CVR Partners, LP (NYSE:UAN), a manufacturer of ammonia and urea
ammonium nitrate (UAN) solution fertilizer products, today
announced a first quarter 2018 net loss of $19 million, or 17 cents
per common unit, on net sales of $80 million, compared to a net
loss of $10 million, or 9 cents per common unit, on net sales of
$85 million for the first quarter a year earlier. Adjusted EBITDA,
a non-GAAP financial measure, was $13 million for the first quarter
of 2018, compared to adjusted EBITDA of $21 million for the first
quarter of 2017.
“Our Coffeyville fertilizer plant performed extremely well
during the 2018 first quarter, posting on-stream rates of 100
percent for gasification, 99.8 percent for ammonia and 99.2 percent
for UAN,” said Mark Pytosh, chief executive officer. “Operations at
our East Dubuque plant were interrupted by 12 days of unplanned
downtime related to a boiler feed water coil leak.
“While late snowfall and lingering winter temperatures delayed
the start of the spring planting season, we continue to anticipate
a strong application period with solid demand driven by lower than
normal customer inventory levels and an estimated 88 million
planted corn acres.”
Consolidated Operations
For the first quarter of 2018, consolidated average realized
gate prices for UAN and ammonia were $153 per ton and $322 per ton,
respectively. Consolidated average realized gate prices for UAN and
ammonia were $160 per ton and $308 per ton, respectively, for the
same period in 2017.
CVR Partners’ fertilizer facilities produced a combined 199,000
tons of ammonia during the first quarter of 2018, of which 59,000
net tons were available for sale while the rest was upgraded to
other fertilizer products, including 339,000 tons of UAN. In the
2017 first quarter, the fertilizer facilities produced 219,000 tons
of ammonia, of which 80,000 net tons were available for sale while
the remainder was upgraded to other fertilizer products, including
342,000 tons of UAN.
Distributions
CVR Partners will not pay a cash distribution for the 2018 first
quarter. CVR Partners 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 received for its finished products, maintenance capital
expenditures, and cash reserves deemed necessary or appropriate by
the board of directors of its general partner.
First Quarter 2018 Earnings Conference Call
CVR Partners previously announced that it will host its 2018
first quarter Earnings Conference Call for analysts and investors
on Thursday, April 26, at 11 a.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 athttps://edge.media-server.com/m6/p/ep8okq85. For
investors or analysts who want to participate during the call, the
dial-in number is (877) 407-8029.
For those unable to listen live, the webcast will be archived
and available for 14 days
athttps://edge.media-server.com/m6/p/ep8okq85. A repeat of the
conference call can be accessed by dialing (877) 660-6853,
conference ID 13678610.
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 Partners’
distributions to foreign investors are attributable to income that
is effectively connected with a United States trade or business.
Accordingly, CVR Partners’ distributions to foreign investors are
subject to federal income tax withholding at the highest effective
tax rate.
Forward-Looking StatementsThis 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 Partners 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 Partners, LPHeadquartered in Sugar
Land, Texas, CVR Partners, LP is a Delaware limited partnership
focused on the production, marketing and distribution of nitrogen
fertilizer products. It primarily produces urea ammonium nitrate
(UAN) and ammonia, which are predominantly used by farmers to
improve the yield and quality of their crops. CVR Partners’
Coffeyville, Kansas, nitrogen fertilizer manufacturing facility
includes a 1,300 ton-per-day ammonia unit, a 3,000 ton-per-day UAN
unit and a dual-train gasifier complex having a capacity of 89
million standard cubic feet per day of hydrogen. CVR Partners’ East
Dubuque, Illinois, nitrogen fertilizer manufacturing facility
includes a 1,075 ton-per-day ammonia unit and a 1,100 ton-per-day
UAN unit.
For further information, please contact:
Investor Contact:
Jay FinksCVR Partners, LP
(281) 207-3588
InvestorRelations@CVRPartners.com
Media Relations:Brandee StephensCVR Partners,
LP(281) 207-3516MediaRelations@CVRPartners.com
CVR Partners, LP
Financial and Operational Data (all
information in this release is unaudited other than the balance
sheet data as of December 31, 2017).
