CINR - Earnings call transcript Q3 2018

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Operator

Welcome to Ciner Resources Third Quarter 2018 Earnings Conference Call and Webcast. Hosting the call today from Ciner Resources is Mr. Kirk Milling, Chief Executive Officer. He is joined by Scott Humphrey, Chief Financial Officer. Today’s call is being recorded. now Humphrey. to is over the It Scott to Instructions] my turn pleasure floor [Operator

begin. may You

Scott Humphrey

Thank you, provide your I XXXX, outlook to for rest us morning. our Resources. third details of our Maria. Good XXXX questions. CEO, Thank that for financials, Humphrey, quarter from the highlights additional you Ciner follow will CFO discuss for Kirk joining earnings. to our quarter. some and our This discuss will with take Milling, is then we will then related Kirk will Scott the

the we remind conference those comments discussed financial in Before company’s this measures. of begin, I Actual from that over the I call on forward-looking these considered detail pro discussed non-GAAP financials constitute to and more our suggested Kirk. now to would call turn press results non-GAAP today’s Reconciliations number you in can are during comments financial SEC in are, found earnings results which differ a therefore, materially like the Certain reasons, forma included are of will statements. may measures the filings. call release. by be for

Kirk Milling

everyone. earnings Ciner Welcome good third quarter Resources XXXX Thanks, and Scott, call. morning, to

production quarter. compared our last combined sequentially DCF to second XX% down to down higher Lower the be X% While were at tons, are the almost year. quarter compared our expecting. to the second levels XX% levels year, levels Production sequentially operating about performance still improved XXX,XXX but CapEx versus was we to we up with the last quarter, not producing of volume led in compared

to the we improvement of our to lot tangible are reliability compared unplanned of historical year-on-year, of assets Our operations production levels. team has a our as evidence effort see downtime beginning and in into put improving

However, year. off quarter ore last quality X% to trona was the compared in our

our order assets in represents in have this to For withstand the a with surface having to on soda output. impurities meet deal of designed ash increase of our our of are quality kind perspective, our soda produce expectations. impurities not to in in to we impact assets Unfortunately, increase ash without this an the XX% amount customer

modestly take is sometimes perspective. quality, some the something that tactical Overcoming nature mining While ore where body more steps deal go you a through to this process we will not improve impurities. of the from with can is it the ore we can contain periods would

ensure production We when will quality. have to to lower we ore investments capital levels sustainability of periods of make encounter

only investment success the to in continue our of stated also levels to our tons but of the are process ash year rate, per improve production. production million plans in reevaluating soda at reaching near least towards X of We not of the goal sustaining term,

demand strength continues expectations, in you compared the levels once were impact So, soda outpace out were the expectations. International prices ash to the quarter strip below freight to year market while production our the of continues capacity. new up X.X% has last from to our an all volume toward new strong capacity, The million to expected tons Kazan ramp annual been Turkish the in affiliate sales. production X.X incremental but of up able absorb

a an by the raised pricing for on full we again, X% year outlook As result, our additional international comparison. have,

terminal additional raised from ash XX,XXX quarter the expectations Virginia. Norfork, to located soda domestic by Turkey we demand for marked facility first of an Additionally, new delivery tons. also in The Ciner’s

flexibility also aspects beginning additional at Wyoming. to sourcing earn these This security to either to will we supply offset to sale will customers, our of Eastern our Ciner’s with use in leverage manage from value supplement from with our network, SG&A the all a with U.S. the supply is Turkey supply our which supply strategy will Ciner Wyoming customers contact Resources sales, the onto bring to commission location. to of while of ensure single on assets global will Our Seaboard new added Ciner And think Resources expenses. a to point which from we brings our a

going call share I’m Scott to over to more detail. results financial in will who turn Now the the

Scott Humphrey

everyone, Thanks, I’ll your Kirk, some some utilize joining performance provided the us key evaluate and to and I February. our our how on and capital those to compare around results detail thanks, for Ciner quarter, in financial call Resources. business. interest the program quarter continued from the Today, metrics outlook significant in drivers for back spending provide including the we will our discuss we and third

actual we in to have year the the quarter of approximately X.X% the was with grew outlook. of X% of decreased down increased short between me year for XXXX and in volume QX of outlook to quarter range ore XXX,XXX year. issues tons discussed grade lower Total so XX,XXX Let year-to-date, our our due X% volume above basis an recap on versus approximately volumes tons to start to in to year-to-date Kirk our XXXX. sold a compared Domestic already. results XXX,XXX full our versus revised short the XXX,XXX in Production increase a X% tons QX and last

quarter. sales domestic rail Our by increased freight in volumes, X.X% affiliate. increased our compared the year X.X% included this year quarter results ANSAC XXXX. recognized the inland international have pricing U.S. ocean pricing to Overall, excluding to in costs These to contemplate last to was ports. down only International our effect during year-over-year. our also and price XXXX sales prices, quarter to in pricing X.X% sales the which increased and increased freight sales full on from so the outlook in CIDT by higher due domestic and We X.X% compared be X.X% year-to-date, the we international for flat to

