UAN - Earnings call transcript Q4 2021

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Operator

Greetings, and welcome to the CVR Partners, LP Fourth Quarter 2021 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, VP of FP&A and IR. Richard. you, Thank

begin. You may

Richard Roberts

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

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

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

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

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

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

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

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

Mark Pytosh

Good EBITDA full of you for call. the included and Richard. joining net year for The you, us million, today's million, XXXX financial summarized morning, million. XX,XXX net income highlights year of sales CVR Thank distributions for common declared common for over $XXX of thank everyone, cash Board $XXX and Partners of $XX the XXXX repurchased We per of total full unit. the $X.XX units, Directors

net EBITDA the Board quarter Looking which declared fourth unit, quarter, million, of record in reported of $XX on a cash more common $XXX market distributions million, we in at for million, and We $XX sales March per of XX, $X.XX CVR specifically improvement a the Partners. close X, income of XXXX be the unitholders distribution drove fourth of at earnings net will Directors significant XXXX, paid March saw on which XXXX, XXXX. to market fertilizer nitrogen the strong the of and of

we to safe operations. our on addition market reliable and improved fundamentals, the In continued focus

safety metrics, we is Work and a year. in more progressing to providing events. report publicly improvement including environmental internal XXXX health published first and We're in report for on proud to this disclosures our year-over-year are We XX% the continued XXXX. our environmental later release that ESG report reduction ESG plan

October upgrade and air the the tie-ins when the the plant reliably separate plant at downtime third-party XX made XX%. days work utilization of outages project. with quarter We approximately consolidated operated facility we due ammonia experienced for of fourth the approximately the X turnaround separation XXXX, urea of for at and During to we days safely plant downtime Coffeyville X of in

address XXXX turnaround the downtime A issues during major Dubuque We resulted should the part that of Dubuque East at the also days our at in quarter. experienced approximately of the Facility. East downtime XX fourth plan

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

the the downtime for quarter pricing the we mentioned, and Dubuque strong sale ammonia demand times available that due to maximize I production addition at at to to also East elected environment. In in

quarter ammonia outlook of the and persisted strong. we Europe price driving XXXX, ton of supply approximately sold an fall in tons realized ton. for and and a XXX% good XXX,XXX We demand UAN at average early realized respectively. higher. the adding market fourth of in inputs the ammonia, the The XXXX, $XXX and which the of was our fertilizer significantly average for and and Year-over-year were During tightness the in U.S. crunch crop energy ammonia per tons nitrogen harvest through spring favorable planting for began and The ammonia, approximately an per strong the pricing concerns and quarter, fourth $XXX UAN up XXX,XXX XXX%, in with to application. of weather remain had pricing Asia, price UAN for that increased for

discuss over I but the remained volatile call firm have financial good I urea, our spring the my results. book now in fertilizer to will a will Dane to and which for turn discuss closing pricing further We has in order remarks.

Dane Neumann

you, Thank Mark.

and to $XXX net operating loss for $XX XXXX. full of compared XXXX. results EBITDA was net the income Net sales sales XXXX, per or $X.XX per $X.XX million for million. is XXXX was $XXX loss unit or and year common full million of year million the our $XX common $XX to net reported of Turning for EBITDA full of we compared operating $XX unit $XXX for and This million a year the an of full year and million million, $XXX of million the to income

by results higher slightly by Coffeyville a prices year the goodwill As operating quarter. costs impairment were reduced million feedstock The for in EBITDA ammonia expenses. noncash was $XX to improvement the related taken UAN, in by and and offset year-over-year reminder, primarily our driven second full facility higher a XXXX

fourth quarter and loss a fourth reported we compares income $X of to excluding fourth $XX million, $XXX quarter the the full year Consistent of for was sales This EBITDA of $XX and inventory costs. in XXXX, was turnaround the approximately for and of increase net quarter operating $X.XX with year-over-year, million by unit per operating related Direct per impacts net results, the income increased compared of natural of million XXXX. of common sales $XX compensation of million. quarter unit net common million quarter gas the million or of XXXX. to was of Net the driven $X.XX and expenses primarily $XX for $XX and million EBITDA operating For $XX or an increased pricing and primarily loss and and XXXX, higher million fourth higher EBITDA of to ammonia utility $XX UAN. million for the fourth in expense share-based by XXXX

