CVR Partners(US:UAN)2019-07-25 18:22Financial Data and Key Metrics Changes - For Q2 2019, the company reported net sales of $138 million, net income of $19 million, and adjusted EBITDA of $60 million, compared to net sales of $93 million and a net loss of $16 million in Q2 2018 [5][11] - The operating income for Q2 2019 was $35 million, a significant improvement from an operating loss of less than $1 million in the prior year [11] - UAN sales volume increased by 26% year-over-year, with average pricing rising by 14% to $217 per ton, while ammonia pricing increased by 31% to $456 per ton [7][9][8] Business Line Data and Key Metrics Changes - Combined operations produced approximately 211,000 gross tons of ammonia and 316,000 tons of UAN in Q2 2019, compared to 174,000 gross tons of ammonia and 241,000 tons of UAN in the prior year [7] - The Coffeyville ammonia plant operated at 97% utilization, and the East Dubuque plant operated at 98% utilization, both higher than the previous year [6] Market Data and Key Metrics Changes - The company experienced strong demand for nitrogen due to poor fall application and a late start to spring planting, despite challenging weather conditions [9][18] - The USDA reported a confusing planting intentions report, estimating 92 million acres of corn and 82 million acres of soybeans planted, which the company believes may be overstated [20] Company Strategy and Development Direction - The company plans a 28-day turnaround at the East Dubuque facility starting in September, focusing on upgrades to improve reliability and production [22] - The partnership aims to maximize free cash flow by operating plants reliably, managing costs prudently, and optimizing marketing and logistics activities [23] Management's Comments on Operating Environment and Future Outlook - Management noted that the late planting season and severe flooding affected UAN rail shipments but still anticipated strong demand for nitrogen in the third quarter [18][21] - The company expects fertilizer demand to increase as customer inventories are low and anticipates a significant rise in planted acres for the spring 2020 planting season [21] Other Important Information - The company has approximately $69 million in cash and a total liquidity position of about $93 million at the end of the quarter, which is deemed sufficient for future needs [14] - The long-term gross debt remains unchanged at $631 million, primarily consisting of senior notes due in 2023 [15] Q&A Session Summary Question: Market outlook for July and Q3 volume expectations - Management indicated that there has been decent sales of in-season product in July, with expectations for healthy demand in Q3 due to low inventory levels [25][27] Question: Ammonia market commentary - Management noted differences in market conditions between the Northern and Southern Plains, with expectations for a strong ammonia run in the fall [28][29] Question: Debt refinancing opportunities - Management is evaluating market rates and will make decisions based on the Fed's actions and available rates [30] Question: CapEx reserves and distribution strategy - Management clarified that reserves were set aside for anticipated capital expenditures and turnaround costs, positioning the company well for the second half of the year [31][33] Question: Gas costs and pricing outlook - Management confirmed that gas prices in Q3 are expected to be lower than in Q2, with ongoing evaluations for potential forward purchases [35][36] Question: Sales cadence and inventory levels - Management expects normal sales patterns in the second half, with UAN movement remaining steady and ammonia activity picking up in Q4 [39][43] Question: Delivery conditions and river issues - Management stated that while the Mississippi River is back to normal, other rivers still face challenges, but this does not significantly affect their operations [44][45]