UAN - Earnings call transcript Q2 2019

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Operator

Greetings, and welcome to CVR Partners LP Second Quarter 2019 Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jay Finks, Vice President of Finance and Treasurer.

Jay Finks

Thank you, Danna. everyone. morning, Good participation your call. We in appreciate today's me Tracy Jackson, are of Pytosh, and Mark Officer; Executive management. Chief our our members With other today Chief Officer; Financial you quarter discussing statements forward-looking term federal let XXXX to under that conference second defined laws. Prior me may our as remind securities that is contain this call results,

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

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

differ the publicly a discussed to materially from result, required events a whether forward-looking information, As the future by forward-looking law. obligation otherwise, to We or may in undertake update no any of new as statements, except actual operations result results extent statements. results the or

This the measures including market. non-GAAP call release filed SEC non-GAAP GAAP the quarter directly most in XXXX to to financial after the second with financial disclosures comparable related we our also yesterday earnings measures. are reconciliation close such included The of that includes measures the various

With Officer. Pytosh, the Mark? that said, call Executive I'll Mark our Chief turn over to

Mark Pytosh

unitholders XXXX. which August August of included quarter common sales The today's the Thank highlights the the you, net Jay. million, Good million, for declared of morning, second adjusted of you distribution of $X.XX XX, for summarized of will $XX of financial X, call. close XXXX at of paid unit on second Directors of everyone, be us for net thank joining and million, EBITDA record and market the on Board XXXX, income quarter $XXX to $XX per a

the second challenging quarter, at Dubuque, despite the the Coffeyville, During had for quarter quarter period. utilization utilization was of XX% also plant the well ammonia XX% operated impacted the flooding At the planned at prior that both ammonia East XXXX, The by of operated and the was XXXX at utilization both downtime. weather strong than second facilities which we above for plant conditions. higher year and unplanned utilization,

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

addition, In during year per Ammonia XXX,XXX we of the second quarter prior average approximately the pricing XXXX the ammonia tons at of an quarter $XXX ton. of XX% sold over increased period. for price

and Despite strong the for demand the quarter, spring. persistent and during experienced due to volume were constrained prices CVR sales demand financial results quarter up natural quarter. the XX% of flooding the fall wet catch-up the there in in was XXXX. nitrogen poor weather Low conditions for year-over-year river application solid second Partners' and movements with to the gas still combined late strong UAN from start resulted the

our turn Tracy to discuss the results. over now financial will call I to

Tracy Jackson

Mark. you, Thank

to our results. Turning

unit the sales for compared was net Net second XXXX. million a period. of Mark XXXX to of $XXX the and predominantly to of common net primarily net for million. $XX of loss quarter XXXX, million we of improvements improved for These $XX million and and quarter EBITDA prior second of sales sales million $X.XX and than per million second by or million an operating the $X quarter million adjusted were EBITDA of compares or income $XX common just operating in nitrogen, For and loss the increase UAN volumes. income for less reported period demand $XX to the is in $XX attributable unit volumes UAN year discussed. strong of per $X.XX pricing sales was and The driven adjusted $XX This ammonia as of

of Direct prior operating in expenses year for from $XX period. decreased million million to the the XXXX second quarter $XX

million turnaround direct XXXX to Excluding expenses decreased in inventory year-over-year primarily impacts, in XXXX. incurred $X by expenses operating and approximately not related

capital spending. to Turning

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

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

Looking at the sheet. balance

XX, delivery total cash cash, We to $XX our million approximately quarter position As our of product. approximately forward. in $XX the we believe the borrowing related of prepayments base. our million the in future plus of approximately $XX included including June under for million had in customer the sufficient going currently liquidity ABL was end $X of at million facility $XX is million Availability

debt finance million obligations lease Our of and including $XXX unchanged. remains gross current long-term portion

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

needs. and for million we future addition, capital In reserved cash turnaround operating $XX

are variable MLP. We a distribution

established cash for determined amounts general our cash future evaluate by needs our other future We partners's will needs reserve anticipated board. may as reserves, and review previously

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

back that, Mark. will the With call turn I over to

Mark Pytosh

the ways. shipments and the the there X curtailed Oklahoma to late poor were for days the season. still in in begin we UAN season of in soybean The were mid-June. also planting of from rail very season mid-May expect plant and fall dry brought and UAN, next couple impacted the application Kansas two, season in And these either has weeks. late Thanks, the or between Planting quarter corn to The extended for spring. second will late never start late enough inventories the due Sidedress which crops. into at was end low the to delayed the effectively conditions for Tracy. fertilizer to Weather nitrogen planting fill the flooding catch-up level severe for strong the conditions, demand and summer and start and of seasons, planting Despite July XX business consumption Topdress the customer a well

of plant acres only of acres believe acreage. There's of and our were acres XX soybeans point plant, acres. but XX of end been farmers of for the portion either a planted issued longer intentions in spring At the preventative the planted to million lot a fertilizer speculation planted acres waited the demand and soybean soybeans. From we the nitrogen versus significantly their preventatively of or planning overstated nearly of confusing a are corn corn at view, planted that our estimated at plant USDA looking that about million corn June, number report

yields estimated moisture excess planted, Corn were that acre XX acres were down per acre. for the be XXX USDA should negatively those yield versus bushels bushels impact this planting year. by to season For per to last

term, $X.XX With reduced absolute are fertilizer the per production and since acre. yield Corn have about corn from April well prices as as bodes in seen bushel inventories for normal estimates for and bushels distributors XXX have this several the We the rallied years. than season retailers well at short planting lower a prices highest in for XXXX. corn

further fertilizer We expect be XXXX currently on and increase than spring to quarter expect third in be when season, begin the to the planting we strong focusing XXXX. expect planted significantly higher to customers demand acres where demand

