CVR Partners(UAN) - 2019 Q4 - Annual Report

Financial Performance - Net sales for the year ended December 31, 2019, increased to $404,177,000, up 15.1% from $351,082,000 in 2018[272] - Operating income improved significantly to $27,380,000 in 2019, compared to $6,314,000 in 2018, marking a 334.5% increase[272] - The net loss for 2019 was $34,969,000, a reduction from a net loss of $50,027,000 in 2018, representing a 30.5% improvement[272] - Cash flows from operating activities increased to $39,157,000 in 2019, up from $32,234,000 in 2018, indicating a 21.5% growth[280] - For the year ended December 31, 2019, the Partnership reported net sales of $404.2 million, an increase of 15.1% from $351.1 million in 2018[343] - Ammonia sales increased to $94.5 million in 2019 from $66.3 million in 2018, representing a growth of 42.5%[343] - UAN sales rose to $251.2 million in 2019, up 13.0% from $222.3 million in 2018[343] - The Partnership reported a net loss of $24.882 million in the fourth quarter of 2019, with a basic and diluted loss per common unit of $0.22[410] - Operating income for the second quarter of 2019 was $34.544 million, while the Partnership experienced an operating loss of $9.086 million in the fourth quarter[410] Assets and Liabilities - As of December 31, 2019, total assets decreased to $1,137,955,000 from $1,254,388,000 in 2018, representing a decline of approximately 9.3%[270] - Current assets fell to $130,594,000 in 2019, down from $193,981,000 in 2018, a decrease of about 32.6%[270] - Total liabilities increased slightly to $718,411,000 in 2019 from $754,562,000 in 2018, indicating a marginal rise of approximately 1.5%[270] - Partners' capital decreased to $419,544,000 in 2019, down from $499,826,000 in 2018, reflecting a decline of about 16%[270] - Cash and cash equivalents dropped to $36,994,000 in 2019 from $61,776,000 in 2018, a decrease of approximately 40%[270] - Accounts receivable decreased to $34,264,000 in 2019, down from $61,662,000 in 2018, representing a decline of about 44.7%[270] - Total Property, Plant, and Equipment, net decreased from $1,015,240,000 in 2018 to $951,959,000 in 2019, a decline of approximately 6.3%[299] - Long-term debt remained relatively stable at $632,406,000 in 2019 compared to $628,989,000 in 2018, showing a slight increase of about 0.7%[270] - The Partnership's total current liabilities increased from $122,635,000 to $126,097,000 due to the initial recognition of lease liabilities following the adoption of Topic 842[319] - Long-term debt as of December 31, 2019, was $632.4 million, slightly up from $629.0 million in 2018[334] - The estimated fair value of total long-term debt outstanding was approximately $673.8 million as of December 31, 2019[340] Revenue and Expenses - The company reported a significant reduction in deferred revenue, which fell to $27,841,000 in 2019 from $68,804,000 in 2018, a decrease of approximately 59.6%[270] - Total inventories decreased to $53,930,000 in 2019 from $63,554,000 in 2018, reflecting a 15.2% decline[297] - Cash and cash equivalents at the end of 2019 were $36,994,000, down from $61,776,000 at the end of 2018, representing a 40.4% decrease[280] - Capital expenditures for 2019 were $18,656,000, slightly down from $19,806,000 in 2018, indicating a 5.8% decrease[280] - The total cost of materials and other for 2019 was $113.103 million, with the highest cost recorded in the second quarter at $26.000 million[410] - The Partnership's natural gas expense totaled approximately $33.1 million for the year ended December 31, 2019, down from $42.4 million in 2018[365] Market and Operational Risks - The company is exposed to significant market risk due to potential changes in prices for fertilizer products and natural gas, which are critical for production[255] - The management believes that market prices of nitrogen products are affected by changes in grain prices and demand, as well as natural gas prices[256] Distributions and Compensation - The company declared distributions of $0.40 per common unit in 2019, compared to $0.02 in 2017, showing a significant increase[272] - Total distributions paid to CVR Partners' unitholders for 2019 amounted to $45.313 million, with a distribution per common unit of $0.40[405] - In 2019, the Partnership did not declare any distributions for the fourth quarter, while the total distributions for the previous quarters were $29.745 million to public unitholders and $15.567 million to CVR Energy[405] - Total compensation expense related to the Long-Term Incentive Plan (LTIP) was approximately $2.3 million for the year ended December 31, 2019, up from $1.9 million in 2018[357] Agreements and Contracts - The Partnership's share-based compensation is classified as liability-classified and is measured at fair value, affecting compensation expense based on unit price fluctuations[313] - The Partnership's cash settled non-vested phantom unit awards liability was $1.2 million as of December 31, 2019, compared to $0.5 million in 2018[358] - The Partnership had an outstanding liability of $0.4 million related to the 2017 Performance Unit Award Agreement as of December 31, 2019[362] - The Partnership's expenses associated with the Amended and Restated On-Site Product Supply Agreement totaled approximately $4.2 million for the year ended December 31, 2019[367] - The Coffeyville Facility operates under a Feedstock Agreement with CRRM, which has an initial term of 20 years ending in 2031, automatically extending for successive five-year periods[377] - The Coke Supply Agreement requires CRRM to deliver a minimum of 500,000 tons of pet coke annually, with the facility purchasing 61% of its pet coke needs from this agreement over the last five years[379] - The Hydrogen Purchase and Sale Agreement commits CRRM to deliver 90,000 mscf of hydrogen per month, with pricing based on fixed and variable fees[383] - The Corporate MSA, also effective February 19, 2020, consolidates the Services Agreement and GP Services Agreement, providing for monthly fees for services supplied[400] Environmental and Compliance Matters - The Partnership recognized no liabilities for environmental remediation matters as of December 31, 2019, indicating no identified probable or estimable matters[308] - The partnership's environmental agreement with CRRM includes indemnification rights related to environmental contamination, with no liabilities recorded as of December 31, 2019[386]