Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the CVR Partners LP First Quarter 2023 Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host. Richard Roberts, Vice President of FP&A and Investor Relations. Thank you, Richard.

begin. may You

Richard Roberts

and Good today's Paul. our We your Financial appreciate Executive management. Thank With morning, me in Officer; Chief our call. Dane Pytosh, members today participation of Officer; you, Neumann, everyone. other are Chief Mark

first our contain you securities may results, let statements laws. under federal as that Prior that XXXX me conference this to quarter discussing defined call forward-looking remind term is

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

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

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

includes measures, release are the also our call filed financial various measures, first related included measures. reconciliation Disclosures SEC the with directly we GAAP period. most earnings quarter a This the XXXX including such comparable financial non-GAAP that in non-GAAP for to to

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

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

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

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

Mark Pytosh

to $XXX today. financial unitholders Directors net the May per and will close the paid income Good $XXX of of our $XX.XX joining EBITDA for XX of Board common declared quarter first XXXX million, record of first sales market include the be The Richard. And on morning, unit, which the thanks $XXX for of at you, of May million. quarter of Thank million, summarized net highlights a everybody, on call distribution of XX.

ran Consolidated This Our XXXX achieving quarter. and at of utilization of during with was ammonia the record available the of the in plants were plant levels XXX,XXX sale production quarter combined ammonia production in for which XXX%. facilities net combined tons, resulted gross XX,XXX UAN XXX,XXX tons. production tons well first

an ton. price approximately of the ton During we tons average per sold per tons quarter, of at of of $XXX XX,XXX approximately average an at and $XXX XXX,XXX UAN price ammonia

the to of a volumes quarter prices completion first operations of and UAN of falling year the falling the XXXX. the in prices quarter X%. the improved quarter XX% for and planned Prices third declined sales quarter XXXX, facilities from first Relative at last first with ammonia were result turnarounds as ammonia the both of following higher of UAN

as we to quarter decline. our benchmark prices increased prices than by less price first quarter than ammonia approximately our production sold realized from and first of UAN more fourth ammonia was before UAN the XX% Although XXXX the our quarter-over-quarter, fourth for Belt quarter, XX% realized quarter price and for down began of Corn in half declined

spring my which I planting Looking closing economics, discuss in farmer ahead, grain demand to fertilizer to in continue healthy we remarks. for strong and expect the due prices will season further

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

Dane Neumann

Mark. Thank you,

and to operating in the and EBITDA quarter expenses, XXXX, income volumes of primarily reported was for in million Relative sales the $XXX to XXXX, production prices. higher offsetting the first was million. Net operating or $XXX For and EBITDA quarter $X.XX per income was unit, million, SG&A $XXX decline million. of of the common lower $XXX quarter sales increase net due the and first slight and we of

operating Direct first for XXXX the of million. quarter $XX were expenses

quarter XXXX by expenses expenses first electricity direct to relative inventory to and increased the $X and operating costs decreased driven Excluding the by partially and repair approximately natural lower primarily by gas in stock-based current personnel maintenance higher compensation million period. of offset impacts, costs related

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

million, approximately with delivery had to the facility of prepayments consisted quarter and $XXX $XXX related product. the liquidity customer of million, balance We of for of cash ABL availability ended our $XX million. cash which million under future total $XX we of Within the

for cash assessing net will Board discuss of that turnarounds planned cash for from proceeds transaction closing and $XXX elected distribution, begin remarks. in closing our The received generated of of $X million $XX Mark EBITDA the million projects further $XX in In reserving January. of of million XXQ available cash to his in capital the future reserves we addition for to million,

We currently these reserves subject further approvals. quarterly projects, anticipate future for to

interest $XX and also needs million had cash net other costs, reserves. CapEx We maintenance for of

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

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

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

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

Mark Pytosh

from summary, pleased quarter a ammonia were with results, XXX%. record with driven our In production combined first utilization Dane. rate of by we very our facilities Thanks,

we quarter from in last softening also prices. of significant where marketing advance production sold of portion forward a first our We executed well our on plan fall,

is April. to at acres. acres flat Plains off XXXX levels consistent XX.X an million the million and million activity estimated be increase to in XXXX in Plant Corn spring up start, acres to are March acres levels the of of good Belt estimates corn X%. we saw pick XX season in planted a compared with the XXXX, Southern Overall, pre-plant with of seem where levels soybean XX.X Spring and late activity USDA in

