UAN - Earnings call transcript Q1 2019

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Operator

Greetings, and welcome to the CVR Partners, LP First Quarter 2019 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 Treasurer. President Vice Finks, Finance and Jay Thank you.

may begin. You

Jay Finks

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

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

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

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

Mark Pytosh

will included joining be today’s $XX of May morning, a of to XX of sales financial per thank net paid $X loss you declared which unitholders of first the To us XXXX on of Board first record the adjusted $X.XX Thank you, million, common summarize million. distribution everyone quarter million $XX quarter unit, net and May EBITDA of Jay. and for Good highlights for And call. on for of Directors X.

poor strong XX% with quarter During At at of the XXXX, the reliability XX% period adjusted turnarounds. quarter utilization operated plant We Coffeyville, at capacity the the at we year the Dubuque, to at for Dubuque facilities. storage the at our XX% lowered quarter ammonia to for ammonia XXXX. the operational weather. utilization compared the the during first levels prior plant the consistent fall in first East plant first rate both East manage utilization to At ammonia quarter operated of due had for

the of the of production XXX,XXX net available XXX,XXX combined gross of UAN gross ammonia, to quarter and XXXX, available ammonia sale ton. XX,XXX XXX,XXX of the net for sold over $XXX our of of ammonia prior increased quarter and year XXXX ammonia, UAN the in of sale of approximately produced prior We at average year for compared per quarter operations tons XXX,XXX tons for UAN the first tons first of of tons price tons period. tons pricing UAN tons an For XXX,XXX of XX% during period. approximately XX,XXX

prior the an delayed. to XX,XXX due XXXX sold of in wet of first quarter and of down tons for first Ammonia ammonia the average during cold ton. quarter of UAN pricing XX% year approximately per increased spring In we which Midwest, XXXX the at to $XXX application the throughout addition weather be quarter price volumes sales fertilizer caused XX% year-over-year period. were planting over and the

up get farmers to catching rapidly. started, While spring fertilizer application was slow are

results. to pace up Tracy And the in will will our now this closing remarks. my product movements April. over turn financial discuss seen I pick have call We in to further discuss

Tracy Jackson

Mark. you, Thank

sales from $X results sales to by were to operating quarter million and predominantly sales $XX $X.XX or to EBITDA $X income issues primarily attributable loss the XXXX, partially $X pricing of and UAN for $XX million for costs. of loss million, $XX UAN of adjusted operating common the of of $XX decreased Turning decrease Midwest, or increased period, $X.X million. million, offset of million $XX year first These XXXX in million, operating by improved net reported related discussed. excluding common of prior the slightly driven $XX direct a expenses volumes. Mark to inventory as primarily and of lower the we the utility our million period net impacts net net is expenses losses per of for and weather ammonia prior approximately in $XX UAN million year improvements million volumes for $X.XX This unit The quarter in EBITDA sales to compared first year-over-year just million Direct of per the operating adjusted by was period. unit

capital to Turning spending.

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

be for have to continue turnaround at will planned expect capital fall, which XXXX to a cost total estimate $XX approximately In million we we million We would the excluding $XX approximately $X to spending turnaround East spending. million. Dubuque,

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

current Our portion term unchanged. $XXX million long growth debt including of remains

derived callable maintenance is senior debt of our XXXX. after X.XX% this of XXX.X% majority million of from These for our service quarter environmental cash become the position in debt at is million reminder, and year EBITDA adjusted par. of at a Available notes due $X expenditures. for and of June distribution the million $XX for notes for positive capital reserves consideration $X comprised of gross our As

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

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

Mark Pytosh

spring imports business after of than the arrive. Thanks, Tracy. carrying the late colder impact already Weather We been difficult Midwest, continued wetter to believe has fall application to and customers Conditions were throughout quarter. inventory normal Barge the until both in as levels back normal the been also were than higher application first flooding has the conditions. for logistics began. and demand by have on up the to on lower prices. Mississippi and In put NOLA rail and the first spring caused quarter nitrogen was impacted the in This pressure Nebraska nitrogen River. urea in

during price in reach application, started spring start UAN season weeks. trade conditions quarter. application the to UAN European seasonal the prices customers the still weeks, with the expect of we season now expect ammonia to the we few in believe $XX during in in fall the shortfall is cold past urea the levels nitrogen. farmers. products target fertilizer purchase Because and to caused and swing corn to at the million we recovered. past for not As the of ramped $XX the be progresses to be a levels. as move past more time of exports EU. At likely and full Union’s and the from particular for Even spring that most We over spring are delayed planted result of ammonia for demand has application the in we has into rest flows also application flows duties weeks. nitrogen when several to resetting is should first The days second the the impacted from the record with This have We and the in time range UAN wet and Russia East European have the strong the by to million XXXX imposition the in spring up UAN for prices to a strong two acres three UAN the trade had UAN markets of full on through planting quarter, few the being demand believe Trinidad of reset U.S., being these seen urea higher shipments Dubuque in

