CVR Partners(US:UAN)2019-02-21 21:39Financial Data and Key Metrics Changes - For the full year 2018, the company reported net sales of $351 million, a net loss of $50 million, and adjusted EBITDA of $90 million, compared to a net loss of $73 million and adjusted EBITDA of $63 million in 2017, indicating a significant year-over-year improvement [8][14] - In Q4 2018, net sales were $98 million, with a net loss of $1 million and adjusted EBITDA of $33 million, compared to net sales of $78 million and a net loss of $27 million in Q4 2017, reflecting improved pricing and sales volumes [8][15] Business Line Data and Key Metrics Changes - Combined operations produced approximately 209,000 tons of ammonia, 357,000 tons of UAN, and 59,000 tons of ammonia available for sale in Q4 2018, compared to 200,000 tons of ammonia, 306,000 tons of UAN, and 64,000 tons of ammonia available for sale in the prior year period [10] - UAN sales volumes increased by 20% year-over-year, while ammonia sales volumes decreased significantly due to weather conditions, impacting overall sales [15][11] Market Data and Key Metrics Changes - The average net back price for UAN was $180 per ton in Q4 2018, a 36% increase over the prior year period, while ammonia's average net back price was $324 per ton, a 23% increase [10][11] - The U.S. corn-belt fall ammonia application season was down by 50% from early season expectations, leading to a shift in demand from fall to spring [11][22] Company Strategy and Development Direction - The company focused on safe and reliable operations, improving market capture, and maintaining financial discipline throughout 2018 [6] - A new rail loading rack at the Coffeyville facility enhances logistics capabilities, allowing for unit train deliveries and improved access to high netback markets [7][31] Management's Comments on Operating Environment and Future Outlook - Management noted that weather conditions in Q4 2018 negatively impacted normal farming operations, leading to lower nitrogen fertilizer demand [22] - The company expects a significant order book for spring ammonia and is preparing to meet customer needs as the planting season approaches [23][25] Other Important Information - The Board of Directors declared a fourth-quarter distribution of $0.12 per common unit, to be paid on March 11, 2019 [8] - The company reported a total liquidity position of approximately $87 million at the end of 2018, which is deemed sufficient for future operations [19][20] Q&A Session Summary Question: Market commentary on UAN pricing and its progression - Management indicated that Q4 pricing was largely reflective of fill prices, with some spot pricing included, and that first-quarter pricing would be influenced by the spot market [28][29] Question: Opportunities from the new rail loading at Coffeyville - The new loading rack allows for improved logistics and access to larger geographic markets, enhancing competitiveness in delivering large quantities to customers [30][31] Question: Capital expenditure outlook for 2019 - The company expects capital expenditures to be in the range of $20 million to $25 million, with some targeted growth projects included [34][38] Question: Impact of natural gas pricing on Q1 - Management noted that natural gas prices spiked in Q4 but have moderated, with expectations for stable pricing in Q1 [42] Question: Pricing movements in regions served by the company - The company observed that interior markets have been less volatile compared to NOLA, with stable pricing despite some declines [44][46] Question: Timing of product movement in the spring - Typically, product movement begins in February in southern regions and progresses northward, with logistics being a critical factor for timely delivery [47][50] Question: Customer purchasing behavior and inventory management - Management acknowledged that customers are holding back on purchases due to inventory levels, which could lead to a squeeze in logistics as demand increases [49][52]