SUGAR LAND, Texas, Oct. 31, 2011 /PRNewswire/ -- CVR Partners, LP
(NYSE: UAN), a manufacturer of ammonia and urea ammonium nitrate
(UAN) solution fertilizer products, today announced third quarter
2011 net income of $36.3 million on
net sales of $77.2 million, compared
to $13.5 million net income on net
sales of $46.4 million for the third
quarter a year earlier.
(Logo:
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Adjusted EBITDA for the third quarter 2011 was $43.3 million compared to $15.7 million adjusted EBITDA in the third
quarter 2010 (see footnotes 2 and 3 in accompanying tables).
For the nine-month period, net income was $91.2 million on net sales of $215.3 million compared to $39.5 million of net income on net sales of
$141.1 million for the comparable
period a year earlier. Adjusted EBITDA for the nine month period in
2011 was $114.0 million compared to
adjusted EBITDA of $45.1 million for
the first nine months a year earlier.
On Oct. 27, 2011, CVR Partners
announced its third quarter distribution based on available cash of
57.2 cents per common unit to unit
holders of record on Nov. 7, 2011,
payable on Nov. 14, 2011. CVR
Partners said the results leave it well positioned to meet or
exceed the distributions guidance in its IPO prospectus of
$1.92 per common unit for the 12
months ending March 31, 2012.
"Third quarter numbers mirror the excellent results CVR Partners
had last quarter," said Byron
Kelley, president and chief executive officer. "The
prices for ammonia and UAN have grown stronger as the demand for
corn and other agricultural commodities increased during the past
year.
"Our nitrogen fertilizer plant's production remained
consistently high, as well," he said. "We continue to achieve our
financial and operational objectives and are pleased with the
results."
For the third quarter 2011, average realized plant gate prices
for ammonia and UAN were $568 per ton
and $294 per ton respectively,
compared to $317 per ton and
$168 per ton respectively for the
equivalent period in 2010.
CVR Partners produced 102,700 tons of ammonia during the third
quarter of 2011, of which 25,900 net tons were available for sale
while the rest was upgraded to 185,800 tons of more highly valued
UAN. In the 2010 third quarter, the plant produced 112,600
tons of ammonia with 41,000 net tons available for sale with the
remainder upgraded to 173,800 tons of UAN.
Ammonia production was down slightly in the third quarter of
2011 due to the sale of $5.7 million
of hydrogen (equivalent to the production of 8,703 tons of ammonia)
under a feedstock and shared services agreement to the refinery
located adjacent to the nitrogen fertilizer plant and operated by
Coffeyville Resources Refining & Marketing, LLC (CRRM). The
sale of hydrogen was a price neutral transaction.
On-stream factors during the third quarter were 99.2 percent for
the gasifiers, 98.6 percent for the ammonia synthesis loop, and 97
percent for the UAN conversion facility.
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
You can generally identify forward-looking statements by our use of
forward-looking terminology such as "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 Prospectus dated April 7, 2011, and filed with the SEC on
April 11, 2011, and other filings
with the SEC. 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. The
Partnership undertakes no duty to update its forward-looking
statements.
About CVR Partners, LP
Headquartered in Sugar Land,
Texas, with manufacturing facilities located in Coffeyville, Kan., CVR Partners, LP is a
Delaware limited partnership
focused primarily on the manufacture of nitrogen fertilizers. The
CVR Partners nitrogen fertilizer manufacturing facility is the only
operation in North America that
uses a petroleum coke gasification process to produce nitrogen
fertilizer and includes a 1,225 ton-per-day ammonia unit, a 2,025
ton-per-day urea ammonium nitrate unit, and a dual-train gasifier
complex having a capacity of 84 million standard cubic feet per day
of hydrogen.
CVR Partners, LP
The following tables summarize the financial data and key
operating statistics for CVR Partners, LP (the "Partnership") for
the three and nine months ended September 30, 2011 and 2010.
Select balance sheet data is as of September 30, 2011
and December 31, 2010.
