CVR Partners Reports Fourth Quarter and Full-Year 2020 Results
- Operated safely and reliably amid the COVID-19 pandemic.
- Achieved record combined ammonia production of 852,000 tons.
- Received certification for the Partnership’s first-ever carbon offset credits through nitrous oxide abatement efforts at the
Coffeyville facility. - Increased unitholder value through the repurchase of approximately 623 thousand common units, decreasing the number of outstanding common units by 6 percent.
“CVR Partners achieved solid fourth quarter and full-year 2020 results, led by record ammonia production for the year, with the
“Farmer economics have continued to improve during the past several months, with corn and soybean prices increasing by approximately 75 percent since July 2020,” Pytosh said. “In addition, weather conditions were favorable for both the harvest and fall ammonia applications, resulting in strong demand. Looking to the spring, we currently are seeing strong customer demand for fertilizer application at prices that are significantly higher than last year.”
Consolidated Operations
For the fourth quarter of 2020, CVR Partners’ average realized gate prices for UAN decreased over the prior year, down 21 percent to
CVR Partners’ fertilizer facilities produced a combined 220,000 tons of ammonia during the fourth quarter of 2020, of which 75,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 335,000 tons of UAN. During the fourth quarter of 2019, the fertilizer facilities produced 180,000 tons of ammonia, of which 55,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 286,000 tons of UAN.
For full-year 2020, the average realized gate price for UAN decreased 24 percent to
Capital Structure
On
The Partnership’s common units began trading on a split-adjusted basis when markets opened on
In
Distributions
Fourth Quarter 2020 Earnings Conference Call
The fourth quarter and full-year 2020 Earnings Conference Call will be webcast live and can be accessed on the Investor Relations section of CVR Partners’ website at www.CVRPartners.com. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8029. The webcast will be archived and available for 14 days at https://edge.media-server.com/mmc/p/yaypx4aq. A repeat of the call can be accessed for 14 days by dialing (877) 660-6853, conference ID 13715422.
Qualified Notice
This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of CVR Partners’ distributions to foreign investors are attributable to income that is effectively connected with a
Forward-Looking Statements
This news release contains forward-looking statements. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding future: continued safe and reliable operations; impacts of COVID-19, including the duration thereof; purchases under the Unit Repurchase Program (if any), including the timing, pricing and amount thereof; ammonia production rates; utilization rates; ability to offset impact of lower product pricing; farmer economics, including improvement thereof; corn and soybean pricing increases; growth of customer demand for fertilizer applications; finished product pricing, including improvement thereof; ability to upgrade ammonia to other fertilizer products; distributions, including the timing, payment and amount (if any) thereof; direct operating expenses; capital expenditures; depreciation and amortization; turnaround expense; inventories and adjustments thereto; other matters. You can generally identify forward-looking statements by our use of forward-looking terminology such as “outlook,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. Investors are cautioned that various factors may affect these forward-looking statements, including (among others) the health and economic effects of COVID-19, the rate of any economic improvement, impacts of planting season on our business, general economic and business conditions and other risks. For additional discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and our other
About
Headquartered in
For further information, please contact:
Investor Relations:
(281) 207-3205
InvestorRelations@CVRPartners.com
Media Relations:
(281) 207-3516
MediaRelations@CVRPartners.com
Non-GAAP Measures
Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our GAAP financial information presented in accordance with
Effective
The following are non-GAAP measures presented for the period ended
EBITDA - Net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.
Reconciliation of Net Cash Provided By Operating Activities to EBITDA - Net cash provided by operating activities reduced by (i) interest expense, net, (ii) income tax expense (benefit), (iii) change in working capital, and (iv) other non-cash adjustments.
Available Cash for Distribution - EBITDA for the quarter excluding non-cash income or expense items (if any), for which adjustment is deemed necessary or appropriate by the board of directors (the “Board”) of our general partner in its sole discretion, less (i) reserves for maintenance capital expenditures, debt service and other contractual obligations, and (ii) reserves for future operating or capital needs (if any), in each case, that the Board deems necessary or appropriate in its sole discretion. Available cash for distribution may be increased by the release of previously established cash reserves, if any, and other excess cash, at the discretion of the Board.
We present these measures because we believe they may help investors, analysts, lenders, and ratings agencies analyze our results of operations and liquidity in conjunction with our
Factors Affecting Comparability of Our Financial Results
Our historical results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future for the reasons discussed below.
