UAN - Earnings call transcript Q3 2019

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Operator

Greetings, and welcome to CVR Partners LP Third Quarter 2019 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jay Finks, Vice President of Finance and Treasurer. Thank you, you may begin.

Jay Finks

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

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

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

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

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

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

Mark Pytosh

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

at at above plant leading Dubuque quarter Coffeyville turnaround in for a to the XXXX, at prior ammonia of which both the and turnaround East of utilization During At utilization the at quarter XX% at the utilization of completed third mid-October the XX% quarter utilization XXXX XX%. strong operated up we plan XXX% and operated the facilities had period. year East of Dubuque the also plan third ammonia began was comparing

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

UAN EBITDA higher pricing [Pepco] by expenses sales benefited the increased lower we over fertilizer decline drove and quarter the from slight our operating and prices, While gas XX% in year direct in natural our increases and prior year-over-year.

my We I closing which XXXX to discuss to spring will continue a XXXX expect compared season planting favorable remarks. in further

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

Tracy Jackson

Mark. Thank you,

of $XX million. This of million third $X.XX or loss the and common EBITDA the net loss $X quarter per an net XXXX, or XXXX quarter unit common million operating million year of third the to $XX adjusted operating our of $XX XXXX. million for compared reported Turning was million sales million to results to in net Net for the and period. and quarter of million $X adjusted for period sales per of prior EBITDA of $XX losses $X.XX $XX unit $XX third and for a we the of were income compares

in for slight by in higher Pepco XXXX prices. decrease predominantly from and adjusted $XX $XX quarter was costs EBITDA third Direct operating the operating period. year higher million increased driven The prior the of million expenses

Excluding primarily inventory turnaround million by impacts year-over-year approximately to direct operating $X expenses increased related expenses.

projects capital, of during quarter million was capital the $X third on maintenance which Turning XXXX, spent we capital. primarily to

$XX approximately for for spending $X XXXX expenses to spending. continue estimate expected excluding to to year We approximately million. be million $XX million to total Turnaround capital be the turnaround are

$XX of approximately as product. Within of million in balance million the of comprised cash $XX approximately ABL to had of in facility our cash million of Looking million, in liquidity September we borrowing the million availability less XX, sheet, had balance $XXX delivery base. at $XX which for was cash of we related pre-payments our $XX million included the customer $XX future under

unchanged. consideration service million finance including remains $X distribution of $XX positive cash and maintenance capital the expenses. and debt our reserves after portion is of and for $XXX from million of obligations Our of for turnaround lease million EBITDA expenditures for current quarter Available derived for million long-term $XX adjusted gross debt

turnaround In of prior $XX addition, and cash released other we reserved quarters million operating maintenance in for needs.

variable distribution MLP. We a are

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

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

XXXX our be we XXX% quarter the to for XX% the and excluding of rate plan impact fourth turnaround. utilization Looking between estimate ammonia ahead,

to be $XX and and total approximately $XX between inventory million. be direct $X $XX to impacts operating to expect expenses excluding spending capital We million million and turnaround million

the to Mark. over With I turn that call back

Mark Pytosh

due vessels. we completing repairs We Tracey. reformer and than week Dubuque last on turnaround our more days expect Thanks to completed few a the took longer East at which piping

further million made $X.X we to more the primarily improve We primary planned reformers. as reliability secondary number long-term also and a improvements to of than spent

turnarounds next both improve capital plants that gain reliability ways last several investment. incremental mentioned to low will for added I our to our call in projects at As intended for production and targeting are debottleneck on the of the we

performance plans improve in past have for reliability. been we our further While years, and several strong operations to the continually look ways

is will speculation analysts purchase Weather summer for going more the aggressive more buying the and readily is than little been Customers XX the ammonia ammonia corn and dictate for past has stage the than normal. application timing and prepay of numbers the later for bike. UAN be harvests Consistent later cycle expectation the timing early with August believe. to for the a have fertilizer fertilizer continues the been numbers of harvest as than their purchasing fill There been in to a led normal the customers soybeans months, and and be full yield of about application. customers to most have lot normal available window USDA that

and purchasing there to retailers couple of of needs. depending this for up soybean have compared amount favorable to crop the prices cold be levels distributors Fertilizer expected. fall year, a XXXX inventory past existing planted highest fulfill but of prices for been to comfortable to time in should ammonia These Early than XXXX. and lower to the the the another hold be of weather should levels their inventories way months. rest The corn on rise nitrogen spring application acres are levels has fall caused

ammonia application production UAN the when the At existing fall of we'll our for CBR year we have to of the market continue participate at participate because for to for program most of sold the turnaround in a the our liquidity we'll plants have accelerates. UAN in look It book due and available. and we order good is both rest our rest of purchasing of is as

safely maximizing capacity in the I flow managing continue investing want judicious selectively high operating capital to reliability incremental with cash costs, on at production prudently focus our activities. and projects and to our logistics and utilization additions maximizing reiterate marketing reliably our rates, will that to free being but and our plants by partnership

both all employees the would quarter planned to turnaround for I contributions closing, of at the their thank Dubuque. and completing drive to like utilization facilities East In third continued high the in safely

With that questions. call open to for the we're ready

Operator

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

Adam Samuelson

Yes. Thanks. Good morning everyone.

Mark Pytosh

Morning, Adam.

