UAN - Earnings call transcript Q4 2024

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Operator

Greetings, and welcome to the CVR Partners Fourth Quarter 2024 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 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

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

Board. a are cash needs anticipated as review cash distribution usage, amounts other future Let cash reserve for partner's you that evaluate needs established determined reserves, me remind our we MLP. We future previously variable our current and general may by

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

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

Mark Pytosh

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

to year We EBITDA XXX,XXX of for ammonia and of an with utilization $X.XX also reported of had full of We're as operations year facilities XXXX, incident We reduction to the our set well proud common improvement total rate with year records recordable For in XXX% our unit. metrics we million a safety tons. of volumes as in report new in utilization the XX% East rate distributions XX% $XXX Dubuque. XXXX. per another at for at compared XXXX rate continued from XXXX approximately solid ammonia ammonia production in

-- our fourth of the annual for XX,XXX of production quarter average ammonia at all For This total tons XXXX, utilization of per which plant our we of $XXX XXX,XXX per of $XXX tons, production and tons available net tons of approximately ammonia which XXX,XXX at substantially was price ton, an sold XX,XXX sold was in Total average UAN ammonia an sale. were XX%. of was price ton. resulted gross

weather sales Relative partially X%, volumes sales line application. to fall approximately during to quarter XXXX due of fourth ammonia conditions volumes UAN down the challenging were were and the in the

fourth in relative good drove and quarter year X% prior ammonia increased to products for and increase. new our facilities. start have had been prices we weather the demand prices Supply for the and the year quarter, higher fertilizer nitrogen Despite fertilizer some conditions X% to declined the compared to unfavorable approximately UAN strong nitrogen prices third saw we have for approximately continued that from Fourth period. prices demand and tight to quarter, shipments

market discuss my With season, rally look for the grain spring I which favorable in planting prices, closing further conditions remarks. the in will recent

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

Dane Neumann

Mark. you, Thank

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

net $X.XX unit, for For XXXX, EBITDA Quarter Xth million the was and Net $XX $XX $XX income fourth of and or operating $XXX Quarter the reported million. per we common sales of income was million. of million,

feedstock the prices fourth the million. sales Direct to quarter XXXX, to for lower operating XXXX of Petco costs. expenses quarter $XX of increased and fourth EBITDA higher ammonia Relative primarily due were

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

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

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

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

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

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

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

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

Mark Pytosh

and demand for the strong strong experienced throughout fall, In fertilizer we in had nitrogen Dane. despite operations the summary, application quarter. Thanks, we quarter conditions of another difficult

the these of down USDA yield but is be estimated now bushels With XXX now previous to are carryout bushels approximately per estimates complete, harvest XXXX acre, inventory levels and corn record XX%. high estimates yields are XXX the estimating XXXX for of from

we Soybean averages, earnings prices yields with bushels soybean acre down with for from higher $X an for are be strong bushel beans, favors per out and since bushels now to soybean acres corn for to at prices at March XX XX estimated XX estimated The are per $XX.XX. grain corn X%. our prices, XX-year With expect grain carryout demand prices both application. are planting XX over previously see balances most in XXXX. inventories estimates current fertilizer These of nitrogen and approximately fertilizer driven spring and below corn to last of tighter call the planted corn spring and which supply-demand calling higher million has inventory for

a represent card Middle to Russia. nitrogen fertilizer continue residing industry, fertilizer risks countries significant Africa, Geopolitical across wild East, the and the given the capacity North for in production

volatility continue business. monitor continued fertilizer markets, the higher-than-historical East that impact a the in will We of period expect developments Middle and XXXX could to be we in likely energy and

and desire stated the the the administration beginning Ukraine the with With end Middle to dynamics Washington, are conflicts to the East. the in change, new in

in imposition timing, could products. Canadian significant The fertilizer, on prices also flows disruption importer the are foreign tariffs. U.S. the in Canadian to of and of potential particularly watching the tariffs is a and import on increase U.S., closely imports, size, a We depending cause fertilizer energy and

concerns down prices since U.S. be last into alleviated from continue although to there ability of XXXX, Natural Russia, by per winter $X $XX could earning any gas call, natural of between potentially war than in Europe while has to are per before more about inventory MMBTU in additional prices replenish drawn gas the gas supply expected, our have and inventories $X remained this pending resolution given constraints Europe around range Ukraine. the and MMBTU. Europe, the supplies

