UAN - Earnings call transcript Q1 2018

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Operator

Greetings. And welcome to the CVR Partners LP First Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure Finance. your my Vice Jay now of President is to host, introduce Finks, It you begin. you, Thank may

Jay Finks

Thank Securities you, Mark forward-looking may Michelle. management. me participation is Executive in remind Good term and statements Prior morning, Laws. everyone. call. Officer under this recent defined me as We to With you discussing that today results, members that contain are other Pytosh, our Chief today's our Federal of appreciate let your call conference

made during of expects, statements words call that be For to to statements any this anticipates, statements. and the this are not are intended the identify historical deemed plans, purpose, expressions outlook, believes, foregoing, may forward-looking facts similar Without statements. be forward-looking limiting

factors and our with You're cautioned that Commission these Exchange statements latest important forth the filings set may earnings Securities in by be our and release. in affected

comparable over included the earnings reconciliation non-GAAP of turn Executive Officer. market. financial such Pytosh, related morning, to filed this most prior I'll that may disclosures in forward-looking Mark? actual discussed update no extent result, any With Mark or to in operations said, future various call are open with new the as This also non-GAAP events or forward-looking the to required information, includes to a we our the measures, obligation statements. the our measures. directly results release otherwise, financial call As materially XXXX undertake except measures, that quarter including statements, result a GAAP We to The results law. first from of Chief by the publicly whether to the differ SEC

Mark Pytosh

our And everyone. call today. Thank you, Jay. And morning, thanks for good joining

of contribution success, would Partners, for all will summarize first of begin, to our $XX be quarter success million, has a future. but to for included many best loss been like Ball over wish financial she Susan the net to thank I Susan years. CVR missed, $XX we EBITDA $XX I adjusted To instrumental all of her sales net the million. the Before her highlights million in and the XXXX

approximately million. UAN schedule at First by $X at first total was the ran at impacted at ran earnings Coffeyville, ammonia on-stream approximately The the XXX%, operated XX%. and plant gas were East quarter quarter rates impact fire results approximately days in were The downtime on a Dubuque January the XX facility. XXX% at unit month

Dubuque East unit and plant XX%. While UAN ammonia ran the at

as combined the ton This quarter We XXX,XXX the XXXX. first of niche other the per operations sold of For the XXX,XXX led produced of was back UAN. UAN tons converted upgraded for price a compared of We the of the sale ammonia. net approximately quarter tons majority per of XX,XXX $XXX to our combined rest of approximately to while nitrogen to ton in into $XXX ammonia first quarter, during available XXXX tons tons of XXX,XXX approximately produced products. a and first the total of ammonia

East first the sold less per of the to fertilizer For compared for we will a the the first quarter XXXX. financial pay volumes my first in discuss our ton first remainder a Due in the we XXXX. In the I to sales in in Dubuque price and Jay? XXXX. of discuss the quarter the application, ammonia XXXX results. downtown in and ammonia Jay in that's before pricing will XX,XXX and remarks, as compared at back the are detailed be plan facility, during affecting closing outlook very the XXXX we Also lower, weather strong quarter were combined $XXX XXXX. on at of first to to fall would result XXXX Dubuque. that, a was quarter a downtown conditions ton net nitrogen total of to at levels of of quarter XXXX East And first of strong But fall challenging sold not ammonia, application inventory year. per compared $XXX approximately of conditions distribution volume The difficult tons for position the quarter a industry environment the fall