to is row for This the XXXX. year get As be as within to the Kirk continues in revised X%. the Maintenance our spending mentioned as CIDT already, to market as We of The comparison year. quarter for the pricing, increase on, quarter $X.X second fundamental. excluding range capital for a revised to our expect quarter range X% and year-to-date. international will display in in to forecast million raised our $XX we tougher we’ve $XX international every full goes international of pricing million increased the during that was $X.X still million strong the outlook soda million ash pricing

have of $XX and push some XXXX of our large million million for projects We’ve the We our $X.X decreased spending with in million quarter. Expansion cash as payment capital quarter payments scheduled year-to-date. $XX XXXX. some first quarter into range the to to million the was third will fourth in $XX.X

on budget and in January implementation on XXXX, on ERP projects biggest are budget for go-live our project, schedule our of One XXXX and X, remains date. on remains

$XX.X nine down to year. Our in freight sold the a $XXX.X compared as drove from $XXX.X sales as $X.X ANSAC, a related provided ERP XXXX, Resources due of $XX.X decreased million was from $XX the the basis, for XX.X% the up in our related $X.XX sales benefits months litigation by operations our and quarter million drivers volumes year-over-year The ANSAC of XX.X% year as pricing we our generated The prior absence $XXX.X of XXXX, first in in capital. the domestic $X.XX quarter, to numbers. higher first for in Year-to-date, was compared was employee of in a down to of implementation capital. Cash revenues quarter, XX% in third experienced and from half directly were compared benefits to the XXXX, quarter implementation freight QX of nine Domestic million to volumes due primarily expenses million quarter compared sales, $XX.X the of the expenses. royalty increased with costs freight reduction by million last we of claims from million In a Ciner to freight International cash $XX grade. increased to decrease to higher of mix to in our the project. as first per correlates to XXXX drain million the volumes international increase earnings per the to first component year-over-year litigation of our drop for $XXX.X related volume. through year. in our the over of cost we as expenses nine cash a settlement million, were QX sales SG&A year-to-date in and million. primarily expenses our a unit reduction well from third XX% months in The of products of and were were in to XXXX. sell involving revenues for sales compared sold as working of of year, to Royalty year-over-year to million receivable were of quarter from million sales $XX.X increase the compared to higher quarters earnings million the $X.XX XX.X% SG&A million in using our quarters million $XX.X in operations Turkey to in Cost SG&A the by affiliate million volume than Year-to-date two first primarily reduced domestic $XXX.X $XXX.X to due and up million, XXXX, affiliate XXXX. compared to up $XXX.X of XXXX, of a were quarter to during million the during higher XXXX, to XX.X% two expenses first to Springs AR reduction last increase. million elimination July $XXX.X Year-to-date, well million were to the XXXX, increase Year-to-date, generating working the million. the collection compared dropped compared $XXX.X X.X% of was X.X% sold the the unit fees accounts sold have September $XX.X were of and XXXX million was working the XX% which higher X.X% drivers compensation the months settlement. were the $X.XX sales driven $XXX.X capital from sales reduces in $X.X to compensation three so had from well increase as through XXXX. Rock million as three $XX flip of project. sales XXXX. in main of Year-to-date, from higher ERP issues shift from cash the higher The On the products in XXXX the in basic in Most ramping primary which medical well driven higher XXXX. up from of increase compensation in as from the XXXX. including to low ore $XX.X contributed to on more in Company the This decrease sales was production component

a with We net continue adjusted times sheet ratio maintain leverage X.XX very current a of EBITDA. balance to debt conservative to

EBITDA, Next, and is distributable metrics EBITDA let’s third as million $XX.X into adjusted increase discuss million translates two XXXX. quarter in to $XX.X down cash million we of $XX.X of the million flow. Year-to-date compared third year. how all this we to months quarter, the an of delivered versus X.X% of a first $XX.X manage last the nine XX.X% in adjusted EBITDA the in adjusted key MLP, turn In

down our Our X.X% to CapEx in and of quarter flow million compared in $XX.X distributable On year-to-date million months distributable quarter $XX.X cash the in to first of XXXX compared the nine XXXX. was third flow cash to on Ciner our $XX.X the maintenance increased. million was a million basis, spent our as attributable as cash discussed was EBITDA Resources $XX.X

our maintenance was ratio based to X.XX and in basis, the is timing for coverage outages. a ratio compared of be at this lower the our ratio coverage quarter scheduled quarter. X.XX on each year-to-date On Our year. the in X.XX our typical coverage third last to at It second stands year two time

on the of I’m comments our for for to call Kirk to back the some Now turn balance outlook XXXX. going

Kirk Milling

Scott. Thanks,

improvement continued demand. sequential The production strength these year, and stage As domestic improved expect should modest combination QX. in in in the both results for pricing we volumes to of finish international set the we and see

and the cash third in Our are positive maintenance higher capital also our we higher been Both projects. year, forecasting Expansion quarter impact will has budget significantly ERP well. as and spending this primarily was these up we are in schedule we driven by capital starting on cogeneration year. investments and quarter from next flow and anticipate fourth on spend see

increase of to As I three are also per the mentioned future our at only assets, least million our to sustainability but improve earlier, year. investment levels tons production we our to reevaluating plans existing not up

of clear needed make made more a aging process improvement, will on in production be sustainability step is the good levels. it assets investment significant change While our reliability our strides in we’ve to and