We contributions also in on continue lows that gradually and the pricing would rates, all in recovering plants activities. cash at market to to improve still free maximizing like prudently us from planting want believe capital to utilization being questions. our and continue focus maximizing of the to navigate prepare and that and employees high our first for spring partnership our weather next that their the judicious are our the two closing, safely operating conditions cost, flow to years. will reliably any our In XXXX quarter managing one nitrogen for to thank should answer we the is challenging to I over help reiterate marketing by and the I logistics season. With ready with

Operator

line Instructions] [Operator question proceed Adam Sachs. you. comes Thank Samuelson Our first of Goldman Please the with from question. with your

Adam Samuelson

Good thanks. morning Yes everyone. Hi.

Mark Pytosh

Good morning, Adam.

Adam Samuelson

help some recently, more the how you about bit along – if little talk it barge if from some spring has impact logistics, disruptions perspective the the has of of the challenges the to East the just Mark, for presented understand the and and a flooding might on dig and you we given those rail Dubuque, actually and Belt, your presented. business to challenges you I Corn wanted just pricing in Western especially into second Maybe think more of to each about and quarter. opportunities first, So as the both river a opportunities that the that realize you and saw, the

Mark Pytosh

Sure.

delivering because Nebraska first little probably they’re to UAN, application affect to but does going easiest particular start going Let’s points be it affect It’s rail in the It’s probably – a going to some of product in timing. with is be not ultimate the where later. the rail one. we’re

So of of are delivery pretty fit quickly kind our we alleviating That had later certain those that number things there in to Nebraska. – schedule rail are points re-rack into here. a to a

weren’t severe some we our that market was was other Nebraska. So schedule, in in just In product Northwest, that It really difficult the the Nebraska. there. Iowa, Nebraska there seeing we like really farmers movement for areas were and particularly issues any certain Eastern had parts affecting Oklahoma, changed and California, flooding, conditions rail that Kansas, Pacific Texas, into

the until more to opportunity mid-May. East given able us probably the get On to at view for the is – the Dubuque being of of of the top market the be riverside, location probably won’t Minneapolis that’s most an – It’s up at of that barges there.

really barge and should – scramble little later for movement. in a in will there’s season, the that product backup Orleans pricing so move created there. be product up That’s there. said UAN we the us were opportunity that seen the stage. bit East up comments, – And there won’t an a there. for affected going some to customers be see Dubuque up in kind of earlier for pricing impact but I’ve to my of at a We because up earlier stages But as haven’t on And that looking a New as

So my that’s really answer Adam. two, for those

Adam Samuelson

on just And helpful. or XQ? to more into the – shipments be not, out actually push that just clear Did rail on for really in of side That’s the XQ any timing Nebraska. just XQ

Mark Pytosh

in just they called when really than Q all already things be is tanks in in. go applying products prepared Nebraska, There’s XQ, go weeks first to putting for It’s tanks it of but there’s more a that always – apply. normal product there in It when I be would go to few be refill later going of in of to it’s kind they probably there. replenishment. wouldn’t to a what was replenish the cycle in in No. but – the And some would the timing some going

that’s be year. this going So to delayed

Adam Samuelson

market couple prices Okay, months. and last the of then impact declines in UAN in as at – the NOLA about just on seen think to we the least broader you’ve

is second presold is Your that just the of pricing in was holding XQ Is or up quite a place just good premium like that in you’re Midwest from into just held really sums feel just the that strongly. quarter? kind you of that strongly pricing

Mark Pytosh

quarter little the chunk there’s Adam, both. a of usually sold in big good the first dip forward before And season. was usually a time January frame pricing the and March a We it’s bit of then. February and in

been recovery but to of because expecting the was tend during – get kind sort we’ve we come now. so our part tonnage, then of And dip. February. starting patient we’ve been And sell to thought. We And than lined a and try least production for out is March. we It some to January, we we of at sold bigger were patient expected

would a is typically run. And first so be this after when there’s participate when the looking replenishment we to

firming like – been for patient looks our we’ve that So it waiting of the occur. sort to here, market is and

