NEDERLAND, Texas, March 13, 2017 /PRNewswire/ -- OCI Partners
LP, a Delaware limited partnership
(the "Partnership"), announced its results for the three and twelve
months ended December 31, 2016. The
Partnership owns and operates an integrated methanol and ammonia
production facility that is strategically located on the Texas Gulf
Coast near Beaumont.
Summary of Financial Results for the Three Months Ended
December 31, 2016
- Revenues decreased 25% to $66
million compared to $88
million for the same period in 2015
- EBITDA decreased 58% to $16
million compared to $38
million for the same period in 2015
- Net loss of $17 million compared
to net income of $15 million for the
same period in 2015
- EBITDA and net income (loss) margins were 24% and (26)%
respectively, compared to 43% and 17%, respectively, during the
same period in 2015
Summary of Financial Results for the Twelve Months Ended
December 31, 2016
- Revenues decreased 17% to $258
million compared to $309
million for the same period in 2015
- EBITDA decreased 52% to $59
million compared to $123
million for the same period in 2015
- Net loss of $51 million compared
to net income of $52 million for the
same period in 2015
- EBITDA and net income (loss) margins were 23% and (20)%
respectively, compared to 40% and 17%, respectively, during the
same period in 2015
Buyout Offer from OCI N.V.
On December 6, 2016, the
Partnership announced that its board of directors had received a
proposal from OCI N.V. (Euronext: OCI) ("OCI") pursuant to which
OCI would acquire all publicly held common units of OCI Partners in
exchange for OCI N.V. shares. OCI currently owns 79.88% of issued
and outstanding common units of OCI Partners. The proposed
transaction is subject to the negotiation and execution of a
definitive agreement and approval of such definitive agreement and
transactions contemplated thereunder by the board of directors of
OCI N.V., the board of directors of the general partner of OCI
Partners (the "OCIP Board") and a Conflicts Committee, comprising
of independent non-executive members of the OCIP Board, established
by the OCIP Board, and would be subject to customary closing
conditions. There can be no assurance that any such approvals will
be forthcoming, that a definitive agreement will be executed or
that any transaction will materialize.
Distributions
Based on the results of the three months ended December 31, 2016, the Board of Directors of the
general partner of the Partnership has not approved any cash
distribution. The amount of any subsequent quarterly cash
distributions will vary depending on our future earnings as well as
our cash requirements for working capital, capital expenditures,
debt service and other contractual obligations, and reserves for
future operating or capital needs.
Run-Rate Quarterly Distribution Guidance
The decision to forgo our cash distribution for the three months
ended December 31, 2016 reflects an
average realized methanol price of $257 per metric ton, an average realized ammonia
price of $199 per metric ton, and an
average natural gas price of $3.10
per MMBtu.
To assist investors in making the linkage between these prices
and potential future distributions, we provide below a sensitivity
analysis:
- A $0.50 per MMBtu change in
natural gas prices results in an approximately $0.23 impact on annual distributions
- A $10 per metric ton change in
methanol prices results in an approximately $0.10 impact on annual distributions
- A $10 per metric ton change in
ammonia prices results in an approximately $0.04 impact on annual distributions
It is our intention to continue making distributions consistent
with our run-rate guidance, but there can be no assurance we will
be able to do so. In addition to the impact of commodity prices,
our distributions are subject to fluctuations in capacity
utilization, working capital, capital expenditures, debt service
and other contractual obligations, reserves for future operating or
capital needs and other factors, including overall business,
regulatory and financial considerations that may affect the
availability of cash to distribute. Please see "Forward-Looking
Statements" below."
Term B Loan and Revolver Covenant Amendments
On November 30, 2016, OCI Beaumont
LLC ("OCIB"), the Partnership and OCI USA Inc. entered into an amendment to its Term
Loan B Credit Facility ("Term Loan"). The amendment, among other
things, improved the Term Loan's financial covenants. Concurrently,
OCIB agreed to prepay $200 million of
term loans under the Term Loan B Credit Facility with the proceeds
of a borrowing from its parent company OCI N.V. through an
Intercompany Term Facility. The borrowings under the Intercompany
Term Facility are subordinated to the existing Term Loan.
On January 4, 2017, OCIB and the
Partnership entered into an amendment to the Revolving Credit
Agreement with Bank of America, N.A., as administrative agent, and
the other lenders party thereto. The amendment, among other things,
improved the Revolving Credit Agreement's financial covenants,
extended the maturity of the Revolving Credit Facility until
March 31, 2018 and increased the
applicable margin by 1.25% to LIBOR + 4.75%.
