SUGAR LAND, Texas, Aug. 1, 2012 /PRNewswire/ -- CVR Partners,
LP (NYSE: UAN), a manufacturer of ammonia and urea ammonium nitrate
(UAN) solution fertilizer products, today announced second quarter
2012 net income of $35.1 million, or
48 cents per fully diluted common
unit, on net sales of $81.4 million,
compared to net income of $38.2
million on net sales of $80.7
million, or 42 cents per fully
diluted common unit, for the 2011 second quarter.
(Logo:
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Adjusted EBITDA, a non-GAAP measure, was $44.1 million for the second quarter of 2012
compared to $45.0 million in the
second quarter of 2011.
For the first six months of 2012, net income was $65.3 million on net sales of $159.7 million compared to $54.9 million of net income on net sales of
$138.1 million for the comparable
period a year earlier. Adjusted EBITDA for the six month period in
2012 was $82.1 million compared to
adjusted EBITDA of $70.9 million for
the first six months of 2011.
"Solid execution throughout the organization resulted in another
strong quarter for the partnership," said Byron Kelley, president and chief executive
officer. "A key highlight of the period was operational on-stream
rates as high as 99 percent, which represented a substantial
improvement from the preceding quarter.
"In addition, we leveraged a continued environment of robust
fertilizer pricing during the second quarter and secured orders for
substantially all of our targeted production for the third quarter
and a significant majority of the fourth quarter. We also began
placing orders for a number of early 2013 deliveries," Kelley
said.
Operations
For the second quarter 2012, average realized plant gate prices
for ammonia and UAN were $568 per ton
and $329 per ton, respectively, as
compared to $574 per ton and
$300 per ton, respectively, for the
same period in 2011.
CVR Partners produced 108,900 tons of ammonia during the second
quarter of 2012, of which 34,900 net tons were available for sale
while the rest was upgraded to 180,000 tons of more profitable
UAN. In the 2011 second quarter, the plant produced 102,300
tons of ammonia with 28,200 net tons available for sale with the
remainder upgraded to 179,400 tons of UAN.
On-stream factors during the 2012 second quarter were 99.2
percent for the gasifiers, 98.0 percent for the ammonia synthesis
loop, and 96.7 percent for the UAN conversion facility.
Distributions and Guidance
On July 26, 2012, CVR Partners
announced a second quarter 2012 distribution of 60 cents per common unit that will be paid on
August 14, 2012, to unitholders of
record on August 7, 2012.
The company said that as a result of solid operating results to
date and improved visibility for the final six months of the year,
it is reaffirming its previous distribution guidance range for
calendar year 2012 of $1.65 to $1.85
per common unit. Included in this guidance is an approximate
25 cent negative impact per common
unit associated with the company's biennial turnaround scheduled
for the 2012 fourth quarter. Normalized for the turnaround, the
distribution range would be $1.90 to
$2.10 per common unit.
"We made important progress on our UAN expansion project during
the 2012 second quarter, and we now expect to benefit from a full
year of increased UAN production in 2013," Kelley said. "We
estimate the combined impact from the UAN expansion during a year
without a turnaround could contribute 50
cents per common unit of cash available for distribution
versus 2012, all else being equal. Compared to the mid-point of our
2012 guidance of $1.75 per common
unit, this indicates an increase in cash available for distribution
of almost 30 percent.
"As we look to 2013 and beyond, we anticipate a continued
positive fertilizer pricing environment as a result of growing
demand for corn and potentially the lowest stocks-to-use ratio
coming out of the year since 1988 due to the impact of severe
drought conditions on this year's crop," Kelley said. "This places
us in a solid position to continue to deliver strong value to our
unitholders well into the future."
This news release contains forward-looking statements. 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 (including
statements about future distributions and potential future
distributable cash flow) 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 Annual Report on Form 10-K for the year ended
Dec. 31, 2011, and any subsequently filed quarterly reports on
Form 10-Q. 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 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, 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. Scheduled for completion at the start of 2013, a
capital project is underway to expand the facility's UAN production
capacity to more than 3,000 tons per day.
