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CVR Refining Reports 2016 Fourth Quarter and Full Year Results

SUGAR LAND, Texas, Feb. 16, 2017 /PRNewswire/ -- CVR Refining, LP (NYSE: CVRR), a refiner and marketer of petroleum fuels, today announced net income of $15.3 million on net sales of $4,431.3 million for full year 2016, compared to net income of $291.2 million on net sales of $5,161.9 million for full year 2015. Adjusted EBITDA, a non-GAAP financial measure, for full year 2016 was $222.8 million, compared to adjusted EBITDA of $602.0 million for the previous year.

For the fourth quarter of 2016, the company reported a net loss of $10.7 million on net sales of $1,269.4 million, compared to a net loss of $122.2 million on net sales of $948.3 million for the fourth quarter of 2015. Adjusted EBITDA, a non-GAAP financial measure, for the 2016 fourth quarter was $27.7 million compared to adjusted EBITDA of $16.4 million for the 2015 fourth quarter.

"CVR Refining had strong 2016 fourth quarter operational performance," said Jack Lipinski, chief executive officer. "The Coffeyville and Wynnewood refineries posted a combined crude throughput of 207,422 barrels per day (bpd), which exceeded the range of our outlook.

"As expected, refining margins for the fourth quarter were seasonally weak," he said. "Renewable Identification Number (RIN) expenses under the broken Renewable Fuel Standard (RFS) program remained high in the fourth quarter and continue to be a serious concern for merchant refiners. As we have said many times, the RFS point of obligation must be expanded to include all blenders in order for the program to work as Congress originally intended.

"Moving forward, we are cautiously optimistic that the new administration will have a pragmatic approach to how it administers the RFS program," Lipinski said. "Certainly, the drop in ethanol RIN prices from 2016's high of $1.09 on Dec. 1 to yesterday's settlement just under 49 cents proves our supposition that the RIN market is contrived."

Consolidated Operations

Fourth quarter 2016 throughputs of crude oil and all other feedstocks and blendstocks totaled 223,266 bpd. Throughputs of crude oil and all other feedstocks and blendstocks for both refineries totaled 172,364 bpd for the same period in 2015.

Refining margin adjusted for FIFO impact per crude oil throughput barrel, a non-GAAP financial measure, was $7.32 in the 2016 fourth quarter, compared to $8.96 during the same period in 2015. Direct operating expenses (exclusive of depreciation and amortization), excluding major scheduled turnaround expenses, per crude oil throughput barrel, for the 2016 fourth quarter were $4.96, compared to $7.04 in the fourth quarter of 2015.

Distributions

CVR Refining will not pay a cash distribution for the 2016 fourth quarter. CVR Refining is a variable distribution master limited partnership. As a result, its quarterly distributions, if any, will vary from quarter to quarter due to several factors, including, but not limited to, its operating performance, fluctuations in the prices paid for crude oil and other feedstocks, as well as the prices received for finished products, RINs' expense and cash reserves deemed necessary or appropriate by the board of directors of its general partner.

Fourth Quarter 2016 Earnings Conference Call

CVR Refining previously announced that it will host its fourth quarter 2016 Earnings Conference Call for analysts and investors on Thursday, Feb. 16, at 1 p.m. Eastern. The Earnings Conference Call may also include discussion of the Partnership's developments, forward-looking information and other material information about business and financial matters.

The Earnings Conference Call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1005/19480. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8289.

For those unable to listen live, the Webcast will be archived and available for 14 days at https://www.webcaster4.com/Webcast/Page/1005/19480. A repeat of the conference call can be accessed by dialing (877) 660-6853, conference ID 13653930.

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

Forward-Looking Statements
This news release contains forward-looking statements. You can generally identify forward-looking statements by our use of forward-looking terminology such as "outlook," "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "seek," "should," or "will," or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. For a discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and our other SEC filings. These risks may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. CVR Refining disclaims any intention or obligation to update publicly or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

About CVR Refining, LP
Headquartered in Sugar Land, Texas, CVR Refining, LP is an independent downstream energy limited partnership that owns refining and related logistics assets in the Midcontinent United States. CVR Refining's subsidiaries operate a complex full coking medium-sour crude oil refinery with a rated capacity of 115,000 barrels per calendar day (bpcd) in Coffeyville, Kansas, and a complex crude oil refinery with a rated capacity of 70,000 bpcd in Wynnewood, Oklahoma. CVR Refining's subsidiaries also operate supporting logistics assets including approximately 340 miles of active owned and leased pipelines, approximately 150 crude oil transports, a network of strategically located crude oil gathering tank farms, and approximately 6.4 million barrels of owned and leased crude oil storage capacity.

