CVR Partners, LP (“CVR Partners” or the “Partnership”) (NYSE: UAN),
a manufacturer of ammonia and urea ammonium nitrate (“UAN”)
solution fertilizer products, today announced a net loss of $25
million, or $2.37 per common unit, on net sales of $61 million for
the first quarter 2021, compared to a net loss of $21 million, or
$1.83 per common unit, on net sales of $75 million for the first
quarter 2020. EBITDA was $5 million for the first quarter of 2021,
compared to $11 million for the first quarter of 2020.
“During the first quarter 2021, CVR Partners
continued to operate safely and reliably while responding to Winter
Storm Uri, which negatively impacted shipments from both our East
Dubuque and Coffeyville fertilizer facilities,” said Mark Pytosh,
Chief Executive Officer of CVR Partners’ general partner. “However,
we were able to quickly react to the weather event, reducing
throughput at East Dubuque and selling contracted natural gas to
capitalize on market opportunities. In addition, our Coffeyville
facility was one of the only plants capable of operating during the
storm due to its use of petroleum coke as its feedstock.
“The nitrogen fertilizer industry reached an
inflection point during the first quarter of 2021, where improved
farmer economics translated into increased demand for nitrogen
fertilizer as well as much higher pricing,” Pytosh said. “So far,
the spring planting season has gone well, with nitrogen fertilizer
prices materially higher in the second quarter compared to the
first quarter.”
Consolidated Operations
For the first quarter of 2021, CVR Partners’
average realized gate prices for UAN showed a reduction over the
prior year, down 4 percent to $159 per ton, and ammonia was up 14
percent over the prior year to $300 per ton. Average realized
gate prices for UAN and ammonia were $166 per ton and $264 per ton,
respectively, for the first quarter 2020.
CVR Partners’ fertilizer facilities produced a
combined 188,000 tons of ammonia during the first quarter of 2021,
of which 70,000 net tons were available for sale while the rest was
upgraded to other fertilizer products, including 272,000 tons of
UAN. In the first quarter of 2020, the fertilizer facilities
produced 201,000 tons of ammonia, of which 78,000 net tons were
available for sale while the remainder was upgraded to other
fertilizer products, including 317,000 tons of UAN.
Capital Structure
On May 6, 2020, the Board of Directors of
the Partnership’s general partner (the “Board”), on behalf of the
Partnership, authorized a unit repurchase program (the “Unit
Repurchase Program”). The Unit Repurchase Program enables the
Partnership to repurchase up to $10 million of the
Partnership’s common units. On February 22, 2021, the Board
authorized an additional $10 million for the Unit Repurchase
Program. During the three months ended March 31, 2021, the
Partnership repurchased 24,378 common units, on the open market in
accordance with a repurchase agreement under Rules 10b5-1 and
10b-18 of the Exchange Act, at a cost of $0.5 million, inclusive of
transaction costs, or an average price of $21.70 per common unit.
At March 31, 2021, the Partnership had $12.4 million in authority
remaining under the Unit Repurchase Program. This Unit Repurchase
Program does not obligate the Partnership to acquire any common
units and may be cancelled or terminated by the Board at any
time.
Distributions
CVR Partners will not pay a cash distribution
for the first quarter 2021. CVR Partners is a variable distribution
master limited partnership. As a result, its 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, use of cash and cash reserves
deemed necessary or appropriate by the Board.
First Quarter 2021 Earnings Conference
Call
CVR Partners previously announced that it will
host its first quarter 2021 Earnings Conference Call on Tuesday,
May 4, 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 first quarter 2021 Earnings Conference Call
will be webcast live and can be accessed on the Investor Relations
section of CVR Partners’ website at www.CVRPartners.com. For
investors or analysts who want to participate during the call, the
dial-in number is (877) 407-8029. The webcast will be archived and
available for 14 days at
https://edge.media-server.com/mmc/p/9uikt5qq. A repeat of the call
also can be accessed for 14 days by dialing (877) 660-6853,
conference ID 13718880.