Jay Finks

year million by in ammonia offset of higher to and $XX as Thanks, This Mark. were adjusted primarily or UAN materials was $XX decrease for $XX $XX of compared per period. million or compared loss period. the attributable adjusted as per is common the unit to flat Cost $X.XX a $XX net of volumes. volumes $XX We the sales unit first for the and net for compared remained quarter quarter sales Net partially EBITDA million in prior year period of of XXXX. The reported lower of to the and first prior first in quarter million XXXX. common million million of $X.XX the a $XX EBITDA loss same $XX the other for XXXX to million million

first Additionally, quarter the $XX The XXXX $XX year we tons operating prior direct compared for million, of period. expenses overall XXXX. to higher UAN increase sold primarily being was in as due inventory had to to quarter higher increased expensed the due of first cost in million

turnaround associated million plant of impacts spent during we including expect $X is this A in million. Coffeyville XXXX, $X.X In $X.X with CapEx two We XXXX days turnaround for approximately mid-April began the is our at $XX which facility XX loss maintenance million combined last capital the at first to spending, which we production to capital the of spend. full is to of on million expected million, estimate Turning approximately our for days. be $XX capital exclusive maintenance our projects the quarter, facilities. business XX spending

are We budget schedule. on on and

position our quarter $XX forward. as March adequately of approximately availability We the approximately cash liquidity cash of of at facility sheet balance the total and going we of XX, at and million. million the is equivalents of $XX Looking had ABL under the end $XX million feel

Our current including was debt the over With million. portion that, approximately turn $XXX I'll long-term to call back gross Mark.

Mark Pytosh

temperatures in a averages lot the temperature weeks to estimating and has million belt. rain, has be start corn look corn $XX for are Demand and and on and planting Spring increased is can to of promising a get track as normal the couple terms we year The acreage slow this off dryness week up this of USDA next snow had we've throughout below Jay. approximately been catch easily acres. well Thanks, back and planted corn planting.

corn UAN the XXXX Since should demand expect have per While about earnings declined the this only will call, planting carryover amount solid be year urea are nitrogen the this $XX help fertilizer inventory a a last ammonia into season. reducing ton, from we period. during and still and down XXXX, from small $XX but lower down prices to acreage

and normal the expect were At marketing season, XXth season. the year, We demand will of flows. being pricing gains lower our good the rest a preplanned last capacity idea in the we this through have side are season their June for trade experiencing rest than change momentum. causing time levels a application We believe we competitors once better new production domestic of customer inventory

and We they their can urea onstream more producers, market settled Now production custom is just with been customers so from the is XXXX. are meet to have year deliveries all in needs domestic more believe of of fulfill trade provide a demand. as our normalizing, the production. in steady not export new China well time a new that supply largely to flows to grown the this supply Among need. in the active UAN production from allowing as the their domestic and has very market purchasing

As second to the in better of been half market the XXXX pricing and the season, have downturn. nitrogen the we balanced second low the quarter we last the planting than year this expect finished to expect fertilizer be

prudently plants to improve However, even focused our on-stream improve, organization Energy our regard conditions and been managing reduce eliminate we on company high this and with our in G&A operating more cost, in unprofitable making. plan our have collaboration our costs decision activities really parent CVR restructuring at as rates, business

positioned expect our marketing versus logistics quarter the savings We continue and XXXX was and judicious our $X we capital XXXX. lower Our first and cash of in really ready for we're SG&A and be going approach in to but activities. our manage logistics to conservative that during the we're well with million until maximize with marketing, further the our recovery by rest We Michelle, our With production, we're Q&A. fully to remain think hold. takes

Operator

you. Thank

be Goldman Sachs. now conducting Adam comes with question-and-answer will your proceed first questions. Please We [Operator from with Our line Instructions] the question Samuelson a of session.

Adam Samuelson

Thanks. everyone. Good morning,

Jay Finks

morning, Good Adam.

