UAN - Earnings call transcript Q3 2020

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Operator

Greetings, and welcome to the CVR Partners Third 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, Richard Roberts, Senior Manager of FB&A and Investor Relations. sir. you, Thank

begin. You may

Richard Roberts

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

For deemed purpose, during call forward-looking this statements any this historical that made of statements facts are statements. to not may be be

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

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

variable we a that remind distribution me Let you are MLP. also

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

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

Mark Pytosh

financial the Richard. for morning quarter net units $X.X for of $XX is no partners included X.X highlights available $XX EBITDA CVR million XXXX you and joining million and a The everyone Good of you, common thank million. for repurchased third for million for We million us of cash loss sales Thank and summarized this today's there call. distribution $XX quarter. net

at the to at both The the Coffeyville, During XX%. had Dubuque, period at XX% utilization ammonia compared quarter utilization at operated last East XXXX XXXX the the third plant scheduled of utilization third quarter prior for in to compared At strong XX% we XX% the year turnaround. operated of plant ammonia facilities. year's adjusted

of operations tons growth ammonia sale available combined prior produced of which the XX,XXX in as approximately gross net prior the for to of tons UAN for the in period. of production produced the in year compared net compares which of were third were of XXXX XXX,XXX XXX,XXX tons tons period. third tons quarter tons Our to We available for This year XXX,XXX XXXX. XXX,XXX XX,XXX sale ammonia quarter

weakness. Natural for gas XX% the down and and which softened UAN and offset XXX,XXX per $XXX tons as approximately an UAN sold XX% UAN tons of $XXX During average well pricing we ammonia the third and of price of per approximately at some quarter Year-over-year ammonia of ton. ton price average was are respectively. XXXX, helping at pricing an price lower of XX,XXX ammonia

financial cautiously that make year Although and us farm been prices supply further for which optimistic the crop this softer in uptick will now remarks. call seen nitrogen we've levels. fertilizers in fertilizer economics The from an about in improvements pricing have these prices to recently our and to market conditions discuss and favorable I improving more turn Tracy looking over I discuss is corn for closing balance my demand are will results.

Tracy Jackson

you, Thank Mark.

year $X Turning to sales to sales loss third $XX $X million XXXX, net EBITDA lower an an million for operating increase lower of quarter operating unit the of prior for prior third per expenses was quarter were per Direct million. ammonia net or sales million $X.XX was period. and $XX driven of year and XXXX common operating EBITDA net million of in expenses from in a of losses for XXXX. of for results third and $XX $XX loss of unit by prices The the by of decreased in reported our of common and third compares million $XX $XX Net compared operating quarter UAN. quarter million or $XX offset the for million we the loss million million and EBITDA year-over-year and XXXX higher period. $XX $X.XX the the volumes somewhat to This to

cost operating X% Excluding or to last progress our million inventory impacts and decreased compared turnaround reduction year direct made effort. same approximately X on expenses by we as the period

Turning capital. to

$X $XX to XXXX primarily estimate spent which on third million of to quarter million which We spending approximately the be remainder we $XX was be million less year-to-date expenses $X capital million for expenditures not were projects capital. do XXXX. XXXX capital. During $XX of for $XX to maintenance total turnaround than expect million is of significant maintenance expected million the and any currently to Turnaround we capital

September the including facility the to cash our ABL the At and out the the end inventory to of of borrowing while XXXX eligible increasing commitment base sheet. and balance total rate million the to on XX advance we certain maturity also improving amended to the elimination XX, Turning extend September reducing receivables.

of million. of $XX which liquidity comprised in cash XX, $XX notes million In for and approximately due ABL million our future assessing million current delivery XXXX in X for of customer product. approximately had due senior for June available $XX the of $XX September generated was of the maintenance and senior $XX Total debt $XX cash balance we at million availability of EBITDA under million comprised of for facility distribution of in debt on Within sheet prepayment of related of remains the $XX service approximately of million and $XX of expenditures. As XX, million improvement of had million cash is cash balance approximately which $XXX and million to we XXXX. $X an over capital million April needs our XXX notes we million