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
Consolidated Statement of
Operations data:
|
|
|
|
|
|
|
|
|
Net sales
|
$ 77.2
|
|
$ 46.4
|
|
$ 215.3
|
|
$ 141.1
|
|
Cost of product sold –
Affiliates*
|
3.6
|
|
2.9
|
|
8.0
|
|
5.1
|
|
Cost of product sold – Third
parties*
|
7.3
|
|
7.9
|
|
20.2
|
|
22.6
|
|
Direct operating expense –
Affiliates*
|
0.2
|
|
0.5
|
|
1.0
|
|
1.4
|
|
Direct operating expense – Third
parties*
|
19.9
|
|
16.7
|
|
64.4
|
|
59.3
|
|
Insurance recovery – business
interruption
|
(0.5)
|
|
—
|
|
(3.4)
|
|
—
|
|
Selling, general and
administrative expenses – Affiliates
|
3.4
|
|
2.4
|
|
13.1
|
|
6.8
|
|
Selling, general and
administrative expenses – Third parties
|
1.1
|
|
0.9
|
|
4.5
|
|
2.0
|
|
Depreciation and
amortization
|
4.7
|
|
4.5
|
|
13.9
|
|
13.9
|
|
Operating
income
|
$ 37.5
|
|
$ 10.6
|
|
$ 93.6
|
|
$ 30.0
|
|
Interest expense and other
financing costs
|
(1.4)
|
|
—
|
|
(2.6)
|
|
—
|
|
Interest income
|
—
|
|
3.0
|
|
0.1
|
|
9.6
|
|
Other income (expense),
net
|
0.2
|
|
(0.1)
|
|
0.1
|
|
(0.1)
|
|
Income before income tax
expense
|
$ 36.3
|
|
$ 13.5
|
|
$ 91.2
|
|
$ 39.5
|
|
Income tax expense
|
—
|
|
—
|
|
—
|
|
—
|
|
Net
income
|
$ 36.3
|
|
$ 13.5
|
|
$ 91.2
|
|
$ 39.5
|
|
_______________
|
|
|
|
|
|
|
|
|
*Amounts shown are exclusive of
depreciation and amortization.
|
|
|
|
|
|
|
|
|
|
|
Net income subsequent to initial
public offering
|
$ 36.3
|
|
|
|
$ 67.1
|
|
|
|
Net income per common unit –
basic**
|
$ 0.50
|
|
|
|
$ 0.92
|
|
|
|
Net income per common unit –
diluted**
|
$ 0.50
|
|
|
|
$ 0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average, number of
common units outstanding (in thousands):
|
|
|
|
|
|
|
|
|
Basic
|
73,003
|
|
|
|
73,002
|
|
|
|
Diluted
|
73,083
|
|
|
|
73,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**Reflective of net income per
common unit since closing the Partnership's initial public offering
on April 13, 2011. The Partnership has omitted net income per unit
for the periods in 2010 because the Partnership operated under a
different capital structure prior to the closing of the Offering
and, as a result, the per unit data would not be meaningful to
investors.