For further information, please contact:

Investor Contact:
Jay Finks
CVR Refining, LP
(281) 207-3588
IR@CVRRefining.com

Media Relations:
Brandee Stephens
CVR Refining, LP
(281) 207-3516
MediaRelations@CVRRefining.com

 

CVR Refining, LP

Financial and Operational Data (all information in this release is unaudited other than the statement of operations and cash flow data for the year ended December 31, 2015 and the balance sheet data as of December 31, 2015).



Three Months
Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except per unit data)

Statement of Operations Data:








Net sales

$

1,269.4



$

948.3



$

4,431.3



$

5,161.9


Operating costs and expenses:








Cost of materials and other

1,107.5



842.8



3,759.2



4,143.6


Direct operating expenses(1)(2)

94.7



188.7



393.4



478.5


Depreciation and amortization

32.6



31.5



126.3



128.0


Cost of sales

1,234.8



1,063.0



4,278.9



4,750.1


Flood insurance recovery







(27.3)


Selling, general and administrative expenses(1)

18.5



20.2



71.9



75.2


Depreciation and amortization

0.8



0.6



2.7



2.2


Operating income (loss)

15.3



(135.5)



77.8



361.7


Interest expense and other financing costs

(11.7)



(10.5)



(43.4)



(42.6)


Interest income

0.1



0.1



0.1



0.4


Gain (loss) on derivatives, net

(14.6)



23.6



(19.4)



(28.6)


Other income, net

0.2



0.1



0.2



0.3


Income (loss) before income tax expense

(10.7)



(122.2)



15.3



291.2


Income tax expense








Net income (loss)

$

(10.7)



$

(122.2)



$

15.3



$

291.2










Net income (loss) per common unit - basic and diluted

$

(0.07)



$

(0.83)



$

0.10



$

1.97










Adjusted EBITDA*

$

27.7



$

16.4



$

222.8



$

602.0


Available cash for distribution*

$



$

(3.7)



$

0.3



$

402.0










Weighted average, number of common units outstanding:








Basic and diluted

147.6



147.6



147.6



147.6








* See "Use of Non-GAAP Financial Measures" below.

(1) Direct operating expenses and selling, general and administrative expenses for the three months and years ended December 31, 2016 and 2015 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses and selling, general and administrative expenses.


(2) Direct operating expenses includes $0.0 million and $31.5 million of major scheduled turnaround expenses during the three months and year ended December 31, 2016, respectively. Direct operating expenses includes $84.9 million and $102.2 million of major scheduled turnaround expenses during the three months and year ended December 31, 2015.

 



As of
December
31, 2016


As of
December
31, 2015




(audited)


(in millions)

Balance Sheet Data:




Cash and cash equivalents

$

314.1



$

187.3


Working capital (1)

313.7



297.5


Total assets (1)

2,331.9



2,189.0


Total debt, including current portion (1)

541.5



573.8


Total partners' capital

1,296.7



1,281.4








(1) Prior period amounts have been retrospectively adjusted for Accounting Standard Update No. 2015-03, which requires that costs incurred to issue debt be presented in the balance sheet as a direct reduction from the carrying value of the debt.

 



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions)

Cash Flow Data:








Net cash flow provided by (used in):








     Operating activities

$

81.4



$

(93.2)



$

267.8



$

473.7


     Investing activities

(21.3)



(71.2)



(107.9)



(194.7)


     Financing activities

(31.9)



(149.4)



(33.1)



(461.9)


          Net cash flow

$

28.2



$

(313.8)



$

126.8



$

(182.9)










Capital expenditures for property, plant and equipment








Maintenance capital expenditures

$

13.5



$

36.9



$

63.6



$

103.4


Growth capital expenditures

5.4



34.2



38.7



91.3


          Total capital expenditures

$

18.9



$

71.1



$

102.3



$

194.7


Operating Data

The following tables set forth information about our consolidated operations and our Coffeyville and Wynnewood refineries. Reconciliations of certain non-GAAP financial measures are provided under "Use of Non-GAAP Financial Measures" below.