During units the quarter repurchased consideration we just X.X for $X.X cash million total over million. common of

for of planned $X.X In directors board addition in the the of our established at reserves partner of general turnaround XXXX. Coffeyville million

cash distribution. no was there result a for available As

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

to total between back that million $X $XX expenses between operating Mark. range million excluding capital and million and With be will $X turn to over direct spending $XX the expect to I million. We impacts inventory and call

Mark Pytosh

improvement Thanks acres initial there for of in prices Tracy. XX economics. XX from Since USDA been estimates million. estimate a in crop has call corn our marked and farm the to acres million were planted last earnings September lowered

During parts other drought conditions Midwest of the corn. damaged summer over storm XX there the of of were struck acres and Iowa million Midwest the and in Derecho the parts that unusual

this for vaccine uptick and gasoline to or an a usage. been domestic an see developed On at gasoline the remains ethanol blending and consumption and demand in we but consumption that corn by therapeutics an in turn largely year to corn. side Chinese for last ethanol other lower increase Eventually, offset for due than in demand blending lower demand has increase as COVID-XX, expect levels in

has from than been demand Soybean expected greater China well. far as

a result expected USDA expected levels. currently lower and of inventory and conditions therefore is Derecho lower drought the harvested As and corn forecasting storm acres yields much

cents rally to crop been led of $X.XX and in the harvest corn the over these October bushel from is soybeans fields per prices per low July a and per bushel. per for application. from factors $X.XX Weather favorable have September rallied rallied in bushel All have since largely $X.XX over complete and the bushel $XX.XX to ready prices has ammonia have conditions to also leaving

fall for one have have coming for consider demand expect in seen the to important begin in most years of be demand ammonia substantially already and improved We the regard. solid run Midwest. that We the the and conditions fertilizer market farm economics this in upper factors healthy ammonia

While urea for July three have months. past largely multiple strength and the UAN especially tenders, prices since prices with ammonia have exhibited been India flat

efforts October East Previously on of among may been Coffeyville pound UAN footprint. our we X, acid between Coupling press where and full see these We obtaining emissions of to the are million also these interest As urea. the and similar reduce reduce and the in growing release into Recently equivalent to prices our acid two for and carbon issued call, incremental natural oxide on run oxide relative recovery one the carbon price ammonia, in of process the facility will plants. its at by fall want Since ammonia installed risen earnings at natural a at gas one dioxide of five for the gravitate capacity. the our prices enhanced reducing credits could incentive plants. now towards years. per markets the have our carbon through Coffeyville the favorable gas to we are over first we facility nitrous the past offset year winter. highlight average rising urea application among for a we the carbon tons dollar certified over curve the today MMBTU nitrous traditional to able think units CVR's both Higher plants inputs about Dubuque enter sequestration two our last we its emissions year at UAN a have natural shows to per relationships pricing over efforts lower on producers of I majority our with vast nitrogen. the metric gas rest per oil for prices our further ongoing and emissions

the ammonia as energy we new Coffeyville the customers believe of could seeking energy potential and a our footprint. produced With source low production a we is blue seek will carbon be footprint to as certify that ammonia going as reduced that transition with blue forward part carbon at

the call, Finally, average on of received below continued a quarter unit the discussed notice $X. price we closing New falling in earnings from our listing York April Exchange as that first our result we Stock

have We X, January compliance. to until regain XXXX of

for Board nearest our every the our XX, November the receive owned with reverse the the one close holders of rounded unit. general after split will common effective Directors the X authorized whole unit at of for units of fractions on on such closing market business units of XX Unit has XX. to As partner XX November a

units believe We continue are to undervalued. our

marketing during at with to our judicious additions projects cash our production being In selectively our thank and closing, the employees plants operating third free for conditions. in by cost, our high We're flow execute a the capital forward reliably necessary to COVID-XX. we ready However, the at questions. company on safe split healthy, high the Exchange want more impact that reiterate Stock we're listing that focus partnership I regaining to the to compliance with our will flexible helping capacity to reverse quarter level while continue their to to I step maximizing consider and managing towards utilization reliability being and maximizing safely want logistics a prudently and York standards. and but managing New and incremental rates, normalized to activities. commitment take all returning to the looking With investing

Operator

you. Thank

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

Adam Samuelson

good morning everyone. Thanks Yes.