CVR Partners, LP
Financial and Operational Data (all information in this
release is unaudited except as otherwise noted).
|
Three
Months Ended
June 30,
|
Change from 2011
|
|
|
2012
|
2011
|
Change
|
Percent
|
|
|
|
(in
millions, except per unit data)
|
Consolidated Statement of Operations
Data
|
|
|
|
|
Net sales
(1)
|
$
81.4
|
$
80.7
|
$
0.7
|
0.9%
|
Cost of
product sold – Affiliates
|
2.5
|
2.9
|
(0.4)
|
(13.8)
|
Cost of
product sold – Third parties
|
8.2
|
6.8
|
1.4
|
20.6
|
Direct
operating expenses – Affiliates
|
0.4
|
0.2
|
0.2
|
100.0
|
Direct
operating expenses – Third parties
|
22.0
|
22.1
|
(0.1)
|
(0.5)
|
Selling,
general and administrative expenses - Affiliates
|
5.2
|
3.3
|
1.9
|
57.6
|
Selling,
general and administrative expenses - Third
parties
|
1.8
|
1.4
|
0.4
|
28.6
|
Depreciation and amortization
|
5.2
|
4.7
|
0.5
|
10.6
|
Operating income
|
36.1
|
39.3
|
(3.2)
|
(8.1)
|
Interest
expense and other financing costs
|
(1.0)
|
(1.2)
|
0.2
|
(16.7)
|
Interest
income
|
0.1
|
—
|
0.1
|
—
|
Other
income (expense), net
|
—
|
0.1
|
(0.1)
|
(100.0)
|
Income
before income tax expense
|
35.2
|
38.2
|
(3.0)
|
(7.9)
|
Income tax
expense
|
0.1
|
—
|
0.1
|
—
|
Net income
|
$ 35.1
|
$ 38.2
|
$ (3.1)
|
(8.1)%
|
______________
|
|
|
|
|
|
|
|
|
|
Net income
subsequent to initial public offering (April 13 through
June 30, 2011)
|
|
$
30.8
|
|
|
Net income
per common unit – basic (2)
|
$
0.48
|
$
0.42
|
|
|
Net income
per common unit – diluted (2)
|
$
0.48
|
$
0.42
|
|
|
|
|
|
|
|
Adjusted
EBITDA*
|
$
44.1
|
$
45.0
|
$
(0.9)
|
(2.0)%
|
Available
cash for distribution (2)*
|
$
43.8
|
$
29.7
|
|
|
|
|
|
|
|
Weighted
average, number of common units outstanding (in
thousands):
|
Basic (2)
|
73,035
|
73,001
|
|
|
Diluted (2)
|
73,194
|
73,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended
June
30,
|
Change
from 2011
|
|
2012
|
2011
|
Change
|
Percent
|
|
(in
millions, except per unit data)
|
Consolidated Statement of Operations
Data
|
|
|
|
|
Net sales
(1)
|
$
159.7
|
$
138.1
|
$
21.6
|
15.6%
|
Cost of
product sold – Affiliates
|
5.5
|
4.3
|
1.2
|
27.9
|
Cost of
product sold – Third parties
|
17.8
|
12.9
|
4.9
|
38.0
|
Direct
operating expenses – Affiliates
|
0.8
|
0.8
|
—
|
—
|
Direct
operating expenses – Third parties
|
44.5
|
44.5
|
—
|
—
|
Insurance
recovery - business interruption
|
—
|
(2.9)
|
2.9
|
(100.0)
|
Selling,
general and administrative expenses - Affiliates
|
9.0
|
9.7
|
(0.7)
|
(7.2)
|
Selling,
general and administrative expenses - Third
parties
|
4.0
|
3.4
|
0.6
|
17.6
|
Depreciation and amortization
|
10.6
|
9.3
|
1.3
|
14.0
|
Operating income
|
67.5
|
56.1
|
11.4
|
20.3
|
Interest
expense and other financing costs
|
(2.2)
|
(1.2)
|
(1.0)
|
83.3
|
Interest
income
|
0.1
|
—
|
0.1
|
—
|
Income
before income tax expense
|
65.4
|
54.9
|
10.5
|
19.1
|
Income tax
expense
|
0.1
|
—
|
0.1
|
—
|
Net income
|
$ 65.3
|
$ 54.9
|
$ 10.4
|
18.9%
|
______________
|
|
|
|
|
|
|
|
|
|
Net income subsequent
to initial public offering (April 13
through
June 30, 2011)
|
|
$
30.8
|
|
|
Net income
per common unit – basic (2)
|
$
0.89
|
$
0.42
|
|
|
Net income
per common unit – diluted (2)
|
$