Turning to spending. capital

million spent XXXX, capital. During the primarily fourth maintenance on of $XX we quarter

be $XX planned million currently turnaround we the Dubuque million $XX capital. spent was $XX $XX excludes to will at the expect estimate which and between maintenance million to $XX spending, year million be million, to for For XXXX which maintenance which approximately $XX million XXXX, full total million, We of of spending we $XX Coffeyville the capital summer. million approximately is This for and expected $XX in to turnarounds capital. be for East

balance sheet. at Looking the

facility liquidity, prepayments which million December of million, of XX, $XXX and future had $XX of $XX of cash our in $XXX million was customer the Within approximately delivery approximately the ABL we product. cash we of under had for to million. related As $XXX of comprised million balance availability

another million the of X.XX redeemed fourth remaining senior to outstanding. the notes the of that final notes were the we $XX Subsequent During XXXX XXXX quarter, $XX we year-end, redeemed outstanding. million

previously of release the of a in turnaround on of reserves have million of to remaining established reduced million per annual for assessing and earlier work $XXX,XXX turnarounds debt maintenance the XX%. for refinancing we the year, debt June for expenditures, With the to planned of of a storm senior $X of of reduced reduction from million quarter and in for quarter, Winter the available related capital at and pass-through approximately million sheet notes completed by by today, XXXX cash Dubuque and million and the $XX total balance of distribution, million service Uri. $X EBITDA Coffeyville full XXXX, related generated $XX the In during Coffeyville cost East city $XX $X for million XXXX over interest, utility at reserves our we the Coffeyville the debt redemption and $XX completed our

senior of our general of repay Directors the fourth notes in of addition, quarter. the million portion established Board XXXX to a $XX In of partner reserves the

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

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

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

Mark Pytosh

challenges the of the the recent be largest came fall fall as bushels to for activities has the its acre inventory and corn XX-year lower XXXX-XXXX in China continues well. and estimate the soybean $XX entering harvest crop restrict imports recently The prices yields levels export of bushels in sell and with at out winter. Since and call, and per acres acres NYMEX bushel XX.X% available planted in were supply at We low The of our corn, of earnings corn MMBtu, of per fall persisted to and urea, were last with X% $X.XX The Europe, XX the Dane. continue most one went -- an whole well Egypt prices has $XX XX through XX where with application remain grain acre. exports with as expected shipped very inventory carryout at and gas XXXX. USDA for continue March soybeans we of curve strength range. approximately of Thanks, expected natural soybeans had the across at per was The currently the prices and years. inventory a end the the to yields Russia million, stronger XXX industry reduced of ammonia million

countervailing quarter fourth closely preliminary In Department this book the order fertilizers are versus export first fertilizer quarter, but of developed Nitrogen and that first prices third higher good of Commerce provided the in impact good more Trinidad. sell, orders have book were to We The into duties ranging we of fourth requirements from imports Russia higher a against the in a product Trinidad, second XX% Russia, to UAN the foundation have through Prices and market impact seen. the to a the determination currently economic and could strength to -- from to through ability pricing on expected remains these the the is and both that and still with spring. through XX% hold up put fourth to XX% the XXXX. to the potential cash be rose from due a sanctions. deposit prices from able quarter, half, ultimate Russia-Ukraine to of duties from watching Russia's to nitrogen quarters were We situation January, we capture quarter.