The supply-demand continue cost the balance announced, the cost of high and global ammonia several will remained first plant we half through producing at the Europe of expect have XXXX. to in end keep closures tight which curve, been the global of has durably

issues At alternative natural with next over implementing an to continue issues construction design third-party seek feedstock project. Board detailed the construction technical potential to natural we pet have we the have completed currently that coke, significant no seen Europe approval likely structural begin in We years. facility, We're on gas on gas the on as to plan and utilize working to market Coffeyville the project. effect studies to will believe our and plans two engineering faces remain

could that in this the implemented project optimal the the only successfully the mix be with If choose feedstock ability to flexibility. us nitrogen fertilizer plant and U.S. give

the pet utilize depending this likely As flexed feedstock were remainder project while can by refinery, pet supplied adjacent the would coke if prevailing to Coffeyville the implemented, the natural between continue coke we gas and prices. of a be on reminder,

As call, the mentioned further decline last of the on to quarter prices seen and we a of XXXX. the in softening coke U.S. costs have coke our we see in pet pet earnings expect first

to debottlenecking XX% plants at of reliability plants the impact support both The turnaround. We is above excluding certain are nameplate these that our our of also to execute goal of operating utilization projects the target rates. production continue at and expected capacity, projects of improve to rates

which should boilers new steam improve installation fourth the and in X our the of availability completed reliability. We in quarter, Coffeyville

After plants, and water electricity reliability units, the with other of aligns nitrous footprint quality of plants, abatement acid projects. fall nitrous planning installation, our our at during reducing our turnaround. at unit which X on focused we abatement among operations. oxide oxide to and our have carbon of the we're XXXX XXXX, We're nitric would plant a install all strategy For both also Coffeyville

are efforts reserving spend the the years. The rates continue and next the over we over needed lower to in XXXX the X to the at elected the better plants to redundancy fourth future. reliability projects for as to production and the Board in expect years that X last in coming focus from The on improving taken reserves we funds downtime X provide capital X quarter

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

and quarter. employees for XX% In per plans, for unit our common marketing like distribution execution, thank closing, achieving safely I'd and our solid $X.XX logistics resulting their the of utilization to in delivery excellent a in ammonia

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

Operator

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

Brian DiRubbio

Just morning. a couple for me this

interest short-term couple lowering you changes with any customer off, First quarters. seen Fed over have the ordering rates last in patterns the of

think just the there saying, was Mark, costs? that last you're of a I higher ordering working sort given year time more in capital

Mark Pytosh

any pattern. how Brian, was we customer bring hold. points that the seen view think to inventory basis real don't I XXX the in haven't on enough change change to much

ratable So buying. we're still seeing more

And very been the since summer ratable it's X so X, year, months. last for really the last

Brian DiRubbio

And that project, it. gears. still just is now, The XXXX timing that of you Coffeyville Got a switching potential where stand event?

Mark Pytosh

referring. project I'm are not you which sure

Brian DiRubbio

I apologize. calling ability dual switch what pet the the to The -- to gas from fuel I'm coke. nat project,

Mark Pytosh

be would to plan for decision to a able 'XX to be approved . it's would on by Board feedstock The be place execute have in -- it to on the Yes. if

Brian DiRubbio

-- where then start And you see starts. in to so trying you construction So just approval? this 'XX, get

Mark Pytosh

We would option. this approved, If would that will we the we start have so construction year do construction. it's

to we make natural gas. or decision pet a have would use before whether on declare coke or sort We of year-end

so have try So get we year-end make for we to choice next that place to that year. before in

Brian DiRubbio

you this period? how a So weekly, back daily for one not work forth commit then. to have or you'd fuel to switch and would another Could or then year

Mark Pytosh

would we for not it or make commit but days decisions say probably year would over a won't weekly. period, or be wouldn't I months, daily We weeks.

