CVR Partners(US:UAN)2022-02-22 18:40Financial Data and Key Metrics Changes - For the full year 2021, the company reported net sales of $533 million, net income of $78 million, and EBITDA of $213 million, a significant improvement from a net sales of $350 million and an operating loss of $35 million in 2020 [15][8] - In Q4 2021, net sales were $189 million, net income was $61 million, and EBITDA was $93 million, compared to net sales of $90 million and an operating loss of $1 million in Q4 2020 [9][16] - The company declared total cash distributions for the full year 2021 of $9.89 per common unit and a fourth quarter distribution of $5.24 per common unit [8][9] Business Line Data and Key Metrics Changes - The company produced approximately 197,000 gross tons of ammonia in Q4 2021, down from 220,000 gross tons in the prior year period, with 70,000 net tons available for sale [12] - UAN production in Q4 2021 was 288,000 tons, compared to 335,000 tons in the prior year period [12] - The average realized price for UAN was $347 per ton, and for ammonia, it was $745 per ton, with year-over-year pricing increases of 150% for UAN and 179% for ammonia [13] Market Data and Key Metrics Changes - The nitrogen fertilizer market saw significant improvements in 2021, driven by strong demand and pricing, with a favorable fall harvest in the U.S. [10][13] - Supply challenges in Europe and restrictions on urea exports from China and Egypt contributed to higher prices for nitrogen fertilizers [27] - The Department of Commerce's preliminary determination of countervailing duties against UAN imports from Russia and Trinidad may reduce core volumes, supporting pricing in the U.S. [29][30] Company Strategy and Development Direction - The company is focused on maximizing cash flow generation while safely operating its plants and managing costs [35] - There is an ongoing evaluation of opportunities to improve and diversify the business, including potential investments in decarbonization projects and brownfield expansions [34][48] - The company aims to maintain a disciplined approach to capital deployment, with a high hurdle rate for any new investments [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong crop prices and favorable planting conditions for the upcoming season, with a good order book for spring [26][28] - The company is closely monitoring the geopolitical situation regarding Russia and Ukraine, which could impact nitrogen fertilizer exports [27] - Management expects strong pricing to persist through the first half of 2022, supported by a tight nitrogen fertilizer market [28] Other Important Information - The company completed a $95 million debt reduction, significantly lowering its annual debt service cost by approximately $26 million [22][33] - The company has approximately $148 million in liquidity as of December 31, 2021, with $113 million in cash [21] Q&A Session Summary Question: Can you help me get to a pro forma liquidity number between the payout of the distribution and the redemption of the old first lien notes? - Management indicated that they maintain minimum liquidity levels similar to the past and that strong operating performance has not materially impacted that minimum balance [38][40] Question: Can you remind us what the minimum liquidity level is? - The minimum target liquidity level is usually between $20 million to $30 million, which may increase with higher prices [39] Question: Can you help us understand the drop in imports for UAN? - Management noted that the drop in imports was primarily observed in the fourth quarter due to concerns over potential duties, leading to a slowdown in imports from Russia and Trinidad [41] Question: Is Coffeyville still considered a pet coke facility? - Management confirmed that Coffeyville has become more competitive with pet coke and that they have adequate supplies and agreements with refiners [42][43] Question: What are the company's plans for future investments? - Management stated that they are considering a combination of M&A activity and diversification opportunities, but will be methodical and disciplined in their approach [46][47]