CVR Refining's (CVRR) CEO Jack Lipinski on Q4 2015 Results - Earnings Call Transcript

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CVR Refining, LP (NYSE:CVRR) Q4 2015 Earnings Conference Call February 18, 2016 1:00 PM ET

Executives

Jay Finks - Vice President of Finance

Jack Lipinski - President, Chief Executive Officer

Susan Ball - Chief Financial Officer

Analysts

Neal Matta - Goldman Sachs

Matthew Blair - TPH

Johannes Van Der Tuin - Credit Suisse

Operator

Greetings, and welcome to the CVR Refining Fourth Quarter 2015 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Finks, Vice President of Finance for CVR Refining. Please go ahead, Jay.

Jay Finks

Thank you, Kevin, and good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Refining fourth quarter 2015 earnings call. With me are Jack Lipinski, our Chief Executive Officer, and Susan Ball, our Chief Financial Officer. Prior to discussing our 2015 fourth quarter results, let me remind you that this conference call may contain forward-looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not forward-looking statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words outlook, believes, anticipates, plans and expects and similar expressions are intended to identify 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. 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 reconciliations to the most directly comparable GAAP financial measures, are included in our 2015 fourth quarter earnings release that we filed with the SEC this morning before the opening of the market.

With that said, I’ll turn the call over to Jack Lipinski, our Chief Executive Officer. Jack?

Jack Lipinski

Thank you, Jay, and thank you, everyone, for joining our call. This morning we reported a net loss of $122.2 million in the 2015 fourth quarter. That compares to a net loss of $108.5 million in the fourth quarter of 2014. Our fourth quarter 2015 adjusted EBITDA was $16.4 million and that compares to $104.6 million in the same period a year ago. Operationally, our refineries ran approximately 160,000 barrels a day of crude for the quarter, which was in line with our guidance of 155 to 165. Coffeyville ran approximately 77,000 barrels a day, while Wynnewood ran about 83,000 barrels a day. During the 2015 fourth quarter, we gathered approximately 68,500 barrels a day of crude and that compares to approximately 63,100 barrels a day a year ago.

As I discussed in our last earnings call, we expected a weak fourth quarter. In October, we saw Group 3 cracks in the mid-$20 per barrel range. By the time December rolled around, group cracks fell to seasonal lows just under $10 a barrel. Coffeyville, which is the largest contributor to our earnings, also completed the first days of its bifurcated turnaround. The effects of the turnaround are twofold. The costs we incur are reserved, but the lost earnings while the plant is down is not reserved and results in lower earnings.

During the inspections, we identified a substantial additional mechanical work, which we completed. It added to our cost and time schedule. Overall, the turnaround was nine days longer than scheduled, resulting in approximately $4 million of additional related expenses. Of course, we undertook this work not only for safety and environmental reasons, but also for reliability purposes. As a result of lower realized margins and the impact of the turnaround, it will not be a cash distribution this quarter.

With this, I’ll turn the call over to Susan to talk more about the financials. Susan?

Susan Ball

Thank you, Jack, and good afternoon, everyone. As Jack previously mentioned, in the 2015 fourth quarter our adjusted EBITDA was $16.4 million as compared to $104.6 million in the same quarter of 2014. The decrease was primarily driven by lower realized margins as adjusted for FIFO and the first phase of Coffeyville’s bifurcated turnaround during the quarter. In the fourth quarter of 2015, the more significant adjustments to our net loss of $122.2 million utilized to derive adjusted EBITDA were adjustments related to major scheduled turnaround expenses of approximately $85 million, unfavorable impacts under the first in, first out, or FIFO, inventory accounting method of $26.6 million, and a gain on derivatives not settled during the period of $15.5 million.

Adjusted EBITDA is reduced by certain reserves that are pro rated on a quarterly basis to derive available cash for distribution. These reserves are set aside for future cash needs regarding maintenance and environmental capital expenditures, as well as for major scheduled turnaround expenses. Additionally, adjusted EBITDA is reduced for cash needs associated with debt service and other future operating and capital needs, as may be determined. Available cash for distribution for the fourth quarter was a negative $3.7 million. Included in the calculation of available cash for the fourth quarter was the release of a reserve previously established during the 2015 third quarter of 30 million. As we have said in the past, we are a variable distribution master limited partnership. As a result, our quarterly distributions, if any will vary from quarter to quarter due to several factors.

