UAN - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to the CVR Partners, LP Fourth 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 call is being recorded. It is now my pleasure to introduce your host, Mr. of Treasurer. President Vice Finks, Finance and Jay Thank you, sir.

may begin. You

Jay Finks

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

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

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

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

Mark Pytosh

CVR you year morning, us good joining XXXX today’s and Jay, for was for for a you, and call. everyone, thank successful Partners. Thank

were maintaining discipline. the focused our capture reliable market safe and improving financial on year, and operations, we During

and Coffeyville facility. capabilities, locations, facility our completed loading and Some process construct of excluding impacts third-party turnaround and plan in a are identified we new maintained railcars downtime began And utilization time distribution at We on the rail areas improvement during budget. specific EBITDA developing unit health half reduce $XX Coffeyville's Coffeyville reducing rates, outages. UAN high million, access We sales financial train office the the including a the accomplishments oxygen of overhead order increase XXXX adjusted achieved net planned highlights reduce racker facilities. BN $XXX safety second providing We of certain full back million on in we environmental million. our backup summarize and of both and completed railroading to $XX To of include, loss net and to Coffeyville costs. to planned a of consolidated in XXXX, line year-over-year in unit year, significant costs staffing. at We for possible of a

specifically, Xth. at Directors unit, fourth March $X.XX $X the Looking We and In of we net fourth the illustrates EBITDA of better this a to a we production distribution feel our to reliability on changed more the reliability measured reported compared Board paid sales unitholders $XX capacity on which loss of per quarter, million, be metric. on time-based to of XXth as record capture a production quarter during March of XXXX, focus period. And the net XXXX million. quarter will million, common of fourth declared $XX adjusted

XX% fourth XXXX. to periods. quarter year East fourth both facilities. plant the of XXXX, prior ammonia Coffeyville, compared performance for the the XX% ammonia the to the quarter strong the utilization at XX% we at plant had At compared XX% of At During utilization Dubuque, quarter operated operated for at to

available gross available-for-sale of produced XXX,XXX XX,XXX tons tons of of ammonia, of XXX,XXX UAN ammonia of XXX,XXX XXXX, quarter or XXX,XXX ammonia, combined of approximately tons ammonia UAN For and of and XX,XXX to of operations the in sold year the fourth $XXX our tons fourth tons UAN tons prior XXX,XXX production compared an per increase approximately the quarter was during sale of price net of XX% over ton, that period. for average which period. We prior year of in the back were XXXX at

expectations XXXX In and the addition, the approximately over service season to XX% that from period. cold fourth sold a ton, estimates the and down surrounding fertilizer tons plains MPK at year-over-year XX% from the northern of down season moisture the XXXX ammonia Ammonia was due indicate we during weather. in Current prior corn-belt corn-belt price for U.S. ammonia significantly application per combination of which were average advisory of quarter year volumes was for quarter net East back by fourth U.S. early sales excess XX,XXX fall increase of XX% $XXX of Dubuque. the

shipment. fourth to production In our ammonia Dubuque's weather, unshipped While these help financial December, over manage now East contracts retain were to results results. reduced our call our were I'll XXXX quarter XXXX fall quarter discuss impacted we rate by second inventory inventories, the negatively Tracy to the able which were for we levels. to resold turn and

Tracy Jackson

Thank you, Mark.

adjustments like the interruption first recoveries. Before of I EBITDA outline we cover that our quarter XXXX, during for and internal results, to business eliminate to use I measures revised non-GAAP to would of insurance any external our

based reliability a production a based mentioned, ton was onstream Mark metric changed utilization, our rates, also which of measure from which to metric. we is As

a $XX year $XX XX% due of and $XX a pricing $X.XX year-over-year we adjusted Turning EBITDA adjusted to $XX The respectively. approximate year of million. results reported common in or million EBITDA XXXX. losses and to This was ammonia of income XXXX, million net XX% is million our EBITDA net full and per of of unit net improved for to of loss million, common primarily loss operating the $XX increase for and back compared unit per adjusted of $X the XX% UAN for the or million, $X.XX with full operating

for net million, of $X we the compared XXXX, $X.XX per million, income or EBITDA million. of sales unit common quarter $XX of a reported million, net improved back net sales losses to primarily volumes as as Direct in increase approximately of prior loss $X.XX million sales $XX corn-belt XXXX decreased $XX sales a of fourth prior weather of XXXX, were UAN of fourth period $XX ammonia of recovered million XX% loss business the operating attributable pricing, and adjusted unit $XX adjusted from This issues These a ammonia net million, lower or of XXXX net sales $XX EBITDA year For also partially in million offset as and the was driven discussed. predominantly million for operating Decrease by for well the period. $X of $XX million quarter million by is period. year per in quarter expenses an $X In operating XX%, in fourth volumes. we common from the to improvements the insurance interruption to claim. $X just Mark of volumes the of

expenses Excluding $X inventory natural impacts, to increased operating due year-over-year, gas by primarily approximately costs. million direct

