Document




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
___________________________________

Date of Report (Date of earliest event reported): July 27, 2017

CVR PARTNERS, LP
(Exact name of registrant as specified in its charter)

Delaware
(State or other
jurisdiction of
incorporation)
001-35120
(Commission File Number)
56-2677689
(I.R.S. Employer
Identification Number)
 
2277 Plaza Drive, Suite 500
Sugar Land, Texas 77479  
(Address of principal executive offices, including zip code)
 

Registrant’s telephone number, including area code: (281) 207-3200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o






Item 2.02. Results of Operations and Financial Condition.

On July 27, 2017, CVR Partners, LP (the “Partnership”) posted a presentation to its website at www.cvrpartners.com under the tab “Investor Relations” providing information regarding its results of operations and financial condition for the quarter and six months ended June 30, 2017. The presentation is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being furnished pursuant to Item 2.02 and Item 7.01 of Form 8-K and will not, except to the extent required by applicable law or regulation, be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

The information set forth under Item 2.02 is incorporated by reference as if fully set forth herein.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following exhibit is being “furnished” as part of this Current Report on Form 8-K:

99.1    Slides from presentation.






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 27, 2017
CVR Partners, LP
By: CVR GP, LLC, its general partner
 
 
By:
/s/ Susan M. Ball
 
Susan M. Ball,
 
Chief Financial Officer and Treasurer



uanq22017earningspresent
CVR Partners, LP 2nd Quarter 2017 Earnings Report July 27, 2017


 
1 The following presentation contains forward-looking statements based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. The assumptions and estimates underlying forward-looking statements are inherently uncertain and, although considered reasonable as of the date of preparation by the management team of our general partner, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the prospective information. Accordingly, there can be no assurance that we will achieve the future results we expect or that actual results will not differ materially from expectations. You are cautioned not to put undue reliance on such forward-looking statements (including forecasts and projections regarding our future performance) because actual results may vary materially from those expressed or implied as a result of various factors, including, but not limited to those set forth under “Risk Factors” in CVR Partners, LP’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any other filings CVR Partners, LP makes with the Securities and Exchange Commission. CVR Partners, LP assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Safe Harbor Statement


 
2 Consolidated Selected Financials (All information in this earnings report is unaudited other than the balance sheet data as of December 31, 2016) On April 1, 2016, CVR Partners, LP (the "Partnership") completed the merger (the "East Dubuque Merger") whereby the Partnership acquired a nitrogen fertilizer manufacturing facility located in East Dubuque, Illinois (the "East Dubuque Facility"). The consolidated financial statements and key financial metrics contained in this presentation include the results of the East Dubuque Facility beginning on April 1, 2016, the date of the closing of the acquisition. (1) Definition of this non-GAAP financial measure is on slide 7. (2) Reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is on slide 8. Consolidated Financial Results and Cash Flow Data (In millions) 6/30/2017 6/30/2016 6/30/2017 6/30/2016 Net Sales 97.9$ 119.8$ 183.2$ 192.9$ Operating Income 12.2$ 3.7$ 17.5$ 23.4$ Net Income (Loss) (3.5)$ (17.0)$ (13.8)$ 1.0$ Adjusted EBITDA (1)(2) 32.3$ 29.1$ 53.1$ 57.0$ Cash Flow Provided By (Used In) Operations (23.0)$ 5.5$ 7.0$ 29.1$ Cash Flow Used In Investing Activities (4.5)$ (74.0)$ (8.6)$ (75.7)$ Cash Flow Provided By (Used In) Financing Activities (2.3)$ 92.8$ (2.3)$ 72.9$ Net Increase (Decrease) In Cash and Cash Equivalents (29.8)$ 24.3$ (3.9)$ 26.3$ Maintenance Capital Expenditures 4.4$ 4.1$ 8.4$ 4.9$ Growth Capital Expenditures 0.1$ 6.0$ 0.2$ 7.0$ Total Capital Expenditures 4.5$ 10.1$ 8.6$ 11.9$ Balance Sheet (In millions) 6/30/2017 12/31/2016 Cash and Cash Equivalents 51.7$ 55.6$ Working Capital 87.9$ 71.5$ Total Assets 1,280.6$ 1,312.2$ Total Debt, including current portion 624.5$ 623.1$ Partners' Capital 608.9$ 624.9$ Second Quarter Year to Date as of


