UAN - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to the CVR Partners, LP Third 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. It is now my pleasure to introduce your host, Mr. of President Vice Finks, Finance. Jay Thank you.

begin. may You

Jay Finks

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

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

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

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

Mark Pytosh

net financial there available quarter thank everyone, morning, you of EBITDA and call. this for joining for $XX sales net loss XXXX include is third of Good $XX million, no adjusted the million, distribution of today’s for million, quarter. for Jay. $XX you, highlights us a and Thank The cash

at and at a both Dubuque while were XX% facilities. operated gas strong UAN operated the at XX% operating plant Coffeyville the third UAN the and we quarter performance supplier unit XXX% at rates the the units The East ammonia and ran XX%. ran at the During had in at onstream unit ammonia

third of tons operations UAN per during of the ammonia sale. at We available quarter XXX,XXX UAN a quarter was For net a approximately quarter of of third produced XX% approximately our XXXX. $XXX at and the XXX,XXX increase combined XXXX which back price over of tons sold a total of XX,XXX tons third ton for the

In of seasonal than pattern. XXXX was now XXXX. the of UAN quarter over sold in price fall year higher a of our had of ammonia we we quarter our of per XX% the XX,XXX in application quarter to discuss to over sales I expect so addition quarter the third at represent plains spring tonnage The XXXX, ammonia much we will to sales sold quarter $XXX as period. of ton volumes results. plant a the unusually turn the ammonia the compared call XXXX volume ammonia significantly the of quarter XXXX application normal much to a to normal second the higher selling ammonia total approximately the ammonia the sold volumes making we third in be during fourth we summer tons financial at third enter the be the Tracy inventories third caused high. of season fill in increase This end downtime ammonia more back a 'XX. conditions In of of Coffeyville quarter which XXXX This in of northern net poor the third quarter and second

Tracy Jackson

compared adjusted was decrease and third to of million to or for $XX loss year common the $XX million cost unit of a quarter XXXX unit Thanks million which of that $XX at the of discussed. prior of loss net XXXX. adjusted $X $X.XX in We reported common to is expenses million of million with sale $XX operating Direct $XX Mark. due at net beginning This to facility or per decreased compared coupled EBITDA per the maintenance a XXXX compared of turnaround resulted XXXX million of prior the year third were primarily as for quarter decrease and $X.XX higher to cost repairs to by the Net $XX million personal period East in less X.X for turnaround of volumes. third reasons due The the increase due million Mark sales last the in in period. UAN quarter sales volumes third year-over-year for as the and back of million was result decreases quarter and prices sales $XX inventory period. to turnaround available primarily ammonia just ammonia Dubuque activity. attributable the XXXX. was in net from a lower in partially third offset quarter of to The The year's EBITDA expenses mainly the as

Turning to capital spending.

CapEx. million to During the our $XX combined approximately is of for quarter be million $XX for $XX maintenance to CapEx we our on to million XXXX, million In $XX which million projects, XXXX, capital we two facilities. including $X $X spending at third spent maintenance million expect

$XX prepayments total including had at million approximately Looking million XX, of feel of end million we our to $XX balance of quarter cash under $XX position September sufficient customer going We sheet product forward. the XX related at facility the and of availability future liquidity the is delivery approximately our of for as of million. ABL

portion, million. remains X and release In term X expenditures for cash million for unchanged. for cash million gross debt at rising we including capital of XX environmental reserves current long available of debt, need Our no and the established maintenance had distribution service, previously of a

also our other for needs previously future review board. remaining needs. anticipated will we established reserve reserves MLP We amounts future evaluate cash by distribution variable the as a are and We determined may cash

fluctuation but partner. result capital limited over to necessary distribution, deemed reserves not and if from operating Mark. by our prices I'll that quarter-to-quarter expenditures maintenance cash factors a or Directors several of for of our due will the the in general products, back performance, including appropriate received As the finished vary With to Board any, to call turn

