UAN - Earnings call 4 2023 | CVR Partners, LP

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Operator

Greetings, and welcome to the CVR Partners Fourth 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, Financial Planning and Analysis and Investor Relations. Thank you, sir.

You may begin.

Richard Roberts

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

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

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

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

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

comparable measures, and included earnings be such we call. also for of the call related disclosures with release This to directly financial and period during various the The XX-K discussed includes including SEC the fourth the quarter reconciliation measures. filed our XXXX financial GAAP measures non-GAAP Form that non-GAAP will most in are

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

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

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

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

Mark Pytosh

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

full per reported we $XXX of unit. XXXX, common the EBITDA million and $XX.XX distributions For year of

well XXX% extremely of of UAN Coffeyville, production Coffeyville Dubuque, ammonia respectively. and operated with for XXXX, at and utilization records UAN a record production facilities at rates the volumes with XX% for new East year along ammonia for monthly Dubuque. at Our In new we set and annual volumes both East

environmental safety We with are X also our and proud incidents. XXXX for entire metrics the only process in one in environmental Tier to improvement event and report continued X safety year

the available quarter ammonia tons. Combined XXXX, fourth plant XXX,XXX XX%. sale. combined This consolidated of tons production were utilization for resulted XXX,XXX of our was XX,XXX in which net For gross was production UAN of tons, ammonia

the to relative were fertilizer fall, the fourth we sales weather of sold past of $XXX demand approximately During to XXXX, lower higher, X Relative and nitrogen tons by UAN of the in price ton. quarter, average fertilizers UAN ton $XXX tons favorable of XX,XXX primarily pricing driven XXX,XXX per of ammonia per price quarter for average at at due the volumes ammonia an years. approximately and conditions and strong to

ammonia period. and Fourth quarter respectively, year prices relative XX%, for XX% to prior UAN the declined approximately and

we by pricing driven saw fall, harvest. in of an particularly reset ammonia, strong increase after prices the for in in nitrogen the demand application for the Following fertilizer XXXX, December

discuss economics which we closing at I the and believe expect grain market in to upcoming fertilizer continued remain farmer current my season, spring conditions levels, have further While see remarks. price for softened strong will attractive, we recently, demand planting

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

Dane Neumann

Mark. you, Thank

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

we reported of of quarter $XXX million $XX fourth the net For and sales XXXX, of operating income million.

for per $XX for unit fourth $XX fourth due operating to declined gas was quarter EBITDA fourth sales XXXX and $X.XX were volumes of million XXXX, ammonia higher somewhat primarily of offset common prices. income million. lower was prices, lower Relative million. or $XX and quarter the Net the EBITDA sales the quarter UAN by natural Direct to and expenses

million quarter electricity gas $X and Excluding natural related inventory repair of expenses primarily direct by expenses. by and impacts, fourth and XXXX, declined to increased maintenance turnaround operating costs, from lower approximately the somewhat offset

was quarter year fourth maintenance million and estimate to $XX primarily $XX the spending be XXXX to to spending $XX We million. capital, was growth spending and for capital was spending be $XX million to $XX million, full capital million which million. $XX Capital capital XXXX maintenance

million the a expect spending Board XXXX. growth these quarter $XX liquidity the total cash from start of $XX $X we $XX delivery elected for of approximately to consisted million balance availability the We for of be funded related [ significant the million, our had ended projects in and of XXXX million future the portion with of capital product. which million will cash $XX in prepayments Within of cash ABL under reserving facility ]. We to customer

and other we CapEx needs EBITDA interest for and distribution, for cash approximately available reserves. cash our million net of of million generated had assessing $XX maintenance costs, In $XX

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

Coffeyville planned our the quarter. ahead between XXXX, downtime be estimate first and will in utilization XX% rate of to Looking the by XX%, which be we to at quarter ammonia impacted some

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

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

Mark Pytosh

$X near to and market grain now expect to inventory XX% results. strong believe conditions estimates for our XX% fertilizer XX We quarter soybean in facilities we've one for and per per see for Thanks, recent are from periods increasing Dane. pleased fall In summary, ammonia prices our for May steady, increasing from demand good lower current XXX soybeans nitrogen to another demand and XXXX, demand well carryout little million are for bushels application, $XX we of fourth experienced the quarter in we're are be with fertilizer of production for and are solid with last acre, bushels spring We These for levels season in USDA Current prices, seen strongest market years. had inventories grain to up will of coupled planting the the XXXX XX-year support decrease levels acres have estimates our the yield per XXXX. X% from Planted projecting USDA million planted production last a spring for indicate conditions XXXX. which farmer of soybean XX call, to nearly season. Overall, from corn risen. grain soybeans, softened. Yield in Since acres X% nitrogen per $XX.XX are should bode have corn than to $X.XX Grain compared averages. be this the acres fertilizer corn XXXX and corn is prices spring grain XX at XX estimated bushel. in of estimates resulting estimates at economics, approximately XXX The bushel from million a with acre. quarter XXXX XXXX, be planting attractive million.

