UAN - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the CVR Partners, LP First Quarter 2020 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 Good everyone. you, are your management. our Chief members participation and Thank Financial Mark Tracy appreciate Officer; Chief our today in morning, of me We Michelle. other Jackson, With today’s Pytosh, Officer; call.

that discussing to you first a variable let me quarter Prior are results, distribution XXXX remind our we MLP.

determined established may by evaluate future cash needs and reserve We for usage, needs general will anticipated our cash as review partner’s Board. reserves, current our future amounts previously other cash

a quarter-to-quarter of result, reserve cash fluctuations goods, including of Directors to our vary As finished distribution, if partner. Board and performance, due but deemed the will general any, necessary operating in from for expenditures factors, prices or received to appropriate several capital the limited by

you forward-looking Let under defined securities call this that that as me term conference also statements, is may remind laws. federal contain

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

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

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

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

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

Mark Pytosh

for thank for morning, Jay. joining and you you, Thank Good us everyone, today’s call.

a net net XXXX this for EBITDA million; distribution loss there for of million, quarter. of first of and quarter available $XX sales highlights $XX financial summarized cash of million; $XX the included The no is

During the days of quarter at outages Coffeyville do we downtime. XXXX, third-party of first facility approximately led that XX unplanned experienced

at move allowed turnaround fall downtime XXXX. the planned we summer maintenance from facility to of us the Coffeyville, work proactively that its XXXX the the at During to completed of

Aside these the expected Coffeyville issues, from third-party operated in as quarter.

ammonia quarter of at XX%. plant below the first unplanned by outages X%. The The rate downtime at XX% operated Coffeyville’s impacted the utilization, third-party utilization from approximately XXXX

utilization Dubuque fall. compared the completion of following plant at had turnaround operated ammonia We East last at the At East facility XXX% Dubuque, year the period. XX% the strong its utilization, prior in planned of utilization to

We was XXXX. of of period inventory last As year. reminder, of XXXX East into caused weather, the storage managed which ammonia carried during levels capacity severely first our the a by reducing quarter additional Dubuque by wet fall be to utilization ammonia impacted that

of per period. year an sold UAN at average quarter ton. of XX,XXX net XXXX XXX,XXX Our to produced quarter UAN approximately last of to of XXXX. ammonia net of produced We XXX,XXX in ammonia, of prior of tons sale the XXX,XXX XXXX, year. of tons XXX,XXX production ammonia ammonia, operations in for of of for compared the of approximately gross and and first tons combined tons available for price This quarter tons sale of the first first during compares XXX,XXX $XXX tons gross available tons We the XX,XXX UAN

and at were quarter of down for price of $XXX In addition, respectively. per UAN during Year-over-year, an XXXX ammonia which and sold first approximately XX%, we ton. the soft XX,XXX pricing XX% average of tons remained ammonia,

customers as having ammonia gas was pressure helping imports be of The the fall weakness. lower market Trinidad, and well-supplied on inventories Russia Natural over put the a as to continued UAN pricing EU pricing carried by price with the pricing. after well, from which tariffs. UAN into some additional application result the offset impacted also poor U.S. season remained of

normal prepared from activity for our base we In planting the season. they spring as customer the first quarter, saw

application has been and spring expect I healthy last to in to acreage, planted continue a corn to far, remarks. year, So robust, we which discuss further will compared closing increase my

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

Tracy Jackson

Mark. Thank you,

common $X.XX million. predominantly or net and $XX of was net and million prices first UAN. our Turning net and XXXX for by unit, of compared the to year loss per prior We XXXX. $X.XX of year-over-year common losses first Net of reported driven quarter and an first ammonia of operating in was per of to $X for compares million $XX income operating million sales quarter a million $X The sales the for decline quarter of the $XX XXXX. loss results and of $X EBITDA period. $XX This lower $XX of million or the million, were in EBITDA unit to EBITDA for million

Direct operating were year first XXXX quarter expenses of million, the line in the prior period. with for $XX

direct were million, also with $XX consistent impacts, the operating inventory Excluding expenses prior period.

spending. Turning to capital

approximately $XX spent be be less million which full the total year for capital. on which $XX We capital we capital. of primarily $XX was expected expenses quarter to $X million maintenance million, spending the million. XXXX is million to first estimate for projects, to of million Turnaround to capital than $X are maintenance $XX During XXXX, expected be to

million as less comprised included $XX sheet, was balance million facility we $XX liquidity, in XXst, borrowing of under in of March base. the cash, had which of cash ABL $XX approximately million availability the our of million, at $XX Looking of

related future delivery customer balance $XX million products. of had approximately million, we prepayments $XX our to for cash of the Within

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

distribution, generated capital and In and had million of assessing $X for $XX million our $XX debt expenditures. cash million cash for available for EBITDA total we needs of service, maintenance

turnaround and for operating other In addition, quarters maintenance of we cash released prior reserves $X million needs. from

available result, no a there cash As was for distribution.