Qualified NoticeThis 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. Statements
concerning current estimates, expectations and projections about
future results, performance, prospects, opportunities, plans,
actions and events and other statements, concerns, or matters that
are not historical facts are “forward-looking statements,” as that
term is defined under the federal securities laws. These
forward-looking statements include, but are not limited to,
statements regarding future: continued safe and reliable
operations; impact of Winter Storm Uri on shipments and throughput;
capitalization on natural gas sales; the ability of the Coffeyville
facility to operate during storm conditions; farmer economics
including improvement thereof; nitrogen fertilizer demand and
pricing, including the increase thereof; success of the Spring
planting season; ammonia production levels including volumes
upgraded to other fertilizer products including UAN; purchases
under the Unit Repurchase Program (if any), including the cost
thereof; distributions, including the timing, payment and amount
(if any) thereof; operating performance, finished product pricing,
costs and capital expenditures including management thereof, cash
flow, use of cash and reserves; and other matters. You can
generally identify forward-looking statements by our use of
forward-looking terminology such as “outlook,” “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “explore,”
“evaluate,” “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. Investors are cautioned that various factors may affect
these forward-looking statements, including (among others) the
health and economic effects of COVID-19, the rate of any economic
improvements, impacts of planting season on our business, general
economic and business conditions, and other risks. For additional
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 and other
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 news release are made
only as of the date hereof. CVR Partners disclaims any intention or
obligation to update publicly or revise any 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.
Investors and others should note that CVR
Partners may announce material information using SEC filings, press
releases, public conference calls, webcasts, and the Investor
Relations page of its website. CVR Partners may use these channels
to distribute material information about the Partnership and to
communicate important information about the Partnership, corporate
initiatives and other matters. Information that CVR Partners posts
on its website could be deemed material; therefore, CVR Partners
encourages investors, the media, its customers, business partners
and others interested in the Partnership to review the information
posted on its website.
For further information, please contact:
Investor Relations:Richard
RobertsCVR Partners, LP (281)
207-3205InvestorRelations@CVRPartners.com
Media Relations:Brandee
StephensCVR Partners, LP(281)
207-3516MediaRelations@CVRPartners.com
Non-GAAP Measures
Our management uses certain non-GAAP performance
measures, and reconciliations to those measures, to evaluate
current and past performance and prospects for the future to
supplement our GAAP financial information presented in accordance
with U.S. GAAP. These non-GAAP financial measures are important
factors in assessing our operating results and profitability and
include the performance and liquidity measures defined below.
The following are non-GAAP measures we present
for the period ended March 31, 2021:
EBITDA - Net income (loss) before (i) interest
expense, net, (ii) income tax expense (benefit) and (iii)
depreciation and amortization expense.
Reconciliation of Net Cash Provided By Operating
Activities to EBITDA - Net cash provided by operating activities
reduced by (i) interest expense, net, (ii) income tax expense
(benefit), (iii) change in working capital, and (iv) other non-cash
adjustments.
Available Cash for Distribution - EBITDA for the
quarter excluding non-cash income or expense items (if any), for
which adjustment is deemed necessary or appropriate by the Board in
its sole discretion, less (i) reserves for maintenance capital
expenditures, debt service and other contractual obligations, and
(ii) reserves for future operating or capital needs (if any), in
each case, that the Board deems necessary or appropriate in its
sole discretion. Available cash for distribution may be increased
by the release of previously established cash reserves, if any, and
other excess cash, at the discretion of the Board.
We present these measures because we believe
they may help investors, analysts, lenders, and ratings agencies
analyze our results of operations and liquidity in conjunction with
our U.S. GAAP results, including, but not limited to, our operating
performance as compared to other publicly traded companies in the
fertilizer industry, without regard to historical cost basis or
financing methods, and our ability to incur and service debt and
fund capital expenditures. Non-GAAP measures have important
limitations as analytical tools, because they exclude some, but not
all, items that affect net earnings and operating income. These
measures should not be considered substitutes for their most
directly comparable U.S. GAAP financial measures. Refer to the
“Non-GAAP Reconciliations” included herein for reconciliation of
these amounts. Due to rounding, numbers presented within this
section may not add or equal to numbers or totals presented
elsewhere within this document.