Major Scheduled Turnaround Activities
Overall, results are negatively impacted due to lost production during downtimes that result in lost sales and certain reduced variable expenses included in Cost of materials and other and Direct operating expenses (exclusive of depreciation and amortization). The Partnership did not have planned turnarounds during the year ended
Facility | Related Period | Turnaround Downtime | Turnaround Expense (in thousands) |
Estimated Lost Production (in tons of Ammonia) |
||||||
2019 - 3rd/4th Quarter | 32 days | 9,842 | 33,706 |
Goodwill Impairment
As of
(unaudited)
Three Months Ended |
Year Ended |
|||||||||||||||||
(in thousands, except per unit amounts) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
Consolidated Statement of Operations Data | ||||||||||||||||||
Net sales (1) | $ | 90,299 | $ | 86,062 | $ | 349,953 | $ | 404,177 | ||||||||||
Operating costs and expenses: | ||||||||||||||||||
Cost of materials and other | 23,442 | 22,756 | 91,117 | 94,103 | ||||||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 44,230 | 45,622 | 157,916 | 173,629 | ||||||||||||||
Depreciation and amortization | 19,080 | 19,807 | 76,077 | 79,839 | ||||||||||||||
Cost of sales | 86,752 | 88,185 | 325,110 | 347,571 | ||||||||||||||
Selling, general and administrative expenses | 4,135 | 6,195 | 18,174 | 25,829 | ||||||||||||||
Loss on asset disposals | 463 | 768 | 582 | 3,397 | ||||||||||||||
— | — | 40,969 | — | |||||||||||||||
Operating income (loss) | (1,051 | ) | (9,086 | ) | (34,882 | ) | 27,380 | |||||||||||
Other income (expense): | ||||||||||||||||||
Interest expense, net | (15,877 | ) | (15,766 | ) | (63,428 | ) | (62,636 | ) | ||||||||||
Other income, net | 37 | 40 | 159 | 269 | ||||||||||||||
(Loss) before income tax expense | (16,891 | ) | (24,812 | ) | (98,151 | ) | (34,987 | ) | ||||||||||
Income tax (benefit) expense | (9 | ) | 70 | 30 | (18 | ) | ||||||||||||
Net loss | $ | (16,882 | ) | $ | (24,882 | ) | $ | (98,181 | ) | $ | (34,969 | ) | ||||||
Basic and diluted loss per unit data | $ | (1.53 | ) | $ | (2.20 | ) | $ | (8.77 | ) | $ | (3.09 | ) | ||||||
Distributions declared per unit data | — | 0.70 | — | 4.00 | ||||||||||||||
EBITDA* | $ | 18,066 | $ | 10,761 | $ | 41,354 | $ | 107,488 | ||||||||||
Available cash for distribution* | — | (4,517 | ) | (11,795 | ) | 26,677 | ||||||||||||
Weighted-average common units outstanding - basic and diluted | 11,010 | 11,328 | 11,195 | 11,328 |
_____________________
- See “Non-GAAP Reconciliations” section below.