Turning spending. capital to

quarter the XXXX, capital During spent maintenance projects, of primarily fourth we which capital. $X on was million

million. plan to we maintenance million million approximately with to difference to facilities. the total slight compares of estimate spent $XX be of million our two of for a and XXXX $XX spending this at for $XX million capital year million approximately For due capital maintenance This year our $XX $XX which We spending total was timing. of to for $XX full XXXX, capital

that sufficient availability at full December the had position cash, under of $XX in and $XX we million. delivery our product the to as customer approximately balance for forward. $XX sheet, facility liquidity at of Looking the million is $XX the of of approximately the million total end future million ABL of year believe going XXst, currently related including We prepayments

million, debt quarter $XX distribution million of from adjusted for per Available and expenditures. remains portion including after consideration positive and maintenance environmental $XX.X unit million reserves current is million gross debt long-term unchanged. of cash EBITDA $X of for the our capital $XXX or for service derived $X.XX of Our for

We MLP. are distribution variable

by review reserves our the evaluate other will to cash future may and determined board. reserve established amounts future previously needs for anticipated We as needs

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

Mark Pytosh

of nitrogen was able the to fall, We had of farming corn-belt, ammonia temparatures quarter weather made preparation Tracy. or normal XXXX. just There After apply the that soybeans. early fell of XXXX in planting of the delayed farmers moisture seasoning. normal Thanks, of harvest field work do areas application lot which the confluence during completed, for late rapidly levels not were the harvest factors limiting and and conditions in summer across fourth a in many the corn was difficult

shifted demand to and springs. were As nitrogen customers' result a was most orders the canceled to from and producer the were fertilizer reorder fall our and spring. from fall sales of demand, decreased follow Due then down

because competitors have the order normal product levels for and Inventory to for application lower to higher spring been have book for short-term, was As we customers a both in spring ammonia. we significant demand have such, for pricing and soften led than while wait market begin.

we now a UAN large fourth we the order comfortable during in wait spring for quarter the as UAN inventory to of addition production book, our first XXXX In season most sold ammonia start. to We position volumes spring quarter. are

XX a there challenge Therefore, a last either incremental meet the acres logistics well of to facilitate uncertain acres. application or to needs for the we if for and weather to be year. of customer up customers' to when window. the incremental are demand our inventory with lead CVR farmers levels catch refinish for tons positioned compared of emerges, the enough million planting. levels have season during XX quickly which be demand. and if spring plus million preparing planting moving need planted will for be Most will logistics a long spring lost whether the the when customers should million tight achieve our In ammonia to improved nitrogen industry be be fall is expect X reduced will will season However, urea It repurchasing XX estimates required lot meet case, to we corn window application lower the begins. that targeted to UAN ammonia end is the application to nitrogen will million of corn in to million the X there

nitrogen are distribution of the market of fourth pleased fertilizer be to the a see for second half our the provide to to evidence the for unitholders able in quarter. We and recovery to XXXX

being we by safely flow our of cash plans capital judicious any Partners. maximizing high marketing pleased with we we will to closing, employees and are activities. maximizing free and continue to see early for cost, utilization operating that, While managing are to at ready thank for stages our answer this the rates, focus their want In XXXX prudently questions. our all our a on recovery, of our successful making to for I CVR and logistic contributions reliably Mitchell? year With

Operator

we'll [Operator a conducting Thank question-and-answer you. time, be this session At Instructions].

of Please Our comes from Goldman first with question. question line Adam proceed Sachs. Samuelson your with the

Adam Samuelson

levels I'm some on spot much dig in was was XQ lower the stock seen impact better little of of Mark, then then. I than summer So, recently. let's bit and And pricing market you pricing just fill how the was Obviously, UAN a around come quarter and how pricing has get off softening fourth sense summer into since trying considerably guess, XQ pricing the fill more commentary more just have versus to progressed? a higher the market have the markets specifically where market

first triangulate half to up shaping the is guys in between I think for as those your trying about book. from Just what's you how

Mark Pytosh

fourth all There book, showed part. we fill it, the in have most plants, of we the taking for half spot not it in was The of in their two of results, quarter was fill the price. it pricing price some fill and worked our our 'XX. there the but really if numbers we But that second largely was although most off

the fourth pricing be quarter quarter. reflective first the the in so spot of market And was what largely will

sold book we for the sold first this So December. some of we year a larger quarter but in percentage October, our and November,