0.89
|
$
0.42
|
|
|
|
|
|
|
|
Adjusted
EBITDA*
|
$
82.1
|
$
70.9
|
$
11.2
|
15.8%
|
Available
cash for distribution (2)*
|
$
82.0
|
$
29.7
|
|
|
|
|
|
|
|
Weighted average,
number of common units outstanding (in thousands):
|
|
|
|
|
Basic (2)
|
73,033
|
73,001
|
|
|
Diluted (2)
|
73,195
|
73,044
|
|
|
(1) Below are the components of Net sales:
|
Three
Months Ended
June
30,
|
Six
Months Ended
June 30,
|
|
2012
|
2011
|
2012
|
2011
|
Reconciliation to net sales (dollars in
millions):
|
|
|
|
|
Sales net plant gate
|
$
75.1
|
$
69.2
|
$
142.9
|
$
121.8
|
Freight in revenue
|
6.3
|
5.4
|
11.1
|
10.2
|
Hydrogen revenue
|
—
|
6.1
|
5.7
|
6.1
|
Total net sales
|
$ 81.4
|
$ 80.7
|
$ 159.7
|
$ 138.1
|
(2) Reflective of net income per common unit since
closing the Partnership's initial public offering on April 13, 2011. Based upon the full quarter's net
income for 2011, net income per common unit would have been
$0.52 per common unit.
* See "Use of Non-GAAP Financial Measures" below.
|
|
As of
June 30,
2012
|
As of
December 31,
2011
|
|
|
|
(audited)
|
|
Balance
Sheet Data
|
(in
millions)
|
|
Cash and
cash equivalents
|
$
196.4
|
$
237.0
|
|
Working
capital
|
191.8
|
229.4
|
|
Total
assets
|
639.7
|
659.3
|
|
Total
debt
|
125.0
|
125.0
|
|
Partners'
capital
|
477.1
|
489.5
|
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|
|
2012
|
2011
|
2012
|
2011
|
|
|
(in
millions)
|
|
Other
Financial Data:
|
|
|
|
|
|
Cash flows
provided by operating activities
|
$
26.0
|
$
18.0
|
$
79.8
|
$
50.2
|
|
Cash flows
used in investing activities
|
(16.9)
|
(4.0)
|
(39.2)
|
(5.8)
|
|
Cash flows
provided by (used in) financing activities
|
(38.3)
|
144.4
|
(81.2)
|
142.6
|
|
Net cash flow
|
$ (29.2)
|
$ 158.4
|
$ (40.6)
|
$ 187.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$
16.9
|
$
4.0
|
$
39.2
|
$
6.0
|
|
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|
2012
|
2011
|
2012
|
2011
|
Key
Operating Statistics:
|
|
|
|
|
|
|
Production
(thousand tons):
|
|
|
|
|
Ammonia (gross produced) (1)
|
108.9
|
102.3
|
198.2
|
207.6
|
Ammonia (net available for sale)
(1)
|
34.9
|
28.2
|
59.9
|
63.4
|
UAN
|
180.0
|
179.4
|
334.6
|
350.0
|
|
|
|
|
|
Petroleum
coke consumed (thousand tons)
|
130.2
|
135.8
|
250.7
|
259.9
|
Petroleum
coke (cost per ton)
|
$
31
|
$
30
|
$
36
|
$
23
|
|
|
|
|
|
Sales
(thousand tons):
|
|
|
|
|
Ammonia
|
29.4
|
33.6
|
59.3
|
60.9
|
UAN
|
177.2
|
166.1
|
335.5
|
345.4
|
|
|
|
|
|
Product
pricing plant gate (dollars per ton) (2):
|
|
|
|
|
Ammonia
|
$
568
|
$
574
|
$
591
|
$
570
|
UAN
|
$
329
|
$
300
|
$
322
|
$
252
|
|
|
|
|
|
On-stream
factors (3):
|
|
|
|
|
Gasification
|
99.2%
|
99.3%
|
96.2%
|
99.6%
|
Ammonia
|
98.0%
|
98.5%
|
94.7%
|
97.6%
|
UAN
|
96.7%
|
97.6%
|
90.1%
|
95.4%
|
|
|
|
|
|
Market
Indicators:
|
|
|
|
|
Ammonia —
Southern Plains (dollars per ton)
|
$
585
|
$
604
|
$
585
|
$
605
|
UAN — Mid
Cornbelt (dollars per ton)
|
$
417
|
$
366
|
$
380
|
$
358
|
(1) Gross tons produced for
ammonia represent total ammonia produced, including ammonia
produced that was upgraded into UAN. Net tons available for sale
represent ammonia available for sale that was not upgraded into
UAN.