- Below are the components of net sales:
Three Months Ended |
Year Ended |
||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Reconciliation to net sales: | |||||||||||||||
Fertilizer sales | $ | 78,792 | $ | 74,852 | $ | 306,490 | $ | 363,096 | |||||||
Freight in revenue | 9,098 | 9,527 | 33,329 | 33,436 | |||||||||||
Other | 2,409 | 1,683 | 10,134 | 7,645 | |||||||||||
Total net sales | $ | 90,299 | $ | 86,062 | $ | 349,953 | $ | 404,177 |
Selected Balance Sheet Data:
(in thousands) | |||||||
Cash and cash equivalents | $ | 30,559 | $ | 36,994 | |||
Working capital | 41,873 | 49,429 | |||||
Total assets | 1,032,880 | 1,137,955 | |||||
Total long-term debt | 636,182 | 632,406 | |||||
Total liabilities | 718,639 | 718,411 | |||||
Total partners’ capital | 314,241 | 419,544 |
Selected Cash Flow Data:
Three Months Ended |
Year Ended |
||||||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Net cash flow (used in) provided by: | |||||||||||||||||||
Operating activities | $ | (9,477 | ) | $ | (29,515 | ) | $ | 19,740 | $ | 39,157 | |||||||||
Investing activities | (3,424 | ) | (9,131 | ) | (18,550 | ) | (18,529 | ) | |||||||||||
Financing activities | (4,825 | ) | (8,027 | ) | (7,625 | ) | (45,410 | ) | |||||||||||
Net (decrease) in cash and cash equivalents | $ | (17,726 | ) | $ | (46,673 | ) | $ | (6,435 | ) | $ | (24,782 | ) |
Capital Expenditures:
Three Months Ended |
Year Ended |
||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Maintenance | $ | 2,206 | $ | 7,306 | $ | 11,651 | $ | 18,247 | |||||||
Growth | 462 | 1,216 | 4,780 | 2,027 | |||||||||||
Total capital expenditures | $ | 2,668 | $ | 8,522 | $ | 16,431 | $ | 20,274 |
Key Operating Data:
Ammonia Utilization Rates (1)
Two Years Ended |
|||||
(percent of capacity utilization) | 2020 | 2019 | |||
Consolidated | 95 | % | 93 | % | |
95 | % | 94 | % | ||
95 | % | 91 | % |
________________
(1) Reflects our ammonia utilization rates on a consolidated basis and at each of our facilities. Utilization is an important measure used by management to assess operational output at each of the Partnership’s facilities. Utilization is calculated as actual tons produced divided by capacity. We present our utilization on a two-year rolling average to take into account the impact of our current turnaround cycles on any specific period. The two-year rolling average is a more useful presentation of the long-term utilization performance of our plants. Additionally, we present utilization solely on ammonia production rather than each nitrogen product as it provides a comparative baseline against industry peers and eliminates the disparity of plant configurations for upgrade of ammonia into other nitrogen products. With our efforts being primarily focused on ammonia upgrade capabilities, this measure provides a meaningful view of how well we operate.
Sales and Production Data
Three Months Ended |
Year Ended |
||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Consolidated sales (thousand tons): | |||||||||||||||
Ammonia | 114 | 62 | 332 | 241 | |||||||||||
UAN | 325 | 293 | 1,312 | 1,261 | |||||||||||
Consolidated product pricing at gate (dollars per ton) (1): | |||||||||||||||
Ammonia | $ | 267 | $ | 324 | $ | 284 | $ | 392 | |||||||
UAN | 139 | 176 | 152 | 199 | |||||||||||
Consolidated production volume (thousand tons): | |||||||||||||||
Ammonia (gross produced) (2) | 220 | 180 | 852 | 766 | |||||||||||
Ammonia (net available for sale) (2) | 75 | 55 | 303 | 223 | |||||||||||
UAN | 335 | 286 | 1,303 | 1,255 | |||||||||||
Feedstock: | |||||||||||||||
Petroleum coke used in production (thousand tons) | 131 | 131 | 523 | 535 | |||||||||||
Petroleum coke used in production (dollars per ton) | $ | 30.65 | $ | 39.90 | $ | 35.25 | $ | 37.47 | |||||||
Natural gas used in production (thousands of MMBtus) (3) | 2,203 | 1,646 | 8,611 | 6,856 | |||||||||||
Natural gas used in production (dollars per MMBtu) (3) | $ | 2.77 | $ | 2.87 | $ | 2.31 | $ | 2.88 | |||||||
Natural gas in cost of materials and other (thousands of MMBtus) (3) | 2,689 | 1,474 | 9,349 | 6,961 | |||||||||||
Natural gas in cost of materials and other (dollars per MMBtu) (3) | $ | 2.59 | $ | 2.58 | $ | 2.35 | $ | 3.08 |
___________________
- Product pricing at gate represents sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure that is comparable across the fertilizer industry.
- Gross tons produced for ammonia represent total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represent ammonia available for sale that was not upgraded into other fertilizer products.
- The feedstock natural gas shown above does not include natural gas used for fuel. The cost of fuel natural gas is included in direct operating expense.
Key Market Indicators
Three Months Ended |
Year Ended |
||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Ammonia — Southern plains (dollars per ton) | $ | 256 | $ | 288 | $ | 251 | $ | 348 | |||||||
Ammonia — Corn belt (dollars per ton) | 340 | 385 | 337 | 435 | |||||||||||
UAN — Corn belt (dollars per ton) | 163 | 189 | 168 | 210 | |||||||||||
Natural gas NYMEX (dollars per MMBtu) | $ | 2.76 | $ | 2.40 | $ | 2.13 | $ | 2.54 |
Q1 2021 Outlook
The table below summarizes our outlook for certain operational statistics and financial information for the first quarter of 2021. See “Forward-Looking Statements” above.