Adam Samuelson

Okay. I were to made East sounded at it like you you the there want comments – of of but the days utilization rates few a utilization good I then sounded some consciously in like and And rates down just to about clarify mean quarter, had where because Dubuque. tank space. the the for here slow things It

utilization things could of been and storage just have could there points the otherwise. – – not felt for a actually you if couple constraints So better

Mark Pytosh

last of from the the would quarter, – were conditions. It because would have basically inventory much because already at you most a about carrying ran we if – been it much recall XX% significant quarter fall of poor we have been yes,

we running we we and – and the us get do quarter, turnaround. off rate were in the to were plant to little during we’re on rate but intend well. full full we rate, plants run just a to of to till there. first so work the allowed back the good They backed The And shape bit

Adam Samuelson

pass it Okay great. That’s I’ll all super Thanks. helpful. on.

Operator

Thank you.

question. Our of Bank line comes from America. with Roger with of Please next your proceed question Spitz the

Roger Spitz

Thank and I of you Could what thinking you perhaps the X.XX% morning. prepared you remarks. said missed you your say about what were refinancing in the good bonds?

Tracy Jackson

available at the to They sometime and if watch the June consider do the Fed we’ll date evaluating They markets. passes. in and and open, are we after become to are us movements and continue call we callable those call XXX.X%,

Roger Spitz

Okay.

takeaway that to take? just should the So you’re going be with is opportunistic conditions, market we

Tracy Jackson

Yes.

Roger Spitz

Thank much. very right. All you

Operator

question. Charles you. with Thank Please Our your line with Cowen. next [Operator comes Instructions] question the Neivert from of proceed

Charles Neivert

morning, Good guys.

Mark Pytosh

Good morning, Charles.

Charles Neivert

sort the at like bunch XQ so ask. XQ, rise looking yet, got One, sold pricing allow the things of of it way into to play I to haven’t then A you’re if into to sounds you and going we’re lot a it.

be you second quarter a – going that read right? – lot haven’t of did you’re the not to into of I first levels the sort presold quarter. So lowest that Is the at

Mark Pytosh

correct. That’s

Charles Neivert

bit should this going I a on we at looked from – So I’m going fall that as – you sort as assuming – is would behavior Is way be of But such that was as the such a – looking mean, terrible different. into be is I that mean here I forward intend the things early to little a spring. normal of forward? and assume way is sort to this play at that well?

Mark Pytosh

tanks and January come the and for in is push was there were to then – a typical. fill and run the is already in then This and And came first after tanks was be the that big typically, but cycle the February in, Well, spring Charlie, then because occurs, That’s people January late they back. normal exaggerated ready. they full. February, year

And would be pushed – were it year this and than out we that of come and that. come for – more expectations when wave wait they the replenishment. our back for the second decided would they patient we the normal to so back, And inevitable maybe

And waited coming It’s it now. bit a out. normal so than that’s just we and later little

December the quarter, most That product pre-priced carried February. the The season and back of our second ammonia started into January, about other pricing thing we pricing. good coming had already in into at in

the our was bunch dollars had and that time a balance sitting a priced Tracy of prepaid was sheet. good that prepaid. mentioned all So on at in marketplace, we

in pricing process in delivered occurred is now, earlier, in the December January. and So of all the just the – priced that but and the being is ammonia was

Charles Neivert

East at whether only you much like running an it build When you want look I fairly Dubuque was didn’t ran – Okay. portion UAN I operations, mean basically it’s the storage. ran looked because up you ammonia the as to ammonia but full,

could the normal cut run at much looked for didn’t you is to this? the of for it ammonia you pretty had piece have back UAN. because So you way is you But that as storage

Mark Pytosh

rate, ran XX% ammonia full exactly. at we’re kind upgrade was of and of where We UAN running. full Yes,

Charles Neivert

having I any the ammonia Gulf there And not – to deal considering its adding with available better – that? from it more then there to is it’ll more mean given would sale – probably even few mean time, isolated likely situation that any if times. Is storage this you’re over Okay. for I there thought likelihood repeat be of itself little and especially delayed the thought a Coast. sort situation a

to position point, thought you good So some capacity? guys at some a in there arise, when adding sell. that situations Is to are storage