Adam Samuelson

to went might a late that color First spring-like of specifically and the cadence, how Mark, third versus the fall more have I actually sell ground bit through pricing get bit cadence quarter you just calibrate on do Just year would want kind summer in much the quarter? to just more reset? probably you little helped think much back the sales a just the little quarter love of to how your three the on of in half the

Mark Pytosh

there Actually the pretty the helped July this wasn't going a season. I of ground on lot end quarter. lot really because think don't was at it a the light

So we left I a of think don't in down there. lot got

I the was and in for UAN summer think quarter fill the ammonia was pricing largely was the that fill you fill, the largely and pricing pricing the the prepay. see

a don't from carryover of I So was think lot book. there our

longer pretty it see deal low June season in book book we Our and of out the great was a didn't July. flow at our end of though the even went of

we price what that the took quarter. of So is in kind

Adam Samuelson

the the So visiting pricing in you're with then that selling for quarter. sense fourth

second just decent good sell might usually quarter out lot a fill gauge the your a you volumes half right? through as Third where of summer of you check

Mark Pytosh

levels But for it's those half of of pretty the been fill what gradable am Yes. UAN, quarter buying about. usually fill, the price The is but reflective numbers. price UAN such that's I of this talking a second kind there's and is kind around

is it's half So a for second it consistent us. that, that's consistent normally I think like

Adam Samuelson

about just That's seemed you attractive bonds, just tender refinancing that a you you're opportunities and how that? maybe just at helpful. can rates refinancing today? are to how talk just where look the you're It and for then, or go look not and like approaching And looking as at decision pretty

Tracy Jackson

year the evaluate to that to us continue comes the to the was looking felt the it. short around sufficiently forward of at rate will be period down able for we the just wanted we were again premium enough again. time it we we payback not and certainty move call as like next We out and strong At believe market the it wasn't when to that to we take at would decided it look as

Adam Samuelson

some then, think lot we're spring really or out this come or there And ammonia that of do coming was depleted empty? for the do out think channel you both you a manage product of carryover kind planted find more ultimate you or UAN you think than about of just I the to can't mean, Mark people the do and the inventories, in average questions spring, as about think inventories just year acreage of there's

Mark Pytosh

There were in were I empty and we've out later geographic. was pockets well fill still the some some it carrying were pockets where where which why than seen I the people the they I emptied generally it market say prior cut years. would this year was at season end was of there products. pretty the mean that's say

system think our out there. shape, in inventory that So been really carried was from don't the there good out some there still the there. where we hearing was that participate spring that I in markets customers We from didn't where had were inventory there pretty markets, over some we were but see pockets really

So I in right It's It's very not situation marketplace. now heavy. not comfortable light. is think inventory the the

of is is it's typical which think I There a I year. horizon need comfortable. time more buy to for this think some

picked I the and It's we're colder last pockets dryer, we're us ammonia to that I a think week already is see which been little spot. of and a So starting good tell helping a weather in up surprisingly generally industry. has the early. been little has you just would application momentum harvest the pretty

the This coming lower most but think to pockets soil scenario people what enough but and with in kind ammonia the cold temperature. the because be, is seeing it's of everywhere harvest not would been I in fields getting right then done and not thought that the we're they're clearing behind

the for pockets seeing which application well think we're early fall. So of I the rest ammonia and goes

Adam Samuelson

helpful super Thanks. I'll Alright, it color. pass on.

Operator

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

Charles Neivert

applications, the to available fall may One guys. looks typical like sorry. you the of held mean, guys question. when at some for it fall Morning I guess be look or -- ammonia you have back I

come bit if is in applied and if you game run you so be fall to assuming stay ahead you are, you'll fall application, through like right of a For things little clean? pretty it get said inventory sort the into January possible the that as of got and they now

any, going less way a ammonia to a well is putting think getting UAN in or consuming through down little ready I of there to is less little and a looking at sort UAN you for guys And production it, as also are ammonia consuming quarter or a less for producing this application. put be that then that little better

So the balance for of quarter? I the production mean again this

Mark Pytosh

let that will Well, of end question me with and start to way the back move last my the front. up I

now market a we going little on tells application. and go I all this see how we've change what right ammonia to depending got the think ways we're don't, to to the could

ammonia look This I going pretty now and what see is really that prepaid in think our and are bulk inventory in to shape we're windows we East around kind the get. we carrying Dubuque. just good with we're of

what got run when ammonia normal demand deliver to the dial it. there really a some deliver we dial long waiting to if just be we application application run a can we've occurs, that production plant more UAN and for window can around is always ammonia that where and going that back The harvest the normally there ammonia we good make get to and good product, and we always probably back we UAN we slate have for our see

flexibility the back have we in really plant. that's the to So there pull

going Right this the all again the full year if we stayed through because able we What because wet wet it front a we last end out in been and is last the field got but year. than now just we spot slate the both the East right we, it around we're of this bodes remember temperature slate run way we year which weather the harvest to we're normal better have have tell and never we're year November progress on year would soil had the it and we're you you ammonia seeing I drier plant drawl get a windows crops in seeing far to and well saw has Dubuque in just last bodes fall UAN. and so at least to the for going coming so October

this that had haven't wet year. We October

could this of get year. So application run a feel we we like, full ammonia out maybe

Charles Neivert

through ammonia a had Wouldn't excess? lot close, basically in run prepay case that would guys again full bring got pretty down a would lower put between you on inventory the a again you basically the side and of you've you the lot

Mark Pytosh

Yes. be come and the into footing think starting of we off we're October. our did This didn't to going spring with and it. last pretty mean, year weather inventory we year be That's goal I much I low than the would on to dependent. Last kind number more better year for get ready get that's

Charles Neivert

Got it, thanks much. very

Mark Pytosh

Thank you.

Operator

you. Thank

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

Mark Pytosh

Year. forward coming the again New you. Thank we Well, quarter call after you look for I and sharing to just want results everyone with fourth our thank joining up today to the

Operator

Thank you. This concludes today's teleconference.

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

CVR Partners (UAN) 24 Oct 192019 Q3 Earnings call transcript