|
|
|
|
|
|
As of
September 30,
|
|
As of
December 31,
|
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
Balance Sheet
Data:
|
|
|
|
|
Cash and cash
equivalents
|
$ 255.5
|
|
$ 42.7
|
|
Working capital
|
234.7
|
|
27.1
|
|
Total assets
|
673.8
|
|
452.2
|
|
Total debt
|
125.0
|
|
—
|
|
Partners' capital
|
489.3
|
|
402.2
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
Other Financial
Data:
|
|
|
|
|
|
|
|
|
Cash flows provided by operating
activities
|
$ 57.7
|
|
$ 27.0
|
|
$ 107.9
|
|
$ 56.6
|
|
Cash flows used in investing
activities
|
(2.0)
|
|
(1.9)
|
|
(7.8)
|
|
(3.8)
|
|
Cash flows provided by (used in)
financing activities
|
(30.0)
|
|
—
|
|
112.7
|
|
(29.5)
|
|
Net cash
flow
|
$ 25.7
|
|
$ 25.1
|
|
$ 212.8
|
|
$ 23.3
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$ 4.5
|
|
$ 1.9
|
|
$ 10.5
|
|
$ 3.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
Non-GAAP
Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income to
Adjusted Net Income and to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
Net Income
|
$ 36.3
|
|
$ 13.5
|
|
$ 91.2
|
|
$ 39.5
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Share-based
compensation (1)
|
0.9
|
|
0.7
|
|
6.4
|
|
1.3
|
|
Adjusted net income
(2)
|
$ 37.2
|
|
$ 14.2
|
|
$ 97.6
|
|
$ 40.8
|
|
Major
scheduled turnaround expense
|
—
|
|
—
|
|
—
|
|
—
|
|
Depreciation
and amortization
|
4.7
|
|
4.5
|
|
13.9
|
|
13.9
|
|
Interest
(income) expense
|
1.4
|
|
(3.0)
|
|
2.5
|
|
(9.6)
|
|
Adjusted EBITDA
(3)
|
$ 43.3
|
|
$ 15.7
|
|
$ 114.0
|
|
$ 45.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September
30, 2011
|
|
|
(in
millions, except per unit amount)
|
|
|
(unaudited)
|
|
|
|
|
|
|
Cash flows from operations
(4)
|
$ 57.7
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Plus: Deferred revenue
balance at June 30, 2011
|
3.0
|
|
|
Less: Deferred revenue
balance at September 30, 2011
|
(20.6)
|
|
|
Plus: Insurance proceeds
included in investing activities
|
2.5
|
|
|
Less: Maintenance capital
expenditures July 1 through September 30, 2011
|
(0.8)
|
|
|
|
|
|
|
|
Available cash for
distribution
|
$ 41.8
|
|
|
Available cash for distribution,
per unit
|
$ 0.572
|
|
|
|
|
|
|
|
Common units
outstanding
|
73,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(unaudited)
|
|
Nitrogen Fertilizer Key
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production (thousand
tons):
|
|
|
|
|
|
|
|
|
Ammonia (gross produced)
(5)
|
102.7
|
|
112.6
|
|
310.4
|
|
322.9
|
|
Ammonia (net available
for sale) (5)
|
25.9
|
|
41.0
|
|
89.3
|
|
117.9
|
|
UAN
|
185.8
|
|
173.8
|
|
535.8
|
|
500.5
|
|
|
|
|
|
|
|
|
|
|
Petroleum coke consumed
(thousand tons)
|
131.2
|
|
118.6
|
|
391.0
|
|
351.8
|
|
Petroleum coke (cost per
ton)
|
$ 43
|
|
$ 26
|
|
$ 30
|
|
$ 19
|
|
|
|
|
|
|
|
|
|
|
Sales (thousand
tons):
|
|
|
|
|
|
|
|
|
Ammonia
|
22.6
|
|
33.4
|
|
83.5
|
|
115.2
|
|
UAN
|
179.2
|
|
178.9
|
|
524.7
|
|
506.9
|
|
Total
sales
|
201.8
|
|
212.3
|
|
608.2
|
|
622.1
|
|
|
|
|
|
|
|
|
|
|
Product pricing (plant gate)
(dollars per ton) (6):
|
|
|
|
|
|
|
|
|
Ammonia
|
$ 568
|
|
$ 317
|
|
$ 569
|
|
$ 305
|
|
UAN
|
$ 294
|
|
$ 168
|
|
$ 266
|
|
$ 180
|
|
|
|
|
|
|
|
|
|
|
On-stream factors
(7):
|
|
|
|
|
|
|
|
|
Gasification
|
99.2%
|
|
99.2%
|
|
99.5%
|
|
95.8%
|
|
Ammonia
|
98.6%
|
|
99.0%
|
|
98.0%
|
|
94.6%
|
|
UAN
|
97.0%
|
|
96.9%
|
|
95.9%
|
|
92.2%
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to net sales
(dollars in millions):
|
|
|
|
|
|
|
|
|
Freight in
revenue
|
$ 6.0
|
|
$ 5.8
|
|
$ 16.1
|
|
$ 14.6
|
|
Hydrogen
revenue
|
5.7
|
|
—
|
|
11.9
|
|
—
|
|
Sales net plant
gate
|
65.5
|
|
40.6
|
|
187.3
|
|
126.5
|
|
Total net
sales
|
$ 77.2
|
|
$ 46.4
|
|
$ 215.3
|
|
$ 141.1
|
|
|
|
|
|
|
|
|
|
|
Market
Indicators:
|
|
|
|
|
|
|
|
|
Natural gas NYMEX (dollars per
MMBtu)
|
$ 4.06
|
|
$ 4.38
|
|
$ 4.21
|
|
$ 4.52
|
|
Ammonia — Southern Plains
