CVR Partners Reports Second Quarter 2023 Results and Announces a Cash Distribution of $4.14
“CVR Partners achieved solid results for the 2023 second quarter led by strong production, including a combined ammonia production rate of 100 percent offset by lower fertilizer pricing,” said
“As we enter a new planting season, nitrogen fertilizer prices have fully reset and we have seen strong demand for the second half of 2023,” Pytosh said. “Our focus for the remainder of the year will continue to be on safe, reliable operations and maximizing our free cash generation and cash distribution.”
Consolidated Operations
For the second quarter of 2023, CVR Partners’ average realized gate prices for UAN showed a reduction over the prior year, down 43 percent to
CVR Partners’ fertilizer facilities produced a combined 219,000 tons of ammonia during the second quarter of 2023, of which 70,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 339,000 tons of UAN. In the second quarter of 2022, the fertilizer facilities produced 193,000 tons of ammonia, of which 50,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 331,000 tons of UAN. These increases were due to operating reliability after completing the planned turnarounds at both fertilizer facilities during the third quarter of 2022.
Distributions
Second Quarter 2023 Earnings Conference Call
The second quarter 2023 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/o8wcogou. A repeat of the call also can be accessed for 14 days by dialing (877) 660-6853, conference ID 13739749.
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: Partnership results, including the drivers thereof; production and shipment rates; nitrogen fertilizer pricing; planting season impacts; demand for nitrogen fertilizers; ability to maximize free cash generation and cash distributions; net income; net sales; EBITDA and Adjusted EBITDA; realized gate prices for ammonia and UAN; ammonia production levels, including volumes upgraded to other fertilizer products such as UAN, and the drivers thereof; distributions, including the timing, payment and amount (if any) thereof; the Partnership’s cash distribution policy; continued safe and reliable operations; operating performance, operating costs and capital expenditures; Section 45Q credits and future payments arising under the 45Q Transaction (if any), including the amount, timing and receipt thereof; consideration of opportunities to reduce our carbon footprint; timing of turnaround and reliability projects and the impact thereof on operating rates and results; utilization and reliability of our plants, including the impacts thereon; global fertilizer industry conditions, including the drivers thereof; farm economics; cash flow, use of cash and reserves; weather conditions, including the impact thereof on our business; natural gas and global energy costs; risks related to the conclusion of consideration of a spin-off of some or all of the interests
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For further information, please contact:
Investor Relations
(281) 207-3205
InvestorRelations@CVRPartners.com
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(281) 207-3516
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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 financial information presented in accordance with accounting principles generally accepted in
The following are non-GAAP measures we present for the period ended
EBITDA - Net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.
Adjusted EBITDA - EBITDA adjusted for certain significant non-cash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.
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 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 GAAP results, including, but not limited to, our operating performance as compared to other publicly traded companies in the fertilizer industry, without regard to historical cost basis or financing methods, and our ability to incur and service debt and fund capital expenditures. Non-GAAP measures have important limitations as analytical tools because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable GAAP financial measures. Refer to the “Non-GAAP Reconciliations” included herein for reconciliation of these amounts. Due to rounding, numbers presented within this section may not add or equal to numbers or totals presented elsewhere within this document.
(all information in this release is unaudited)
Consolidated Statement of Operations Data
Three Months Ended |
Six Months Ended |
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(in thousands, except per unit data) | 2023 |
2022 |
2023 |
2022 |
|||||||||||
Net sales(1) | $ | 183,005 | $ | 244,000 | $ | 409,266 | $ | 466,874 | |||||||
Operating costs and expenses: | |||||||||||||||
Cost of materials and other | 33,410 | 40,984 | 69,989 | 71,230 | |||||||||||
Direct operating expenses (exclusive of depreciation and amortization) | 55,759 | 48,767 | 113,303 | 109,084 | |||||||||||
Depreciation and amortization | 19,755 | 21,220 | 34,965 | 40,686 | |||||||||||
Cost of sales | 108,924 | 110,971 | 218,257 | 221,000 | |||||||||||
Selling, general and administrative expenses | 7,291 | 7,008 | 14,675 | 15,752 | |||||||||||
Loss on asset disposal | 64 | 93 | 256 | 267 | |||||||||||
Operating income | 66,726 | 125,928 | 176,078 | 229,855 | |||||||||||
Other (expense) income: | |||||||||||||||
Interest expense, net | (6,919 | ) | (8,308 | ) | (14,093 | ) | (18,343 | ) | |||||||
Other income (expense), net | 52 | 81 | (212 | ) | 108 | ||||||||||
Income before income tax expense | 59,859 | 117,701 | 161,773 | 211,620 | |||||||||||
Income tax expense | 2 | 119 | 46 | 377 | |||||||||||
Net income | $ | 59,857 | $ | 117,582 | $ | 161,727 | $ | 211,243 | |||||||
Basic and diluted earnings per common unit | $ | 5.66 | $ | 11.12 | $ | 15.30 | $ | 19.90 | |||||||
Distributions declared per common unit | 10.43 | 2.26 | 20.93 | 7.50 | |||||||||||
EBITDA* | $ | 86,533 | $ | 147,229 | $ | 210,831 | $ | 270,649 | |||||||
Available Cash for Distribution* | 43,778 | 106,206 | 154,071 | 130,041 | |||||||||||
Weighted-average common units outstanding: | |||||||||||||||
Basic and Diluted | 10,570 | 10,570 | 10,570 | 10,617 |
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* See “Non-GAAP Reconciliations” section below for a reconciliation of these amounts.
