Let’s see, I’ll try to respond.
A few comments.
“Throwing off cash” for UAN doesn’t mean producing net income. They have their own method of calculating distributable cash flow (the distribution amount). It adds back (among other things) non-cash depreciation. So....UAN can have negative net income in a quarter, yet still pay a decent distribution that quarter.
In Q1 2019 UAN paid (from memory....) I think 70 cents.
I think what happened in 2019 was fertilizer prices spiked briefly, then collapsed again, to even lower prices.
Yes, my view of UAN as an easy double in seven months assumes fertilizer prices stay about where they are now. Will they? Who knows?
UAN also sells production in advance. So....
Some of Q1 production was sold in Q4, at much lower prices. So.....Q1 financials should improve from the previously reported quarter, but we won’t get the revenue upward explosion I am expecting until Q2 results are reported, because they are now, in Q1, selling Q2 production, at the current high fertilizer prices. So there is a lag between fertilizer prices increases, and UAN’s sales growth.
But.....it’s coming! UAN spot prices have doubled from UAN’s reported Q4 levels. |