In the fourth quarter 2015, our total realized refining margin, adjusted for FIFO, was 132.1 million or $8.96 per barrel as compared to 203.6 million, or $11.28 per barrel in the same quarter of 2014. This decrease is primarily driven by lower Group 3 crack spreads and the impact of the first phase of Coffeyville's turnaround. Partially offsetting these decreases were slightly lower RINs expense and a higher consumed crude discount to WTI. The NYMEX 2-1-1 crack spread averaged $14 per barrel in the fourth quarter of 2015 as compared to $16.97 per barrel in the fourth quarter of 2014. The PADD II Group 3 2-1-1 product basis averaged a negative $0.09 per barrel as compared to a positive $0.30 per barrel in the 2014 fourth quarter. The PADD II Group 3 2-1-1 crack spread averaged $13.91 per barrel in the 2015 fourth quarter as compared to $17.27 in the same period of 2014.

Our consumed crude oil discount to WTI for the 2015 fourth quarter was $0.20 per barrel as compared to a premium of $1.69 per barrel in 2014. Our fourth-quarter 2015 RINs expense was 30.5 million as compared to 44.9 million in the fourth quarter of 2014. The Coffeyville refinery reported a refining margin, adjusted for FIFO impact, of 49.5 million in the fourth quarter 2015, or $6.97 per crude throughput barrel, as compared to 139.7 million, or $11.97 per crude throughput barrel in 2014. The decrease was primarily associated, again with the impacts of the first phase of the turnaround during the 2015 fourth quarter.

In the fourth quarter of 2015, the Wynnewood refinery reported a refining margin, adjusted for FIFO impact, of $82 million, or $10.74 per crude throughput barrel, as compared to 63.2 million, or $9.92 per crude throughput barrel in the fourth quarter of 2014. The increase in the fourth quarter of 2015 was primarily due to Wynnewood running at reduced rates during the 2014 fourth quarter due to the planned downtime associated with the hydro cracker and unplanned downtime with respect to the SEC unit. Consolidated direct operating expenses, excluding turnaround expense, were $7.04 per barrel of crude oil throughput in the fourth quarter of 2015 as compared to $6.19 in the fourth quarter of 2014. The increase on a per-barrel basis was primarily associated with the lower crude throughput in the fourth quarter of 2015 due to the first phase of Coffeyville's turnaround.

At the refinery level, Coffeyville's direct operating expenses, excluding turnaround expense were $7.53 per barrel of crude throughput in the fourth quarter of 2015 as compared to $4.66 per barrel in the 2014 fourth quarter. Wynnewood's direct operating expenses, excluding turnaround expense were $6.44 per barrel of crude oil throughput for the fourth quarter of 2015 as compared to $8.96 per barrel in the fourth quarter of 2014. Again, the decrease here was primarily associated with lower repairs and maintenance expenses in connection with the downtime of the SEC unit and the hydro cracker during the fourth quarter of 2014, as well as lower energy and utility costs and higher crude throughput in the fourth quarter of 2015.

We ended the 2015 fourth quarter with cash and cash equivalents of $187.3 million and had availability under the ABL facility of just over $290 million. Our total long-term debt outstanding, including the current portion, was approximately 580 million. This was comprised of 500 million of our 6.5% unsecured notes, approximately 48.5 million of capital leases, and 31.5 million drawn against the inter-Company revolver provided by our parent, CVR Energy. As a reminder, the revolver was put in place to fund profit and growth capital expenditures. At December 31, 2015, we had availability under the parent revolver of 218.5 million.

Fourth-quarter 2015 capital expenditures totaled approximately $71 million. Of the total capital expenditures in the fourth quarter, 36.7 million was related to maintenance and environmental capital, and 34.4 million was related to growth capital. In 2016, we estimate total capital spending will approximate $200 million, of which 120 million is estimated to be environmental and maintenance capital, with the remaining being growth capital, primarily associated with the hydrogen plant project at Coffeyville.

With that, Jack, I will turn the call back over to you.