Mark Pytosh

Thanks, carryout analysts corn crop larger approximately in the believe drop Tracy. and is average. week Even for five XXXX; USDA in has ahead corn planted the versus is the XX% This expected soybeans acres slightly given the the will approximately current many the U.S. the year's corn that record appears approximately XX% corn increase harvest to season a planting In nitrogen the higher in be with behind would to The to soybean of year year years. complete to harvest. estimating average, industry XX%, relative XXXX year the increasing past wheat the the first the complete XX% harvest however be XX% is for five a versus are XXXX in XXXX, weather for five at it in projected is improved increase overall XXXX which XXX of is momentum to yield demand per acre the planted of XX% growing bushels fertilizer. acres Also economics

have UAN in to and an UAN earnings by call urea, of has we demand at uptick restraint significantly US strong XX% shown the the XXXX. in ammonia summer; we that and have been have seen were the exports all seen the levels stated a prices shipment urea sanctions. regions prices call and increases in with to summer not China XXXX since on Iranian Since of potential even exports higher in world further and the fall last due price XXXX. ammonia for As for out risen last compared Urea are fill in

in fall through the third less Additionally fertilizer netbacks go prices into favoring we of gas US reflected the making and production high expected US These spring. and quarter but natural fourth to prices quarter were into competitive. increase not currently US outside imports the the results, our as are our are nitrogen higher

XXXX sell fourth supplied the summer we mature provide not on product of to did largely to increasingly continue improved focus to capability Domestic logistics. we we with with quarter customers many in the trade our these logistics to domestic continuing our expect customers results tons value currently our being netbacks. are believe are ammonia to While or flows reflect fill UAN production; in and we comfortable the maximizing market by as low-cost

rates, we being prudently and focus As managing and market plants onstream costs, on the and maximizing will safely our operating maximizing marketing reliability by our our nitrogen activities. high our at logistics capital flow with judicious recovers cash free

that opportunity We questions. the in may to ready distributions to improving Michelle? any us making cash conditions the give return expect the answer With market we are that future. to

Operator

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

Adam Samuelson

versus commentary about to how today continuing about July? Mark maybe any of quarter on given market higher it the to the in than much and today had way kind just utilization to where fourth in discussions fall price some flow pricing differences to being summer results left of it summer through calibrate trying was fill price we’re the was sure has just the program where make the in comparably thinking -- how appropriately you stark

Mark Pytosh

to the will to uptick so in we you’ll a through -- through is year there because tons tonnage that and much say that’ll not don’t kind market were be in a for quarter. end so we time of we’ve not year but last you’ll first were quarter current the the at sell, fourth year first the quantify but quarter sell, versus of fill we we of a what be quarter third blending -- see that do of year blending I sold lot just it the tons fourth sold of and the the because really continued prices end selling largely a sold tonnage lot it’ll the an quarter went been would higher you’ll how the in but so have but We fourth of rising see did some in a or pricing typically be sold the still and we've see and had Adam transitional what generally this quarter that it we the so in the through that, during the and then

Adam Samuelson

point as future look to here the to from distributions of service, or not through above debt you the around maintenance about here CapEx of distributable continued cash near kind third you back less quarter the cause price mean that if these coming with level in of what the of just the million flow at spring then we’re I fair to the the about levels if is pay from stays XX gets things confident And kind it -- the at plant EBITDA, less breakeven distribution? or to would profitability

Mark Pytosh

that the factor benefit the had ammonia think we I quarter issue just if fall the irrespective the pricing seasonally you from run, risk the and the production would fourth seasonality seasonally the because remember have the is but significant the the perspective. volume quantitative the higher issues the with would so than so ran issues has of we quarter risk that without third points quarter fourth, seasonally than be the assuming higher production third the fourth quarter same, third fourth is lower in be factor getting of

us give of for second. usually as from volume perspective where we’re just would that So fourth-quarter is great headed sense is the a but a directionally a quarter you

Adam Samuelson

XX covers interest and the CapEx? charges XX of between like the basically just maintenance EBITDA Right, fixed the that million million your or

Tracy Jackson

a assessment. That’s fair

Mark Pytosh

Yes.

Adam Samuelson

as seeing seeing early evolve import market the market, move of the of progressed market the moves kind here but as just at the UAN we’ve competition it barge then act away was kind imports particular I to how any on distribution color look domestic US as differently you’re And you’re really from that change? customers we UAN seeing be just channel broadly just in it the and mean or just product how seen into