keeping X% continue at low Inventory carryout or inventories at below of to soybeans corn approximately XX-year X% levels be the the for estimated range. for end and

remained As see grain to prices These will, for prices $XX.XX generate a that season. have and upper length should for cycle pharma the [$XXX.XX] are soybeans strong economics, demand nitrogen and of planting with grain We attractive strong at which continuing levels, bushel. the be demand remaining driven bode per large per believe result, strong. elevated by staying fertilizer of we part, bushel for grains prices this fundamentals in grain well

the weather led to has discussed natural in and in the prices As December quarter gas U.S. fourth on starting U.S. call, we earnings and the lower increased Europe. inventories and warmer-than-expected Europe in

indicate levels the from natural result, a for As we off-line nitrogen operating capacity, Recent back XXXX. come nitrogen spot the fall nitrogen XX% sustained lower estimates fertilizer in European the the European products around With have of capacity prices at XX% fall. of the of all gas online. quarter, production in some have Europe prices fallen seen production high up from first in in

dynamics to European price market have of nitrogen marginal costs for be logistical by input gas set the costs. largely gas Natural natural fertilizer plus production prices driven

area natural end of winter, into the curve. nitrogen setting fertilizer nitrogen MMBtu, production since global the of U.S. fertilizer the U.S. prices the cost $X.XX the in of low prices also have per gas costs fallen have While fallen at

more gas do on We than believe Europe should now, been downside natural pressure upside the market the to issues inventories that effect likely not resolved remain years. have have the there next structural is While gas subsided prices believe and X here. in European we natural for in to from extreme over X

the been quarter in Coffeyville from reserve of nitrous the installation. aside the the we've our acid efforts, abatement oxide On the our facility a potential expected plant cost this decarbonization studying set installation have #X at capital and of unit

next facility, carbon fertilizer received in this plant the it further January leveraging XXQ the in by to of project decarbonization U.S. which to already expect at to nitrogen in fund of the one has $X We the decarbonization XXXX, completed the additional any step. be million the lowest we footprints fund believe our should previous footprint reduce we carbon reserve Coffeyville proceeds our project, proceeds essence, We of and

explore reduce COX. we and recover already if installed the various COX units which, We also have in COX opportunities of plants, sequestration facility, our could years. Dubuque to both carbon a several abatement next oxide over East our acid We nitrous footprint approved, food-grade its nitric continue make of portion for to Dubuque's East stream

to We are carbon focused the proud carbon reduce footprint the footprint the reduce Coffeyville of further and our at at Dubuque. facility opportunities East on efforts we're to

projects year, increases the to that been targeted Over evaluating both be existing footprint. our our in we've brownfield capacity attractive facilities past development can production of

for facilities projects that, full of improve result a a the levels. reliability could review, this As expansion even and identified several project, without production we've

spent X initial to these Board-approved to to X are Our projects. quarter next expected this be the years reserves progress over potential

The this reduced a develop and the approved initial a environmental this and for further containment. at projects. We better Coffeyville truck these quarter, as would quarterly potential storage improve intended project, are issue project future Board address exploring also facility storage. unloading coke the loading and approved, anticipate and at project pet through handling key if This facility reserves we reserves also to we

safety select focus operating footprint. plan, the quarter and the communities; incremental on and reduce managing health the all performance. with our our of which and critical elements capital prudently of on and contractors we and investments capacity; a production reliability targeting focusing demonstrated and of and capabilities the reliability targeting plants maximizing and being costs; The our safely benefits with keen our business to logistics employees, carbon first opportunities our quarter, projects reliably but executed on judicious to additions In of marketing include

record in the closing, per quarter. their to execution, ready Paul? our plans, common solid unit distribution take marketing questions. I'd our first employees With and a that, plant excellent to in and production logistics we're for resulting thank achieving on delivery of like In $XX.XX

Operator

first Our Rob from Research. question Granite McGuire Instructions] is [Operator with

Rob McGuire

a on congratulations Richard, well-executed and Dane Mark, quarter.

Mark Pytosh

you. Thank

Rob McGuire

and Would up how to be are sold much are you idea your spot? much give volumes us quarter presold how second of an in set of

Mark Pytosh

But quarter did were We is sold second in during in analytics quarter. we get second ammonia first that I really of don't fourth we side, to the in a the presold, ammonia selling of have good quarter, into like I'd the in the our into for typical chunk percentage the industry. say, we want quarter, particularly the first the back good a that. the preplant. And forward which quarter,

percentage presold So, decent in a the quarter. we second also

Rob McGuire

coming can And utilization discuss much anticipate out running there how is then run rate that something longer you that you And of occurred? XXX% then do turnaround? continue? Is that your at to Or unusual normal?