Brian DiRubbio

Okay.

turn off say, one a let's valve natural collapse producing So quarter that gas prices mechanically, just for on just coke and for, sort the argument natural of then but the pet pet gas sake, coke just for gas? operate turn natural on via basically and you then you you then

Mark Pytosh

we Actually, have would it wouldn't gasifiers. be -- work that. X We

-- have for of And wanted if our on would coke back versa. on pet it coke run pet the running would And produce into run we hydrogen would to coke, and and we for come If turnaround there. pet -- over period go pet coke gasifier we needs enough we run natural want natural to to then gas we pet or would XXX% switch more a gas the XXX% running. vice gasifier to So a run we a gasifier coke, if a time produce.

this run one both -- only we gasifiers. scenario, under run today, gasifier So we

Operator

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

Robert McGuire

Dane Richard. Mark, and

market few a on questions Just trends.

more If you could give us insight, a little Mark.

to distributor then lastly, is a you consequence be inventories mentioned UAN talk give you about shifts this level? X And have season? supply-demand more seen are ammonia trends the material in as feel of the And year? fall any UAN urea ammonia you trend, the at you the one you spring us You prices? a any demand an and farm and can impact of feeling Can And use will do planting UAN tight. towards think is, for there of higher versus

Mark Pytosh

big The These and urea. the New is market lot There's driver price $XXX now take I of in right and is of globally of And the a metric. is in pieces. following in a a tight public questions there. which risen. ton Urea global it's Okay. now has sort but that's price, Nova prices, $XXX like Orleans. the are north right it a

just been, more buy availability. say, and into to urea they're spring, have I'd there's -- been limited a of So our looking lot customers the

so UAN market that tightened And up. sort both lifted has ammonia. the And of and

Ammonia bit December. is typically because sell in the different spring a we prepay little

cheap. of they maybe market But see following seeing kind where the higher there little and today, the a UAN when urea, in orders we'll the effect the UAN starting priced buy pricing from So of looks is spring. we're cash

find so actually there. we more may demand And

acreage And so customers telling typically planting. has corn that the our in us would I up customers and there's, which corn are seed been And corn think seeing at a I spring. acreage the say, more side last supply significantly tight. year-over-year, week, were sales greater implies I the was are of conference

the need think customers buying are acreage be I advance in to they more because there. like likely so be And there's feeling more to

all the So I think be actually stronger. nitrogen will

-- where UAN purchase, pre-plant at And pretty think in and to both top more also is but difficult it's customers side turn UAN, dress attractive. would dress the priced and next urea the today I stays UAN season. if to apply then

of I've kind there, Sorry, stop rambling if I'll questions. I'm your so see answered and

Robert McGuire

No, that Has was ammonia? a UAN great. trend towards versus been more there

Mark Pytosh

more the pretty would direction. moment in cheap the not A than wouldn't in lot urea relative I that there's looks at say ammonia really there. and of times, trend it's compared now, pricing a big right a but unduly that to I UAN, a say of relationship cheaper typically, time. cheap, little bit

urea. our was The did they'll we fall if but as orders and quarter. the the most get we or difficult in customer the of the some And We could UAN don't ammonia for did as with in there conditions fourth there up be for the difficult. in catch nitrogen, actually spring spring. back they with come weather scrambled ammonia get out are, and scrambled,

going pre-plant for a get on of spring what be back didn't fall. in probably a the there's in pickup down urea and in UAN to a the So bit -- little

Robert McGuire

color. of X/X you give the UAN great of idea Can quarter presold has been first us way an through perhaps then second into how That's even the and quarter of And the we're February. in XXXX? much

Mark Pytosh

the been buying our say length question like just are, of forward X specific but UAN customers than up a that's more Yes, kind is spring available, we last of sort ratable, at that into here looking the are and we in in book customers about pushed -- already been sold that get have the to And which weeks. I don't book. the what's going previous ammonia. the have not market what's I would very but consistently for of solid the we've business for

conference, would buy more. March customers the I like tonnage the to difficult find available. What So at heard to very

And in just so at producers. broadly all of this is market kind the April the point, amongst

and this tight needs to working market what stronger May. you the year. customer last tells it year and just than the But in April and So we'll be is fulfill firm, hard it's

market order looks to have than last million the year more between this going itself think book this X last And of acres corn we're is going year stronger somewhere into to spring million than it year. our like the year. and I X

Robert McGuire

helpful. the look gears reserves year? That's turnaround question, excluding And CapEx for should on balance shifting last then of the how the

Dane Neumann

Yes, Rob, the and profile, at as on we for I -- a and at expect think in reserves. level of the the turnaround. the CapEx substantial higher the to will a been balance the looking don't really forward to continue change comparable Obviously, you XXXX, already projects reserved should to has look same reserve growth see

Richard Roberts

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

Mark Pytosh

Just attended to your our today, talking the look and results want the interest in end Thank much. appreciate first quarter I call CVR about April. to and you who everybody thanks say very of Partners to at you forward to

Operator

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

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

CVR Partners (UAN) 19 Feb 252024 Q4 Earnings call transcript