Q1 2021 | |||||||
Low | High | ||||||
Ammonia utilization rates (1) | |||||||
Consolidated | 90% | 95% | |||||
90% | 95% | ||||||
90% | 95% | ||||||
Direct operating expenses (2) (in millions) | $ | 35 | $ | 40 | |||
Total capital expenditures (3) (in millions) | $ | 4 | $ | 7 |
________________
- Ammonia utilization rates exclude the impact of Turnarounds.
- Direct operating expenses are shown exclusive of depreciation and amortization, turnaround expenses, and impacts of inventory adjustments.
- Capital expenditures are disclosed on an accrual basis.
Non-GAAP Reconciliations:
Reconciliation of Net Loss to EBITDA
Three Months Ended |
Year Ended |
||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net loss | $ | (16,882 | ) | $ | (24,882 | ) | $ | (98,181 | ) | $ | (34,969 | ) | |||
Add: | |||||||||||||||
Interest expense, net | 15,877 | 15,766 | 63,428 | 62,636 | |||||||||||
Income tax (benefit) expense | (9 | ) | 70 | 30 | (18 | ) | |||||||||
Depreciation and amortization | 19,080 | 19,807 | 76,077 | 79,839 | |||||||||||
EBITDA | $ | 18,066 | $ | 10,761 | $ | 41,354 | $ | 107,488 |
Reconciliation of Net Cash Provided By (Used In) Operating Activities to EBITDA
Three Months Ended |
Year Ended |
||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net cash (used in) provided by operating activities | $ | (9,477 | ) | $ | (29,515 | ) | $ | 19,740 | $ | 39,157 | |||||
Non-cash items: | |||||||||||||||
— | — | (40,969 | ) | — | |||||||||||
Other | (2,662 | ) | (2,277 | ) | (6,630 | ) | (10,503 | ) | |||||||
Add: | |||||||||||||||
Interest expense, net | 15,877 | 15,766 | 63,428 | 62,636 | |||||||||||
Income tax (benefit) expense | (9 | ) | 70 | 30 | (18 | ) | |||||||||
Change in assets and liabilities | 14,337 | 26,717 | 5,755 | 16,216 | |||||||||||
EBITDA | $ | 18,066 | $ | 10,761 | $ | 41,354 | $ | 107,488 |
Reconciliation of EBITDA to Available Cash for Distribution
Three Months Ended |
Year Ended |
||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
EBITDA | $ | 18,066 | $ | 10,761 | $ | 41,354 | $ | 107,488 | |||||||
Non-cash items: | |||||||||||||||
— | — | 40,969 | — | ||||||||||||
Current reserves for amounts related to: | |||||||||||||||
Debt service | (14,997 | ) | (15,472 | ) | (59,995 | ) | (59,997 | ) | |||||||
Maintenance capital expenditures | (2,206 | ) | (6,839 | ) | (11,649 | ) | (18,247 | ) | |||||||
Common units repurchased | (4,799 | ) | — | (7,076 | ) | — | |||||||||
Other (reserves for) / releases of amounts reserved for: | |||||||||||||||
Future turnarounds | (1,500 | ) | — | (4,500 | ) | — | |||||||||
Repayment of current portion of long-term debt | — | — | (2,240 | ) | — | ||||||||||
Recapture of prior negative available cash | — | — | (5,917 | ) | — | ||||||||||
Future operating needs | 5,436 | — | (5,308 | ) | (28,000 | ) | |||||||||
Major scheduled expenditures | — | — | 2,567 | — | |||||||||||
Previously established cash reserves | — | 7,033 | — | 25,433 | |||||||||||
Available cash for distribution (1) (2) | $ | — | $ | (4,517 | ) | $ | (11,795 | ) | $ | 26,677 | |||||
Common units outstanding | 11,010 | 11,328 | 11,195 | 11,328 |
______________________
- Amount represents the cumulative available cash based on full year results. However, available cash for distribution is calculated quarterly, with distributions (if any) being paid in the period following declaration.
- The Partnership paid no cash distributions during 2020.
Source: CVR Partners, LP