Three Months
Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Key Operating Statistics:








Per crude oil throughput barrel:








Gross profit (loss)

$

1.81



$

(7.80)



$

2.10



$

6.23


Gross profit (loss) excluding flood insurance recovery*

1.81



(7.80)



2.10



5.84


Refining margin*

8.49



7.16



9.27



14.45


FIFO impact (favorable) unfavorable

(1.17)



1.80



(0.72)



0.86


Refining margin adjusted for FIFO impact*

7.32



8.96



8.55



15.31


Direct operating expenses and major scheduled turnaround expenses

4.96



12.81



5.43



6.79


Direct operating expenses excluding major scheduled turnaround expenses

4.96



7.04



4.99



5.34


Direct operating expenses and major scheduled turnaround expenses per barrel sold

4.64



12.34



5.08



6.40


Direct operating expenses excluding major scheduled turnaround expenses per barrel sold

$

4.64



$

6.79



$

4.67



$

5.04


Barrels sold (barrels per day)

221,921



166,168



211,643



204,708








* See "Use of Non-GAAP Financial Measures" below.

 



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Refining Throughput and Production Data (bpd):
















Throughput:
















Sweet

185,154



82.9

%


151,215



87.7

%


177,256



84.8

%


176,097



86.0

%

Medium

3,160



1.4

%


209



0.1

%


2,525



1.2

%


2,460



1.2

%

Heavy sour

19,108



8.6

%


8,715



5.1

%


18,261



8.7

%


14,520



7.1

%

Total crude oil throughput

207,422



92.9

%


160,139



92.9

%


198,042



94.7

%


193,077



94.3

%

All other feedstocks and blendstocks

15,844



7.1

%


12,225



7.1

%


11,077



5.3

%


11,672



5.7

%

Total throughput

223,266



100.0

%


172,364



100.0

%


209,119



100.0

%


204,749



100.0

%

Production:
















Gasoline

114,682



51.1

%


80,111



46.3

%


108,762



51.9

%


99,961



48.5

%

Distillate

91,021



40.5

%


70,201



40.6

%


85,092



40.6

%


85,953



41.7

%

Other (excluding internally produced fuel)

18,782



8.4

%


22,638



13.1

%


15,751



7.5

%


20,074



9.8

%

Total refining production (excluding internally produced fuel)

224,485



100.0

%


172,950



100.0

%


209,605



100.0

%


205,988



100.0

%

Product price (dollars per gallon):
















Gasoline

$

1.42





$

1.32





$

1.34





$

1.61




Distillate

1.52





1.34





1.36





1.62




 



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Market Indicators (dollars per barrel):








West Texas Intermediate (WTI) NYMEX

$

49.29



$

42.16



$

43.47



$

48.76


Crude Oil Differentials:








WTI less WTS (light/medium sour)

0.92



0.35



0.85



(0.28)


WTI less WCS (heavy sour)

15.04



14.45



13.95



13.20


NYMEX Crack Spreads:








Gasoline

12.96



12.79



15.42



19.89


Heating Oil

16.45



15.21



13.89



20.93


NYMEX 2-1-1 Crack Spread

14.70



14.00



14.66



20.41


PADD II Group 3 Product Basis:








Gasoline

(3.70)



0.26



(3.62)



(2.12)


Ultra Low Sulfur Diesel

(2.55)



(0.44)



(0.92)



(2.02)


PADD II Group 3 Product Crack Spread:








Gasoline

9.28



13.05



11.82



17.76


Ultra Low Sulfur Diesel

13.91



14.76



12.96



18.91


PADD II Group 3 2-1-1

11.60



13.91



12.39



18.34


 



Three Months
Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except operating statistics)

Coffeyville Refinery Financial Results:








Net sales

$

854.7



$

522.6



$

2,948.9



$

3,220.6


Cost of materials and other

750.6



490.5



2,513.9



2,626.1


Direct operating expenses(1)

52.0



53.5



196.4



209.1


Major scheduled turnaround expenses



84.9



31.5



102.2


Flood insurance recovery







(27.3)


Depreciation and amortization

18.4



17.5



69.7



72.1


Gross profit (loss)

33.7



(123.8)



137.4



238.4


Add:








Direct operating expenses(1)

