UAN - Earnings call 2 2023 | CVR Partners, LP

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Operator

Greetings, and welcome to the CVR Partners LP Second Quarter 2023 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Richard Roberts, Vice President of FP&A and IR. Thank you, Mr. Roberts, you may begin.

Richard Roberts

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

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

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

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

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

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

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

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

Mark Pytosh

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

well consolidated quarter separation of XXXX. of to ammonia ran outages utilization the of X the at air during downtime facilities plant days Our Coffeyville, despite second at achieved we And XXX%. third-party plant due

East XXX,XXX which We for quarter. also at the for monthly XXX,XXX production XX,XXX ammonia of achieved UAN Combined production ammonia second production new gross tons Dubuque tons, and net were the tons. was was XXXX records of daily ammonia and for available in shipments quarter sale,

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

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

decline first the through volumes quarter quarter we at fertilizer prices. our of prices the to XX% While second quarter, nitrogen than more in continued higher sold second

farmer strong closing increasing discuss my in will prices the we nitrogen recent and into gain and we prices to ahead, expect grain prices economics, believe see fall seen -- I the which Looking have bottom in to fertilizer remarks. due further

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

Dane Neumann

Mark. you, Thank

higher unit or quarter per was of $XX $X.XX XXXX, for net UAN For production Relative sales for decline common second and and operating and million EBITDA to of somewhat quarter million. by in we the Net second was lower XXXX, income ammonia reported EBITDA primarily $XXX to due income $XX volumes. million the was sales the of the of prices $XX offset million. quarter and

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

decreased inventory stock-based costs, driven somewhat expenses gas direct Excluding lower impacts, compensation the and second $X of by higher quarter offset by operating natural expense. by approximately million electricity to XXXX, primarily relative

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

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

In for could a that assessing and needs had $XX million we $XX net $XX cash CapEx reserves reserve for generated distribution, for and future, of released our working reserves. total million future Within if cash interest projects. of needs costs, planned and is million that EBITDA of $X other turnarounds cash be capital capital maintenance available million of appropriate, the along with expected in for

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

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

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

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

Mark Pytosh

in our were production season another very In and with went great demand our had quarter. The we from of forward with planting strong and pleased we marketing team the from logistics production Dane. execution quarter with well Thanks, sold of weather first our second portion second quarter facilities nitrogen. We favorable a along significant where spring quarter for strong summary, volumes results. our

down to level acres estimates soybean increase the in XXXX. planted which be estimated the XX.X demand approximately and was which to the estimated we end is corn levels the not of that in a spring low corn consistent for the of for XX in did inventory XXXX, million resulting to soybeans. strong overall, X% the XX-year demand think range soybeans is at the average XX% million USDA of near While XX of XX and of USDA million corn carryout acres X% And compared X% was level with are XXXX inventories The grain from of be planted acres million.

per cycle Midwest, strong bushel there prices for in significant Given risk most and is Strong conditions the coupled soybeans corn for soybeans. part, grain be for economics, fertilizer estimates believe we application fundamentals at December see prices the we upward elevated in to driven and season. prices corn farmer fall with a levels, at the that We of yield remained this will, lower which both think staying drought large $X.XX should remaining by grain strong. support the at well Grain USDA's prices recent attractive demand fertilizer November $XX.XX bushel. per with demand for the nitrogen grains bode and length

planted than as are demand XX the amount lower areas were an where in million of the We think U.S. nitrogen by that implied acres we lower. think yields fringe the spring estimated corn in was additional acres corn

in that also and levels they months. impacted have dealer level coming by us large drawdown inventories have Customers inventory the believe will per demand with shared application recent seen We a lowest and replenished rates the of years was acre. lower-than-normal in to their planted be were need at the

to increase volumes future. this than ratable with further purchasing behavior over we a think in pattern pattern. more our carrying matches We larger cost the the year, into the past production see With rather shifting well customer purchasing

fertilizers prices discussed Europe. in to costs the lowered factoring we natural The cost first As earnings the gas production urea call, these the gas in lower for sustained in half nitrogen produce in UAN. quarter first natural market Europe in been global ammonia, and has prices of XXXX, in

back We fourth we quarter been the expect fall and in of price the the global The range $XX to the end nitrogen which drive high current should $XX prices gas into that low per for will TTF curve. European reset winter. production the of then as MMbtu, to enter cost stay has Europe

next believe not structural gas the remain the On that low been of MMBtu over placing natural to have should U.S. market prices the $X the natural the and the to years. $X global issues We U.S. the since other resolved at in per in X end effect Europe in hand, of range the cost gas spring, curve. have the been in do X