OCI Beaumont becomes ISO 9001 and ISO 14001 certified and
achieves Star status in the Voluntary Protection Program of
OSHA
On December 20, 2016, OCI Beaumont
became ISO 9001 and ISO 14001 certified, which are sets of
international standards on quality assurance and environmental
management developed by the International Organization for
Standardization.
On March 1, 2016, OCI Beaumont
also achieved Star status in the Voluntary Protection Program of
the Occupational Safety and Health Administration. The program, in
which companies participate voluntarily, recognizes facilities for
their exemplary safety and health programs.
Statement from President and Chief Executive Officer –
Frank Bakker
"During the fourth quarter, our ammonia and methanol production
units were in operation for 89 days and 83 days generating capacity
utilization rates of 99% and 88%, respectively. This was short of
optimal utilization rates due to a power outage causing unplanned
downtime of approximately 2.5 days in the ammonia production unit
and approximately 4 days in the methanol production unit. We also
took our methanol production unit off-line for approximately 8.5
days in order to change out the bearing of the steam turbine.
Contract and spot methanol prices increased during the quarter,
but ammonia prices continued to decline. Our average realized
methanol price was $257 per metric
ton in the fourth quarter, up 20% from $214 per metric ton in the third quarter. Our
average realized ammonia price was $199 per metric ton in the fourth quarter, down
15% from $235 per metric ton in the
third quarter. Finally, our natural gas price averaged $3.10 per MMBtu during the quarter.
Looking forward, we expect higher first quarter 2017 average
realized prices for both methanol and ammonia as a result of recent
robust increases in contract and spot prices. Weighted average
methanol contract prices increased by 36%, or almost $100 per metric ton during the fourth quarter of
2016, and a further 33% in the beginning of 2017 to reach
$491 per metric ton in March. More
recently, ammonia markets also turned positive, after reaching a
multi-year low in November. Since then, ammonia (Tampa cfr) prices have increased by
$120 to reach $330 per metric ton in March.
Methanol prices are currently benefiting from reduced supply
globally and healthy demand. Recently, various plant outages around
the world and continued natural gas curtailments in Trinidad have tightened global inventories.
Global demand is expected to remain supported by Chinese
Methanol-to-Olefins (MTO) demand. Two new Chinese MTO facilities
started up in December 2016, adding
more than 3 million metric tons of methanol demand, and at least
one other facility is expected to commence operations in 2017.
Ammonia markets turned more bullish at the end of 2016,
supported by widespread supply shortages at key export locations in
Eastern Europe, the Middle East and Trinidad, improved demand from key ammonia
importers and a rebound in prices of some downstream products,
including caprolactam and urea."
|
Volume Weighted
Average Price of
|
Volume Weighted
Average Price of
|
|
Methanol and
Ammonia
|
Natural
Gas
|
|
($ per metric
ton)
|
($ per
MMBtu)
|
|
For Three-Months
Ended December 31,
|
For Three-Months
Ended December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Ammonia
|
199
|
|
378
|
|
3.10
|
|
2.32
|
|
Methanol
|
257
|
|
282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
Capacity
Utilization
|
|
(in '000
tons)
|
Rate %
|
|
For Three-Months
Ended December 31,
|
For Three-Months
Ended December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Ammonia
|
83
|
|
80
|
|
99%
|
|
96%
|
|
Methanol
|
203
|
|
211
|
|
88%
|
|
92%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume Weighted
Average Price of
|
Volume Weighted
Average Price of
|
|
Methanol and
Ammonia
|
Natural
Gas
|
|
($ per metric
ton)
|
($ per
MMBtu)
|
|
For Twelve-Months
Ended December 31,
|
For Twelve-Months
Ended December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Ammonia
|
258
|
|
425
|
|
2.57
|
|
2.73
|
|
Methanol
|
213
|
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
Capacity
Utilization
|
|
(in '000
tons)
|
Rate %
|
|
For Twelve-Months
Ended December 31,
|
For Twelve-Months
Ended December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Ammonia
|
332
|
|
235
|
|
100%
|
|
89%
|
|
Methanol
|
823
|
|
652
|
|
90%
|
|
94%
|
|
Non-GAAP Financial Measure
EBITDA is defined as net income (loss) plus (i) interest
expense and other financing costs, (ii) depreciation expense
and (iii) income tax expense. EBITDA is used as a supplemental
financial measure by management and by external users of our
unaudited financial statements, such as investors and commercial
banks, to assess:
- the financial performance of our assets without regard to
financing methods,
capital structure or historical cost basis; and
- our operating performance and return on invested capital
compared to those of other
publicly traded partnerships, without regard to financing methods
and capital structure.