Mark Pytosh

pleased for to thought we We the year. main We year those the with thought run of were target some feel lot to promise like we what XXX% won't we for is last issues the last XXX% plate. to our we reliability And talked the struggled And the addressed XX% challenges plants. it We very had forward addressed reliability we about operate turnaround. the see we some -- issues. identified but performance us. that We rates had. at of a I with of we've had were quarters, in

we put next side years. And in I X identified -- we're next as of that round We effort basically -- the already to is next reliability reliability we're sets for the reliability which the in of business. X got the production and And for think paid in, the ahead my this that -- of on comments. to for everything preparing thinking projects, we

that hope run can I high So, we at rates.

have the think, points outages, had we with year, in big issues have spent that again, thought, turnarounds past long we improve. various we we a we at to other -- last of in And and we the dealt plant stretch time. opportunities, but We at

run the the for hoping has will lined I'm so, And years, last be, focus typically the We continue better plants out. more on again, on. but But several focused that once continue turnaround to our we'll are reliability. after anything, if been

Rob McGuire

notable influences that's production over prices. And lower seen done. then gas drop you led returning in nitrogen Europe, and some behind the and prices? nitrogen any the of about in continued you Well Have to talked European other natural

Mark Pytosh

industrial probably in we ammonia that ammonia in the area lighter, that's softness causing say one for created I of, been is side. demand the the seen and that of length has terms maybe think, some the overseas would of I have some

the for fall you -- If look a gas, because next forward the window to European going to fall it may prices the production for last get the are be the open natural you Europe from for we like U.S. And if that think at did into are as there. export higher the fourth economics challenged and think curve again at summer to winter. we in back going European the the quarter, winter, look that we next much

the what together restart cost able if you're the year. is be saying European if most that I they economics only at you'd year you're it have will to that hold look of be to they And assume that are challenged producers they you going think gas make a curve, a to think And for where going to be competitive.

we opportunities for to summer there So, -- maybe Gulf for for Europe export production are of there's think Europe for upgrade that either do ammonia this in out -- or fall. the

end news world. in our the at We're right that produce is cost curve us for the the is U.S. in So, the the the good low to lowest. of cost

with from natural much the still X and years. there these margin down -- X the And been it's still years than where higher for in the -- it's last the But come -- marketplace us it is pricing in good at there's prices, has gas still historically way so was. or very nitrogen where for

Rob McGuire

I reasons could thoughts for appreciate has are out finishing that. trying out price do on, you there it. farmer? the And get logistical Perhaps if last type season anticipate urea or and cite movement And the me to behind are you you if bounced to here, and logistical then and to any issues can back due there obviously ammonia other your just out question, there. of product issues UAN give

Mark Pytosh

Yes.

reluctant. not good to top hard -- you, bet season that we even purchasing industry purchasing logistics. strong that preplant, down in think more are for reliable to nitrogen. just-in-time we're seeing dress and think and going which I farm think the bet been good challenges, our logistical in flooding dress shows imagine really Mississippi it's that to side And the I the this is the They're in have be customers pretty a and the to more just which a time, on given level

part the think our is producers part it that it production north. challenged be issue. that I of logistics. think have which And urea We upper capacity as is to for is demand it a isn't in logistically, the Midwest of of that going favors Part

in and And to expect strong get because the so, we demand dress. to river, won't in time up meet Plains Northern product side think, to ability the be the dress top be there we

there. a I So, it's think confluence factors of

when purchase lot of industry has And a just end up you you in to this short. had time, a of times try history

in You timing critical. can't the -- don't purchase when the enough, and And there's not spring needed. you it is quickly relieve of market pressure it's

you And so, at the right the the location. right need fertilizer in time

needs try think, And little so, bit when -- the a play this lot they preplanning. purchased. of a I with people did it customers cute And to it year, with too

Operator

management I'd no the this time. are floor comments. to questions closing There further over at like to back hand any for

Mark Pytosh

results July. in Thank you much very quarter second much. to Well, forward our for we later thank participating -- you call very right. the look All today, reviewing and in in

Operator

This today's conference. concludes

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

CVR Partners (UAN) 2 May 232023 Q1 Earnings call transcript