Jack Lipinski

Thank you, Susan. Let me spend a little bit of time looking at the first quarter. January was, sorry, January’s Group 3 crack spreads were softer than those we saw in December and in February, cracks continue to deteriorate even further and hit a low on February 9th before rebounding. This first quarter is reminiscent of annual shoulder margin seasons when the refiners in the mid-continent realized lower margins in the winter months. The last couple of years have not been consistent with this historical pattern. In addition, geo-political issues continue to impact crude and product pricing, as worldwide crude production out paces global demand.

The markets are struggling to find normalcy. Given the relative weakness in margins, we have elected to begin the second phase of Coffeyville’s turnaround one week early. It will be coming down this weekend. We expect the turnaround to last 30 to 35 days and cost approximately $35 million to $38 million. Because of higher product inventories and the low margin on incremental barrels, we have trimmed crude rates at our Wynnewood refinery by 8,000 to 10,000 barrels a day, but we do look at this on a daily basis. So with margins rebounding, this may or may not stack. If you were to look at the inventories in our product system, on gasoline, we’re roughly 1.2 million barrels higher than we were a year ago, and distillate is about 300,000 to 400,000 lower than a year ago. And these are historically high numbers.

So if you look at the EIAs that came out today, crude built about 2 million barrels, but gasoline continued as incessant built and built another 3 million barrels. We are building products in the United States at a very, very high rate. So as a result of the turnaround activities at Coffeyville and lower crude rates at Wynnewood, we estimate our total crude throughputs to the first quarter to range between 170,000 and 180,000 barrels a day for both refineries. Please recall that our margin capture will be affected by this turnaround.

Operator, we’re ready for questions.

Question-and-Answer Session

Operator

Thank you. I’ll be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Neal Matta from Goldman Sachs. Please proceed with your question.

Neal Matta

Jack, wanted your perspective on some of these crude differentials and also the product market in the mid-con. You’ve always been very helpful in terms of sharing your outlook for both of them. Does look like Cushing is starting to build a little bit here. Can you see these spreads widening out and with the crude export ban, how wide could they go? And then on the product side, can you help us make sense of the level of inventory builds we’re seeing, particularly in gasoline and how that jives with the, how you see it going forward?

Jack Lipinski

Okay. Well I’ll take this in pieces. First, I think the crude export ban is not a major impacter in today’s market. I mean, if you take a look where Brent TI is, truly Brent is running a little bit but as Brent and TI come together, the economics of moving crude to somewhere else on the planet just doesn’t seem to make a whole lot of sense. And there’s a lot of ways of getting crude to the Gulf Coast, not necessarily through Cushing. And we are forecasting to see wider contango and we’re benefiting from it right now. I didn’t mention that in my remarks and I probably should have. But right now, the front to back is over $2, so that just gets added to our margin, if you would.

I, and now let me just jump to products. I think what we saw for the last several weeks or maybe a little longer, there is a, there is a push for a Middle East producers to get market share. As a result, they have priced their mid sours and heavy sours into the Gulf very attractively. I think that’s one of the reasons we’ve seen large crude builds, because Gulf Coast refiners will import those barrels because they are more profitable. Hence, during the shoulder months when refiners would typically cut back runs, runs were at extraordinarily high levels. Well, crude goes into a refinery and products come out and if you have a situation, particularly in December, January, February when demand is down, you’re going to build inventory.

Now, we’ve seen people talk about run cuts. We’ve done a little at Wynnewood. It’s really a marginal cut, just for reasons, just that it doesn’t make sense to process something when you’re not making anything on it, and why feed the inventory. But others are cutting rates and moving turnarounds up and the like and we would expect over time this inventory overhang to decline, to come out. And we’ve also seen recently that pricing in the Gulf Coast is back to more normal levels, where Mars is starting to pick up its head and get a little bit more pricey because there’s less competition in the gulf. So maybe, maybe with a little luck we’ll see some reduced runs or higher turnaround, people moving into turnarounds and eat up some of this glut by the end of this first quarter and through the second quarter.

Neal Matta

All right. Thanks, Jack. And then on the distribution, this was a quarter where you didn't pay a distribution. Was there a thought of at least providing a nominal distribution, or do you think this more is formulaic? Then as you go into the first quarter, given that you're going to be taking turnaround, is there a risk, especially given your comments that January was softer than December, there a risk that there is no distribution in the first quarter?