52.0



53.5



196.4



209.1


Major scheduled turnaround expenses



84.9



31.5



102.2


Flood insurance recovery







(27.3)


Depreciation and amortization

18.4



17.5



69.7



72.1


Refining Margin*

104.1



32.1



435.0



594.5


FIFO impact, (favorable) unfavorable

(15.4)



17.4



(37.8)



38.0


Refining margin adjusted for FIFO impact*

$

88.7



$

49.5



$

397.2



$

632.5










Coffeyville Refinery Key Operating Statistics:








Per crude oil throughput barrel:








Gross profit (loss)

$

2.76



$

(17.42)



$

3.03



$

5.77


Gross profit (loss) excluding flood insurance recovery*

2.76



(17.42)



3.03



5.11


Refining margin*

8.55



4.52



9.57



14.37


FIFO impact (favorable) unfavorable

(1.26)



2.45



(0.83)



0.92


Refining margin adjusted for FIFO impact*

7.29



6.97



8.74



15.29


Direct operating expenses and major scheduled turnaround expenses

4.27



19.48



5.02



7.53


Direct operating expenses excluding major scheduled turnaround expenses

4.27



7.53



4.32



5.06


Direct operating expenses and major scheduled turnaround expenses per barrel sold

3.84



18.46



4.54



6.92


Direct operating expenses excluding major scheduled turnaround expenses per barrel sold

$

3.84



$

7.14



$

3.92



$

4.65


Barrels sold (barrels per day)

146,930



81,484



137,047



123,279








* See "Use of Non-GAAP Financial Measures" below.

(1) Direct operating expenses for the three months and years ended December 31, 2016 and 2015 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses.

 



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Coffeyville Refinery Throughput and Production Data (bpd):
















Throughput:
















Sweet

113,243



78.4

%


68,452



80.7

%


104,679



78.9

%


96,727



79.5

%

Medium



%


57



0.1

%


1,229



0.9

%


2,058



1.7

%

Heavy sour

19,108



13.2

%


8,715



10.3

%


18,261



13.8

%


14,520



11.9

%

Total crude oil throughput

132,351



91.6

%


77,224



91.1

%


124,169



93.6

%


113,305



93.1

%

All other feedstocks and blendstocks

12,206



8.4

%


7,540



8.9

%


8,453



6.4

%


8,400



6.9

%

Total throughput

144,557



100.0

%


84,764



100.0

%


132,622



100.0

%


121,705



100.0

%

Production:
















Gasoline

75,273



51.1

%


36,493



42.1

%


69,303



51.4

%


57,815



46.5

%

Distillate

60,550



41.1

%


35,588



41.0

%


55,790



41.4

%


53,136



42.7

%

Other (excluding internally produced fuel)

11,446



7.8

%


14,655



16.9

%


9,756



7.2

%


13,503



10.8

%

Total refining production (excluding internally produced fuel)

147,269



100.0

%


86,736



100.0

%


134,849



100.0

%


124,454



100.0

%

 



Three Months
Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except operating statistics)

Wynnewood Refinery Financial Results:








Net sales

$

413.6



$

424.6



$

1,478.0



$

1,936.9


Cost of materials and other

356.9



351.8



1,245.4



1,516.3


Direct operating expenses(1)

42.7



49.2



165.5



166.2


Major scheduled turnaround expenses








Depreciation and amortization

12.8



12.6



50.7



50.2


Gross profit

1.2



11.0



16.4



204.2


Add:








Direct operating expenses(1)

42.7



49.2



165.5



166.2


Major scheduled turnaround expenses








Depreciation and amortization

12.8



12.6



50.7



50.2


Refining Margin*

56.7



72.8



232.6



420.6


FIFO impact, (favorable) unfavorable

(7.0)



9.2



(14.2)



22.3


Refining margin adjusted for FIFO impact*

$

49.7



$

82.0



$

218.4



$

442.9










Wynnewood Refinery Key Operating Statistics:








Per crude oil throughput barrel:








Gross profit

$

0.16



$

1.44



$

0.61



$

7.01


Refining margin*

8.20



9.54



8.60



14.44


FIFO impact (favorable) unfavorable

(1.01)



1.20



(0.53)



0.77


Refining margin adjusted for FIFO impact*

7.19



10.74



8.07



15.21


Direct operating expenses and major scheduled turnaround expenses

6.19



6.44



6.12



5.71


Direct operating expenses excluding major scheduled turnaround expenses

6.19



6.44



6.12



5.71


Direct operating expenses and major scheduled turnaround expenses per barrel sold

6.20



6.31



6.06



5.59


Direct operating expenses excluding major scheduled turnaround expenses per barrel sold

$

6.20



$

6.31



$

6.06



$

5.59


Barrels sold (barrels per day)

74,991



84,684



74,596



81,429








* See "Use of Non-GAAP Financial Measures" below.