 
3 Key Performance Indicators Coffeyville On-Stream Rates(1) East Dubuque On-Stream Rates Consolidated Sales (thousand tons) Consolidated Product Pricing at Gate ($ / ton) (1) The Linde air separation unit experienced a shut down during the second quarter of 2017. Following the Linde outage, the Coffeyville Facility UAN unit experienced a number of operational challenges, resulting in approximately 11 days of UAN downtime during the three months ended June 30, 2017. Excluding the impact of the Linde air separation unit outage at the Coffeyville Facility, the UAN unit on-stream factors at the Coffeyville Facility would have been 99.5% and 98.1%, respectively, for the three and six months ended June 30, 2017.


 
4 Capital Structure and Debt Metrics (1) Amounts presented are gross debt not net of unamortized debt issuance costs or unamortized discount. (2) Net debt is defined as total debt less cash and cash equivalents. (3) Reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is on slide 9. The summary unaudited pro forma financial information for the LTM period assumes CVR Partners owned the East Dubuque Facility for all periods presented and also assumes the $645M principal balance of the 2023 senior secured notes was outstanding for all periods presented. Pro forma net income (loss) has also been adjusted to exclude $13.0 million of nonrecurring expenses related to the fair value adjustment to acquisition-date inventory and deferred revenue. Pro forma net income (loss) includes incremental depreciation resulting from increased fair value of the property, plant and equipment. The summary pro forma financial information is for informational purposes only and does not purport to represent what the Partnership's consolidated results of operations actually would have been if the East Dubuque Merger or financing transactions had occurred at any date, and such data does not purport to project the Partnership's results of operations for any future period. LTM LTM LTM LTM Q3 2016 Q4 2016 Q1 2017 Q2 2017 Cash and Cash Equivalents 65.3$ 55.6$ 81.5$ 51.7$ Total Debt, Including Current Portion (1) 649.2$ 647.2$ 647.2$ 647.2$ Net Debt (2) 583.9$ 591.6$ 565.7$ 595.5$ Partners' Capital 639.5$ 624.9$ 614.6$ 608.9$ Pro Forma Adjusted EBITDA (3) 150.5$ 121.4$ 98.6$ 88.8$ Debt to Capital 50% 51% 51% 52% Net Debt to Capital, Net of Cash 48% 49% 48% 49% Debt to Pro Forma Adjusted EBITDA 4.3 5.3 6.6 7.3 Net Debt to Pro Forma Adjusted EBITDA 3.9 4.9 5.7 6.7 ($ in millions, except ratios)


 
5 Capital Spending YTD $- $5 $10 $15 $20 $25 2014 2015 2016 2017 Estimate Maintenance Profit and Growth 2014 2015 2016 YTD Q2 2017 2017 Estimate Maintenance 4.7$ 9.6$ 13.7$ 8.4$ 15.0$ Profit and Growth 16.4 7.4 9.5 0.2 0.2 Total Capital Spending 21.1$ 17.0$ 23.2$ 8.6$ 15.2$


 
Appendix


 
7 To supplement the actual results in accordance with GAAP for the applicable periods, the Partnership also uses non-GAAP financial measures as discussed below, which are reconciled to GAAP-based results. These non-GAAP financial measures should not be considered an alternative for GAAP results. The adjustments are provided to enhance an overall understanding of the Partnership’s financial performance for the applicable periods and are indicators management believes are relevant and useful for planning and forecasting future periods. EBITDA and Adjusted EBITDA. EBITDA represents net income (loss) before (i) interest expense and other financing costs, net of interest income, (ii) income tax expense and (iii) depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for share-based compensation, non-cash; major scheduled turnaround expenses; gain or loss on extinguishment of debt; loss on disposition of assets; expenses associated with the East Dubuque Merger and business interruption insurance recovery. We present Adjusted EBITDA because it is the starting point for our calculation of available cash for distribution. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be substituted for net income or cash flow from operations. Management believes that EBITDA and Adjusted EBITDA enable investors to better understand our ability to make distributions to our common unitholders, help investors evaluate our ongoing operating results and allow for greater transparency in reviewing our overall financial, operational and economic performance. EBITDA and Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently. Non-GAAP Financial Measures