Jack Lipinski

We don't forecast those, Neal. I mean, margins can turn rapidly and turn everything around. And obviously, because of our particular situation, Coffeyville is our money maker. I mean, it -- and when Coffeyville's in turnaround, our margin capture is lower. If I could forecast what the second half of this quarter would be like, I could answer you, but I'm not willing to do that.

Neal Matta

Okay. Very good. Jack, one last one for me was that can you just speak to the RINs and your thoughts in terms of how it's going to play out over the course of the year? And then also the economic impact you see for the Company relative to what you saw in the fourth quarter.

Jack Lipinski

Well, obviously RINs are higher priced this year. We're thinking it's going to be somewhere between $140 million and $190 million with RINs priced between $0.60 and $0.80. We're somewhat disappointed in what EPA came out with. What makes no sense about this program entirely is you go back a couple weeks ago when gasoline was selling for $0.65 in Chicago and ethanol was $1.35. I mean, I'm not sure how many people in the House and Senate realize the impact on the consumer for this program. But it's certainly an issue for anyone who has to buy RINs.

Operator

Thank you. Our next question today is coming from Matthew Blair from TPH. Please proceed with your question.

Matthew Blair

Jack, on light heavy crude differentials, I was hoping you could give your outlook here going forward, given that U.S. production looks like it's rolling over a little bit. Canadian production looks like it's actually holding in pretty nicely. And then specifically in regards to Coffeyville, it looks like the heavy crude slate at Coffeyville was down a little bit this year down to about 12%. And that compares to previous years when it was closer to 14% to 17%. If the economics dictate it, could you ramp Coffeyville back up to that 14% to 17% heavy crude range, or are there any constraints that we should be aware of?

Jack Lipinski

No, no. As a matter of fact, we don't go into a whole lot of detail, but about two or three weeks ago we actually trimmed Coffeyville from its running in the low 130s down into the high 120s to run more heavy sour. At those levels, we're running probably close to 20,000 barrels a day. And we do make those adjustments periodically. So one of the reasons why you saw lower heavy runs was we were in turnaround. If we run the heavies during turnaround, we end up having to build higher stocks of gas, oil and coker feed. We did shift our crude slates to be lighter during the turn-around period. Again, that goes back to my margin capture discussions. What we are starting to see a little bit is we are starting to see a little -- there is heavy Canadian continuing to come on, but we're also seeing certain producers trimming back on their steam plugs a little bit, lowering their production and that's led to a slight tightening of the differential. I mean, we were -- we're about $12.50 today and we were $14.50, almost $15 a few weeks ago. So it's starting to tighten a little bit.

As long as we have an oil war, crude differentials is going to be anybody's guess because it depends who fights for market share, who can do what. I do agree with you, we're going to start seeing some downturn in U.S. production, but I think it's a mistake to underestimate the resiliency in the shale oil producers. I firmly believe if oil prices do pick their heads up into the high 40s, mid to high 40s, you're going to see people taking their ducks, their drilled, unconverted wells and completing them, and there's thousands of them out there. My view of the world is, we have a longer, lower view, but what we want is normalcy. We want things to fall back to their normal patterns and discounts and differentials and right now, nobody can count on any of that.

Matthew Blair

Very helpful. Thanks, Jack. We've also noticed some that midstream companies have commented that their customers aren't meeting take-or-pay shipping commitments. We were curious if this might open up some opportunities for CVRR. Would you look to increase your pipeline commitments in this environment? Or are you pretty set with what you have now on, I think, it's Keystone and Pony Express and Spearhead and a few others.

Jack Lipinski

Right. Well, right now, we're not -- actually, I would not take on a long-term commitment. The fact that there's plenty of space -- and now you got me started. I'm going to talk about the midstream. Okay. Midstream was trailing, the pipelines in the U.S. were trailing U.S. production for two or three years, which led to somewhat of the big blowout between Brent and WTI. And then as the shale revolution took hold, people took commitments, drillers were out there, E&Ps were out there saying I’m going to drill, I’m going to produce 100,000, 200,000, 300,000 barrels a day in these fields. And the next thing you know is, you have a number of pipelines, a lot of pipelines that are now built that will never see capacity because they were being built for not the time when the U.S. was producing 10 million barrels a day, but 11 million or 12 million.

