CVR Partners Announces First Quarter Results
SUGAR LAND, Texas, May 9, 2011 /PRNewswire via COMTEX/ -- CVR Partners, LP (UAN),
a manufacturer of ammonia and urea ammonium nitrate (UAN) solution fertilizer
products, today announced pre-initial public offering net income of $16.7 million
for the first quarter 2011 on net sales of $57.4 million.
In the first quarter 2010, the company reported net income of $6.0 million on net
sales of $38.3 million.
Adjusted for share-based compensation expense, CVR Partners had adjusted net
income of $21.3 million compared to adjusted net income of $7.1 million for the
same period in 2010 (see footnote 2 in attached table). CVR Partners posted an
adjusted EBITDA of $25.9 million for 2011 compared to $8.8 million in 2010 (see
footnote 3 in attached tables).
"We are pleased to issue our first quarter results as CVR Partners, LP," said
Chief Executive Officer Jack Lipinski, "having begun trading on the New York
Stock Exchange April 8 with the initial public offering closing on April 13."
For the first quarter 2011, average realized plant gate prices for ammonia and
UAN were $564 per ton and $207 per ton respectively, compared to $282 per ton and
$167 per ton respectively for the equivalent period in 2010.
Nitrogen Fertilizers produced 105,300 tons of ammonia during the first quarter of
2011, of which 35,200 net tons were available for sale while the rest was
upgraded to 170,600 tons of more highly valued UAN. In the 2010 first quarter,
the plant produced 105,100 tons of ammonia with 38,200 net tons available for
sale and the remainder upgraded to 163,800 tons of UAN.
On April 13, 2011, CVR Partners closed its initial public offering and sold an
aggregate 22.1 million common units, or 30.2 percent of the limited partnership
interests, to the public at $16 per common unit. The first distributions to
holders of these common units will be made beginning with the quarter ending June
30, 2011, with the first distribution scheduled to be made by Aug. 15, 2011.
Although first quarter results will not be part of these distributions,
management decided to issue this first quarter report for its interest to CVR
Partners' new investors.
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. You can generally identify
forward-looking statements by our use of forward-looking terminology such as
"anticipate," "believe," "continue," "could," "estimate," "expect," "intend,"
"may," "might," "plan," "potential," "predict," "seek," "should," or "will," or
the negative thereof or other variations thereon or comparable terminology. These
forward-looking statements are only predictions and involve known and unknown
risks and uncertainties, many of which are beyond our control. For a discussion
of risk factors which may affect our results, please see the risk factors and
other disclosures included in our Prospectus dated April 7, 2011, and filed with
the SEC on April 11, 2011, and other filings with the SEC. These risks may cause
our actual results, performance or achievements to differ materially from any
future results, performance or achievements expressed or implied by these
forward-looking statements. Given these risks and uncertainties, you are
cautioned not to place undue reliance on such forward-looking statements. The
forward-looking statements included in this press release are made only as of the
date hereof. The Partnership undertakes no duty to update its forward-looking
statements.
About CVR Partners, LP
Located in Coffeyville, Kansas, CVR Partners, LP is a Delaware limited
partnership focused primarily on the manufacture of nitrogen fertilizers. The CVR
Partners nitrogen fertilizer manufacturing facility is the only operation in
North America that uses a petroleum coke gasification process to produce nitrogen
fertilizer and includes a 1,225 ton-per-day ammonia unit, a 2,025 ton-per-day
urea ammonium nitrate unit, and a dual-train gasifier complex having a capacity
of 84 million standard cubic feet per day of hydrogen.
CVR Partners, LP
The following tables summarize the financial data and key operating statistics
for CVR Partners, LP (the "Partnership") for the three months ended March 31,
2011 and 2010. Select balance sheet data is as of March 31, 2011 and December 31,
2010.
Three Months Ended
March 31,
----------------------------------------------------
20112010
--------------------------------------------------
(in millions)
(unaudited)
Consolidated Statement of Operations Data:
Net sales$57.4$38.3
Cost of product sold -- Affiliates*1.51.0
Cost of product sold -- Third parties*6.04.0
Direct operating expenses -- Affiliates*0.70.5
Direct operating expenses -- Third parties*22.321.7
Insurance recovery - business interruption(2.9)--
Selling, general and administrative expenses -- Affiliates*6.42.9
Selling, general and administrative expenses -- Third parties*2.00.5
Depreciation and amortization4.64.7
--------------------------------------------------
Operating income$16.8$3.0
Other income (expense), net(0.1)3.0
--------------------------------------------------
Income before income tax expense$16.7$6.0
Income tax expense----
--------------------------------------------------
Net income$16.7$6.0
_______________
* Amounts shown are exclusive of depreciation and amortization.