Adam Samuelson

should rail help me unit do trains. at just And there from Can that up netbacks you to were would improve netback ability the helpful. summer the you update the step fill reach then, And very that the into opportunities that where in that’s provides loading then nice the actually markets. some Coffeyville, Just through to high additional market about there? talk think for a

Mark Pytosh

UP a largely plants the facilities the to equal BNs. shipping UP access of are rail loading the either at Coffeyville the BN, The out back generally there. that step let's both So rack rail or facility. is there and It's few has one

We are UP and BN.

set able was that’s the the economically geographic opened rack of So to that loading what whole in serve points a then up past. we weren’t

domestically the have bigger into facility. Coffeyville the at in now where the feeds train a to marketplace, quantities how the and from we rack facility, where So market very given co-op footprint served, BN points customers buy system, we of some put unit in it's the the largely distributors And geographic everywhere. not large that doesn’t and go like that various every that retail

of train than there that are nitrogen Just that an are parts our unit one big certain consumers cars. individual of rather buy

to the quantities able market one once in the do for have us we opens been all a that points ship customer same delivered time. what big to point to certain is that large so for on up And at geographic

allow if the will to people going move that now what's at point. want to you product especially in to volume are us season deliver a spring, coming look So position, to in large

able deliver train makes so producers. with the to other And us unit competitive being

Adam Samuelson

of a I if XXXX? Did finance CapEx it. missed I'm couple you And outlook ones. modeling sorry then for provided And just

Mark Pytosh

around it the be comparable So, probably to pretty will million year, levels… this $XX

Tracy Jackson

I million have $XX to provided million. $XX

Adam Samuelson

in of some little there? that bit growth included growth, there s is And

Mark Pytosh

Yes, there it's targeted there, bit in any is largely smaller projects a of maintenance. growth major not some projects little but

Adam Samuelson

in they is And the -- bonds, then are any the just I finally quarter… second there callable believe

Tracy Jackson

fed market we to will as as and this monitor take the what duration well callable. year. structure pricing what and the continue monitor available, And actions is and are they closely They

Adam Samuelson

If to on get an reduction it be potentially things to think today, that do the could cost would open opportunity call? that Do amenable you or credit be stand is think meaningful you a markets to the -- some up bond… will

Tracy Jackson

possible… certainly It's

Adam Samuelson

refinance… Through

Tracy Jackson

that possible occur. certainly it's that would Yes,

Operator

question. comes Please Company. proceed your from with And Charles Neivert of next line question your the & Cowen with

Charles Neivert

I questions, it will pricing. any quarter-over-quarter? gas short down fourth natural there Few say one, significant relatively gas was just manner? the in really was did Or looking price. see burst you decrease from be XQ guys some impact mean, at a like it and quarter in Does look big

Mark Pytosh

We had It's spike. market and winter. spike The of a a coming in into gas kind had the moderated.

high not in low. its the first not quarter So, going I moderate would to too too

as obviously in coming into holds If there. is the look you out spring, it lot down a it

backed some opportunity as I get weather. we after So spike will December. the was think normal be that into there But off not confirmed it

fourth So, that the quarter moderated first is number. quarter from

Charles Neivert

have in is tying a to markets'. same you And if I tend at not pricing I per guys NOLA in and the what going NOLA, better. volatile, level mean se, you similar? to mean, into similar a was But tighter in your assume Or not sell little experience, but -- guys to pricing being is movement been less range? sell regions obviously just obviously it don’t the into I I you seen bit lot look a

Mark Pytosh

interior would in because liquidated. the you because be the a not off certain as customers a comparable barges in moving, plus old market, they generally disconnected, product are it's the is measurement is stable. non-liquid so to movement first the least and place there just activity NOLA come generally, a it’s more markets a different lot the liquid point that liquid have liquidating And or they tell liquidity. system have of as fall, the not are with just been been the pricing it's between much it's through the barges, volatility. liquid producer not a best But much not not have think you into pricing market not NOLA I that not that not the transportation, is but what point, the more been are their NOLA, It's products, The from I a are don’t weather volatile, has there. within structure. that’s so not a to don’t in much very probably at go And lot product pulled because a measure, quarter, market, to school a being Well, of there is

see through the here don’t corn-belt, If bigger you swings the you NOLA in first… saw that in these go you

