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01/11 11:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a consolidated net loss, negative EBITDA, and a high RFS obligation, indicating financial strain. Despite some positive aspects like increased fertilizer segment EBITDA and cash flow, the Q&A highlights uncertainties, vague guidance, and potential legal challenges. The lack of clear dividend plans and the focus on debt reduction further dampen sentiment. Given the market cap of approximately $2.68 billion, the negative factors are likely to outweigh the positives, leading to a stock price movement in the negative range of -2% to -8% over the next two weeks.
Consolidated Net Loss $90 million for Q2 2025, compared to a profit in the prior year. The loss was driven by an unfavorable mark-to-market impact of $89 million on the RFS obligation, an unfavorable inventory valuation impact of $32 million, and unrealized derivative losses of $2 million.
EBITDA A loss of $24 million for Q2 2025, compared to a positive EBITDA in the prior year. The loss was due to increased RIN prices, lower throughput volumes, and other unfavorable impacts.
Adjusted EBITDA $99 million for Q2 2025, compared to a lower figure in the prior year. The adjustment excludes the negative impacts of RFS obligation, inventory valuation, and derivative losses.
Petroleum Segment Adjusted EBITDA $38 million for Q2 2025, slightly higher than the prior year. This was driven by increased Group 3 crack spreads but offset by higher RIN prices and lower throughput volumes.
Renewable Segment Adjusted EBITDA A loss of $4 million for Q2 2025, compared to a loss of $2 million in Q2 2024. The decline was due to higher soybean oil prices, lower diesel prices, and the loss of the Blenders' Tax Credit.
Fertilizer Segment Adjusted EBITDA $67 million for Q2 2025, higher than the prior year. The increase was driven by higher UAN and ammonia sales pricing and volumes.
Cash Flow from Operations $176 million for Q2 2025, compared to a lower figure in the prior year. The increase was partially due to crude oil and feedstock inventory draws following the Coffeyville turnaround.
Free Cash Flow A use of $12 million for Q2 2025, driven by $189 million of capital and turnaround spending, a $70 million prepayment on the term loan, and other cash uses.
Capital Spending $36 million for Q2 2025, including $23 million in the Petroleum segment, $10 million in the Fertilizer segment, and $2 million in the Renewable segment.
Turnaround Spending $24 million for Q2 2025, related to planned maintenance activities.
Consolidated Cash Balance $596 million as of June 30, 2025, including $114 million in the Fertilizer segment.
Total Liquidity $759 million as of June 30, 2025, including $482 million of cash and $277 million of availability under the ABL facility.
Renewable Diesel Production: Processed approximately 14 million gallons of vegetable fuel oil in the Renewable Diesel Unit at Wynnewood during Q2 2025. However, unplanned downtime in May impacted production. Gross margin was $0.38 per gallon, down from $0.43 per gallon in Q2 2024.
Alkylation Project: The alkylation project at Wynnewood is 40% complete and expected to come online in 2027. This project aims to increase premium gasoline production.
Refined Product Demand: Refined product demand in the U.S. remained steady, with gasoline and diesel demand in line with 2021-2024 averages. Premium gasoline pricing in Group 3 is strong, benefiting the company's system.
Fertilizer Demand: Strong demand for nitrogen fertilizer due to a 4% increase in corn acres planted over 2024 levels. Tight supply and robust demand are supporting pricing.
Turnaround Activities: Completed planned turnaround at Coffeyville in April 2025, resuming full operating rates in July. No additional turnarounds planned for 2025 and 2026.
Financial Performance: Reported a consolidated net loss of $90 million for Q2 2025, with adjusted EBITDA of $99 million after excluding certain impacts. Cash flow from operations was $176 million, and free cash flow was a use of $12 million.
Deleveraging Strategy: Paid down $90 million of principal on the term loan between Q2 and Q3 2025 as part of a deleveraging strategy.
Renewable Business Strategy: The company is cautious about further investments in renewables without government assurances. It plans to remain in renewable diesel production while awaiting clarity on credits and regulations.
Financial Performance: The company reported a consolidated net loss of $90 million and a loss per share of $1.14 for Q2 2025. EBITDA was a loss of $24 million, impacted by unfavorable mark-to-market effects on RIN obligations and reduced throughput following a planned turnaround.
Regulatory Challenges: The company faces significant regulatory hurdles related to the Renewable Fuel Standard (RFS). The Supreme Court ruling on venue for challenges to EPA's denial of small refinery exemptions adds uncertainty. The company is awaiting EPA's decision on 2024 SRE applications and has filed its 2025 SRE petition, with delays in regulatory clarity impacting operations.