XXXX for of XX% XXX%. rate quarter our between and we ammonia to ahead, Looking be estimate the second utilization

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

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

Mark Pytosh

Tracy. Thanks,

In preparing quarter, the for were activity season. planting levels customer the spring normal saw as we first customers

March, facilities in maximize employees distancing. During to have took a measures adjusted we social to result our remotely, non-essential schedules as locations of and work COVID-XX, staffing and

modified our compressed also employees, We workers drivers our contract typical of a allowing to the schedule. load-out process execution protect by application and

able levels plants. Even to of added were in measures, with from these of April record ammonia our both ship we

ammonia wet robust fall ammonia the was spring While application weather, throughout been below expectations due Midwest. to has application season the

the estimate its the the the last acres ethanol demand that not be exports. XX too the recent will U.S. pace U.S. of into be the the We to which still in of before gasoline was spring of planting will intentions million year. weeks a million compared in corn. significant our acres survey early think ethanol, timing planting season. and most a by economy acres, and in did increase between it take for survey corn to planted and is plant will We spring, in million by after of to strength Looking be healthy March, driven to the reopening and XX recovery which early and opinion predict report corn in the decline taken ethanol farmers prices and USDA XX account estimated in This

for approximately Despite product a impacts accounts one-third pattern, for large the in planting to is COVID-XX, from these second spring expect corn. demand Ethanol quarter. domestic and normal we following of see movements

the pound a UAN call tariffs discount During see per regarding on the Russia to Trinidad discussed urea product we continue last dynamics a to impact quarter, at the EU we of on of impact price continued basis. on The market. from to nitrogen and our

for April, to increasing urea and prices However, we UAN. strengthened as entered led prices

spring still nitrogen a the discount for versus the UAN believe we remainder valued for will is of UAN be at topdress Although sidedress and urea, urea to application. that favored margin on the

offset the of per XXXX, the the MMBtu Natural gas first of $X.XX has XXXX lower some in remainder cost. natural the lower Gas averaging $X.XX to where forward to looks strip the quarter in first were quarter Pricing pricing compared $X.XX averaging MMBtu. attractive XXXX. issues used in is per as MMBtu Continuing of significantly of production prices per for been

the Coffeyville resulted December plant in to by at caused downtime days XX from March. separation Outages of party air third

During opportunity this repair or and equipment. certify we and catalysts replace to piping, the clean, took and downtime, replace inspect vessels

As Coffeyville’s a back that been work determined had we turnaround planned of push XXXX maintenance result, fall done the summer that XXXX. decision to of the supports to the from our

the the moving second Dubuque are to for of half addition, East In fall of the planned turnaround XXXX XXXX. we

the Exchange. New listing across the weakness market price and notice we stock unit fallen $X, the the our has COVID-XX Stock pandemic, York from received a continued below from With

have January until regain compliance. X, to XXXX We

get we as necessary if take, to actions to appropriate the consider date. will We that closer

the million. The recently, Board cancelled $XX any performance significantly Board does the at feel of unit they units units any to be or and are and has Given Directors a general authorized program common repurchase by we partnership of terminated the the may partner’s of undervalued, obligate our to up acquire not authorization time.

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

I We a the helping conditions. returning and closing, for to time thank look at their and to our on of committed focus all Company flexible would forward employees execute all high the customers. level like more to healthy our In gradually critical a of to for safe, normalized year being at

take that, to any ready are With Michelle. questions, we

Operator

you. Thank

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

Adam Samuelson

you. safe. hope Thank everyone. everyone Good I is Yes. morning,

Mark Pytosh

Thank you.

You too.

Adam Samuelson

is half an Mark, facing the of dynamics spring, given market view in it? where demand second potential of and it strong where holds we for acreage curve you. year, facing and potentially and year is outlook of -- UAN some understanding kind your the the lower Thank get for market it sit of is. Can if cost about the corn ethanol corn the on the you next thinking but where -- and

Mark Pytosh

have Well, the would pretty a it. kind Obviously, business. refining all, Because days address benefit the we’re our of of me first in parent say aspect we recovery in market. let company I the experiencing -- of is of early the of Adam,

have so, have been ethanol. of normal. of particular kind XX% tossed estimates has about And headed gasoline ability the refiners is March. by days where in watch demand, most bounced gasoline -- that last starting been XX% fell the to in around -- here dynamics And have And demand gasoline the or in we of other that of few by maybe that the to XX%

concern that gasoline going call there’s to But in some on gasoline where I share We signs encouraging But that ethanol. about about week make May. early demand. of And demand it’s concerned. the so, the draw everyone’s think first be pretty and is to

So, out just to put that there.

the gas it would may how early LNG know natural marketplace. gas that appears of our numbers benefit low ever last been. and down producers natural the been down, there, On but really all that producers the We’ve in can globally, cost pretty tell -- much have yet, -- be driving again, what’s XX in you the of obviously in some we globally the low America, seen see have from the days, seen -- months offshore. out curve, prices, prices I gone you North other don’t What taken has

it out way. The It’s there natural meant component the not of biggest if has say the in there. probably gas in And I have prices appear I the obviously the associated have I drilling. fallen be U.S. would The sustain gas what globally dramatically. the being would lowest last up I mean, is has benefit conditions low you gas And But, natural we -- to curve, we’ll bottomed. driver natural changing month. be in oil other expect on activity the benefit the gas the is prices dramatically world. will think going probably U.S. following further probably from globally to the look associated been

the producers, the expect gas it natural in So, the fertilizer you producers U.S. when as Midwest that far delivering world, I lowest we will in lower in to be would plus transportation U.S. combine relates by cost the cost

later -- in in it’s in a in spread we think to we fact, like get will be more XXXX probably and retain, compared XXXX. I our competitiveness what as of XXXX been So

improve I So, expect it to actually.

Operator

you. Thank

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

Mark Pytosh

the efforts work today. to to wish and in this safe. the brighter employees they’ve again to to support courageous for in And be careful to you summer done, all quarter And participating support conditions. want to very Just safe and talking and be thank and the be you Thank the and our look forward much Company. on call I everybody hopefully for healthy

Operator

teleconference. Thank you. This concludes today’s

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

CVR Partners (UAN) 7 May 202020 Q1 Earnings call transcript