As of March 31,As of December 31,
--------------------------------------------------
20112010
--------------------------------------------------
(in millions)
(unaudited)
Balance Sheet Data:
Cash and cash equivalents $71.4$42.7
Working capital53.527.1
Total assets479.5452.2
Partners' capital423.5402.2
Three Months Ended
March 31,
-----------------------------------------------------
20112010
---------------------------------------------------
(in millions)
(unaudited)
Other Financial Data:
Cash flows provided by operating activities $32.1$33.2
Cash flows used in investing activities(1.8)(1.2)
Cash flows used in financing activities(1.7)(33.9)
---------------------------------------------------
Net cash flow$28.6$(1.9)
Three Months Ended
March 31,
---------------------------------------------------
20112010
---------------------------------------------------
(in millions)
(unaudited)
Non-GAAP Measures:
Reconciliation of Net Income to Adjusted Net Income
and to Adjusted EBITDA:
Net Income$16.7$6.0
Adjustments:
Share-based compensation (1)4.61.1
---------------------------------------------------
Adjusted net income (2)$21.3$7.1
Major scheduled turnaround expense----
Depreciation and amortization4.64.7
Interest (income) expense--(3.0)
---------------------------------------------------
Adjusted EBITDA (3)$25.9$8.8
Three Months Ended
March 31,
------------------------------------------------------------------------------
20112010
----------------------------------------------------------------------------
(unaudited)
Nitrogen Fertilizer Key Operating Statistics:
Production (thousand tons):
Ammonia (gross produced) (4)105.3105.1
Ammonia (net available for sale) (4)35.238.2
UAN170.6163.8
Petroleum coke consumed (thousand tons)124.1117.7
Petroleum coke (cost per ton)$15$14
Sales (thousand tons):
Ammonia27.331.2
UAN179.3155.8
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Total sales206.6187.0
Product pricing (plant gate) (dollars per ton) (5):
Ammonia$564$282
UAN$207$167
On-stream factors (6):
Gasification100.0%96.0%
Ammonia96.7%94.2%
UAN93.2%90.6%
Reconciliation to net sales (dollars in millions):
Freight in revenue$4.8$3.5
Hydrogen revenue----
Sales net plant gate52.634.8
----------------------------------------------------------------------------
Total net sales$57.4$38.3
Market Indicators:
Natural gas NYMEX (dollars per MMBtu)$4.20$4.99
Ammonia -- Southern Plains (dollars per ton)$605$330
UAN -- Mid Cornbelt (dollars per ton)$349$245
_______________
(1) CVR Partners has been allocated non-cash share-based compensation expense
from CVR Energy, Inc., its affiliates and former affiliates (collectively "CVR
Energy"). CVR Energy accounts for share-based compensation in accordance with
Accounting Standards Codification ("ASC") Topic 718 Compensation - Stock
Compensation ("ASC 718") as well as guidance regarding the accounting for
share-based compensation granted to employees of an equity method investee. In
accordance with ASC 718, CVR Energy applies a fair-value based measurement method
in accounting for share-based compensation. The Partnership recognizes the costs
of the share-based compensation incurred by CVR Energy on its behalf, primarily
in selling, general and administrative expenses (exclusive of depreciation and
amortization), and a corresponding increase or decrease to Partners' Capital, as
the costs are incurred on its behalf, following the guidance issued by the FASB
regarding the accounting for equity instruments that are issued to other than
employees for acquiring, or in conjunction with selling goods or services, which
require remeasurement at each reporting period through the performance commitment
period, or in the Partnership's case, through the vesting period. Costs are
allocated by CVR Energy based upon the percentage of time a CVR Energy employee
provides services to CVR Partners. In accordance with a services agreement
between the entities, CVR Partners will not be responsible for the payment of
cash related to any share-based compensation allocated to it by CVR Energy.
Three Months Ended
March 31,
----------------------------------------------------------
20112010
------------------------------------------------------------
(in millions)
(unaudited)
Share-based compensation recorded in direct operating expenses:$0.3$0.2
Share-based compensation recordedin selling, general and administrative expenses:4.30.9
----------------------------------------------------
Total share-based compensation$4.6$1.1
(2) Adjusted net income results from adjusting net income for items that the
Partnership believes are needed in order to evaluate results in a more
comparative analysis from period to period. For the three months ended March 31,
2011 and 2010, net income was adjusted for the impact of share-based
compensation. Adjusted net income is not a recognized term under GAAP and should
not be substituted for net income as a measure of our performance but rather
should be utilized as a supplemental measure of financial performance in
evaluating our business. Management believes that adjusted net income provides
relevant and useful information that enables external users of our financial
statements, such as industry analysts, investors, lenders and rating agencies to
better understand and evaluate our ongoing operating results and allow for
greater transparency in the review of our overall financial, operational and
economic performance.
(3) Adjusted EBITDA is defined as net income before income tax expense, net
interest (income) expense, depreciation and amortization expense and certain
other items management believes affect the comparability of operating results.
For the three months ended March 31, 2011 and 2010, EBITDA was adjusted for the
impact of share-based compensation. Adjusted EBITDA is not a recognized term
under GAAP and should not be substituted for net income as a measure of
performance but should be utilized as a supplemental measure of performance in
evaluating our business. Management believes that adjusted EBITDA provides
relevant and useful information that enables external users of our financial
statements, such as industry analysts, investors, lenders and rating agencies to
better understand and evaluate our ongoing operating results and allows for
greater transparency in the reviewing of our overall financial, operational and
economic performance. Management believes it is appropriate to exclude certain
items from EBITDA, such as share-based compensation and major scheduled
turnaround expenses because management believes these items affect the
comparability of operating results.
(4) The gross tons produced for ammonia represent the total ammonia produced,
including ammonia produced that was upgraded into UAN. The net tons available for
sale represent the ammonia available for sale that was not upgraded into UAN.
(5) Plant gate sales per ton represent net sales less freight and hydrogen
revenue divided by product sales volume in tons in the reporting period. Plant
gate pricing per ton is shown in order to provide a pricing measure that is
comparable across the fertilizer industry.
(6) On-stream factor is the total number of hours operated divided by the total
number of hours in the reporting period.
Use of Non-GAAP Financial Measures
To supplement the actual results in accordance with GAAP for the applicable
periods, the Partnership also uses non-GAAP measures as discussed above, which
are adjusted for GAAP-based results. The use of non-GAAP adjustments are not in
accordance with or an alternative for GAAP. The adjustments are provided to
enhance an overall understanding of the Partnership's financial performance for
the applicable periods and are indicators management believes are relevant and
useful for planning and forecasting future periods.
SOURCE CVR Partners, LP |