So the midstream guys are now under a lot of pressure for twofold. One, they have the counter party credit risk of their E&P parties. And secondly, there’s plenty of capacity. So it’s a long way of saying I think there’s plenty of spot capacity on any pipe that we would want to play on, and it gives us the optionality to lock it up if we see something different. But for us, the biggest plays in our future are the stack and the scoop. We think they are going to be prolific. They will be produced, and they will be produced at lower breakevens than many of the other plays.

To recap what we have on space, we have nominally 40,000 barrels a day on the basin pipeline out of the Permian Basin. We have 25,000 on Keystone, 10,000 on Spearhead, and nominally, 76, 7,000 barrels a day between Pony Express and White Cliffs. And then the rest of that is our pipelines. Our goal ultimately will be to displace WTI and Cushing with gathered barrels, but with drilling slowing down, our gathering business is going somewhat flat. That’s a long winded answer. I’m sorry.

Operator

Thank you. Our next question today is coming from Johannes Van Der Tuin from Credit Suisse. Please proceed with your question.

Johannes Van Der Tuin

Hi. Great to hear from you all. I’m going to play a little cleanup and touch on some things you’ve already answered, but I wanted to drill down here and there. For the gasoline builds that are happening this winter so far, do you think these are the sorts of builds that are winter grade gasoline or what do you think the molecules actually are and how does that kind of cascade into the summer in your view?

Jack Lipinski

Well, I think anybody that built it two months ago, six weeks ago is winter grade. Anybody that’s building it today has got to have an eye toward the vapor pressure change that’s clearly upon us. So if anybody has winter grade gasoline in there, it’s going to cause some problems in that it’s going to stay there until somebody can move some lower RVP material to blend it off.

Johannes Van Der Tuin

Okay. Do you think then there is a possibility, depending on what happens with builds next week and the week after and next few coming weeks, really, as to what the eye on summer grade gasoline will be? Or do you think that’s not as relevant?

Jack Lipinski

I think demand is going to drive the cleanup. I mean, gasoline prices are still incredibly low. We have crude oil in the low-30s. This will clean itself up. It always does. You’re talking to somebody who’s been in this business now almost 44 years and I don’t know how many cycles I’ve seen. It always looks worse at this time of year and then there’s something that will clean it up. You’ll have a couple of refineries that will have some issues. You’ll have perhaps, Europe has been running very, very hard here of late. Their margins, because of fight for market share, European margins last year, maybe over the last year, maybe even a little longer, have been wider than historical. Everybody was giving, saying they were going to die, but they got a reprieve last year. Not much of a reprieve, but still they were running, year-over-year, almost 1 million barrels a day higher in Europe than they had been. So when you start looking at worldwide dynamics, you have Europe producing more, you have Russia exporting more, you have the Saudis exporting more product, and then it’s just a fight for market share, whether it’s crude or whether it’s products. And I think low prices in the U.S. will ultimately drive our demand and clean this up.

Johannes Van Der Tuin

Okay. And then on the gathering side, you had mentioned kind of volumes look a bit flat. I was wondering if, for your own kind of planning purposes, how long do you think they will remain that way? I know that will link back into your crude price outlook, but what are you seeing on the ground and what are you trying to prepare for?

Jack Lipinski

Well, honestly, we, for our budget, we actually kind of forecast a slow year, because if you look at the huge geography of what we gather in, you have everything from Nebraska to Texas and Colorado to Missouri. And it runs across conventional fields, it runs across stripper wells, it runs across shale. A lot of it has to do with what are the E&P budgets going to be, when is someone going to drill some more wells. But what we’re seeing in general is the stripper well production is falling off. Not necessarily the other productions. So a stripper well, if you’re really not familiar, these things produce one, two, three barrels a day, but they produce a lot of water. So when the cost of the water disposal gets high and the value you get through your crude, you shut them in and maybe you start them back up again when prices come back up. But we’ve seen some of the older stripper production, particularly in Kansas, fall off, but it's being made up with volumes in the Front Range of the Rockies and the scoop and the stack. So our goal this year is to hold steady and be prepared for the next turn.

Johannes Van Der Tuin

That makes sense. And then kind of the last question I have is about Coffeyville. Coming out of the turnaround on the other end, do you foresee any changes either on crude slate or product yields, higher or lower runs than normal? What sort of benefits are going to be imparted on the refinery as a consequence of our spend?