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
|
|
|
|
|
(in millions, except unit
data) |
Consolidated
Statements of Operations Data: |
|
|
|
Net sales (1) |
$ |
79.9 |
|
|
$ |
85.3 |
|
|
|
|
|
Cost of materials and
other - Affiliates |
2.0 |
|
|
2.2 |
|
Cost of materials and
other - Third parties |
20.3 |
|
|
19.6 |
|
Direct operating
expenses - Affiliates (2) |
0.8 |
|
|
0.8 |
|
Direct operating
expenses - Third parties (2) |
38.1 |
|
|
35.1 |
|
Depreciation and
amortization |
16.4 |
|
|
15.4 |
|
Cost of
sales |
77.6 |
|
|
73.1 |
|
Selling, general and
administrative expenses - Affiliates |
3.4 |
|
|
3.9 |
|
Selling, general and
administrative expenses - Third parties |
2.3 |
|
|
3.0 |
|
Operating
income (loss) |
(3.4 |
) |
|
5.3 |
|
Interest expense and
other financing costs |
(15.7 |
) |
|
(15.7 |
) |
Other income, net |
— |
|
|
0.1 |
|
Loss
before income tax expense |
(19.1 |
) |
|
(10.3 |
) |
Income tax expense |
— |
|
|
— |
|
Net
loss |
$ |
(19.1 |
) |
|
$ |
(10.3 |
) |
|
|
|
|
Net loss per common
unit - basic and diluted |
$ |
(0.17 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
Adjusted EBITDA* |
$ |
13.0 |
|
|
$ |
20.8 |
|
Available cash for
distribution* |
$ |
(4.2 |
) |
|
$ |
1.8 |
|
|
|
|
|
Weighted average common
units outstanding - basic and diluted (in thousands) |
113,283 |
|
|
113,283 |
|
________________________________* See "Use of Non-GAAP Financial
Measures" below.
(1) Below are the
components of net sales:
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
|
|
|
|
|
(in millions) |
Reconciliation
to net sales: |
|
|
|
Fertilizer sales net at gate |
$ |
69.3 |
|
|
$ |
76.0 |
|
Freight
in revenue |
8.7 |
|
|
7.1 |
|
Other |
1.9 |
|
|
2.2 |
|
Total net
sales |
$ |
79.9 |
|
|
$ |
85.3 |
|
(2) Direct operating expenses are reflected exclusive
of depreciation and amortization.
|
As of March 31, 2018 |
|
As of December 31, 2017 |
|
|
|
(audited) |
|
(in millions) |
Balance Sheet
Data: |
|
|
|
Cash and cash
equivalents |
$ |
61.1 |
|
|
$ |
49.2 |
|
Working capital |
59.6 |
|
|
62.8 |
|
Total assets |
1,239.5 |
|
|
1,234.3 |
|
Total debt, net of
current portion |
626.6 |
|
|
625.9 |
|
Total partners’
capital |
530.8 |
|
|
549.9 |
|
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
|
|
|
|
|
(in millions) |
Cash Flow
Data: |
|
|
|
Net cash flow provided
by (used in): |
|
|
|
Operating
activities |
$ |
14.5 |
|
|
$ |
30.0 |
|
Investing
activities |
(2.6 |
) |
|
(4.1 |
) |
Net increase in cash
and cash equivalents |
$ |
11.9 |
|
|
$ |
25.9 |
|
|
|
|
|
Capital expenditures
for property, plant and equipment: |
|
|
|
Maintenance capital expenditures |
$ |
2.3 |
|
|
$ |
4.0 |
|
Growth
capital expenditures |
0.4 |
|
|
0.1 |
|
Total capital
expenditures |
$ |
2.7 |
|
|
$ |
4.1 |
|
Operating Data
The following tables set forth information about our
consolidated operations.
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
Key Operating
Statistics: |
|
|
|
|
|
|
|
Consolidated sales
(thousand tons): |
|
|
|
Ammonia |
36.1 |
|
|
61.9 |
|
UAN |
345.3 |
|
|
321.6 |
|
|
|
|
|
Consolidated product
pricing at gate (dollars per ton) (1): |
|
|
|
Ammonia |
$ |
322 |
|
|
$ |
308 |
|
UAN |
$ |
153 |
|
|
$ |
160 |
|
|
|
|
|
Consolidated production
volume (thousand tons): |
|
|
|
Ammonia
(gross produced) (2) |
199.2 |
|
|
219.2 |
|
Ammonia
(net available for sale) (2) |
58.9 |
|
|
80.0 |
|
UAN |
339.3 |
|
|
341.9 |
|
|
|
|
|
Feedstock: |
|
|
|
Petroleum
coke used in production (thousand tons) |
118.2 |
|
|
132.6 |
|
Petroleum
coke used in production (dollars per ton) |
$ |
18 |
|
|
$ |
14 |
|
Natural
gas used in production (thousands of MMBtus) (3) |
1,850.3 |
|
|
2,091.2 |
|
Natural
gas used in production (dollars per MMBtu) (3) (4) |
$ |
3.24 |
|
|
$ |
3.41 |
|
Natural
gas in cost of materials and other (thousands of MMBtus) (3) |
1,257.7 |
|
|
1,476.0 |
|
Natural
gas in cost of materials and other (dollars per MMBtu) (3) (4) |
$ |
3.48 |
|
|
$ |
3.59 |
|
|
|
|
|
Coffeyville Facility
on-stream factors (5): |
|
|
|
Gasification |
100.0 |
% |
|
98.9 |
% |
Ammonia |
99.8 |
% |
|
98.5 |
% |
UAN |
99.2 |
% |
|
96.8 |
% |
|
|
|
|
East Dubuque Facility
on-stream factors (5): |
|
|
|
Ammonia |
86.7 |
% |
|
99.6 |
% |
UAN |
87.0 |
% |
|
98.2 |
% |
|
|
|
|
Market
Indicators: |
|
|
|
Ammonia - Southern
plains (dollars per ton) |
$ |
382 |
|
|
$ |
387 |
|
Ammonia - Corn belt
(dollars per ton) |
$ |
427 |
|
|
$ |
424 |
|
UAN - Corn belt
(dollars per ton) |
$ |
210 |
|
|
$ |
215 |
|
Natural gas NYMEX
(dollars per MMBtu) |
$ |
2.85 |
|
|
$ |
3.06 |
|
______________________________
(1) Product pricing at gate represents net sales less freight
revenue divided by product sales volume in tons and is shown in
order to provide a pricing measure that is comparable across the
fertilizer industry.