Adam Samuelson

was in just go starting back a expectation pricing pricing call, UAN. trying Maybe I and And quarter, be year-on-year think the quarter? last quarter of versus to was 'XX. the on XXXX could realized there spring the If for $X year-on-year off two ASP approach ton that down reconcile to first levels dynamics those XXXX. first even up of just of in happened of the half in And potentially I'm what market

Mark Pytosh

is has at There just the first recalled delivered much the that than higher everything said much we fall at been price are much we sold the number of that prices down higher higher and carryover a than UAN. year, One I this year, this different we've and that blends and prices then orders season quarter than but of probably blended from yet in for dynamics. tons the fill higher at year kind Sure. XXXX as UAN tons [ph] that we the hadn't average was is two last Ammonia lower prices and [ph]. year had which taken approaching year. last We fill

So, it's kind of blended number.

into And the So from we will get higher that. as those the the two are pricing. in dynamics second XXX% we at benefit quarter,

Adam Samuelson

way you given the second I kind to late understand about think season versus market? quarter. could be the that that's in And side what rest price much [ph] the the guess planting. How of How pretty of, the year of important left this the corollary we And any what was that. which I is left have price, quantify

Mark Pytosh

we've And already, our but we good still inventory we've don't Yeah. for more a the fill second into I quarter. But to competitors. sold, got [ph] our levels want to have book post

been has since pricing So, good January.

just demand up our what flattish. it's we flat is book sort of is comp of and expect been sort bit a been but so, down are the it's here. and little a we seeing bit good, pick the to And And little February from market

a few seen last in We've product the move movement. Now days. lot products here

so, the think it, expect ramping finish we at prices And it'll say of spring. good this to as demand out very up I and we sort be I of

today but of sell to book we we we already the good don't supplement couple we next for there So, at a book more that sales sell, prices sitting we'll spot and quarter months, with whole have the have to higher but the have on. a

first. And will different see price a very so, the the in second profile versus you quarter

Adam Samuelson

about at Is they think into I as out that coming full And months turnaround rest side go of running season. kind you'd two of can of expect there is the expectation rates the after kind to Okay. get pickup it June, turnaround? production any that in Coffeyville the the Coffeyville, like May, from full

Mark Pytosh

the ammonia I the the on number, and of Yeah, on order of out a in rate look with ammonia or at but had a give coming first synthesis production issues side, the have decent ammonia tons turnaround. run it's XXX so quarter, probably we're quarters, if - this of going exact incremental some day won't production you a loop we our actually two pick three our last to up

had economics gone out better what we we'll - our So, will coming in. be than

Adam Samuelson

remarks prepared SG&A not is Okay. run year-on-year and down eluded or are reasonable the the you so year And dollars, rate or that then million to the that, of a balance quite is in you a reductions sizable? some that for

Mark Pytosh

we're we with we'll our as CEO hopefully a company But obviously you through a arrival have have we hoping companies as so parent parent summer bring into we renewed we're watching to our plans, out squeeze a of more and further to start working Dave number can go. costs on we that and say so, think good we as had that been down a, some and focus as were here. reduce the been I'd some seen ourselves mission on go We a that's we the the Lamp have to with and

Adam Samuelson

on on focus really Okay. the just that the administrator the Is And you is more SG&A function? then side there could do expense or anything last for operating plant on the the side the on me.

Mark Pytosh

East corporate No, good, initiative expense side the looks this part or away at we but the we're natural at get those well, and are a on for we good we're to pretty are overall of gas, the again SG&A get as the looks SG&A. SG&A as operating are chip at expenses may we that I expenses well. operating for sided pretty both whether that we're its looks the looking Dubuque is - expense hopeful that - pickup benefiting so, curve working so year and going routine

Adam Samuelson

all it thanks. pass that's Okay, helpful. I'll on, very

Mark Pytosh

Adam. Thanks,

Operator

from you, of question. your next Thank with proceed Richard line our Kus the Please question comes Jefferies. with

Richard Kus

Hey, good morning guys.

So, being color delayed ends season as what a to in increase relative you you year give year a spring this the you talked little about here, volume the up bit can little from bit as you go of QX us to last being think QX?

Mark Pytosh

at a but ammonia quarter this really Dubuque. it the more ammonia particularly really amount for in deliveries will East the this will little get sometimes don't waiting particularly be that, year have We and March did will year forecast have second fuller for we we significant have because in a

the So, to quarter stronger we the is versus year a little the it'll two so It's quarter year year but well second following of had quarter second second the always be years. in previous and in basically more the a this than waiting stronger first. this -

Richard Kus

so saw we QX what in more ammonia QX should it, normalized Got relative to in be then?