|
CVR Partners, LP(all information in this release
is unaudited) |
|
Financial
and Operational Data |
|
Three Months EndedMarch 31, |
(in thousands, except per
unit data) |
2021 |
|
2020 |
Consolidated Statement
of Operations Data |
|
|
|
Net sales (1) |
$ |
60,921 |
|
|
$ |
75,080 |
|
Operating costs and
expenses: |
|
|
|
Cost of materials and other |
17,766 |
|
|
23,991 |
|
Direct operating expenses (exclusive of depreciation and
amortization) |
37,075 |
|
|
35,123 |
|
Depreciation and amortization |
14,123 |
|
|
15,597 |
|
Cost of sales |
68,964 |
|
|
74,711 |
|
Selling, general and administrative expenses |
5,891 |
|
|
5,354 |
|
Loss (gain) on asset disposal |
72 |
|
|
(13 |
) |
Operating loss |
(14,006 |
) |
|
(4,972 |
) |
Other (expense) income: |
|
|
|
Interest expense, net |
(15,916 |
) |
|
(15,783 |
) |
Other income, net |
4,557 |
|
|
27 |
|
Loss before income tax expense |
(25,365 |
) |
|
(20,728 |
) |
Income tax expense |
19 |
|
|
7 |
|
Net loss |
$ |
(25,384 |
) |
|
$ |
(20,735 |
) |
|
|
|
|
Basic and diluted loss per
unit |
$ |
(2.37 |
) |
|
$ |
(1.83 |
) |
|
|
|
|
EBITDA* |
$ |
4,674 |
|
|
$ |
10,652 |
|
Available Cash for
Distribution* |
(9,479 |
) |
|
(5,919 |
) |
|
|
|
|
Weighted-average common units outstanding - basic and diluted |
10,695 |
|
|
11,328 |
|
________________________ |
* See
“Non-GAAP Reconciliations” section below for a reconciliation of
these amounts. |
- Below are the components of net sales:
|
Three Months EndedMarch 31, |
(in thousands) |
2021 |
|
2020 |
Components of net
sales: |
|
|
|
Fertilizer sales |
$ |
52,354 |
|
|
$ |
64,694 |
|
Freight in revenue |
6,114 |
|
|
7,722 |
|
Other |
2,453 |
|
|
2,664 |
|
Total net sales |
$ |
60,921 |
|
|
$ |
75,080 |
|
Selected Balance Sheet Data
(in thousands) |
March 31, 2021 |
|
December 31, 2020 |
Cash and cash equivalents |
$ |
52,561 |
|
|
$ |
30,559 |
|
Working capital |
32,902 |
|
|
41,873 |
|
Total assets |
1,031,882 |
|
|
1,032,880 |
|
Total debt, including current
portion |
637,256 |
|
|
636,182 |
|
Total liabilities |
743,554 |
|
|
718,639 |
|
Total partners’ capital |
288,328 |
|
|
314,241 |
|
Selected Cash Flow Data
|
Three Months EndedMarch 31, |
(in thousands) |
2021 |
|
2020 |
Net cash flow provided by
(used in): |
|
|
|
Operating activities |
$ |
25,551 |
|
|
$ |
27,707 |
|
Investing activities |
(2,994 |
) |
|
(6,662 |
) |
Financing activities |
(555 |
) |
|
(25 |
) |
Net increase in cash and cash
equivalents |
$ |
22,002 |
|
|
$ |
21,020 |
|
Capital Expenditures
|
Three Months EndedMarch 31, |
(in thousands) |
2021 |
|
2020 |
Maintenance capital expenditures |
$ |
2,459 |
|
|
$ |
4,139 |
|
Growth capital
expenditures |
666 |
|
|
1,454 |
|
Total capital expenditures |
$ |
3,125 |
|
|
$ |
5,593 |
|
Key Operating Data
Ammonia Utilization (1) |
|
|
|
|
Two Years Ended March 31, |
(capacity utilization) |
2021 |
|
2020 |
Consolidated |
96 |
% |
|
93 |
% |
Coffeyville Facility |
94 |
% |
|
93 |
% |
East Dubuque Facility |
97 |
% |
|
93 |
% |
________________________
- Reflects our ammonia utilization rates on a consolidated basis
and at each of our facilities. Utilization is an important measure
used by management to assess operational output at each of the
Partnership’s facilities. Utilization is calculated as actual tons
produced divided by capacity. We present our utilization on a
two-year rolling average to take into account the impact of our
current turnaround cycles on any specific period. The two-year
rolling average is a more useful presentation of the long-term
utilization performance of our plants. Additionally, we present
utilization solely on ammonia production rather than each nitrogen
product as it provides a comparative baseline against industry
peers and eliminates the disparity of plant configurations for
upgrade of ammonia into other nitrogen products. With our efforts
being primarily focused on ammonia upgrade capabilities, this
measure provides a meaningful view of how well we operate.
Sales and Production Data
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Consolidated sales (thousand
tons): |
|
|
|
Ammonia |
32 |
|
|
54 |
|
UAN |
239 |
|
|
284 |
|
|
|
|
|
Consolidated product pricing
at gate (dollars per ton) (1): |
|
|
|
Ammonia |
$ |
300 |
|
|
$ |
264 |
|
UAN |
159 |
|
|
166 |
|
|
|
|
|
Consolidated production volume
(thousand tons): |
|
|
|
Ammonia (gross produced) (2) |
188 |
|
|
201 |
|
Ammonia (net available for sale) (2) |
70 |
|
|
78 |
|
UAN |
272 |
|
|
317 |
|
|
|
|
|
Feedstock: |
|
|
|
Petroleum coke used in production (thousand tons) |
128 |
|
|
125 |
|
Petroleum coke used in production (dollars per ton) |
$ |
42.91 |
|
|
$ |
44.68 |
|
Natural gas used in production (thousands of MMBtu) (3) |
1,882 |
|
|
2,141 |
|
Natural gas used in production (dollars per MMBtu) (3) |
$ |
3.10 |
|
|
$ |
2.42 |
|
Natural gas in cost of materials and other (thousands of MMBtu)
(3) |
940 |
|
|
1,418 |
|
Natural gas in cost of materials and other (dollars per MMBtu)
(3) |
$ |
2.94 |
|
|
$ |
2.80 |
|
________________________
- Product pricing at gate represents 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.