at Coffeyville compressor However, facility be the supportive of a in quick pricing reduction in capital pump, air core UAN increased a during volumes that This UAN ammonia payback to led our we outage U.S. production which should XXX of we increase the an for expect should to per that in project. separation plant, the completed tons and has installation additional see provide At the production approximately would an capacity for day. COX capacity

development and quarter first the and the discussions the a credits higher more progress carbon that us for an Dubuque values oil XXQ of the and and sequestration investors, we accelerate Iowa of believe projects that tax for the and Build continue our we Back capture pass that legislation ongoing expect are pathways the We at claim recovery early but potentially capture call, sequestration Facility. of for We the Congress second and as by continue allow we've due carbon for price Coffeyville entered to that diligence could structure capture plant. will credit tax structuring activities change carbon on to through XXQ in enhanced to Illinois equity could that increase could creating monetize Better proposed monitor with in legislation to proposed Better. last close or was end would Build did or not in credits, one quarter. Congress, other The deal the get Back be our sequestration passed third-party East into opportunity by climate Since to

we mentioned, fourth $XX morning, quarter. the million of X.XX% the retired our debt notes. Dane $XX As in remaining outstanding the this by senior reduced million XXXX And we

the $XX debt targeted in With XXXX notes, refinancing million million. debt paydown annual XX of The our XXXX the old paydown. of interest $XX lowered retirement has combination notes we of completed -- our the the have expense of by and June

We are per also unit. be the that XXXX of of fourth for we'll a distribution paying $X.XX pleased quarter

coming We quarters markets With and further costs, progress the to the evaluating opportunities our forward nitrogen improvements details our we're we and year over evaluations. the annual to look reductions fertilizer debt additional these past in as the providing diversify the improve business. in over service

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

Operator

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

Brian DiRubbio

going and few a sense the a first the what questions to redemption those between get for you the this for me forma Just old get me. just Just X pro at Can like to distribution of liquidity is look of notes? lien forma of pro help number liquidity a the items? payout point, to trying

Dane Neumann

Yes.

available we So as distribute do as our cash. of you know, all a rate variable MLP,

that So maintained as material what have past impact that has performance rates build in liquidity have seen on had cash will in result minimum we've the similar operating the to a minimum result, we balance. not a of the we as strong a and

in forward, the place for go accommodate reserves down pay we as we As debt. put to of that appropriate will be excess

Brian DiRubbio

Got us the it. you remind is? Can what minimum level liquidity

Dane Neumann

$XX will with ABL million. target minimum prices, probably usually $XX $XX From and a higher of cash is million perspective, our the to facility elevate That the then million.

Mark Pytosh

Dane here trying distribution we're the and is say to that think, what in comfortable I Brian, in quarter. is making payment the paying notes the first

the level ABL balance We have on and our that adequate sheet to plus, higher cash maintain liquidity.

Brian DiRubbio

No, I we you Do understand, -- can saw was XXXX we that us you what definitely in have from versus that's helpful, imports that help of drop a year, understood. or what guess, And any saw UAN. color. in for sense XXXX? last

Mark Pytosh

from preliminary up things loaded Commerce slowed say that back really, on kind down would Well, the indication fourth antidumping duties, pace when half think first imports that came the or I that drop and quarter. that of really, Department picked the in was quarter. fourth And I the of in

that issue, was that there was producers think cash would required or be in from fear I that. the duties So the biggest deposits the

Russia so, and slow, the half and expect imported Trinidad. the seeing reduction in 'XX. in And that's marketplace, continue product to imports that, slowing already started And it we from of a into we're to first

Brian DiRubbio

that your last we've was think ones convert Okay. advantage still you of of to X said thought facility? Coffeyville plant? pet the were Great. I a Mark, time, that do you having keep the you the there. final coke pet Would And thinking you nat Is it then that on sort for past, diversification just an me. gas? coke as -- debated,

Mark Pytosh

to in year, Mid-Continent. it's coke advantage Starting last pet in crudes, -- that's it probably we've competitive. -- actually run strategic pet seen Coffeyville some It's the turned been was we're year, coke now people the concerned -- the -- I flipped in Yes. year, in actually tell last it the area, actually that were and with being refiners, beneficial Uri been to particularly into last with about you the a coming more our has so more gas. marketplace, would more heavier into

We've product. And can and a refiners for got with Mid-Continent, good the draw so river we series we also have adequate off the of agreements in supplies. the that

coke with So very it's pet say, a us. comfortable we strategic become, again, a and and advantage diversifier feel now for I'd good

that And the road, so plant if -- convert can but optionality the we gas to. we always down natural to if we can markets flip the need significantly have we

