CVR Partners(US:UAN)2020-05-07 19:57Financial Data and Key Metrics Changes - For Q1 2020, the company reported net sales of $75 million, a net loss of $21 million, and EBITDA of $11 million, compared to net sales of $92 million, a net income of $9 million, and EBITDA of $26 million in Q1 2019, indicating a significant decline in performance year-over-year [8][17] - The operating loss for Q1 2020 was $5 million, compared to an operating income of $9 million in the prior year [17] - Direct operating expenses remained consistent at $35 million, while total cash needs for debt service and maintenance capital expenditures were $15 million and $4 million respectively, resulting in no cash available for distribution [21][17] Business Line Data and Key Metrics Changes - The ammonia plant at Coffeyville operated at 86% utilization, down from 96% in Q1 2019, primarily due to unplanned downtime [10] - The East Dubuque facility achieved 101% utilization, a significant increase from 69% in the prior year, following a successful turnaround [11] - Combined operations produced approximately 201,000 gross tons of ammonia and 317,000 tons of UAN in Q1 2020, compared to 179,000 gross tons of ammonia and 335,000 tons of UAN in the prior year [12] Market Data and Key Metrics Changes - UAN pricing decreased by 25% year-over-year, while ammonia pricing fell by 28%, influenced by increased imports and well-supplied market conditions [12][13] - Natural gas prices averaged $2.42 per MMBtu in Q1 2020, down from $3.83 per MMBtu in Q1 2019, which helped mitigate some pricing pressures [28] Company Strategy and Development Direction - The company plans to maximize free cash flow by operating plants reliably and at high utilization rates, while managing costs and selectively investing in reliability projects [32] - The planned turnaround for the Coffeyville facility has been moved from fall 2020 to summer 2021, allowing for proactive maintenance during downtime [9][29] Management's Comments on Operating Environment and Future Outlook - Management noted that spring planting activity has been robust, with expectations for a healthy increase in planted corn acreage compared to the previous year [14][26] - The company expressed caution regarding the recovery of gasoline demand and its impact on ethanol and corn prices, which are critical for future performance [26][38] Other Important Information - The company received a continued listing notice from the New York Stock Exchange due to its unit price falling below $1, with a deadline to regain compliance by January 1, 2021 [30] - A unit repurchase program of up to $10 million has been authorized by the Board, reflecting management's belief that the units are undervalued [30] Q&A Session Summary Question: Outlook for UAN cost curve and market dynamics - Management acknowledged early signs of recovery in gasoline demand, which fell significantly due to COVID-19, and expressed concerns about the impact on ethanol demand [38] - The company expects to maintain competitive advantages in natural gas pricing, which is crucial for fertilizer production costs [41]