable of wearing many hats, has very broad experience, and frankly, have made it relatively easy to manage through. Strategically, I don't think anything really changes. We do want to focus on the core commercial business, improving capture, and then just accretive opportunities to shareholders. We're marching forward on that, and hopefully we have some information to share soon.

Speaker #2: And then, obviously, bringing Richard up to help us out here has been, I think, a great move. So I don't really feel like we missed a beat.

Speaker #2: The team I have is capable of wearing many hats, and has very broad experience. And frankly, they have made it relatively easy to manage through. Strategically, I don't think anything really changes.

Speaker #2: You know, we do want to focus on the core commercial business, improving capture, and then just create opportunity for shareholders. So we're marching forward on that, and hopefully we have some information to share soon.

Speaker #4: Thanks, appreciate that. And then, as a follow-up, I just wanted to ask about capital allocation. Can you talk a little bit more about how you guys are thinking about balancing a dividend with debt reduction?

Alexa Breeno: Thanks, appreciate that. As a follow-up, just wanted to ask on capital allocation, can you talk a little bit more about how you guys are thinking about balancing a dividend with debt reduction? As you look at the potentials to scale up refining, what does the M&A landscape look like right now?

Alexa Bruno: Thanks, appreciate that. As a follow-up, just wanted to ask on capital allocation, can you talk a little bit more about how you guys are thinking about balancing a dividend with debt reduction? As you look at the potentials to scale up refining, what does the M&A landscape look like right now?

Speaker #4: And then as you look at the potential to scale up refining, what does the M&A landscape look like right now?

Speaker #2: Sure. So, for capital allocation, consistent with what we've previously said, we really want to get back to that base level of $1 billion of debt, excluding CBR Partners.

Dane Neumann: Sure. For capital allocation, consistent with what we've previously said, we really want to get back to that base level of $1 billion of debt, excluding CVR Partners, that remains a priority. I would say similar to the past, we always said we didn't have to get that balance gone before we return a dividend, we delivered on that in the first quarter. If we can make meaningful progress, which we have a line of sight to doing on the remaining balance of that debt, there's certainly opportunity to discuss some incremental increase to the dividend with the market conditions the way they are. I don't see us returning to the high historical levels, but something that is sustainable and regular throughout the cycle. We'll continue to provide updates on that front.

Speaker #2: So, that remains a priority. I would say it’s similar to the past. You know, we always said we didn’t have to get that dividend, and we delivered on that in the first quarter.

Speaker #2: You know, if we can make meaningful progress—which we have a line of sight to—on the remaining balance of that debt, there's certainly opportunity to discuss some incremental increase to the dividend, with the market conditions the way they are.

Speaker #2: You know, I don't see us returning to the high, high historical levels, but something that is sustainable and regular throughout the cycle. So, we'll continue to provide updates on that front.

Speaker #2: You know, from an M&A perspective, yeah, I think this, to me, almost feels like somewhat of an ideal time for folks to take action, looking to rebalance portfolios.

Dane Neumann: M&A perspective, yeah, I think this to me almost feels like somewhat of an ideal time for folks to take action, looking to rebalance portfolios. Now more than ever, I think the ability for refineries to trade at a mid-cycle level, which over a long term is where people should transact, presents an opportunity. Historically, bid-asks have been very wide, this gives you a scenario where value can be achieved and risk-reward can be balanced as well.

Speaker #2: You know, now more than ever, I think the ability for refining refineries to trade at a mid-cycle level—which, over the long term, is where people should transact—presents an opportunity.

Speaker #2: You know, historically, bid-asks have been very, very wide, but this gives you a scenario where value can be achieved, and risk-reward can be balanced as well.

Speaker #4: Thanks. We'll turn it back.

Alexa Breeno: Thanks. We'll turn it back.

Alexa Bruno: Thanks. We'll turn it back.

Speaker #2: Thank you.

Dane Neumann: Thank you.

Speaker #3: That concludes our question-and-answer session. I will now turn the call back over to Dane Neumann for closing remarks.

Operator: That concludes our question and answer session. I will now turn the call back over to Dane Neumann for closing remarks.

Speaker #2: All right. Again, I would like to thank you all for your interest in CVR ENERGY and our employees for their hard work and commitment toward safe, reliable, and environmentally responsible operations.

Dane Neumann: Again, I would like to thank you all for your interest in CVR Energy and our employees for their hard work and commitment towards safe, reliable, and environmentally responsible operations. We look forward to reviewing our Q3 2026 results during our next earnings call. Have a safe day.

Speaker #2: And we look forward to reviewing our third quarter 2026 results during our next earnings call. Have a safe day.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Q2 2026 CVR Energy Inc Earnings Call

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