(1) Direct operating expenses for the three months and years ended December 31, 2016 and 2015 are shown exclusive of depreciation and amortization, which amounts are presented separately below direct operating expenses.

 



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Wynnewood Refinery Throughput and Production Data (bpd):
















Throughput:
















Sweet

71,911



91.4

%


82,763



94.5

%


72,577



94.9

%


79,370



95.6

%

Medium

3,160



4.0

%


152



0.2

%


1,296



1.7

%


402



0.5

%

Heavy sour



%




%




%




%

Total crude oil throughput

75,071



95.4

%


82,915



94.7

%


73,873



96.6

%


79,772



96.1

%

All other feedstocks and blendstocks

3,638



4.6

%


4,685



5.3

%


2,624



3.4

%


3,272



3.9

%

Total throughput

78,709



100.0

%


87,600



100.0

%


76,497



100.0

%


83,044



100.0

%

Production:
















Gasoline

39,409



51.0

%


43,618



50.6

%


39,459



52.8

%


42,146



51.7

%

Distillate

30,471



39.5

%


34,613



40.1

%


29,302



39.2

%


32,817



40.2

%

Other (excluding internally produced fuel)

7,336



9.5

%


7,983



9.3

%


5,995



8.0

%


6,571



8.1

%

Total refining production (excluding internally produced fuel)

77,216



100.0

%


86,214



100.0

%


74,756



100.0

%


81,534



100.0

%

Use of Non-GAAP Financial Measures

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

Refining margin per crude oil throughput barrel is a measurement calculated as the difference between net sales and cost of materials and other. Refining margin is a non-GAAP measure that we believe is important to investors in evaluating our refineries' performance as a general indication of the amount above our cost of materials and other at which we are able to sell refined products. Each of the components used in this calculation (net sales and cost of materials and other) can be taken directly from our Statements of Operations. Our calculation of refining margin may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. In order to derive the refining margin per crude oil throughput barrel, we utilize the total dollar figures for refining margin as derived above and divide by the applicable number of crude oil throughput barrels for the period. We believe that refining margin is important to enable investors to better understand and evaluate our ongoing operating results and allow for greater transparency in the review of our overall financial, operational and economic performance.

Refining margin per crude oil throughput barrel adjusted for FIFO impact is a measurement calculated as the difference between net sales and cost of materials and other adjusted for FIFO impact. Refining margin adjusted for FIFO impact is a non-GAAP measure that we believe is important to investors in evaluating our refineries' performance as a general indication of the amount above our cost of materials and other (taking into account the impact of our utilization of FIFO) at which we are able to sell refined products. Our calculation of refining margin adjusted for FIFO impact may differ from calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. Under our FIFO accounting method, changes in crude oil prices can cause fluctuations in the inventory valuation of our crude oil, work in process and finished goods, thereby resulting in a favorable FIFO impact when crude oil prices increase and an unfavorable FIFO impact when crude oil prices decrease.

The calculation of refining margin and refining margin adjusted for FIFO impact for the three months and years ended December 31, 2016 and 2015 is as follows:

Consolidated Operating Data









Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions)

Net Sales

$

1,269.4



$

948.3



$

4,431.3



$

5,161.9


Cost of materials and other

1,107.5



842.8



3,759.2



4,143.6


Direct operating expenses (exclusive of depreciation and amortization as reflected below)

94.7



103.8



361.9



376.3


Major schedule turnaround expenses



84.9



31.5



102.2


Flood insurance recovery







(27.3)


Depreciation and amortization

32.6



31.5



126.3



128.0


Gross profit (loss)

34.6



(114.7)



152.4



439.1


Add:








Direct operating expenses (exclusive of depreciation and amortization as reflected below)

94.7



103.8



361.9



376.3


Major schedule turnaround expenses



84.9



31.5



102.2


Flood insurance recovery







(27.3)