Brian DiRubbio

Got on of sourced sister how was from just much coke And company? it. your pet your that,

Mark Pytosh

of the our order sister about getting from company. of on needs XX% We've been the

-- So from buy slate has of people that we been consistent. but pretty the our

that amount. -- by years X really great changed hasn't haven't We any last the

have facilities. a We -- there's trucking refineries within of our distance of series

and able from to consistent been been year-over-year. we've that So pretty it's draw group,

Brian DiRubbio

Understood. Final question for me.

making Any you're that some looking you're thinking exposure the about you to be mentioned other You your activities of consolidate? activity the should Are to be are thinking M&A cash sense that? about direction, you how investments diversification with we of fertilizers? to going nitrogen all to at reduce Or generating.

Mark Pytosh

I our be think factors, combination to we're very it's in going a approach. and of disciplined

disciplined not of we pretty opportunities a we're there's us but nitrogen, could looking the away limited for refinancing to not say, but looking rush going Dubuque either nitrogen other in there. or field that been, So optionality fertilizers do it to we're in from methodical expect at We've We're But last up any we our us, deploy balance and going open we're going anything in obsolete protective East the paydown in diversify to in X I'd nitrogen. -- the since in power do, transactions. capital do things that years and sheet the in we squander nitrogen, be to and bought that to outlet. some is diversify think

skill So and skill else we're take looking set. skill advantage set, our our of at what marketing -- our operating be might set

we're be but going very in not methodical to our returns-focused -- So going approach. anything. to rush and thoughtful We're into and

capital. consider have or capacity but potentially, expansions, ones, high rate having big of going to add-ons projects So give be to to the at hurdle deploying facility a without We're we're lot brownfield look able not to a decarbonization projects, us to spend going to to internal capital. also

to rate So the hurdle be consider it's going high deploy. that. sheet allows all balance a us again, to But to

Operator

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

Unidentified Analyst

on efficiently want also say And history congratulations more safely. long have continuing this I to favorable. First, relatively now, becoming of we operating commodity and prices

So prepared great the on congratulations decision to the quarter, results you on and great question clarification question, remarks answer down My to something that. is expensive debt. and an first pay first in the remaining mentioned the a

in this that from you've think would credits. the the you I tax do past, stated

an I if agreement think hopeful may you you're that. your you that in Mark, in this funding you on comments, have it, do that that the cash I participate stated get opening that from paydown. assume will

couple it, you QX your prepared cash? Or you investors I And or related paid if to don't in another tax as view a coming on be get distribution find get would If an paydown? to amount the of source credits this quarter should follow-ups. so, then reduced you don't of have by being

Mark Pytosh

XXQ we're that will of we'll structure advance doing a the it ultimately feel reach in receiving that requirements. for funds the XXQ. meet Okay. We comfortable Well,

able later. expect funds put that be do place. to until in won't we come that So to The

both of which you XXQ in significant, been I cash way our the fourth $X.XX to it down we previous fourth those debt flow as a in example, million quarter, that and saw down the it's was that credit calls between $XX dollars pay and paid we road, the The really down described the make had -- paid quarter, sort the on cash think distribution. is debt, for and I generation we distributions. operating free

plenty between feeling flow Our we XXQ down of money pay distributions. to on our year both debt payments and one cash of had end is this and pay the that free

capital debt distributions we're to shareholder that. value and today, So and shareholders. paydown we of think the on creates to down pay top we with complete that but think returning We're the

take you'll the has payment we amount from very flow that account have the free So strong. the and cash into debt, do generation our but to we've operations reduced distribution, see available of for been

by we felt over could going to rather $X it we paying that the so year. doing that ratably early we're of it take save comfortable, than And And advantage because generation of. about million

$X we million So stepping about company saved in by the early.

So didn't on want we the to that leave money just table.

Unidentified Analyst

Fair enough.

split the the between UAN Next question relates in and to ammonia quarter.

sell but typical but appears more answered UAN you you QX, do at sort operational think sort upgraded to pricing to you sounds related partly related to to usually more selling ammonia correct, that seasonal more high as much than less UAN of mix It this, production just I in it's less and have of opposed It ammonia to price. clarify. that's maybe, opportunities you market want pattern. of like constraints, I Do that but sold I sort a that sold relative to and to opportunistic related?