we summer July, fall and ordering fill both customers. prepay UAN from ammonia In completed the

prices book heading we order a the saw the With into I and products discussed, strong good reset have demand for fall. both

to On forward the efforts, are our on unit nitrous plant by and decarbonization the completed acid abatement oxide XXXX. be expect moving we the #X of in project Coffeyville facility a installation at the

evaluating the sequestration also to these years. if next on which, approved, to large-scale East one development COX Several Midwest, join for the projects reduce footprint projects. We the the continue various carbon several working Dubuque multi-customers sequestration are over could we facility, and in its are opportunities of developers opportunity explore

the in low UAN We ammonia production interest at are as carbon fertilizer. and of also pursuing nitrogen blue Coffeyville the customer have certification received and

continue brownfield We to in capital reserving next both projects. increases development we facilities of to capacity that existing be spend targeted over to footprint. to these could attractive continue our production Board evaluate X the potential that to the progress elected The projects expect years X to

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

for to for their resulting delivery and logistics we're second our execution like would unit for and common up $X.XX ready on XXX% thank to I per utilization in our closing, Q&A. that, solid marketing a ammonia distribution employees open of Camilla? plans, achieving quarter. With In the excellent

Operator

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

Robert McGuire

Dane last your leading drivers are prices performance. strong Richard, congratulations what opinion, month? the your stabilizing behind operational nitrogen Mark, and in Mark, the on over

Mark Pytosh

were factors. there I think of a confluence

number were were from there power difficulties, been globally, parts gas -- think certain seen world while that natural operating has production generation. to turnarounds in shifted a we've nitrogen planned of there there were and I of the

to where that really look that think So I there produce cost there's gas markets. -- inventories, shortage if would market think fundamentally, with say the gas certain that you at I natural the in was, of pushed a demand. was prices low just And in I

were we And perspective, reach from and so say, an I'd disproportionately maybe probably snapped -- of equilibrium. way inventory back kind to the other back low that

was market last consistent And been demand demand There's eating we've think their even it's all the think pricing large prices that's because driven. I a month. the been spring. really And I the in as fundamentally increase rising. So in seen have through through inventories been

Robert McGuire

then for it. fill is so UAN this point? summer -- Got over And your at program ammonia and

Mark Pytosh

Yes, it is.

Robert McGuire

production of Yes. And can quarter at us Is prices? you in line idea fill the give with presold summer averages? that you that historic an volume fourth

Mark Pytosh

lower The historic than was volume average.

was I the said that's increments. In and -- to terms sold in that in now. are it, used to the like forward, to of the sort people in they shorter call X buying buying selling months of, increments more we buy X summer comments, fill, the in X- market X-month my

patterns factor to So cost there shifted. money, I I as the And buying said, biggest cost inventory. of the would think I say carry is

so so they're in shorter carry and long, to don't want customers inventory periods. And buying as the

summer we as prices fill. And helpful we long since so as typically And then. the -- risen been do because which sell have in has didn't

Robert McGuire

is So stuck farmer mode? just-in-time in still little the a

Mark Pytosh

that to the way farm reset reset, I also level. the happened was that market the say what would all when

a lower And so the retail even in is was the it nitrogen lot than spring. price for

all seeing so And to level. the the farmer buy through the we're going way

pricing And the up, good but from -- it for farmers attractive also so base, the the in to step very in just not makes we've customer farm seen there. take reset

supply say, So through the good farmer chain, it's been, I'd the demand way level. all the to down

Robert McGuire

year? should to second the shifting remain ton we coke the then of level pet prices for the around half it. $XX Got gears, expect And

Mark Pytosh

low longer-term -- longer-term through end being -- in for longer of it's that a that I -- the next expect they'll for contracts. reset We're of series we're natural gas contracts term for that with would that for the year. contracts in contracts, this Yes. most year lower being And contract of should the

Robert McGuire

right saw can you you an idea to you're us And of then in summer? now fall it. give where the for Got the UAN of seeing relative kind versus prices lows

Mark Pytosh

Right now, XX% pricing the about fill. about current summer from is up the

Robert McGuire

right Would for that that... that Or pricing would you're be fall charging now?

Mark Pytosh

-- July sort I'd pricing November be October, would it, Yes. That third quarter yes, versus call of, pricing.

Operator

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

Mark Pytosh

I in third call to look October, Thanks today, early late to sharing you the results for Again, we November. thank everybody and for participating. in participating our forward quarter want with again

Operator

Thank today's concludes you. This teleconference.

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

CVR Partners (UAN) 1 Aug 232023 Q2 Earnings call transcript