Depreciation and amortization

32.6



31.5



126.3



128.0


Refining Margin

161.9



105.5



672.1



1,018.3


FIFO impact, (favorable) unfavorable

(22.4)



26.6



(52.1)



60.3


Refining Margin adjusted for FIFO impact

$

139.5



$

132.1



$

620.0



$

1,078.6


The calculation of refining margin per crude oil throughput barrel and refining margin adjusted for FIFO impact per crude oil throughput barrel for the three months and years ended December 31, 2016 and 2015 is as follows:

Consolidated Operating Data









Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Total crude oil throughput barrels per day

207,422



160,139



198,042



193,077


Days in the period

92



92



366



365


Total crude oil throughput barrels

19,082,824



14,732,788



72,483,372



70,473,105






Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Refining Margin

$

161.9



$

105.5



$

672.1



$

1,018.3


Divided by: crude oil throughput barrels

19.1



14.7



72.5



70.5


Refining Margin per crude oil throughput barrel

$

8.49



$

7.16



$

9.27



$

14.45






Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Refining Margin adjusted for FIFO impact

$

139.5



$

132.1



$

620.0



$

1,078.6


Divided by: crude oil throughput barrels

19.1



14.7



72.5



70.5


Refining Margin adjusted for FIFO impact per crude oil throughput barrel

$

7.32



$

8.96



$

8.55



$

15.31


 

Coffeyville Refinery









Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Total crude oil throughput barrels per day

132,351



77,224



124,169



113,305


Days in the period

92



92



366



365


Total crude oil throughput barrels

12,176,292



7,104,608



45,445,854



41,356,325






Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Refining Margin

$

104.1



$

32.1



$

435.0



$

594.5


Divided by: crude oil throughput barrels

12.2



7.1



45.4



41.4


Refining Margin per crude oil throughput barrel

$

8.55



$

4.52



$

9.57



$

14.37






Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Refining Margin adjusted for FIFO impact

$

88.7



$

49.5



$

397.2



$

632.5


Divided by: crude oil throughput barrels

12.2



7.1



45.4



41.4


Refining Margin adjusted for FIFO impact per crude oil throughput barrel

$

7.29



$

6.97



$

8.74



$

15.29


 

Wynnewood Refinery









Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015

Total crude oil throughput barrels per day

75,071



82,915



73,873



79,772


Days in the period

92



92



366



365


Total crude oil throughput barrels

6,906,532



7,628,180



27,037,518



29,116,780




Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Refining Margin

$

56.7



$

72.8



$

232.6



$

420.6


Divided by: crude oil throughput barrels

6.9



7.6



27.0



29.1


Refining Margin per crude oil throughput barrel

$

8.20



$

9.54



$

8.60



$

14.44




Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Refining Margin adjusted for FIFO impact

$

49.7



$

82.0



$

218.4



$

442.9


Divided by: crude oil throughput barrels

6.9



7.6



27.0



29.1


Refining Margin adjusted for FIFO impact per crude oil throughput barrel

$

7.19



$

10.74



$

8.07



$

15.21


Gross profit (loss) excluding flood insurance recovery is calculated as the difference between net sales, cost of materials and other, direct operating expenses (exclusive of depreciation and amortization), major scheduled turnaround expenses and depreciation and amortization. Gross profit (loss) excluding flood insurance recovery per crude oil throughput barrel is calculated as gross profit (loss) excluding flood insurance recovery as derived above divided by our refineries' crude oil throughput volumes for the respective periods presented. Gross profit (loss) excluding flood insurance recovery is a non-GAAP measure that should not be substituted for operating income (loss). Management believes it is important to investors in evaluating our refineries' performance and our ongoing operating results. Our calculation of gross profit (loss) excluding flood insurance recovery may differ from similar calculations of other companies in our industry, thereby limiting its usefulness as a comparative measure. The calculation of gross profit (loss) excluding flood insurance recovery and gross profit (loss) excluding flood insurance recovery per crude oil throughput barrel for the three months and years ended December 31, 2016 and 2015 is as follows:


Consolidated Operating Data









Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions)

Net Sales

$

1,269.4



$

948.3



$

4,431.3



$

5,161.9


Cost of materials and other

1,107.5



842.8



3,759.2



4,143.6


Direct operating expenses (exclusive of depreciation and amortization as reflected below)

