CVR Partners(US:UAN)2019-10-24 20:26Financial Data and Key Metrics Changes - For Q3 2019, the company reported net sales of $89 million, a net income of $23 million, and adjusted EBITDA of $18 million, compared to net sales of $80 million and operating income of $3 million in Q3 2018 [6][12] - The net loss for Q3 2019 was $23 million or $0.20 per common unit, compared to a net loss of $13 million or $0.12 per common unit in the prior year [12] - Direct operating expenses increased to $48 million from $35 million in the prior year period, primarily due to turnaround expenses [13] Business Line Data and Key Metrics Changes - Combined operations produced approximately 196,000 gross tons of ammonia, 318,000 tons of UAN, and 56,000 net tons of ammonia available for sale, compared to 212,000 gross tons of ammonia, 338,000 tons of UAN, and 63,000 net tons of ammonia available for sale in the prior year [8] - UAN sales increased by 10% year-over-year, with an average price of $182 per ton, while ammonia pricing increased by 13% to an average of $337 per ton [9][10] Market Data and Key Metrics Changes - The company experienced strong utilization rates at both facilities, with the Coffeyville ammonia plant operating at 98% utilization, up from 94% in Q3 2018, and East Dubuque ammonia plant also at 98% utilization [7] - The company anticipates a favorable spring 2020 planting season compared to 2019, influenced by lower natural gas prices and higher fertilizer prices [10][23] Company Strategy and Development Direction - The company aims to maximize free cash flow by safely operating plants at high utilization rates, managing costs prudently, and selectively investing in reliability projects [25] - Future turnaround projects will focus on improving reliability and increasing production capacity with low capital investment [21] Management's Comments on Operating Environment and Future Outlook - Management noted that the existing corn and soybean inventory levels are lower than expected, which has led to rising crop prices [23] - The company expects to maintain ammonia utilization rates between 95% and 100% in Q4 2019, with direct operating expenses projected at $40 million to $45 million [18] Other Important Information - The Board of Directors declared a third-quarter distribution of $0.07 per common unit, payable on November 12 [6] - The company released $18 million of cash reserved in prior quarters for maintenance turnaround and other operating needs [16] Q&A Session Summary Question: Can you provide more details on the sales cadence through the second half of the year? - Management indicated that July sales were light due to limited activity, and pricing was reflective of fill levels rather than carryover from previous sales [31][32] Question: What is the company's approach to refinancing bonds? - Management stated they are evaluating refinancing opportunities but decided against it due to insufficient payback periods and uncertainty around market rates [34] Question: How are inventories for UAN and ammonia managed? - Management noted that inventory levels were generally comfortable, with some geographic variations, and that early ammonia applications were being observed due to favorable weather conditions [35][36][42]