fundamentals remaining at in the part, large We grains elevated grain prices believe we staying see and that cycle be of driven demand for levels, length will, this by steady. upward

buying pattern mentioned experienced to the I become patterns of seen the ratable fall calls, after this nitrogen rates. on due from matching earnings buying regular As last to purchasing which have inventory carrying new more customer with We costs several evolved fertilizer application, our ratable we've is production interest schedule. well ammonia and higher higher more

production in Africa meaningful across Russia. Middle countries Geopolitical a industry represent residing East, and to nitrogen risk fertilizer capacity for continue the North wildcard the with fertilizer

XXXX fertilizer We East in the we are than developments period will impact and higher in and of energy closely historical the be volatility could another monitoring business. markets, that expect Middle

in Europe to gas call is warmer-than-expected than MMBtu to to to per have lower cost our in industrial while XXXX, lower Natural earnings $X fallen it the and U.S., is to of produce still prices $X.XX $X at the XXXX, remained nitrogen the range since of demand at December in currently of winter, due global natural a In fertilizer in Europe since prices curve. cost high MMBtu end the U.S. cost the global low end curve. per of the gas low $X placing last the have the

issues continues its believe import the portion to ammonia remain in that do have structural Europe will gas likely in resolved Europe We continue to over been in to natural of a X years. needs, months. X we effect next the market that the expect and and not coming

us this If ability to certain alternative Board the coke. modifications natural feedstock utilize is with the project and conducting engineering only studies by on could successfully produce in be We either facility, flexibility. that potential the the approved implemented, by believe U.S. to making Coffeyville as give been we our gas plant plant, the to the pet feedstock fertilizer. to an and optimal mix can At we've fertilizer nitrogen that to feedstock nitrogen choose utilize the it

the in existing to continue better also Board we'll evaluate be redundancy at both lower improving the to production X the plants and to at footprint. over and projects X attractive on next We the facilities spend brownfield focused The expect to development production and continue provide increases we reliability can capital future. elected years, to downtime that our X reserving capacity be targeted that that rates can

ammonia record downtime record shipped manner in ongoing. ammonia have in and October A strike application. fourth reliable East in for quarter November strike began, union before had our October of monthly significant of in the production near quarter for XX% with facility began. the occurring with and and the in in strike plant volumes December operated the production is fall a utilization only began the Dubuque early the Since safe in the at we We

sincerely the believe keep safely running reliably to While it's utilization high appreciate operate the the our needs people continue plant future, East to our and customers. and predict to of and We we hard supporting plant hard of at facilities at rates. work can the Dubuque the meeting we

demonstrate continued on our marketing reliably the quarter focus we carbon safely performance. critical which our costs, employees, footprint. benefits fourth the all keen safety with of our and of and capabilities opportunities business our capital, plan and quarter, includes our judicious plants contractors on and of maximizing a prudently and reduce and to on to communities, operating reliability elements logistics focusing managing with In targeting being our health the executed The the of

quarter closing, our In for would the I XX% achieving for the employees to utilization XXX% for and year. execution, ammonia like thank their excellent

$X.XX $XX.XX and per and quarter Solid and unit distribution on operating resulted of for logistics per the a common delivery in fourth declared for marketing our plans performance XXXX. unit

any With ready take questions. we're to that,

Operator

Baird. with DiRubbio [Operator Instructions] Brian Our first line comes from the question of

Brian DiRubbio

question the on that guess coke around thoughts going your fuel around turning cost? into plant. buying in and on with would guess, that Any the agreement I produce they have Coffeyville decision? I is to dual the impact you terms you my timing potentially input be how that a pet what's made -- comments sister of site? of And dual company that the