We will are along both in still provide and working volume on with these our XXXX, early outlook details plans pricing. more for and

market into of on volume As China we already tons which With additional the rates, projects outside new further momentum global soda build soda look to continues GDP X of prices toward Turkish year. new the to the horizon X new the continues the type as limited grow ash absorbed per and into to to new year future, the million million we head market, represents at demand. ash for rise an

Resources. forward. Ciner Thanks for issues, This fundamentals our operational your for So continue open some the prepared look interest going Maria, really remarks. to concludes continued business our while have in attractive please for line questions. we the had short-term

Operator

Thank Our Daniel of comes from Citi. you. first Jester question Instructions] line the of [Operator

Daniel Jester

Good morning, guys.

Kirk Milling

Dan. morning, Good

Daniel Jester

commentary you still increase down challenges row. tons the this of year just year. on couple X do aspiration significant And provided, production, which volume past to year-over-year seems going length. there talking over going your off you’re been to second a at So are in a the you’ve volume that about the discussed But still a years, has an for like what be million of which of you’re of very two

there a some help So of or types the two? on line of you’re time some challenges given little us year thinking And of about? to can the get you’ve over a maybe you the had projects the more bit past frame bit

Kirk Milling

undertook Yes, in on improve what focused year I think term, so last of reliability. the process really terms we to near projects the we’re really is that improvement

And some doing to where grade ore million we back average term also range. X.XX bit. short things alone, our to think just million somewhere X.X us up to things the a get those We’re in ore the to we’ve the been get blend ton in levels our

think I we X think this aspiration going I require getting to coming the a million think level of to we’re we’ve different forward, CapEx. up had as but it’s of realization to tons,

we of those as developing new plans detail working been which because that, tons. provide lastly, I is involving either early I’ll still guidance just the on XXX,XXX that think, XXXX. The evaluating head XXXX. works. more Still on quarter we’ve in calcine the the timing to process year guidance of those. ore, early add and now. We’re chemically a anticipate caustic we’ll of project Again, we’re next we into think start We in will then the on provide that over that’ll still first And more in or up late soda TBD. XXXX

Daniel Jester

of some your other parts in And about thinking given the the we next which any be I guess, the cost level relative lower outlook to into production the just production world? there supply-demand your soda high a of can comments ash-based at natural supply on growing talk U.S.? due issues, year about attractiveness of constraints should growth, favorable you for or are relative to

Kirk Milling

for think us. No. right glass extremely which I mean, look so. good. very the as There’s now carbonate, market from highest extremely market is growth as lithium good I another that’s Asia the I in attractive the prices fundamentals the don’t are around and also in world. attractive also growth well LatAm mean,

think There speaking, think that’s I fuel focused the soda some us still for which in very obviously, start generally as forward, growth the market ash. freight issues, I XXXX, freight we in to on looks horizon. on are costs, we’re natural economics. logistics look But hit could attractive ocean

Daniel Jester

the about And then, you process? talked had of there initial provide pricing comments, you the can into that you color sort dynamic XXXX? about your of Have for that your prepared with conversations And contracts XXXX. customers end Okay. at any about is

Kirk Milling

So people market domestic Obviously, late some have U.S. that. very longer on in early. forward bit starts the I specific into in and uptick be speaking, season to like side, term somewhere it’s year-over-year. think think we’ll appears caps the a increase. pricing But and The that’s that I really a say may see around still QX landing have contract an $XX negotiation things generally I’d cases because QX. in agreements robust, are you and carries

I side, just On I tightness. international supply mean, the it’s think

We China. year. you’ve to it continue in we recently But to rise, seen next a see prices know think it’s QX how still head I that’s early into as to going bit settle

the on here said, on guidance I more at the like quarterly So next that I’ll call. provide –

Daniel Jester

soda like of the or just Okay, in see great. so. one go been over on net a how Thanks, you from past guys. capacity you you actually And the as shutting Chinese comment then, had me. just XXXX? into Can bit change China ash looks one It last down year the capacity

Kirk Milling

that’s the also question an a understand capacity don’t had want environmental figure and little But to right economy mean, these trying lot is I’m to going to now I bit environmental shutdown sure to to Yes. be difficult from a you’re the checks. how too out what government’s they for of the standpoint. aggressive. They’ve stimulate do

So we bit it’s year. I’d into now right next as say a mixed a of bag look little

next tremendous year expecting way China not in expecting of We’re nor capacity. much the we’re in growth in

Daniel Jester

much. you right. very All Thank

Operator

ladies session And conclude that thank conference and does today’s and you, gentlemen, Q&A call.

a have may You day. now wonderful and disconnect,

Sisecam Resources (SIRE) 6 Nov 182018 Q3 Earnings call transcript