(dollars per ton)
|
$ 619
|
|
$ 465
|
|
$ 609
|
|
$ 385
|
|
UAN — Mid Cornbelt (dollars per
ton)
|
$ 401
|
|
$ 247
|
|
$ 373
|
|
$ 246
|
|
_______________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
CVR Partners records non-cash
share-based compensation expense related to awards granted from its
Long-Term Incentive Plan ("LTIP"). Awards to non-employees out of
the LTIP are accounted for as equity based awards and are
marked-to-market each reporting period and amortized through their
vesting date. Additionally, CVR Partners has been allocated
non-cash share-based compensation expense from CVR Energy, Inc.,
its affiliates and former affiliates (collectively "CVR Energy").
CVR Energy accounts for share-based compensation in
accordance with Accounting Standards Codification ("ASC") Topic
718 Compensation – Stock
Compensation ("ASC 718") as well as guidance
regarding the accounting for share-based compensation granted to
employees of an equity method investee. In accordance with
ASC 718, CVR Energy applies a fair-value based measurement method
in accounting for share-based compensation. The Partnership
recognizes the costs of the share-based compensation incurred by
CVR Energy on its behalf, primarily in selling, general and
administrative expenses (exclusive of depreciation and
amortization), and a corresponding increase or decrease to
Partners' Capital, as the costs are incurred on its behalf,
following the guidance issued by the FASB regarding the accounting
for equity instruments that are issued to other than employees for
acquiring, or in conjunction with selling goods or services, which
require remeasurement at each reporting period through the
performance commitment period, or in the Partnership's case,
through the vesting period. Costs are allocated by CVR Energy based
upon the percentage of time a CVR Energy employee provides services
to CVR Partners. In accordance with a services agreement
between the entities, CVR Partners will not be responsible for the
payment of cash related to any share-based compensation allocated
to it by CVR Energy.
|
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
Share-based compensation
recorded in direct operating expenses
|
$ 0.1
|
|
$ 0.1
|
|
$ 0.4
|
|
$ 0.2
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
recorded in selling, general and administrative expenses
|
0.8
|
|
0.6
|
|
6.0
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
Total share-based
compensation
|
$ 0.9
|
|
$ 0.7
|
|
$ 6.4
|
|
$ 1.3
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Adjusted net income results from
adjusting net income for items that the Partnership believes are
needed in order to evaluate results in a more comparative analysis
from period to period. For the three and nine months ended
September 30, 2011 and 2010, net income was adjusted for the
impact of share-based compensation. Adjusted net income is
not a recognized term under GAAP and should not be substituted for
net income as a measure of our performance but rather should be
utilized as a supplemental measure of financial performance in
evaluating our business. Management believes that adjusted net
income provides relevant and useful information that enables
external users of our financial statements, such as industry
analysts, investors, lenders and rating agencies to better
understand and evaluate our ongoing operating results and allow for
greater transparency in the review of our overall financial,
operational and economic performance.
|
|
|
|
|
(3)
|
Adjusted EBITDA is defined as
net income before income tax expense, net interest (income)
expense, depreciation and amortization expense and certain other
items management believes affect the comparability of operating
results. For the three and nine months ended
September 30, 2011 and 2010, EBITDA
was adjusted for the impact of share-based compensation.