(2) Gross tons produced for ammonia represent total ammonia
produced, including ammonia produced that was upgraded into other
fertilizer products. Net tons available for sale represent ammonia
available for sale that was not upgraded into other fertilizer
products.(3) The feedstock natural gas shown above does not include
natural gas used for fuel. The cost of fuel natural gas is included
in direct operating expenses (exclusive of depreciation and
amortization).
(4) The cost per MMBtu excludes derivative activity, when
applicable. The impact of natural gas derivative activity during
the periods presented was not material.
(5) On-stream factor is the total number of hours operated
divided by the total number of hours in the reporting period and is
included as a measure of operating efficiency.
Use of Non-GAAP Financial Measures
To supplement our actual results calculated 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 as an alternative to GAAP results.
EBITDA is defined as net income (loss) before (i) interest
(income) expense, (ii) income tax expense and (iii) depreciation
and amortization expense.
Adjusted EBITDA is defined as EBITDA further adjusted for the
impact of major scheduled turnaround expenses, gain or loss on
extinguishment of debt, loss on disposition of assets, and business
interruption insurance recovery, when applicable.
We present EBITDA because we believe it allows users of our
financial statements, such as investors and analysts, to assess our
financial performance without regard to financing methods, capital
structure or historical cost basis. We present Adjusted
EBITDA because we have found it helpful to consider an operating
measure that excludes amounts, such as major scheduled turnaround
expenses, gain or loss on extinguishment of debt, loss on
disposition of assets, and business interruption insurance
recovery, relating to transactions not reflective of our core
operations. When applicable, each of these amounts is
discussed in the Management’s Discussion and Analysis of Financial
Condition and Results of Operations section of our SEC reports, so
that investors have complete information about these amounts. We
also present Adjusted EBITDA because it is the starting point used
by the board of directors of our general partner when calculating
our 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 flows
from operations. Management believes that EBITDA and Adjusted
EBITDA enable investors and analysts to better understand our
ability to make distributions to common unitholders, help investors
and analysts evaluate our ongoing operating results and allow for
greater transparency in reviewing our overall financial,
operational and economic performance by allowing investors to
evaluate the same information used by management. 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 consolidated Net loss to consolidated EBITDA
and consolidated Adjusted EBITDA is as follows:
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
|
|
|
|
|
(in millions) |
Net loss |
$ |
(19.1 |
) |
|
$ |
(10.3 |
) |
Add: |
|
|
|
Interest
expense and other financing costs, net |
15.7 |
|
|
15.7 |
|
Income
tax expense |
— |
|
|
— |
|
Depreciation and amortization |
16.4 |
|
|
15.4 |
|
EBITDA
and Adjusted EBITDA |
$ |
13.0 |
|
|
$ |
20.8 |
|
Available cash for distribution is not a recognized term under
GAAP. Available cash for distribution should not be considered in
isolation or as an alternative to net income (loss) or operating
income, or any other measure of financial performance or 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
for distribution 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) net cash interest expense (excluding
capitalized interest) and debt service and other contractual
obligations; (ii) maintenance capital expenditures; and
(iii) to the extent applicable, major scheduled turnaround
expenses and reserves for future operating or capital needs that
the board of directors of the general partner deems necessary or
appropriate. Available cash for distribution may be increased by
the release of previously established cash reserves, if any, at the
discretion of the board of directors of our general partner, and
available cash is increased by the business interruption insurance
proceeds. 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 consolidated Adjusted EBITDA to Available
cash for distribution is as follows:
|
Three Months Ended March 31, |
|
2018 |
|
2017 |
|
|
|
|
|
(in millions, except units and per unit
data) |
Adjusted EBITDA |
$ |
13.0 |
|
|
$ |
20.8 |
|
Adjustments: |
|
|
|
Less: |
|
|
|
Net cash interest expense (excluding capitalized interest) and debt
service |
(14.9 |
) |
|
(15.0 |
) |
Maintenance capital expenditures |
(2.3 |
) |
|
(4.0 |
) |
Available cash for distribution |
$ |
(4.2 |
) |
|
$ |
1.8 |
|
Distribution declared, per common unit |
$ |
— |
|
|
$ |
0.02 |
|
Common units outstanding (in thousands) |
113,283 |
|
|
113,283 |
|
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