CVR Partners(US:UAN)2023-08-01 18:27Financial Highlights - For Q2 2023, the company reported net sales of $183 million, net income of $60 million, and EBITDA of $87 million, with a distribution of $4.14 per common unit declared by the Board [5][7][8] - The decline in EBITDA compared to Q2 2022 was primarily due to lower prices for UAN and ammonia, despite higher production and sales volumes [7][22] Business Line Performance - The company sold approximately 329,000 tons of UAN at an average price of $316 per ton and 79,000 tons of ammonia at an average price of $707 per ton, with sales volumes higher than Q2 2022 due to improved operations [6][21] - Ammonia prices fell by 40% and UAN prices fell by 43% compared to the same quarter last year [22] Market Conditions - Grain prices remained strong, with December corn at $5.15 per bushel and November soybeans at $13.30 per bushel, supporting attractive farmer economics [42] - The company noted a significant drought risk affecting USDA yield estimates for corn and soybeans [10] Company Strategy and Industry Competition - The company is pursuing certification for blue ammonia and UAN production and is evaluating brownfield development projects for capacity increases [12] - The company plans to continue reserving capital for potential projects over the next two to three years [12] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about nitrogen fertilizer prices stabilizing and potentially increasing due to strong grain prices and farmer economics [22][42] - The company expects ammonia utilization rates to be between 95% and 100% in Q3 2023, with direct operating expenses projected to be between $50 million and $55 million [40] Other Important Information - Total capital spending for 2023 is estimated to be approximately $33 million to $35 million, with a focus on maintenance capital [24] - The company ended the quarter with total liquidity of $104 million, consisting of $69 million in cash and $35 million available under the ABL facility [24] Q&A Session Summary Question: What are the leading drivers behind nitrogen prices stabilizing? - Management indicated that a combination of planned turnarounds and operating difficulties, along with consistent demand, contributed to the stabilization of nitrogen prices [32] Question: Is the summer fill program for ammonia and UAN over? - Yes, the summer fill program has concluded [34] Question: Can you provide insights on fourth quarter production sold at summer fill prices? - The volume sold was lower than historic averages, with customers shifting to shorter purchasing increments due to increased carrying costs [35] Question: Should we expect pet coke prices to remain around the $75 ton level for the second half of the year? - Yes, the company is in longer-term contracts for pet coke, and prices are expected to reset lower next year due to low natural gas prices [51] Question: What are the current fall prices for UAN compared to summer lows? - Current pricing for UAN is approximately 20% higher than summer fill prices [52]