Mark Pytosh

quarter, weather bulk then upgrade for getting of Coffeyville's our upgrade fall where bigger Yes. there and of is we to that But period doing season we in like that it I once fair is slate, done more Dubuque us, a we escalating at was East plant perfect. fall East were pull full the we advantage to these X to -- And normal when largely a a reverted market is back was what long ended, And amount the so ammonia us, back that. customers season run. then then call We we was so upgrade. we back which a there regular to the because the that decided even were to I Coffeyville, our was -- of we for compared The much Dubuque past and would weeks, And upgrade Coffeyville. market. long. the very obviously, UAN. our had production that during opportunistic UAN opportunities. satisfy to we and attractive for ammonia prices the market, kept took coming ammonia had ammonia we've just it was run, time, pricing have is great But in were -- a say for

So and back ammonia offers -- from where we're to the market done to into spring, able have from going away a normal the it dial to for period of we're there UAN to time. we that but periodically us back

Unidentified Analyst

Great.

all You Is the already that There people answered are is you're why seems us. sort explain that, sell like And this an going can. long-term for not particular, to operational help way a one and I bunch opportunities, a not like just the some squeeze empty feasible to that on be that in the way, and production bit to can to in of some in the Seeking write And to Maybe topic, then of My that I'd can investors of over yours. understand you understanding like so and really always think more always explain quarter. a silos. process concept's bit inventory little if a It just by I question out out pricing expansion manufacturing of on in you maybe, more of right rainbow. an me, never on the relates all a but I dynamic, thinking? sell operation Alpha, and trends that and expectation to write who all about your company inventory.

Mark Pytosh

week. storage don't run we'll Sure, sites. unlimited so production XX/X, Sure. of one, XXX% there's sure. at our the day have Number every X Yes, variables capacity, William, We of ideally, kind there.

production. so think operation lowers and don't can your storage. it be the that -- as the I we that the low makes of lowest maximum cost have unlimited so sell And production, generally to That run forward have is -- as to they we quality for goal we you

So out have storage to you forward you production you always for caught product. that where portion maintain of capacity full of so production some don't sell run get you and can

back to production So level. those you situations, in might your dial have

So that's one issue.

that The other issue our customers. patterns is of buying the

And customer to that they when in the customers And -- I and be liquidity. both selling mean, tonnage. define when spot We product. -- buying when forward have big people market buy I have there's are tonnage we a liquidity, buy

in the So that, between fill quarter they don't you And buy every participate -- the customers the satisfy season year, could have fourth quarter where third in other and from their if somewhere UAN other the product. needs with we summer, then product producers.

for to the participate. spring. They fall and have dynamics in season you similar the have ammonia So the

participate have when customers so you And are buying. the to

-- the liquidity it's And at can't sell our so when there. that we meet spot all We product prices.

a dries that's think that then tanks of if sell have and for fallacy an common we and your a why the market? people, spot all business, this product. production might look don't Because I our lot at fill product, a all you can't they when up, not for we liquidity storage have up the outlet our

So we have to balance that.

behind prices so at rise a XXXX, 'XX the in the to strong as behind look because environment curve, we we the we half we And were experienced we always sometimes, was sell in market stupid in came this selling in forward, than And rising higher we're like because the look the look front or curve. during really of smart the we first much fourth very really curve and XXXX. and sometimes, but either we year, into product were quarter, able pricing

pricing so And We and we we have so XX/X, market good quarter, second some much shape in book can we've on run can the in to out business than great production got second higher but was the a full the of 'XX. the satisfy we're good have book in still comfortably more it is a sell we and customers. half of

Operator

I turn the remarks. floor questions back any closing like There would are to at management time. over for further no this to

Mark Pytosh

and of much. for everyone thank quarter to our you want to I Again, reviewing couple our first results Thank months. joining in a with we you today, look call forward very

Operator

This concludes today's conference.

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

CVR Partners (UAN) 22 Feb 222021 Q4 Earnings call transcript