Charles Neivert

And I it's NOLA But big urea. products deal much trader-to-trader reflected thin nature. of these because market with that know So in selling in you declines urea and of guys in like said, things don’t and the and that generally other not type places being guys of trades into. NOLA, are you you are

seeing? you that’s are what So not

Mark Pytosh

applying not there the fall, spot weaker transaction. of much the is The the January, year lower. April of a been as of down beginning was quarter. softer not in this The is buy was or but because versus again because volatile year Generally a much like buying you it's need until particular is where it's in are deep as and fourth it to in into market burning not less not because so March it and too market, is but there the than interior has activity

Charles Neivert

when where tend you you most April? movement movement where start the the of March? see work. again, this weather direction guys it it move crazy season bracket other? do isn’t at on one it most in assuming a you really I Is do product? where When would to guys Typically, tons seeing range? or early would your to significant Or those late do Is you mean, based of

Mark Pytosh

around… weather previous calls Well, I I'm I've said think best on the not forecaster

Charles Neivert

take out. Well weather we will

of it would an happening? if to season does when it's should start? say it range -- typically late just would these that I things get look if be? you start for What's when when it timing Let's early the start, And

Mark Pytosh

south seeing February then we in or if movement moisture the up Kansas into Oklahoma, said, without Typically Iowa. Texas. for Nebraska, okay, the you February just climbing kind you way April and and then in north you start a season, of in -- into would at typical product you is map keep it February, get all moves you go then and cold, excess excess And then March looked

So weather start spring. we bit full markets to just creeps the it's as normally a would been our -- north, warm cold slow you to see little but -- the

So but much, and are we Kansas some February seeing here. moving hasn’t bits been movement in and as pieces

of bit needs enormous why there So will a Texas to logistics, it’s just that of are and product north amount is way normal the and about that’s be on April. late start was because ground. little get a talking go there an I and the then to And all

Charles Neivert

off trying even you purchasing, customers than you people bigger not still it's you an tying end late about Do where do now, talking see bit because things on up to little things back are out hold with better late possible. as a where and start just to holding as could trying but a squeeze

same are to of look of back at trying they look like we to down the the are see jam end going Assuming nitrogen this trying it, people into thing? it you but amount to are anyway

Mark Pytosh

it's -- typically psychology the the too curve. always if of both is There far at sides on all. It reacts

because system the now they back. are of holding the so And and inventory

entrance you at And other everyone it not to you tends more the because same very up when the door So to side, to it the do runs back to then on negatively, turns react to logistics. And the have the time. overact it's go to liquid. upside,

in to not trucking tons locations them. are them railing are we we choppering can't, you If or

week the a And river, move. the import on are in who of barge so players the one that’s there not is case

to that to need really to backup days time lead get You XX product market.

of are logistics two ground we the have that’s or to to my it grow in so three. a and And is lot are wants windows tonnage or measured week going those again a to about comment

or a two And to lot so of go that’s window. three tonnage week into a

Charles Neivert

you question, going how for word, this because Yes, quarter. in dragging If Last took weather, of I'm deposits you and people you better like because out that lack many now, get product right, to you to back on the it I do worse into XQ better better line of and second if gave how off you you it I that? and their were just are same ground. XQ, are of And go had resold that trying a back judge their get got and sense guys feet in it deliver had many were you what Will with timing. the said you pricing? because of looks worse pricing, gone if assume now sold didn’t people off or just it pricing, you've

Mark Pytosh

moving was would is try I quantify that, many there to too pricing. Well, through say pricing that tell get because that, I'm than I parts answer. all spring the would to going an you the not easy to What are fall better

the However, pricing had we ground. put both would a of liked weren’t We have able both spring volume lot to to on have and periods. the tonnage movement

loved have from that’s a tonnage perfect Now, the get we sold just the the it customers more spring. to too. have good spring money a book very the scenario. able to to that would do move fall We in little were we have with the work fall on, so to But to

pricing us all it's not fall. to here free cost in But quarter So back. -- won't costs it was the it's get the spring of better something we that it than launch fourth the going a

Charles Neivert

should think starting And payout you're the given make XQ, pay now continue. way are covers me like year, to I that good is that moving for that, something that that things this that XQ It's in looks now. now.

good. that’s So

that’s it think me. I from

Operator

you. Thank

We over the question-and-answer would remarks. have like Finks to turn of session. reached Mr. back any the for our to end I call closing

Mark Pytosh

I is all thank like would your you Partners. this for in interest to Mark. CVR Again,

and commitment during to our work forward call. We and safer, quarter would responsible earnings like their employees thank of next you. towards Additionally, results look reviewing our all environmental our for first I Thank operations. to reliable hard XXXX

Operator

you. This teleconference. concludes today's Thank

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

CVR Partners (UAN) 21 Feb 192018 Q4 Earnings call transcript