Mark Pytosh

it's six-month just we'll normal, be moving, if to block, back started as get that there, out you did Yes, recently. product moving a here we'll it's

April. And April like weeks, - so if days, just bit last move its back season, later - and that's XX to it a XX happened the the move from early little to it's you preplan two you what's the lose lose basically don't you so, season

Richard Kus

guys downtime that much Got you the an shouldn't a end of it. it's maybe QX, up out could what little impact? of going have an of you that idea you're give bit taking think in volumes too of taken or And to

Mark Pytosh

XX,XXX look everything at there. if probably UAN, virtually we what days Well, of tons because you upgrade to Coffeyville our in on around XX,XXX at - XX produce we it's UAN posted

Richard Kus

being Got kind you of it, just ends the lost so day in and that that case? up end at of the for

Mark Pytosh

It It does. does.

Richard Kus

QX, into it. on got fixed in going to unplanned QX Okay, was had had And I any about unabsorbed downtime with is million, costs then to of think $X from spillover the there costs be the you regard that that you mentioned that?

Mark Pytosh

on such and any that come that ammonia plants all production one we say of We thing don't expect I'd running the since is see that's January out we to highest levels we've issues so we're seems the plant rates of and very a XXXX north of plant sort of high the want running the everything like done tons there ammonia. with at day

Richard Kus

a That's great, okay. That's it from me. lot. Thanks

Operator

Instructions]. Thank you [Operator

Neivert with Our line next Charles Cowen. Please question. question comes the proceed your of from with

Charles Neivert

planning be area, this is your the at to million, contact down you like going with be your since to the when case but your year customers?' are acreage versus obviously based was planted in Yes, going you before, that corn localized $XX you guys number from or hit be area year more seem a is to very little that you in to look the if normal the year's think last especially on area perspective it's converse Illinois does corn at the for particular

Mark Pytosh

plants. two I'd for the at call Charlie, to that acreage demand tell going you people as of so the would believe just we and we're only here marginal from seeing little what pull difference movement in decisions We the always the kind around the made. Corns bit. be little demand a from in final flooring I much not plant as noticeable and they're with say down feel really little it's end think stronger can a may so I of don't there's product

a than medium be corn that important to price acres. delivered good balances on term $X.XX that domestically long matter if we better import is demand little a than with for product another higher I but more supposed the largely the price see inventory that's today is get the $X is probably think for is get a corn to the us rather think favorable, or we of million would did on higher demand corn the because factor us in term. it can being more two I'd where I long better a if

Charles Neivert

And if let's think does Okay. do markets the the around bother weak then site does damage there's it just might and it have just you to Coffeyville anything prospect is weak not issue because some putting farmers of serve where at any the also down? saying

Mark Pytosh

crop, this than next We wheat do we serve serve most far in important - we good. expected limit more we four thing there. damage generally Kansas so a tough is the we to in than you I country some the demand pretty but we three from of situation middle some do have it that that weeks the of see would a better there moisture pretty market. be and we've we might tell we actually to need it's year. would moisture out say to would thought probably seen and I'd call felt

it's top moisture in and is next be a it's but will finish So, planting in corn of to out here. the market, where hanging the soybeans out kind but and market in that top Kansas season there clean important few weeks the much

Charles Neivert

Okay, great. Thanks very much.

Mark Pytosh

Charlie. Thanks,

Operator

you. management remarks. like call Thank at further would any time. to There the no I are back this closing to for questions turn

Mark Pytosh

I being we call you. want look to to the to next forward thank talking you just on quarter. and for Thank everybody

Operator

Thank you. teleconference. This concludes today's

this at You may your day. Thank and participation disconnect wonderful have you time. your lines for a

CVR Partners (UAN) 26 Apr 182018 Q1 Earnings call transcript