Mark Pytosh

Nova running East import perspective generally UAN the California say would coming at Mississippi the we’ve coming the the so eastern up states either new anymore I that customers are points West would capacity Northwest the from the Pacific all the corn where the in see or Coast from this through imported Coast we it’s the Coast only customers the through really from UAN Coast, is from belt in drawing best. and with rate, that’s those not that are product any East or it a the into product of enter West the import only logistics the so full What basically is Nova seen coming don’t

and has So where and of is plant this have moves that this point your combination that is got all these on at the plant have competitive points barge come but how is point it rail, touches and generally the customers based truck the capacity the logistics a new to good and settled you’ve draw out plants itself Dubuque comfortable out our where that’s what we're way. sorted East Coffeyville for plant the most same the and they at say that

the sorted So the all to customers that. plants and out have are themselves used

than the The about come been in has pattern markets every lag the people more buy summer so customers go a could have because buying -- say that from we’ve at plants they in the so between every now, the draw stayed has and are reflected much customers the week buy the leased the as of in they’ve other the they kind the demand and pretty or a consistent more product since would prices imported customer past and and been during from ratable ratable buying season regular the buying products buying and they’ve so since regular so demand as they even didn’t thing pattern higher weeks a so fill that the consistent. we it the summer of ratably almost prices fill go actually the been I is couple and flow seen the the fill don’t buying time and

Adam Samuelson

perspective belt Wisconsin, specific or of and wet any missing pace there? harvest commentary around Northeast gets and grounds just weather of Iowa, just corn risk a from think as you Northwest northern of kind cold Dubuque too around about any East quickly of temperature more then the a fall too of thoughts that window I Illinois, mean in then kind just kind And

Mark Pytosh

that’s little -- we’re or the been of been lot market from barring normal, get the say and temperatures I now they’ll out lots week don’t more that slow a if side, in seasonal in side's a going cooler last I relatively side come rain see behind don’t normal, a a it’s I so from the not we of point Illinois on in to and Iowa I’d and don’t out there, I was so it’ll right place in normally dryness a can see necessarily to It Iowa the the progress and this corn unforeseen the be but we’ve be some it we’re slow beans being seen actually at I so week good think ahead, the is perspective. two that that field expect anything think I and kicking off made normally normal from in so -- wet they

Adam Samuelson

Okay, I color, that's time. the all very helpful appreciate

Operator

Thank you.

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

Charles Neivert

and as as much XXX stands out you quarter If UAN of sold it the XQ production third business XQ are we we’re to the fourth? volume we guys look you in fourth we we be therefore XQ, you guys If would quarter -- full we to didn’t to your fact had in run obviously ammonia. were what assuming production sold the already bigger at that’s on you’re should of the for you if largely run XXX at look now so than be you sales expect looking fourth in you and undersell and can quarter tons oversell numbers at should but out, sell

Mark Pytosh

the just in the I now, the been waiting be But pretty to of on then out, but that like we ammonia quarter book demand week a third and run. the largely and send we so by sowing waiting quarter. third run for it’s got only what make ammonia early fall has shipping -- we’ll schedule it’s would good it’s usually a there’s little but sell we’re a will there it from all UAN expect the and I over pretty October. of our course there for always out the subject see normal developed we’ve there, think I we sell call; there, say fourth that The will to pattern the normal

a -- it quarter fourth all be and time, -- that’ll we delivered was into the it fill, in that will be will price product in over we didn't it the here So be anything priced first. then obviously that get doesn’t delivered the

Charles Neivert

until quarters you’re able be until the you to wait or Do after wait everything scheduled have couple next spring in to turnarounds application? the any going

Mark Pytosh

next Yes the scheduled turnaround in would we’re year. -- be of our fall next

nothing… So

Charles Neivert

into mean at in probably guys that’s little is If you to benefit more there in I so areas you some distribution. customer terms much that’s a production are much or places be corn you pulled Do to have be or breakdown there’s really should your it? I change of bit that areas likely just that you that look of at mean are how expect customer soybean area locally or going be areas the corn going not two of your much

Mark Pytosh

it up say -- beans conversion some two because corn just not be consensus and from a in East there’s around view different going pretty there would different corn. would of that view beans to there’re really to a customers markets, that’s a some it’s I be there’d our acres Dubuque much a say talk of the two transfer there’s there’s to I from ways -- corn

test month Coffeyville have acreage actually some biggest footprint a So the of up that’ll be all that western if to more that to more pullout be so Coffeyville going the don’t because we period ammonia roll see ammonia may that the better -- the looks five coming of and is fall the really the of there’s this in Coffeyville. there’s see States, will Kansas and -- bearing we more benefit up to to in market wheat see been benefit it there’s years. going in like we’ll of the on over would around so. year At wheat out then I and because and its issue able And but this East expect United the or wheat here we’ve be that a of Dubuque run in out year be gets Dubuque it wheat so think seen you’ve the going few run you locally around years Coffeyville a would pull it then good is Oklahoma out East draw side to Coffeyville see run

