UAN - Earnings call transcript Q3 2021

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Operator

Greetings. Welcome to the CVR Partners LP Third Quarter 2021 Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I'd now like to turn the conference over to Richard Roberts, Director of FP&A and IR. you. Thank

begin. may You

Richard Roberts

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

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

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

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

filed Let Any measures, call reverse the the measures. included common financial XX, of adjusted GAAP on This split we split November the completed various units includes made financial on earnings me SEC of disclosures in quarter XXXX. close including a measures X-for-XX a CVR yesterday you the unit this call its market. our to The with references such basis. most related that non-GAAP on are release are to after remind reconciliation non-GAAP directly comparable XXXX third also per Partners that

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

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

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

Mark Pytosh

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

power safely driven reliably During externally two the plant at the days facilities separation downtime third plants and quarter due to ammonia experienced five of to and facility both with air third-party approximately utilization Coffeeville the of consolidated XX%. at due of outage operated We at an of XXXX, we the facility downtime approximately days outages.

this at handful were the Coffeeville to defer we of that conditions. During complete work outages the the used strong market year, able safely us the turn around, we downtime plant maintenance current advantage of take allowing to unplanned enough to

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

and quarter. of at approximately tons quarter of XXX,XXX ton per the slightly of $XXX $XXX ammonia average part sales due XXXX, price of at of XX,XXX and During per tons price approximately was higher year extended UAN ammonia an sold third an continued move that prices the we XXXX, driven higher The UAN in previously average began the summer, fertilizer for to ammonia. outages quarter were have XXX% throughout earlier in nitrogen this in and volumes pricing of prices for third XXX% rally to decline the as in mentioned further activity turnaround fall. multiple ton. the production during the following reduced remain and Relative shutdowns Hurricane to by summer and in down Ida the UAN across market. Fertilizer volumes, high plant Year-over-year tight over the available levels the US, inventory supply higher

closing the of my to crunch discuss reducing the persistent market and now With causing Asia that the fertilizers will higher which supplies I Dane plant I is in concern in and Europe is will in results. the fertilizer turn discuss and to our move shutdowns further the primary even of availability a remarks. further, number fueling over energy in financial prices, call

Dane Neumann

Thank you Mark.

we year net reported of and income common EBITDA Net were EBITDA net the an and and EBITDA XXXX, to XXXX. no driven year increase of $X.XX the XX to million of million in to adjustments a XX year-over-year quarter unit ammonia XX slightly and expenses There XX million EBITDA of operating to the per of of was XX compares offset higher of of XXX the either compared million. income operating operating for and period. of in and loss in period. sales of million $X.XX expenses. were common prior for higher per X unit in million by XX quarter quarter Direct net XX XX XXXX million third for The prices, sales was For by third the million or quarter operating XXXX UAN period. prior or million million loss sales the This third third costs feedstock was compared

include expenses of operating Uri. city to related direct expenses the quarter Coffeyville by electricity us Winter an allocated for to Storm charge million additional $X Third

as direct of this operating compensation, unit primarily electricity as and charge, million, a costs as expenses higher and impacts, to gas increased well result turnaround by $XX natural and inventory approximately increased price. Excluding the higher related stock-based

be We was spending for primarily capital growth Turning estimate spending, which to third Coffeeville. to XX of to we which approximately capital which quarter be is $X projects, XX $X be to capacity excludes million urea capital. capital capital to million, spending, the expect during spent million million of related total we XX expense. to XXXX of $X million million the approximately turnaround This upgrade at expected XXXX, will on to maintenance XX

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

of XXXX, redeemed we quarter, remaining million the the During XX notes X.XX% outstanding.