Mark Pytosh

this but – once about this this last the severe that, debate we’ve We had only in years. – was like XX

out sure the XX-year the cycle. So not go for plan to would and in I’m we one spend capital

think slate what I plant is there do avenue might than long road. a capacity with we is a at down an the the thing production with one term considering that little that to just – probably putting there. we’re looking the be – That’s another upgrade different tank and better ammonia that’s avenue something for at storage there think that

Charles Neivert

seemed or Dubuque mean the the differential for this reason what looking And that something NYMEX, then is down? of is little that a when – year it because of coming or occurred you it. gas is weather? there. Got that larger just there between it can it was at East bring cold Is – down natural and I sort

Mark Pytosh

usually trades summer the it discount spread the – there is there a actually at And and a to down. usually. in winter, way NYMEX come It’s in the

Dubuque have and we that polar consumption January that planting recall, system. to you January all vortex part the way the is up of – Chicago in big this gas – why was the market and If February pretty late of draw in East in – reason in the the and conditions

So $X.XX, trading dropped premium the a They NYMEX quarter. in we’re unusual to in were was by that’s It at had a pretty $X.XX. only expensive and at But – in trades it event. the around It winter. back this March, stage. trading

Charles Neivert

then Yes. was unusually not – obviously, I premium this but mean large, so expected. that’s the

the side are still – guys Lastly, back. that HollyFrontier much? that pet guys any supply really going to benefit there be with Is from or not on you to you coming coke any

Mark Pytosh

to the that’s – we’re there. our We’ve with we’re one pet No in there – trying of coke. obviously sources our it’s big of inventory process been replenish

are the refinery the it so And on And coke the the deal costs pet has goes pricing mechanism our – so some. that UAN with up higher. it’s price is a little hasn’t our component, a

a UAN So in market. a the market. more economics doesn’t little bit pay we But it much pet rising coke rising in do for a UAN change that

Charles Neivert

the Okay. And in the you – running to go basically operations the spring out into East is sell said, ammonia, can out let’s QX, by, as ammonia. with Dubuque, everything now is you objective? empty because the Do end that full say, now you basically empty tank expect of

Mark Pytosh

always the what consumed April, to tank gone months. to be so close by to had we XX. try in Our we bottom as a few June goal We’ve the through there is for sitting

year into we I was pretty light is we planting as we’re So May, the and to little too. pretty that because same like successful In into we to draw June plants possible. We’ve the moving going two keep feel go we’re end year about think as just – last trying into of try always we’re move XX, been we’re last going summer light season the going much the UAN, to inventories as into in there, season extend trying with we’re good further to this get with the with to as did, to to so hopefully and down and I going then our years. can.

Charles Neivert

Yes. area late bit? shipments up your I into guess play Minneapolis the into the a hands

Mark Pytosh

than year product. help typically. need goes that Sidedress, It’ll think be us And into Topdress for generally, does. for be there’ll does one, to it’ll it – It there’s later. because nitrogen going Because market longer people more looking probably this I

year. this – of good feel pretty the market northern we’re the stretch So we about

Charles Neivert

where and if Okay. at you be this mean, first avoided might for looking drop, the the I somewhat are Any what XQ? I looking UAN for, you similar of mean prices some where course at of we the what let’s quarter, or guys guys lower? XQ quarter pricing level again, it worst But at did did you we’re you a say, X%, ideas during should it. XX% be? looking – obviously, of about

Mark Pytosh

market I’m is Well, we And May markets now think don’t I and what coming what quite guess June right for – the up. still the give on playing out. back enough forecast pricing. – to smart honestly, don’t you Charlie,

don’t to I so settle, where – going us now. come really definitely come And know starting towards it’s to we’re it’s back but

another a have we’ll So better idea month. after

Charles Neivert

very it much. Okay. does All guys. right. Well, that me for Thanks

Operator

Thank you.

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

Mark Pytosh

second you and interest commitment July. Well, employees you attending to We results much work reliable CVR in in for today. look our towards with call safe, again, of for their hard like the reviewing our your very I’d Thank to you thank XXXX for all environmental and responsible Partners and quarter forward operations.

Operator

you. This today’s Thank teleconference. concludes

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

CVR Partners (UAN) 25 Apr 192019 Q1 Earnings call transcript