CVR Energy: Refining Down, Fertilizer Up (CVI)

By Douglas A. McIntyre Updated Apr 27, 7:53PM EDT · Published Nov 6, 9:26AM EST

Oil_refinery_image Before the market opened this morning, CVR Energy (NYSE:CVI) released is third quarter earnings. EPS reached $1.16 and revenues totaled $1.58 billion. Analysts expected EPS of $0.75 on revenues of $1.04 billion, so CVR really blew out the doors. Shares are surging pre-market.

But back in June, CVR killed its plan to spin off its fertilizerbusiness as a master limited partnership. In August, stockholderskilled a plan to offer an additional 10 million shares in a secondaryoffering. Yesterday, CVR withdrew plans for a $125 million offering ofconvertible senior notes.

Operating income from CVR’s petroleum refining business was $20.2million in the quarter, compared with $46.5 million from the fertilizerbusiness. The company sees refining as a drag on its overallprofitability, but it can’t seem to find a way to get rid of it.

The company has only around $60 million in cash on hand, even thoughcash flow from operations in third quarter reached $81.5 million. Thatwas enough to cover $42.2 million of investments and financing, but thecompany can’t keep spending at that rate unless it can borrow orincrease its cash flow. Either case may be difficult going forward.

Regardless, shares are treating this as a win. Volume is thin but the stock is up 20% at $6.00 pre-market.

Paul Ausick
November 6, 2008

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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

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A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.