|
(2) Plant gate sales per ton
represent net sales less freight and hydrogen revenue divided by
product sales volume in tons in the reporting period, and is shown
in order to provide a pricing measure that is comparable across the
fertilizer industry.
|
(3) 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 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.
EBITDA is defined as net income before income tax
expense, net interest (income) expense and depreciation and
amortization expense, which are items management believes affect
the comparability of operating results. 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 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 review of our overall financial,
operational and economic performance.
Adjusted EBITDA is defined as EBITDA adjusted for the
impact of share-based compensation, and, where applicable, major
scheduled turnaround expense and loss on disposition of assets. We
present Adjusted EBITDA because it is a key measure used in
material covenants in our credit facility. Adjusted EBITDA is not a
recognized term under GAAP and should not be substituted for net
income as a measure of our liquidity. Management believes that
Adjusted EBITDA enables investors and analysts to better understand
our liquidity and our compliance with the covenants contained in
our credit facility.
A reconciliation of Net Income to EBITDA and Adjusted EBITDA is
as follows:
|
Three
Months Ended
June
30,
|
Six
Months Ended
June 30,
|
|
|
2012
|
2011
|
2012
|
2011
|
|
|
(in
millions)
|
|
Reconciliation of Net income to EBITDA and to
Adjusted EBITDA:
|
|
|
|
|
|
Net
income
|
$
35.1
|
$
38.2
|
$
65.3
|
$
54.9
|
|
Add:
|
|
|
|
|
|
Interest expense, net
|
0.9
|
1.2
|
2.1
|
1.2
|
|
Income tax expense
|
0.1
|
—
|
0.1
|
—
|
|
Depreciation and amortization
|
5.2
|
4.7
|
10.6
|
9.3
|
|
EBITDA
|
$
41.3
|
$
44.1
|
$
78.1
|
$
65.4
|
|
Share-based compensation
|
2.8
|
0.9
|
4.0
|
5.5
|
|
Adjusted EBITDA
|
$ 44.1
|
$ 45.0
|
$ 82.1
|
$ 70.9
|
|
Available cash for distribution is not a recognized term
under GAAP. Amounts derived in the calculation are derived from
amounts separately presented in our consolidated financial
statements; with the exception of maintenance capital expenditures
and cash reserves for accrued expenses. 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. Available cash as reported by the
Partnership may not be comparable to similarly titled measures of
other entities.
The Partnership announced a cash distribution of 60.0 cents per common unit for the second quarter
of 2012. The distribution was based on the Partnership's available
cash, which is generally equal to 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
the general partner deems necessary or appropriate. The Partnership
also retains 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. 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.
|
Three
Months Ended
June
30, 2012
|
|
(in
millions, except per unit data)
|
Reconciliation of Cash flows from operations to
Available cash for distribution
|
|
Cash flows
from operations
|
$
26.0
|
|
|
Adjustments:
|
|
Plus: Deferred revenue balance at March
31, 2012
|
16.0
|
Less: Deferred revenue balance at June
30, 2012
|
(4.4)
|
Less: Maintenance capital
expenditures
|
(0.5)
|
Plus: Previously established reserve for
accrued expenses
|
6.7
|
|
|
Available
cash for distribution
|
$
43.8
|
|
|
Available
cash for distribution, per unit
|
$
0.600
|
SOURCE CVR Partners, LP