(1) Below are the components of net sales:
Three Months Ended |
Six Months Ended |
||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||
Components of net sales: | |||||||||||
Fertilizer sales | $ | 167,006 | $ | 230,885 | $ | 377,018 | $ | 441,726 | |||
Freight in revenue | 10,910 | 9,856 | 21,846 | 19,071 | |||||||
Other | 5,089 | 3,259 | 10,402 | 6,077 | |||||||
Total net sales | $ | 183,005 | $ | 244,000 | $ | 409,266 | $ | 466,874 |
Selected Balance Sheet Data
(in thousands) | |||||
Cash and cash equivalents | $ | 68,699 | $ | 86,339 | |
Working capital | 120,009 | 139,647 | |||
Total assets | 1,018,990 | 1,100,402 | |||
Total debt, including current portion | 547,050 | 546,800 | |||
Total liabilities | 666,674 | 688,591 | |||
Total partners’ capital | 352,316 | 411,811 |
Selected Cash Flow Data
Three Months Ended |
Six Months Ended |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net cash flow provided by (used in): | |||||||||||||||
Operating activities | $ | 60,844 | $ | 48,684 | $ | 191,287 | $ | 215,611 | |||||||
Investing activities | (3,268 | ) | (5,831 | ) | 12,294 | (13,730 | ) | ||||||||
Financing activities | (110,240 | ) | (23,888 | ) | (221,221 | ) | (158,085 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | $ | (52,664 | ) | $ | 18,965 | $ | (17,640 | ) | $ | 43,796 |
Capital Expenditures
Three Months Ended |
Six Months Ended |
||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||
Maintenance | $ | 5,691 | $ | 7,981 | $ | 9,191 | $ | 13,109 | |||
Growth | 598 | 32 | 623 | 553 | |||||||
Total capital expenditures | $ | 6,289 | $ | 8,013 | $ | 9,814 | $ | 13,662 |
Key Operating Data
Ammonia Utilization(1) | |||||||||||
Three Months Ended |
Six Months Ended |
||||||||||
(percent of capacity utilization) | 2023 |
2022 |
2023 |
2022 |
|||||||
Consolidated | 100 | % | 89 | % | 103 | % | 88 | % |
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(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 for the three and six months ended
Sales and Production Data
Three Months Ended |
Six Months Ended |
||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Consolidated sales (thousand tons): | |||||||||||
Ammonia | 79 | 52 | 121 | 91 | |||||||
UAN | 329 | 287 | 688 | 609 | |||||||
Consolidated product pricing at gate (dollars per ton):(1) | |||||||||||
Ammonia | $ | 707 | $ | 1,182 | $ | 770 | $ | 1,127 | |||
UAN | 316 | 555 | 390 | 524 | |||||||
Consolidated production volume (thousand tons): | |||||||||||
Ammonia (gross produced)(2) | 219 | 193 | 442 | 380 | |||||||
Ammonia (net available for sale)(2) | 70 | 50 | 132 | 102 | |||||||
UAN | 339 | 331 | 705 | 648 | |||||||
Feedstock: | |||||||||||
Petroleum coke used in production (thousand of tons) | 124 | 116 | 255 | 224 | |||||||
Petroleum coke used in production (dollars per ton) | $ | 73.91 | $ | 49.91 | $ | 75.62 | $ | 53.06 | |||
Natural gas used in production (thousands of MMBtu)(3) | 2,194 | 1,936 | 4,296 | 3,697 | |||||||
Natural gas used in production (dollars per MMBtu)(3) | $ | 2.35 | $ | 7.34 | $ | 4.02 | $ | 6.48 | |||
Natural gas in cost of materials and other (thousands of MMBtu)(3) | 2,403 | 1,707 | 3,718 | 3,235 | |||||||
Natural gas in cost of materials and other (dollars per MMBtu)(3) | $ | 4.11 | $ | 5.98 | $ | 5.41 | $ | 5.81 |
________________________________
(1) 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.
(2) 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.