over in needs interest, take non-cash next fees, million X potential financing and the million of cost for any income Senior at X repay currently cash Coffeyville, of electricity actual fertilizer improvements headed intention we the tax market over XX for XX city available charge two advantage the paid to We of distribution, may the the current to million maintenance million net XX our years. and In next nitrogen expenditures. assessing a from previously, discussed have notes XXX,XXX we while we capital for for of EBITDA As back the be XXQ credit years. XXXX cash an intend generated remaining outstanding with

in plant Directors to East of XXXX a of of and Board the at $XX our the Dubuque third remaining of repay XXXX. established portion turnarounds for of million notes Coffeyville the X addition, general and Senior quarter the In partner reserves million

million there was our of distribution As the general $X.XX a unit. available for of result, partner Board a cash per Directors and common XX distribution, declared of of

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

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

Mark Pytosh

XXX million of bushels at XX of per stable conditions continues The be X.X% yields X.X% nearly were with for were of range. estimates out soybean with end expected acres soybeans is inventory were Crop expected acre. lower to throughout million, planted complete. the XXXX the corn summer, Dane. The and per yields bushels XX the and USDA acre, currently year corn XX acres of and the carry Thanks harvest for XX

For $XX.XX The big at year. prices bushel for farmers to and and soy has to story the the corn nitrogen XXXX-XXXX little over December higher the ratio year, still a corn rise $X.XX we use the Crop a for beans at been with of X.X% expect estimates crop next for supply been the fertilizers prices for month to stocks have side and the the past good soybean. USDA to XX.X% see on market.

turnarounds in discussed than on major plant turnarounds our nitrogen of many for As outages Many XXXX. third last quarter call, started we into and North fertilizer expected. in the longer American resulted scheduled delayed XXXX producers these some earnings

of preserve uneconomic usage In sectors fertilizer and third China, customers rush to being to and September. markets, significant scrambling to quarter lower $XX Ida Hurricane caused of have is few prices a prices nitrogen in production coal natural Additionally, spike generation. prices forcing industrial unplanned and escalating be in to of energy both pressure this gas all generation. to making a plants several XXXX. for the in plants are as much fertilizer the be supply. result to that for down XXXX In to weeks shut certain forcing the regions to Europe, and find a had Europe [ph] power on allocate spiked nitrogen US outages production these curtail leading government energy natural in, other nitrogen producers fertilizer compared shortage putting China production gas an available multiple to available for MMBtu, downtime power coal in September, developed caused around to international supply in energy amount thereby a The to certain In

in and dramatically quarter. dramatically these third has fourth to higher into nitrogen versus to exports prices of the expected the is they XXXX. challenges first a second are As winter. quarter, through continue quarter Prices China supply to rise currently quarter exports continue the restrict to are the entering All the half in carry result, to urea escalate and caused and much fourth the reduced expected global

over large per the ammonia energy fall be and a and application Europe We ton. winter, over be Fall don't supply challenges will Forward continued until prices summer as is next holds, $XXX are expected we per shortfall particularly in through ton, $X,XXX the to UAN are if fully think China. prices application available the underway currently season. that expect are and weather ammonia addressed

for day additional carbon capture expected sequestration through to this and an agreement are an equity ammonia of us the ammonia with tax spring forward. per last facility, XXXX, While on XXXX enhanced fall capacity Since that prices planned are investors, the the this plant. at progress apply production first credits the the Coffeeville compressor postponed are a XXXX. turnaround. of monetize compared tax made with for we've XXX form would the week and new to short Coffeeville last the of year. ammonia increase turnaround allow structure of discussions October pump equity Coffeyville and to We a going that year oil for cheapest this of We call, tax July at was CoX by customers At to recovery scheduled our would outage of of reaching and UAM remains ongoing the for the that the to by a claim our we we eager investor XXQ take complete fall started did creation quarter. installation to our activities and ammonia much These are higher tons units expect nitrogen and

legislation We development East could XXQ provide that and sequestration credit sequestration values than for facility. also We could could an our monitor continue opportunity proposed through rules. moving projects capture Congress Iowa for the in third values of Illinois that believe XXQ higher carbon and the be existing one more or credit higher accelerate that to Dubuque the party