EBITDA should not be considered as an alternative to net income,
operating income, net cash provided by operating activities or any
other measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA may have material limitations as a
performance measure because it excludes items that are necessary
elements of our costs and operations. In addition, EBITDA presented
by other companies may not be comparable to our presentation
because each company may define EBITDA differently.
EBITDA margin is defined as EBITDA divided by revenues. EBITDA
margin is used as a supplemental financial measure by the
Partnership's management in its analysis of our operating
performance.
The table below reconciles EBITDA to net income, its most
directly comparable financial measure calculated and presented in
accordance with GAAP, for the three and twelve months ended
December 31, 2016 (dollars in
thousands).
|
|
Quarter Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(17,353)
|
|
|
14,507
|
Add:
|
|
|
|
|
|
|
Interest
expense
|
|
|
16,226
|
|
|
8,449
|
Interest expense –
related party
|
|
|
1,532
|
|
|
51
|
Income tax
expense
|
|
|
217
|
|
|
(33)
|
Depreciation
expense
|
|
|
15,297
|
|
|
15,384
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
15,919
|
|
|
38,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve-months
Ended December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(50,553)
|
|
|
52,021
|
Add:
|
|
|
|
|
|
|
Interest
expense
|
|
|
45,096
|
|
|
20,018
|
Interest expense –
related party
|
|
|
1,777
|
|
|
203
|
Income tax
expense
|
|
|
806
|
|
|
613
|
Depreciation
expense
|
|
|
61,441
|
|
|
49,663
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
58,567
|
|
|
122,518
|
|
|
|
|
|
|
|
Conference Call with Management
The Partnership will hold a conference call on March 13, 2017, at 12:00pm
EST, during which the Partnership's senior management will
review the Partnership's financial results for the fourth quarter
ended December 31, 2016 and provide
an update on corporate developments. Callers may listen to the live
presentation, which will be followed by a question and answer
segment, by dialing (816) 287-5664 and entering the conference code
84346892. A replay of the conference call will be made available
until March 27, 2017 and the replay
can be accessed by dialing (855) 859-2056 or (404) 537-3406 and
entering the same conference code 84346892.
About OCI Partners LP
OCI Partners LP (NYSE: OCIP) owns and operates an integrated
methanol and ammonia production facility that is strategically
located on the Texas Gulf Coast near Beaumont. The Partnership is headquartered in
Nederland, Texas and currently has
a methanol production design capacity of 912,500 metric tons per
year and an ammonia production design capacity of 331,000 metric
tons per year.
Notice to Foreign Investors
This release is intended to be a qualified notice to nominees as
provided for under Treasury Regulation Section 1.1446-4(b)(4) and
(d). Please note that 100% of the Partnership's distributions to
foreign investors are attributable to income that is effectively
connected with a United States
trade or business. Accordingly, all of the Partnership's
distributions to foreign investors are subject to federal income
tax withholding at the highest applicable effective tax rate.
Nominees, and not the Partnership, are treated as the withholding
agents responsible for withholding on the distributions received by
them on behalf of foreign investors.
Forward-Looking Statements
This press release contains forward-looking statements.
Statements that are predictive in nature, that depend upon or refer
to future events or conditions or that include the words "believe,"
"expect," "anticipate," "intend," "estimate" and other expressions
that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking
statements. These forward-looking statements involve certain
risks and uncertainties, including, among others, the
following: our business plans may change as the methanol and
ammonia industry and markets warrant; the demand and sales prices
for methanol, ammonia and their derivatives may decrease due to
market, governmental and other factors; we may be unable to obtain
economically priced natural gas and other feedstocks; we may be
unable to successfully implement our business strategies, including
the completion of significant capital programs; the occurrence of
shutdowns (either temporary or permanent) or restarts of existing
methanol and ammonia facilities (including our own facility); the
timing and length of planned and unplanned downtime; and the
occurrence of operating hazards from accidents, fire, severe
weather, floods or other natural disasters. Furthermore, in
connection with OCI's proposal, there can be no assurance that any
discussions that may occur between us and OCI will result in the
entry into of a definitive agreement concerning a transaction or,
if such a definitive agreement is reached, will result in the
consummation of a transaction provided for in such definitive
agreement. For more information concerning factors that could cause
actual results to differ materially from those conveyed in the
forward-looking statements, please refer to the "Risk Factors"
section of the Partnership's most recently filed Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q filed thereafter. The
Partnership undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events, changed circumstances or otherwise,
unless required by law.
Contacts:
Hans
Zayed
Director of Investor Relations
Phone: +1 917-817-5159
hans.zayed@oci.nl
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visit:http://www.prnewswire.com/news-releases/oci-partners-lp-reports-2016-fourth-quarter-results-300422444.html
SOURCE OCI Partners LP