I breezed UAN's conference call.
Conculsion - fertilizer prices in Q3 2023 (which they have already pre-sold) were quite low. However, the positive is the low prices brought out the customers, and demand (at the low prices) was strong.
Fertilizer prices have moved up well (up 20%) from the Q2 2023 pre-sell prices. However, the up move in fertilizer prices won't be reported until Q4 results, cuz CVR sold a lot at the low Q3 pre-sell prices.
So, my hunch is zero dividend next quarter, and then about $2-$5 in the following quarters, depending on charges and whatnot.
It's a big drop from previous $10 per Q distributions, but the UAN unit price seems to move more with the fertilizer industry than with it's distributions, so if fertilizer prices continue to rise, I think UAN will not pay large distributions for a while, but the unit price may do well along with the fertilizer group.
I was in it for the distributions, so my interest in the story is diminished.
My educated guess (based on the forward price curve for UAN fertilizer) is over the next four quarters it should pay $12 or more. Not bad for a stock that's probably $80 after the current Aug $4.14 distribution gets paid.
I will watch and perhaps re-enter around Jan/Feb when decent distributions should resume.
I sort of don't think the average UAN owner knows that it probably pays zero next quarter, so I wouldn't want to own it on the day of that news. Other than that, I'd expect it to move with the fertilizer groupof stocks, and with the fertilizer forward prices for UAN. |