Dane we quarter. million our by in reduced debt the outstanding $XX mentioned, third As

an operations of As proceeds we've of from debt and XXQ stated reduce additional of combination cash previous credits. monetization XXXX million to a intend any tax from on XX June we overall calls, flow through by by

both to holders. cash, currently of our believe sources distributions two make these unit pay we down With debt can and we

debt We unit a also while strengthening million are paying pleased $XX $X.XX to distribution this the be balance quarter sheet per a reduction. with

our cost, our conditions reliably safely being the fertilizer are and strong, health In we our opportunities capacity, third marketing production being our to their ready While carbon keen managing we healthy by do. employees, With safety operating investments capabilities maximizing employees that, during on would reduce but focus safe a select of the quarter footprint. are and and communities, with thank cash any contractors commitment to our generation in like capital, logistics maximizing continued in questions. take maintaining and we targeting incremental market everything for are and their our closing, Sherry? projects and with execution and focus and targeting additions flow to to I to plants reliability on judicious prudently excellent

Operator

Brian Our from Instructions] first is DiRubbio with Please question [Operator Baird. proceed.

Brian DiRubbio

morning. Good

Mark, be much QX, of forward or results your much will production First how question, of - in think do you how sold? QX

Mark Pytosh

the I'm not that understand question. I of context sure really

end to try mostly quarter me August that that In in would quarter, didn't because the but September market, the we really, at fourth sold the quarter. done start we'll sold, ammonia more July Let chunk the the explain, we'll the the was of in that third pick of be we of until and September. fourth And feel point, a good ammonia typical that so October, it we from sold and - quarter seasonal. and - escalation that of escalating in for first some in portion where for from up really had August, rising

Brian DiRubbio

Okay.

of we volume when bit dynamic about a should at because going How quarter lower XXXX? year, a forward we lot entered your that So into this you think disappointing results were had sold prices. first

Mark Pytosh

lot capture Well, I'd this did We we of more market July then but second the a in so escalation it sort we sold do that year, only August; fourth not we typically, for fourth in that the and a and call, part this that then would vertical have in October, of was year. in the more the and quarter escalating and third just we quarter. half the into went, were capturing sold

Brian DiRubbio

Coffeeville given environment feedstock to gas? pet natural gas, And early converting Okay. year, current from then this changed, gears, the were process possibly switching natural coke Has that you potentially. contemplating for thought

Mark Pytosh

natural have economics coke gas. and now the more obviously, is than Yeah, there pet flipped attractive

that that really gas, ultimately us, it's gas switch to if we're expect coke over, $X.XX now very to continue. to But we natural that, looking not natural year, be attractive We difficult to we were natural so I last call not always really at so And going available option competitive have it, choose. it's move we forward. $X that pet so at feedstock is a looking really going to gas, to

the So diversity our it us pet on good going stay gives course in portfolio we're and coke. to

Brian DiRubbio

I would been gas natural it a thought an mistake switch know analyst. to to only I'm I because good, Okay, have over personally, but

reduction, XX Just for I for pay did in of debt you hear reserved that right, you've notes year. terms $XX another million down the to next

Dane Neumann

distribution paid million, this So the the of $XX another reserve quarter was the out in for correct.

Brian DiRubbio

Perfect. time. so much. Appreciate Thank you the

Mark Pytosh

Thanks Brain.

Operator

question private Stein, next William investor. is Please from Our proceed.

William Stein

section have key we be taking releases, noted of want but Thanks market that as that reporting understand. sounds just so the But refers pricing that are press question. Mark. prices In a surprise this about indicators. much I so already to it you It's aspect Hey, for an like that shouldn't you've move better rising, there's forward. my your to

for that that you retail suspect in prices to just an should gate those relied I maybe sort upon current is are as looking at key your to more about give indicators? and Are pricing. this a relates example lot not given but quarter already to forecasting? that's just through think investors all Can quarter realized how spot us there prices that relate more closed I the of that as be forward informative view market those a walk or of