Renewable Diesel Segment: The Renewable Diesel Unit at Wynnewood experienced unplanned downtime in May, leading to reduced throughput. Additionally, the loss of the Blenders' Tax Credit and increased soybean oil prices negatively impacted margins. The company awaits IRS regulations to claim retroactive credits.
Fertilizer Segment: Planned and unplanned downtime at facilities resulted in an ammonia utilization rate of 91%. While demand for nitrogen fertilizer remains strong, operational disruptions could impact future performance.
RIN Prices: Average RIN prices increased by over 70% year-over-year, significantly impacting costs. On a per-barrel basis, RINs accounted for more than 25% of the Group 3 2-1-1 crack spread for the quarter.
Inventory and Throughput Challenges: Reduced throughput volumes and unfavorable inventory valuation adjustments negatively impacted financial performance. Timing of product sales and expensive feedstocks during high crack spread periods further reduced margins.
Debt and Liquidity: The company has a high estimated accrued RFS obligation of $548 million and continues to focus on deleveraging. While it has made progress in reducing term loan principal, financial flexibility remains constrained.
Refining Segment Outlook: The company expects no additional turnarounds in the Refining segment for the remainder of 2025 and 2026, with the next planned turnaround at Wynnewood scheduled for 2027. Total throughputs for the third quarter of 2025 are estimated to be approximately 200,000 to 215,000 barrels per day. Direct operating expenses are projected to range between $105 million and $115 million, with total capital spending between $25 million and $30 million.
Renewables Segment Outlook: The company plans to process approximately 16 million to 20 million gallons in the third quarter of 2025. Direct operating expenses are expected to range between $8 million and $10 million, with total capital spending between $1 million and $3 million. The company remains cautious about further investments in the renewable space without additional government assurances.
Fertilizer Segment Outlook: Ammonia utilization rate for the third quarter of 2025 is estimated to be between 93% and 98%, with some planned downtime at East Dubuque for control system upgrades. Direct operating expenses are projected to be between $60 million and $65 million, with total capital spending between $20 million and $25 million. The company anticipates strong demand for nitrogen fertilizer due to increased corn planting and tight supply globally.
Capital Spending and Financial Strategy: For the full year 2025, total consolidated capital spending is estimated to be approximately $165 million to $200 million, with turnaround spending projected at approximately $190 million. The company is focused on deleveraging its balance sheet, having paid down $90 million of principal on the term loan between the second and third quarters.
Market Trends and Strategic Projects: The company is optimistic about the refining sector's near- and medium-term outlook due to low refined product inventories and steady demand. The alkylation project at Wynnewood, expected to come online in 2027, aims to increase premium gasoline production. The company is also revamping tankage and pipelines to produce jet fuel at Coffeyville. In the Fertilizer segment, tight supply and strong demand are expected to support pricing.
The selected topic was not discussed during the call.
The earnings call summary reveals strong financial performance with significant net income and EPS growth, driven by market conditions and exemptions. Despite some challenges in the renewables segment, the company shows optimism in refining and fertilizer sectors. The Q&A session hints at cautious optimism, with plans to leverage existing assets and manage obligations. No negative surprises were noted. Given the company's market cap, this positive sentiment is likely to lead to a stock price increase of 2% to 8% over the next two weeks.
The earnings call reveals a consolidated net loss, negative EBITDA, and a high RFS obligation, indicating financial strain. Despite some positive aspects like increased fertilizer segment EBITDA and cash flow, the Q&A highlights uncertainties, vague guidance, and potential legal challenges. The lack of clear dividend plans and the focus on debt reduction further dampen sentiment. Given the market cap of approximately $2.68 billion, the negative factors are likely to outweigh the positives, leading to a stock price movement in the negative range of -2% to -8% over the next two weeks.
The earnings report indicates several financial challenges, including significant losses, high operating expenses, and negative EBITDA in key segments. Despite some positive news in renewables, the Q&A reveals concerns about market volatility, slow demand, and unclear guidance on renewables. The management's evasive responses further undermine confidence. Given the market cap, these factors suggest a negative stock price movement of -2% to -8% over the next two weeks.
The earnings call reveals a significant net loss, widening losses per share, and increased operating expenses, indicating financial struggles. Despite some positive aspects like improved adjusted EBITDA in renewables and fertilizers, the overall sentiment is negative due to operational challenges and lack of shareholder return plans. The Q&A highlights uncertainties, such as poor execution of turnaround and reliance on government credits for renewables, further dampening sentiment. Given the market cap of $2.67 billion, the stock is likely to experience a negative reaction, potentially between -2% to -8%.
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