Mark Pytosh

Adam. morning, Good

Adam Samuelson

Hi.

is of trying the the head of low quarter to around persistent. a quarter to Mark quarterly of kind the perspective guess of pricing? know a record the new I that's and of kind capture So the year just given I marketing my little included UAN of third market on strategy fill spring guess some the I of pricing bit wanted want the But third kind kind still spring on any from to if in the where I pricing that a point of Did volumes sales. some marking maybe UAN wrap am I charge? first

Mark Pytosh

came this occurred basically I third fill would so say book. the into we quarter not earlier really The fill pricing. the year, much with the spring effect from

the really year. this early But fill the is So particularly done even for the UAN. summer fills third pricing is quarter pricing ammonia,

So fundamentally. have it’s Yes, a the not third in quarter any spring rounding does error. pricing it

Adam Samuelson

when or into potentially given have half of you space more some for are -- the kind year And of trying think earnings of and about nitrogen do as this at so, in summer later next typically second to you about rising the you for market open enter that in point? -- part kind capture should leverages deploy there is to you for whole fill context I that it guys kind yourself or the of move and mean

Mark Pytosh

We -- we tons the perspective. timing would and say know the delivery whole around from haven't Yes. we really I been to have a move second selling half ability always

capture for end but quarter. to It end can so really first to So in lift wait quarter, we where can the year the of so did the we and sell and closer we of pricing left. market couple the fourth last typically would of of end opportunities has the the years and see and we got it

So December, go October, there if October, slower these that around last is time. in years that's you by years. of couple of is lift September, further there typically then increased couple Historically been the the pattern price lift and to price the last in the back little September, fill and the it's been January, the in

kind did think and know kind in in significantly will have That's say ammonia any I feel So of take say and economics optimistic we aren't terms are the the of business that's level of opportunities fall of we where about and to of things doing changed. lot and can waiting a improved, and since really idea earnings the market advantage and we be don't the than is jump orders call. opportunities demand last going big well, have see, where we and that to I we Conditions last a customers with of But does I'd call. change better pricing. to application financially really healthy on have take their we more headed farm well are

Adam Samuelson

capitalization clear sustaining just capital the any capital generating you run you've I EBITDA, you've at million got me this come the about mean about due of I'm point, them? think business weather trying to for some you're evaluate different kind level fix interest the looking have and wherewithal about going of cash. with of you're on you Do the that rate $XX bonds you structure opportunities to options thinking one the they how different as $XX final those kind think to you just million of before kind that's kind business, kind the of has then, or are about through when or but the or And evaluating deal to then, between got to got of of charges bonds at before the

Mark Pytosh

in of we used the tell bit XXXX, cash. we haven't you of that using little just -- Well, I even been any but haven't we sort typically a cash

or But comfortable very frankly structure I'm quite in cash to for perspective this the with with position, opportunistic at from refinance a So refinancing is piece not we're about it's our a feel flow really our good rush and think a comfortable us. of position either until cash paper. flow the market with I being and that year price cash next we very year of

weathered. about structure So are. not any where very see nervous cap We're I We don't in like we changes dramatic We with comfortable feel our or that. anything. anything

this second of and tail when say first recovered unclear thought we've than the the what quarter demand quarter, I'd the end of was was end part the really the worst very think of say storm we profile about I'd it in a XXXX. I the pretty or than here little we're we I'd different think would thought would pretty to, but feel we any up we're going good doing for rainbows cheering way we and -- not we I we're no lined not faster say

the markets a that we're refi So to be have. whether to bonds opportunistic offer debt going about to the chance us we going are

Adam Samuelson

I right. the you. appreciate Great. Thank All really color.

Mark Pytosh

Thanks Adam.

Operator

you. Thank

to session. of I end the closing now comments. the to floor for reached over like the management turn have back would question-and-answer We

Mark Pytosh

you're February quarter want today and being safe Thank call to thank forward healthy much. look very just on and fourth you the we our to everybody Well, to talking that for and in for hope I you call.

Operator

gentlemen, today's and this does Ladies conclude teleconference.

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

CVR Partners (UAN) 3 Nov 202020 Q3 Earnings call transcript