94.7



188.7



393.4



478.5


Flood insurance recovery







(27.3)


Depreciation and amortization

32.6



31.5



126.3



128.0


Gross profit (loss)

34.6



(114.7)



152.4



439.1


Flood insurance recovery







(27.3)


Gross profit (loss) excluding flood insurance recovery

$

34.6



$

(114.7)



$

152.4



$

411.8


 



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Gross profit excluding flood insurance recovery

$

34.6



$

(114.7)



$

152.4



$

411.8


Divided by: Crude oil throughput barrels

19.1



14.7



72.5



70.5


Gross profit (loss) excluding flood insurance recovery per crude oil throughput barrel

$

1.81



$

(7.80)



$

2.10



$

5.84


 


Coffeyville Refinery









Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions)

Net Sales

$

854.7



$

522.6



$

2,948.9



$

3,220.6


Cost of materials and other

750.6



490.5



2,513.9



2,626.1


Direct operating expenses (exclusive of depreciation and amortization as reflected below)

52.0



53.5



196.4



209.1


Major schedule turnaround expenses



84.9



31.5



102.2


Flood insurance recovery







(27.3)


Depreciation and amortization

18.4



17.5



69.7



72.1


Gross profit (loss)

33.7



(123.8)



137.4



238.4


Flood insurance recovery







(27.3)


Gross profit (loss) excluding flood insurance recovery

$

33.7



$

(123.8)



$

137.4



$

211.1


 



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions, except for $ per barrel data)

Gross profit (loss) excluding flood insurance recovery

$

33.7



$

(123.8)



$

137.4



$

211.1


Divided by: Crude oil throughput barrels

12.2



7.1



45.4



41.4


Gross profit (loss) excluding flood insurance recovery per crude oil throughput barrel

$

2.76



$

(17.42)



$

3.03



$

5.11


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

A reconciliation of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA for the three months and years ended December 31, 2016 and 2015 is as follows:



Three Months Ended 

 December 31,


Year Ended 

 December 31,


2016


2015


2016


2015


(in millions)

Net income (loss)

$

(10.7)



$

(122.2)



$

15.3



$

291.2


Add:








Interest expense and other financing costs, net of interest income

11.6



10.4



43.3



42.2


Income tax expense








Depreciation and amortization

33.4



32.1



129.0



130.2


EBITDA

34.3



(79.7)



187.6



463.6


Add:








FIFO impact (favorable) unfavorable

(22.4)



26.6



(52.1)



60.3


Share-based compensation, non-cash



0.1





0.6


Major scheduled turnaround expenses



84.9



31.5



102.2


(Gain) loss on derivatives, net

14.6



(23.6)



19.4



28.6


Current period settlements on derivative contracts(1)

1.2



8.1



36.4



(26.0)


Flood insurance recovery(2)







(27.3)


Adjusted EBITDA

$

27.7



$

16.4



$

222.8



$

602.0


_________________________



(1)

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



(2)

Represents an insurance recovery from environmental insurance carriers as a result of the flood and crude oil discharge at the Coffeyville refinery on June/July 2007.

 

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

Available cash begins with Adjusted EBITDA reduced for cash needed for (i) debt service; (ii) reserves for environmental and maintenance capital expenditures; (iii) reserves for major scheduled turnaround expenses and (iv) to the extent applicable, reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate, if any. Available cash for distribution may be increased by the release of previously established cash reserves, if any, and other excess cash, at the discretion of the board of directors of our general partner. Actual distributions are set by the board of directors of our general partner. The board of directors of our general partner may modify our cash distribution policy at any time, and our partnership agreement does not require us to make distributions at all.

A reconciliation of Adjusted EBITDA to Available cash for distribution is as follows:



Three Months Ended 

 December 31, 2016


Year Ended 

 December 31, 2016


(in millions, except per unit data)

Adjusted EBITDA

$

27.7



$

222.8


Adjustments:




Less:




Cash needs for debt service

(10.0)



(40.0)


Reserves for environmental and maintenance capital expenditures

(17.7)



(114.1)


Reserves for major scheduled turnaround expenses



(48.7)


Reserves for future operating needs



(19.7)


Available cash for distribution

$



$

0.3






Available cash for distribution, per unit

$



$


Distribution declared, per unit

$