(3) 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 |
Six Months Ended |
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2023 | 2022 | 2023 | 2022 | ||||||||
Ammonia — Southern plains (dollars per ton) | $ | 435 | $ | 1,241 | $ | 586 | $ | 1,259 | |||
Ammonia — Corn belt (dollars per ton) | 472 | 1,405 | 682 | 1,391 | |||||||
UAN — Corn belt (dollars per ton) | 298 | 632 | 335 | 624 | |||||||
Natural gas NYMEX (dollars per MMBtu) | $ | 2.33 | $ | 7.49 | $ | 2.54 | $ | 6.06 |
Q3 2023 Outlook
The table below summarizes our outlook for certain operational statistics and financial information for the third quarter of 2023. See “Forward-Looking Statements” above.
Q3 2023 | |||||||
Low | High | ||||||
Ammonia utilization rates | |||||||
Consolidated | 95 | % | 100 | % | |||
Coffeyville Facility | 95 | % | 100 | % | |||
East Dubuque Facility | 95 | % | 100 | % | |||
Direct operating expenses (in millions)(1) | $ | 50 | $ | 55 | |||
Capital expenditures (in millions)(2) | $ | 14 | $ | 16 |
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(1) Direct operating expenses are shown exclusive of depreciation and amortization, turnaround expenses, and impacts of inventory adjustments.
(2) Capital expenditures are disclosed on an accrual basis.
Non-GAAP Reconciliations:
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Three Months Ended |
Six Months Ended |
||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||
Net income | $ | 59,857 | $ | 117,582 | $ | 161,727 | $ | 211,243 | |||
Interest expense, net | 6,919 | 8,308 | 14,093 | 18,343 | |||||||
Income tax expense | 2 | 119 | 46 | 377 | |||||||
Depreciation and amortization | 19,755 | 21,220 | 34,965 | 40,686 | |||||||
EBITDA and Adjusted EBITDA | $ | 86,533 | $ | 147,229 | $ | 210,831 | $ | 270,649 |
Reconciliation of Net Cash Provided By Operating Activities to EBITDA and Adjusted EBITDA
Three Months Ended |
Six Months Ended |
||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net cash provided by operating activities | $ | 60,844 | $ | 48,684 | $ | 191,287 | $ | 215,611 | |||||||
Non-cash items: | |||||||||||||||
Loss on extinguishment of debt | — | — | — | (628 | ) | ||||||||||
Share-based compensation | (2,203 | ) | 721 | (4,136 | ) | (11,353 | ) | ||||||||
Other | (250 | ) | (345 | ) | (752 | ) | (958 | ) | |||||||
Adjustments: | |||||||||||||||
Interest expense, net | 6,919 | 8,308 | 14,093 | 18,343 | |||||||||||
Income tax expense | 2 | 119 | 46 | 377 | |||||||||||
Change in assets and liabilities | 21,221 | 89,742 | 10,293 | 49,257 | |||||||||||
EBITDA and Adjusted EBITDA | $ | 86,533 | $ | 147,229 | $ | 210,831 | $ | 270,649 |
Reconciliation of EBITDA to Available Cash for Distribution
Three Months Ended |
Six Months Ended |
||||||||||||||
(in thousands) | 2023 |
2022 |
2023 |
2022 |
|||||||||||
EBITDA | $ | 86,533 | $ | 147,229 | $ | 210,831 | $ | 270,649 | |||||||
Current (reserves) adjustments for amounts related to: | |||||||||||||||
Net cash interest expense (excluding capitalized interest) | (8,466 | ) | (8,466 | ) | (16,932 | ) | (17,800 | ) | |||||||
Debt service | — | — | — | (65,000 | ) | ||||||||||
Financing fees | — | — | — | (815 | ) | ||||||||||
Maintenance capital expenditures | (5,691 | ) | (7,981 | ) | (9,191 | ) | (13,109 | ) | |||||||
Utility pass-through | (675 | ) | (675 | ) | (1,350 | ) | (1,350 | ) | |||||||
Major scheduled expenditures | 662 | — | 662 | — | |||||||||||
Common units repurchased | — | — | — | (12,397 | ) | ||||||||||
Net cash proceeds from the 45Q Transaction | (701 | ) | — | 17,351 | — | ||||||||||
Other (reserves) releases: | |||||||||||||||
Future turnaround | (3,334 | ) | (9,875 | ) | (6,500 | ) | (16,750 | ) | |||||||
Cash reserves for future operating needs | (20,000 | ) | (15,000 | ) | (20,000 | ) | (15,000 | ) | |||||||
Reserve for maintenance capital expenditures | (4,550 | ) | 974 | (20,800 | ) | 1,613 | |||||||||
Available Cash for distribution(1) (2) | $ | 43,778 | $ | 106,206 | $ | 154,071 | $ | 130,041 | |||||||
Common units outstanding | 10,570 | 10,570 | 10,570 | 10,570 |
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(1) Amount represents the cumulative available cash based on quarter-to-date and year-to-date results. However, available cash for distribution is calculated quarterly, with distributions (if any) being paid in the period following declaration.
(2) The Partnership declared and paid a
Source: CVR Partners, LP