 
8 Non-GAAP Financial Measures (1) Definition of this non-GAAP financial measure is on slide 7 ($ in millions) 6/30/2017 6/30/2016 6/30/2017 6/30/2016 Net Income (loss) (3.5)$ (17.0)$ (13.8)$ 1.0$ Interest expense and other financing costs, net 15.7 15.5 31.4 17.2 Depreciation and amortization 20.0 17.6 35.4 24.5 Income tax expense - 0.1 - 0.1 EBITDA (1) 32.2$ 16.2$ 53.0$ 42.8$ Major scheduled turnaround expenses 0.1 6.6 0.1 6.6 Loss on extinguishment of debt - 5.1 - 5.1 Expenses associated with the East Dubuque Merger - 1.2 - 2.5 Adjusted EBITDA (1) 32.3$ 29.1$ 53.1$ 57.0$ Second Quarter Year to Date


 
9 Non-GAAP Financial Measures Pro Forma(2) (1) Definition of this non-GAAP financial measure is on slide 7 (2) The summary unaudited pro forma financial information for the LTM period assumes CVR Partners owned the East Dubuque Facility for all periods presented and also assumes the $645M principal balance of the 2023 senior secured notes was outstanding for all periods presented. Pro forma net income (loss) has also been adjusted to exclude $13.0 million of nonrecurring expenses related to the fair value adjustment to acquisition-date inventory and deferred revenue and also excludes expenses associated with the East Dubuque Merger. Pro forma net income (loss) includes incremental depreciation resulting from increased fair value of the property, plant and equipment. The summary pro forma financial information is for informational purposes only and does not purport to represent what the Partnership's consolidated results of operations actually would have been if the East Dubuque Merger or financing transactions had occurred at any date, and such data does not purport to project the Partnership's results of operations for any future period. ($ in millions) Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Net Income (loss) 13.1$ 9.0$ 2.5$ (12.8)$ (14.5)$ (10.3)$ (3.5)$ Interest expense and other financing costs, net 15.8 15.8 15.3 15.7 15.8 15.7 15.7 Depreciation and amortization 18.3 18.6 17.6 16.4 17.2 15.4 20.0 Income tax expense - - 0.1 0.2 - - - EBITDA (1) 47.2$ 43.4$ 35.5$ 19.5$ 18.5$ 20.8$ 32.2$ Major scheduled turnaround expenses - - 6.6 - - - 0.1 Share-based compensation, non-cash 0.2 0.2 - - - - - (Gain) on extinguishment of debt - - - - (0.2) - - Insurance recovery - business interruption - - - (2.1) - - - Adjusted EBITDA (1) 47.4$ 43.6$ 42.1$ 17.4$ 18.3$ 20.8$ 32.3$ LTM LTM LTM LTM ($ in millions) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Net Income (loss) 11.8$ (15.8)$ (35.1)$ (41.1)$ Interest expense and other financing costs, net 62.6 62.6 62.5 62.9 Depreciation and amortization 70.9 69.8 66.6 69.0 Income tax expense 0.3 0.3 0.3 0.2 EBITDA(1) 145.6$ 116.9$ 94.3$ 91.0$ Major scheduled turnaround expenses 6.6 6.6 6.6 0.1 Share-based compensation, non-cash 0.4 0.2 - - (Gain) on extinguishment of debt - (0.2) (0.2) (0.2) Insurance recovery - business interruption (2.1) (2.1) (2.1) (2.1) Adjusted EBITDA (1) 150.5$ 121.4$ 98.6$ 88.8$