Adjusted EBITDA is not a recognized term under GAAP and
should not be substituted for net income as a measure of
performance but should be utilized as a supplemental measure of
performance in evaluating our business. Management believes
that adjusted EBITDA provides relevant and useful information that
enables external users of our financial statements, such as
industry analysts, investors, lenders and rating agencies to better
understand and evaluate our ongoing operating results and allows
for greater transparency in the reviewing of our overall financial,
operational and economic performance. Management believes it
is appropriate to exclude certain items from EBITDA, such as
share-based compensation and major scheduled turnaround expenses
because management believes these items affect the comparability of
operating results.
|
|
|
|
|
(4)
|
CVR Partners has announced a
cash distribution of 57.2 cents per common unit for the third
quarter of 2011. This distribution is based on our available cash
flow. Available
cash for each quarter will generally be equal to our cash flow from
operations for the quarter, less cash needed for maintenance
capital expenditures, debt service and other contractual
obligations, and reserves for future operating or capital needs
that the board of directors of our general partner deems necessary
or appropriate. Additionally, the Partnership also retains the cash
on hand associated with prepaid sales at each quarter end for
future distributions to common unitholders based upon the
recognition into income of the prepaid sales.
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Available cash is a
significant performance metric used by senior management to compare
cash flows generated by the Partnership (excluding maintenance
capital expenditures, debt service and other contractual
obligations, and reserves for future operating or capital needs as
deemed appropriate by the board of directors) to the cash
distributions expected to be paid to unitholders. 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.
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Available cash is not a
calculation based on GAAP. Amounts derived in the calculation are
derived from amounts separately presented in our consolidated
financial statements; with the exception of maintenance capital
spend. The measure most directly comparable to available cash
is operating cash flow for which we have reconciled to in this
release. Available cash should not be considered in isolation or as
an alternative to net income or operating income. It is presented
here to support the quarterly distribution. CVR Partners' available
cash may not be comparable to similarly titled measures of other
entities.
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(5)
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The gross tons produced for
ammonia represent the total ammonia produced, including ammonia
produced that was upgraded into UAN. The net tons available
for sale represent the ammonia available for sale that was not
upgraded into UAN.
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(6)
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Plant gate sales per ton
represent net sales less freight and hydrogen revenue divided by
product sales volume in tons in the reporting period. Plant gate
pricing per ton is shown in order to provide a pricing measure that
is comparable across the fertilizer industry.
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(7)
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On-stream factor is the total
number of hours operated divided by the total number of hours in
the reporting period. Excluding the impact of the Linde air
separation unit outage and the reactor outage, the on-stream
factors would have been 99.2% for gasifier, 99.5% for ammonia, and
97.4% for UAN for three months ended September 30, 2010 and 98.0%
for gasifier, 97.3% for ammonia, and 95.0% for UAN for nine months
ended September 30, 2010. The on-stream factors would have been
100% for gasifier, 99.6% for ammonia, and 97.9% for UAN for three
months ended September 30, 2011 and 99.8% for gasifier, 98.3%
for ammonia, and 96.3% for UAN for nine months ended
September 30, 2011, as adjusted to exclude the impact of a
Linde air separation unit outage.
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Use of Non-GAAP Financial Measures
To supplement the actual results in accordance with GAAP for the
applicable periods, the Partnership also uses non-GAAP measures as
discussed above, which are adjusted for GAAP-based results.
The use of non-GAAP adjustments are not in accordance with or
an alternative for GAAP. The adjustments are provided to
enhance an overall understanding of the Partnership's financial
performance for the applicable periods and are indicators
management believes are relevant and useful for planning and
forecasting future periods.
SOURCE CVR Partners, LP