Mark Pytosh

So there. a questions few in

sort goal costs good it the capital the the think to don't the the to decision to make investment final of us, require year gasification doesn't us. but complex. but a reconfiguration we not the our be Board, I that particularly is so It of that final number, big a for significant have have present would there a I plant, and don't we a it's investment engineering, this for think

refinery the we sourced that pet coke, been at bring So these refineries a from that it's capacity out of we refinery component from using way plant. of transportation building The fund. Mid-Continent. other we group The to the of Coffeyville have is It is Coffeyville cheaper the reserves the something And source easily don't that others locations. that. could be in the than for cost we've could of a big we've feedstock from because the it

pet costly feedstock. consider And of we providers, intact But end it a -- we or but more of to which so what that what depending But we so dual and as which do is not keep offering, coke. give more -- our back or coke that intention would the natural with -- is go would removing do be coke to optionality be XXX% what the third-party our exists on able design, have contract one depending market gas, would today, the be XXX% pet we're we natural would feed system, us but contemplating the gas Coffeyville and may would today. likely -- are on we

this it. year make And a intend about we're that. excited decision on we very to And so do

Brian DiRubbio

see the by it. take place get sake, more green say from let's very work little early that you by Board, Got And then would a I the just Or project is guess, 'XX? light that stages, argument know in time? done but bit you I for 'XX a that in

Mark Pytosh

think would that that I the do in 'XX project we could frame. time

or make typically, to goal sourcing think I our 'XX contracts goal X-year for because sourcing pet decision we coke a would I on think there for sign -- the there our be on pet there year coke. the

looking So making on we'd coke source the 'XX calendar at decision be the how a based pet year. to for

Brian DiRubbio

it. Got

in scenario, P&L? of case best a the So this terms impacting 'XX event is

Mark Pytosh

Yes.

and coke is currently, the think up, I think that an unless we the annual logical pet be I basis. speed it would cycle on

be coke down have aside, year an and pet costs last as costs from pet come down year. so this will our And coke

seems coming pick market in like being optionality able natural or we coke pet to subsided But a the two. the combination really of of and peak the down. coke have gas or to it's those pet of So

Brian DiRubbio

makes that remember the a on you think at but not guys agree gas approach. grief this overall. I sense all Coffeyville, couple I giving oil, years about when thought I you going ago of

Operator

of comes with next Research. Rob Granite the question from Our line McGuire

Robert McGuire

questions have your few in you from Can inventories about color that the you Do on here. talk a Just channel? perspective? any

Mark Pytosh

saying in size But think seen than buying. we I sum -- historical. seen in -- we've ammonia years call the And we've we prepay -- that's I and they're lump January Historically, in spring. buying Well, was call spring, after really the saw the ratable are buying that's what customers in winter for and also so recent what that remarks pattern I in run -- haven't is for February as fall, it's seen ratable buying what about would of buying typically Inventory what and that And in in application be we that kind because Yes. levels spring lower February. fill. in much not a December. ammonia January much my

we immediate And lower never were And never end -- are definitely buying call for, so inventory the I'd needs. levels system. last the season. they after the They in of replenished it,

lot they've and the application. And talking UAN, been as So time customer for base, in bought they as more fall up filling had ammonia, months we They April of to -- historically. quickly they don't In to May. buying not ratably cost inventories from don't carry product over a of carry in buying X customers months, applying their fall isn't it or want as want or to capital is it X and for X%. the -- in it

in it but comments, really well we're and matches customers are said we -- -- month, sold selling it whereas So of the every kind because ready. what I episodes historically, when matches in my

it actually So well very schedule. our matches production with

Robert McGuire

us ammonia that just Coffeyville's give color step Can then And down? utilization. you some on

Mark Pytosh

of in utilization first work on his plant. quarter the with our catalyst for there. which the We've Dane said guidance you doing on the change Yes. the a issues had some what remarks ammonia for is converter, to We're

is done to bridged rates -- the March, a in get work ammonia February, little why mostly that and going in bit that's back dipped so And down.

in wanted change we get that out so and catalyst. And to there

that's right So get we as that expect we out to going project. and it of production full back soon now, on as to come rates

Robert McGuire

OCI's Fertilizer you Iowa thoughts And Company valuation on and forth? do then have lastly, announced so sale of any

Mark Pytosh

capacity feel brownfield a construct, there. that We that for than couple assets the years real assets, cost of have think there's on they the there's you plants in the the when value the hits us in makes it say contemplated production -- more did the cost even you our here years Gulf have, would plants and value projects blue definitely in of the is is market for existing look escalation running the my plants believe are getting if we worth already new Because in. X enormous. the -- new particularly have the last that I thinks. in X done there price than expansions that all and And of the the to maybe like -- recently cost us think been ammonia the points are it the value value that But look purchase to really that at synergy certainly I located up more that in therefore, are and And that good more at think I relative are have we mind, ago. -- X Midwest. that

Operator

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

Mark Pytosh

and look in thanks, we'll months. results Well, Thank a today, our of for quarter forward couple first to reviewing everybody, joining you.

Operator

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

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

CVR Partners (UAN) 21 Feb 242023 Q4 Earnings call transcript