Dubuque significant XX-day our focused reformer upgrade our we starting other million in various gas mentioned, projects. of turnaround a September natural Tracy and are As $X are repair at a planning reliability on and East and facility

targeting at improve our to to will ways in our added debottleneck the capital investment. plants the for both next incremental intended be gain are that production and several turnarounds reliability low Over of projects our we plans,

Our can we plants know have better been do we but strong the the past performers several years in future. in

prudently Finally, managing judicious I logistics plants our reiterate maximizing that continue rates, free being focus operating at our to safely maximizing on want and the to cost, by cash capital partnership utilization marketing activities. high and and our with reliably will our flow

this on challenging being their weather In employees to contributions all well closing, thank would I past us to in spring our help of and conditions navigate to for prepared season. the capitalize second quarter like

questions. With that, to ready we're Danna? any answer

Operator

Instructions]. [Operator

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

Adam Samuelson

color listed the sense spring still for -- XQ how volume would guess, relative as outlook there that a So to fill guys much of interested summer more step-down the color XQ be was any press, this Mark, late first, be might trade of from in happens I can in that second frames July half. at the on or last I pricing always bit what near I'd at week. or how got time the summer the But at be little mean you and getting I market thus believe, it pricing in spring on notable provide least price you far a year?

Mark Pytosh

Sure.

July So in-season going measure, period been is in quantitative what I and we still would product. been where a on I'm selling -- to not but there, we've there's get Adam, that that decent say

chunk for had Oklahoma time. to the late embargoed we so a in rail the the big then mid-June -- sort season, equally that mid-May during a of facilities And for and all were of embargo

So then on people to there. up the catch refill and had product later the left

an we to sale, So X the but normal, season come Dubuque, in at main product July some did sort expect went fill the East into or we to next weeks. still that sell tons The sell at I have of weeks. of was And further than and isolated X Dubuque. couple down East maybe

pricing. some of the spring late get spring June. pricing know, So we'll sort to you starts blending typically, as in And fall of

the dealer won't inventory down but the So be refill bodes exactly late the demand was second most and it the longer. important for to of sort where way thing of about which network, -- The it in drew went pricing tank. was, season the all distributor well the quarter that the season that

coming because empty healthy So quarter we're expecting out stage. a here in the -- largely in demand third the are this tanks the very at

Adam Samuelson

little And on obviously, how go bit. we as market correction out the also a you've late you where, don't of of kind pretty but any the season? a similar of had ammonia have Gulf frame demand, or sharp the Yes. season at commentary thoughts that prices to market Just

Mark Pytosh

you your say would spring Tampa may there a would I the Plains, need say where the very different lot still Plains had not on down depending I have because of better was, much at had fall. Northern markets didn't put price. bit of best the had Yes. because Gulf is is it's than than fortunate little Southern pent-up plant We East X on Dubuque. it or very get the spring. which the need, a a We the

So I East and was strong profile of the expect there's at to and Dubuque plant because the But the good wasn't be fall. there's acres if been allow fall. Southern had the a conditions there to in able us weather hold going there's Southern have the the say, The to market than healthy was in ammonia looking together into ground. the Plains pick all desire Northern But we up run correct, Plains, pretty spring to rain. very are in ammonia But Plains. I'd going on the the that to Plains, more the more, Northern carryover just to the of because weather get demand

Adam Samuelson

just And refinancing. helpful. Okay. -- the the callable debt very No, I note become couple on bonds that's then did in June. a

you've color Just provide that, could refinance there? on any at the to how looked you market opportunity

Tracy Jackson

the continue Board us available rates look and the to future. make versus does rates to with week around a see Fed market, the we'll what So we've are the the that available discussion been next premium the the decision call in and our and evaluating

Adam Samuelson

I sure intended the And Okay. Should straight-line production taken think the about days, production more just the CapEx you as in for guess, have level to and and I we sugar the effort relative in in the assuming one to distribution? reserves and maybe XQ, turnaround out is to distribution, conscious a it hold? distribution. to that the aid making then, of last certainly market kind from But conditions me, turnarounds XQ understand or

Mark Pytosh

Adam, there, and spending of aggressive second half, second pretty half CapEx we in the the say around backwards drifted partly that Well, plan -- a what I is turnaround. would into kind have we this the year, the spending around

we generated pay decided that cash free go -- we to reserve that have and hand spending. had the horizon, Board of we cash in flow big for and spend so quarter And the a the the and portion would would that cash ahead second this more on we'd -- on we our it since

reserve really So where came that's from. the

Adam Samuelson

just But capital of Right. the the XQ. turnaround maintenance rest cost the the year for for and

that So proves flow, maintenance have thinking and into most of just EBITDA distributable to the and already we're second cash expense the filters you reserved about how whatever correct? in for, the be capital already half turnaround

Mark Pytosh

ahead decided go quarter, that and now the and what a aside we half. would Yes, had free sort that second dollars the prudent spending happens of in again. big big set be flow a cash to of it Board lot Yes, see and

in that the second so shape in are good going reserved, a right half in we're good we're turnaround So the into position now. CapEx and

Operator

[Operator Instructions].