Charles Neivert

wheat if mean a is acres -- from giving what’s it from? you see I taking increase it in just it it taking

Mark Pytosh

of some they acres corn to a If going mean definitely -- wheat wheat market from to go we’re we’re taking bean Milo those just the product a it’s guys, there to downgraded you it’s -- been think of -- kind more sorghum I’d customer see bean that’s of it’s not base. I view don’t but they just Kansas consensus I but bean a say going see talk away corn more to wheat and to or is not market difficult are so

Charles Neivert

and things Is the goes through I and then the then benefit come spring pricing generally whole that and you right? pricing the wheat cycle any got season out luck the mean go benefit in things is going winter hold enough the with like and also to cider in in wheat as winter coming assuming out all wheat of you’re spring they will of in those come probably a that strong that generally get

Mark Pytosh

we’re too and to soil run it’s there’s out is first quarter light going to issue really a hard moisture we’ve see indications call this the we’re for Kansas pretty rough the but be rotation the there, several the wheat year to so pull starting that’s run had interest in the to weather the there’s and starting in years in in and quarter pull early for wheat a it’s wheat and Coffeyville. big of in that been in but years get dry good Well really last couple that we’ve run see that first seen to indications the

Charles Neivert

much left? what you’re what could I your and assuming at at again that going I think -- how guys mean high to production certain of already be for through to prices left how is you -- you’re that sell said committed whatever what you come out you’ve have commitment much that sale at haven’t much rates that XQ it not assuming sort sold is reasonably how or

Mark Pythosh

like Well we that. flagging what our we like about don’t we’re to do planning so to to to competitors talk tend don’t

We’re to market to we’ve where quantify comfortable I want on where that tons we but stand there is flag we don’t sell we’re don’t where want because our demand I comfortable the but stand and stand, books. to we

Charles Neivert

back I the the dealing to demand were just you wasn’t or guys is that I classify that market that the go I third then down pricing way fill the was you with make it? available decided it of demand and product there, assume you at a quarter let decision the to mean was there, it wasn't that off guys did it When to you Okay. programs, level amount made a it certain -- more conscious to cut would is to normal

Mark Pytosh

we they anymore boy have customers of domestic production -- before to the on that so the knew customers because demand others and most variables be around told the us for but that's that full when make don’t decided without river and makes everyone we buy those barges sell block as they so and we I -- we buy and they’d that’s We in things of another didn't not that bought like all weren’t it are now either in than can our the but going was describing way comfortable saw think expectation did buy there, last the risk there been that so September was -- and only and continued smaller is ones September a too, demand has steadily July assumption book year steady in we the and could October you’ve I to the we closes but why the as they much ratable they a expect back our was buy. that

Charles Neivert

or When when -- does the is guys. it river close do you

Mark Pytosh

and Part in because created up that’s but on river of variables there market of the some of some which far there closings closing. all due -- beginning we’re the the here we has from north parts to off is that urea rains in was the not go the of the been way there but not flooding were river it

Operator

Thank you.

Our with with next question from the Lin comes Hite. Please of question. proceed your line Shen

Lin Shen

think given pet coke in do Quickly I stay final the feedstock prices the running see going some to were cost higher or see you XXXX? usual here light do than improvement you

Mark Pytosh

are I we our think lighter in see but to be expect able as we XXXX planning sourcing cost these we’re that to to so get might slightly of refineries the account into taken days we’ve that and crude higher into and ’XX all the going costs the be there and effectively. running manage

spot as work -- in refinery for and can economic price good we doing comfortable of have so Coffeyville up work We different pet draw we more XXXX. we pursue lighter those that year feed there's Coffeyville going had on more we’re go crude because the our from pet to have onto the we coke coke of to end than avenues market plan for will through normal just that, going -- refineries that but and a I feel group that various and close we’re refineries are ‘XX this and the a we to

Operator

to I for over to We’ve like back any the management call our question-and-answer would turn the end you. reached Thank closing of session. remarks.

Mark Pytosh

all Partners. of like you I’d for Again interest thank in your to CVR

next to New Year. fourth-quarter environmentally the like We hard commitment look all our you Thank for the and work our employees reviewing responsible their results operation. forward I’d Additionally reliable to toward thank in and our much. of during call very safe

Operator

concludes day. you you. participation a teleconference, your This disconnect this for time, at may and you today��s Thank lines wonderful have your thank

CVR Partners (UAN) 25 Oct 182018 Q3 Earnings call transcript