Mark Pytosh

there spot Well, are price. I it, that the would are, call prices in current

weeks take you if or sell to we markets there think retail current extent away that the kind green there perspective the the from that the facilities, if we - advance ammonia loads is representative quarter. of but, of week there'll prices. those be, of of either the retail portion be the think, that's loads, we're sell quarter a and spot have spot to Dubuque, from be and sold markup East We demand a run be example, into were price, spot week demand everything there week, at incremental and will be will going as and we smart but would don't an would so today the spot, sell And so spot this I would two good selling be few loads a next today a have in generally will we pricing. the coming next it'll this of Generally, or through at representative we

obviously, rising been Now, September than the kind spring August, a in escalated since in kind into be timeframe that's as have a in our and we contracted quite of in we much prices we go. of a But, we've really the as part it back see full to bit, that, price pricing the the installed the the first get previous the ammonia price. the the so higher the But quarter, mentioned and capturing I previously going spot been of will again, environment pricing here we've quarter. brunt fourth as we're answer, of vertical occurred

William Stein

one Thanks, Mark and I follow-up, if can.

with investors the you open longevity it? bought many in market guessing quarter. certainly cycle, I'm noted to shares excitement of talk current years. in and than longevity about the trajectory the the think view of relate your as Can on the we've the now you to I that and last that during the Thank that that great cycle few we're interest you. as been better you see might this

Mark Pytosh

pricing the a good really look in length. crop around think XXXX Kansas economics for demand really at in here the underlying longevity kind country. actually grains, you prices. of cycle feel Wheat couple key about wheat is for And us crop and and wheat because customer probably sleeper the to so at is is is facility good Coffeeville out for year I the critical high Kansas. wheat, there of any a the XX last [ph] has is emerged out months, I

If so I very demand they even here we stay generally the and extended next And 'XX quarter. just about creating really are more issues starting cycle farmer prices think now, easy of major the grain on good farmer to global for like and to with, a we of in production economics. longevity. pressure high which see an to the fertilizer, and obviously, answer And think 'XX global are deal economic energy have don't is to me, an over feel I lot shortage have key about because can the I energy to the fixing even

So good really I is where but We're and lose going headed any market focus. feel to do we're about we're run well our not going we well, to well. do our product what plants which

William Stein

for Thanks Great. questions. taking my

Operator

[Operator Instructions] proceed. McGuire question next with Our Rob is Research. Please Granite from

Rob McGuire

this morning, Richard. talk Can view favorable anti-dumping to potential - and Good Mark, pricing? impact duty with Dane the - negatively you little just do higher or removal prices a have pricing, imports bit in about negative of negative you of would investigations? threat a impacting this a countervailing is and And ruling result a as more

Mark Pytosh

Mark. this Rob,

and the create and that of pricing think eliminate if is there compared with Trinidadian that are issues where of cases so, United producing they where that they it clear we that trying go because this some be in see in I or would to they, to it ruling we I is it - issues really energy duty factor, of in there. extends in forward environment the be the we globally. that I sort see additional here end markets think think but that perspective if my from imposing to Russian several market States that in adjust of is globally favorable But to that they're a hard supply that from prices and and the it's times, is reduce typically pricing. that perspective, the the UAM, decided it, European product many over I kind up subsidized have to a I did if it's the factor change see kind do US natural can would very gas time, It what gas with if alone versus, supply just but say that probably the like a factors issues globally these would you would think one

to just think extend we have US it current it So probably that - market. out in would I issues the just would supply the compared

it out supply extend So, issue. could this

Rob McGuire

further I've Thank no you. questions.

Mark Pytosh

Thanks, Rob.

Operator

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

Mark Pytosh

on to being look we results Well, today you quarter very in with Thank thanks, sharing for fourth February. much. the our you and everybody call forward

Operator

This conference. you. Thank today's conclude does

disconnect for lines you this at and your You your participation. may thank time

CVR Partners (UAN) 2 Nov 212021 Q3 Earnings call transcript