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

Charles Neivert

Just quick question.

-- at we should point? in for And look had still lower this XQ was than your cost You in XQ? gas XQ lower

Mark Pytosh

the to call A little XQ. early

my skills aren't prognostication there. greatest the in So

Charles Neivert

it's does Well, looking it it be look to -- -- it strip it's then, going going at the like low -- lower? does be to is look

Mark Pytosh

the be first third lower gas the Yes, was strip Equal. quarter, lower quarter the today which price would than quarter. than second

today's looks through end reasonably So for prices, and the year. the -- forward next low of look strip low

Charles Neivert

Okay.

reason any or whether gas point of this obviously, to about there Coffeyville, is do not for your I an East any would thinking to issue, there you mean start some Is buy but not? Dubuque it Okay. at forward? reason

Mark Pytosh

portion it evaluating presents we'd price. always opportunity were a itself, think weather gas what of to I our take is if that We and like the do, -- to

we put in there to I'm place able So hoping we'll something be as go.

So at we the it look all time.

now. something there. pretty It's So right attractive in I'm hoping put we'll

Charles Neivert

any then at XQ little think side to that the cadence reason quarters, of the over because harvest guess late late of sales I occur course is the the when down taken? be be because you will of might any each on going planting a X all to opportunity get offset to play it fact get other? the is prevent Or you is you the next of that look of be planting, by pulled against to basically that's fertilizer likely have there going those lighter sort on that might that? out do early to those get How

Mark Pytosh

light a Well, quarter the a the is ammonia third the of put quarter third in because we lot always quarter. on don't ground

to big -- quarter for application. the second fourth are the the second ammonia relative So quarters and

because will just third the fourth we'll where much. lower the be ammonia the pick always move be activity doesn't up. second see will So than And really that then that

you UAN. know, always lighter. of are -- as out ship pretty ratably volumes Coffeyville, So going to be Charlie, We'll be we

shipping but plants running, big in being equal So the until East quarter. then UAN, we'll fourth we'll won't the schedule in be the Dubuque have And be ammonia will all shipping else there. have, move a normal

Charles Neivert

corn the increase Okay. good are expectations And right demand now, of acres? for likely because in

Mark Pytosh

Yes.

think saw I what I other Southwest that each the -- at conference. we

big ammonia of acreage spring. most customers to they strong be are weather would to the able think filling number a really for have the see I preparation to the in in fall the application in like saying good

Charles Neivert

mean get the of that assume that pricing the down a And quarter that but didn't did Okay. question we in is you that I for had out. at it getting or discussed I last that first didn't XQ -- during received, looking you carryover the get volume lot after reasonable it's QX,

into XQ. it through carried you So

You managed rid of all. basically it to

to it XQ bit least definitely maybe half, the and don't I little you is think might assume second guess, from a So entire the sales that perspective at through. work volumes, reasonable to lighter? either XQ, have I in in But just inventory a be

Mark Pytosh

UAN is moves, tell would ratably. to I more again, say, what Well, that, got

got So the and in UAN the the the up in did be But there'll and fourth. UAN then will taken of the of and little there. in third A think the ammonia any We normal. lot first in changes I ammonia I lose second half bit a big of don't because weather they've second. think application be movement

that planting buying didn't expect So pattern normal anything change what second season, in half. the it's purchasing. I of terms fill consider don't rather the than picking and I'd unusual. And cycle bit in really The any little a of of than normal later up the

Charles Neivert

got I one thing. Okay. other

the make back hike, You of guys lot still affecting high the all. and and of that's and of normal? Or that for the took river lack that upriver boards word, Is a the couldn't completely that because fact advantage is the something are, things to water currents of better the the and a now by deliveries? products issues it

Mark Pytosh

you affecting say look the to I'd normal is the Mississippi But that's is affecting normal. Mississippi the normal. But it, are but southern back are that not country, when the in other points rivers se. upstream -- that really not are at per there in rivers the us Mississippi

Charles Neivert

Okay.

can get the to opposed when things in Dubuque couldn't -- competitive as basically second So to up again East be? be quarter they they and

Mark Pytosh

correct. that's Yes,

Operator

we and I session. for of would reached the the like to back question-and-answer Ladies call turn end closing the to And gentlemen, management remarks. have

Mark Pytosh

everybody thank Thank Well, call. again, today. quarter very speaking joining to you we And third the we to look our for want to you call on forward much.

Operator

This today's conference. concludes

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

CVR Partners (UAN) 25 Jul 192019 Q2 Earnings call transcript