Jack Lipinski

Well, we did spend a fair bit of capital at Coffeyville during the turnaround and some more is being spent right now. Some of these are yield projects. Some of these are efficiency projects. We do have our hydrogen plant under construction, which will be coming up at the end of the second quarter. That will help our yield. We've seen -- we're just in the process of doing a -- or just finished a test run on the cat cracker where we spent a number of millions of dollars on air grids and injectors and equipment and the results we were expecting we achieved. With a little bit of luck, yes, our yields and our capture will be better post-turnaround.

Johannes Van Der Tuin

Okay. Thank you very much.

Operator

Thank you. Our next question is coming from Matthew Blair from TPH. Please proceed with your question.

Matthew Blair

Hey Jack, have you noticed an improvement in the M&A picture, given the pullback we've had just in the beginning of 2016? Are you seeing any more assets on the markets, either in refining or midstream?

Jack Lipinski

Refining has been quiet. Midstream, we're always looking. There is going to be players out there who have bet on the take-or-pay type of business or a play in the general market that when crude comes out of the ground, they will be there to take it, who are suffering right now. As I've always said, we have the resources through CVR Energy or through the fact that we're associated with Icon Enterprises. We're doing deals. We're constantly looking. We're sharpening our pencils. We're looking more and more. We announced a deal with Velocity to build a pipeline. We will build a pipeline. We're just trying to see right now where this shakes out rather than to drive lines just in the ground just to get there first. It doesn't make a whole lot of sense. But ultimately, we will be supplying Wynnewood directly from those fields.

So yes, M&A is looking -- there's going to be more on the market on what I would call the MLP space, the midstream space. Refineries, I would love to see another refinery coming up but right now I don't see very much. I mean, everybody is kind of just slogging through all the -- we're knee-deep in gasoline in this country and everybody is kind of slogging their way through this.

Matthew Blair

Right, right and then I guess this is a question maybe for Susan, but could you talk about your philosophy on holding back distributable cash? I guess number one, why did you allocate the full $30 million release to Q4, even though the distribution still turned out to be zero? Why not wait till a later period when returning the hold back would have actually benefited unit holders? And then two, going forward, should we expect these kinds of hold backs if there is turnaround activity, or would you think about doing it just on the seasonal basis, holding back some excess cash in the summer months to cushion the lower earnings in the winter months?

Jack Lipinski

I'll answer that for Susan. We decided to do a hold back because, number one, we knew we were going into turnarounds. We secondly, did not expect margins to fall as hard as they did. And once something is in a reserve, we have plenty of reserves as you could see from our balance sheet. We just decided to release them right now. There was about a $3.6 million shortfall, which we're just going to take out of our cash reserves and just call it even that there was no distribution. I mean, yes. I mean, there's different ways you could play it, but what we do is we try to focus on our reserves. We are very clear. We are a variable distribution MLP. Our distributions will be lumpy, but we have two very good refineries and I would like to think a decent management team to run it and the ride is a little more of a roller coaster than a standard MLP.

Operator

Thank you. Our next question is a follow-up from Neil Matta from Goldman Sachs. Please proceed with your question.

Neal Matta

Jack, I just wanted to follow up on that last point on the variable rate structure. You and I have talked about this in the past, but obviously with NTI going through some changes and ALDW, we'll see what happens there, but potential for consolidation. You'll be a unique animal as CVR is a variable rate MLP. Is that something you continue to believe in as the right structure to extract value and to represent the fullest value for the Company? Or does a C corp make sense? How do you just think about the right structure to get the most value for your shareholders?

Jack Lipinski

Well, if you think about it simply from shareholders, if you set up your reserves and run your company on a tight leash so that you generate as much profit as you can and then you turn that profit over to your unit holders, that has been our goal all along. We think it’s a very efficient way of doing it. Obviously, you could see when you go into turnaround or you have a really slack period, it gets lumpy. But we still believe we will return more to our unit holders than any other model.

Operator

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to Management for any further or closing comments.

Jay Finks

Thank you, Kevin. I would like to thank everyone for listening to our conference call today. As a reminder, our conference call will be available for replay over the next 14 days. Please visit our website at cvrrefining.com or contact Investor Relations for additional information. Thank you.

Operator

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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