- 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.
- 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 expense.
Key Market Indicators
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Ammonia - Southern plains (dollars per ton) |
$ |
437 |
|
|
$ |
272 |
|
Ammonia - Corn belt (dollars
per ton) |
497 |
|
|
364 |
|
UAN - Corn belt (dollars per
ton) |
256 |
|
|
169 |
|
|
|
|
|
Natural gas NYMEX (dollars per
MMBtu) |
$ |
2.72 |
|
|
$ |
1.87 |
|
|
|
|
|
|
|
|
|
Q2 2021 Outlook
The table below summarizes our outlook for
certain operational statistics and financial information for the
second quarter of 2021. See “Forward-Looking Statements” above.
|
Q2 2021 |
|
Low |
|
High |
Ammonia utilization rates (1) |
|
|
|
|
|
|
|
Consolidated |
|
95 |
% |
|
|
100 |
% |
Coffeyville Facility |
|
95 |
% |
|
|
100 |
% |
East Dubuque Facility |
|
95 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
Direct operating expenses (2)
(in millions) |
$ |
35 |
|
|
$ |
40 |
|
|
|
|
|
|
|
|
|
Total capital expenditures (3)
(in millions) |
$ |
4 |
|
|
$ |
7 |
|
________________________
- Ammonia utilization rates exclude the impact of
turnarounds.
- Direct operating expenses are shown exclusive of depreciation
and amortization, turnaround expenses, and impacts of inventory
adjustments.
- Capital expenditures are disclosed on an accrual basis.
Non-GAAP Reconciliations
Reconciliation of Net Loss
to EBITDA
|
Three Months EndedMarch 31, |
(in thousands) |
2021 |
|
2020 |
Net loss |
$ |
(25,384 |
) |
|
$ |
(20,735 |
) |
Add: |
|
|
|
Interest expense, net |
15,916 |
|
|
15,783 |
|
Income tax expense |
19 |
|
|
7 |
|
Depreciation and amortization |
14,123 |
|
|
15,597 |
|
EBITDA |
$ |
4,674 |
|
|
$ |
10,652 |
|
Reconciliation of Net Cash Provided By
Operating Activities to EBITDA
|
Three Months EndedMarch 31, |
(in thousands) |
2021 |
|
2020 |
Net cash provided by operating activities |
$ |
25,551 |
|
|
$ |
27,707 |
|
Non-cash items: |
|
|
|
Other |
(4,851 |
) |
|
(785 |
) |
Add: |
|
|
|
Interest expense, net |
15,916 |
|
|
15,783 |
|
Income tax expense |
19 |
|
|
7 |
|
Change in assets and liabilities |
(31,961 |
) |
|
(32,060 |
) |
EBITDA |
$ |
4,674 |
|
|
$ |
10,652 |
|
Reconciliation of EBITDA
to Available Cash for Distribution
|
Three Months EndedMarch 31, |
(in thousands) |
2021 |
|
2020 |
EBITDA |
$ |
4,674 |
|
|
$ |
10,652 |
|
Current reserves for amounts
related to: |
|
|
|
Debt service |
(14,996 |
) |
|
(14,999 |
) |
Maintenance capital expenditures |
(2,459 |
) |
|
(4,139 |
) |
Common units repurchased |
(529 |
) |
|
— |
|
Other (reserves)
releases: |
|
|
|
Future turnaround |
(1,500 |
) |
|
— |
|
Previously established cash reserves |
5,331 |
|
|
2,567 |
|
Available Cash for
distribution (1) (2) |
$ |
(9,479 |
) |
|
$ |
(5,919 |
) |
|
|
|
|
Common units outstanding |
10,681 |
|
|
11,328 |
|
________________________
- Amount represents the cumulative available cash based on
quarter-to-date and year-to-date results. However, available cash
for distribution is calculated quarterly, with distributions (if
any) being paid in the period following declaration.
- The Partnership paid no cash distributions related to the
fourth quarter of 2020, and no distribution was declared for the
first quarter of 2021.
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