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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (63508)	3/20/2020 8:00:03 PM
From: Elroy	Respond to of 78464

I am not expecting any dividend but it is really a function of the fertilizer prices. I don't know, but I think a dividend is more than likely. Production volumes in Q1 should ramp from Q4 2019 levels since they ran at 92% utilization adjusted for a turnover in Q4 2019, and the turnover is said to have increased production rates, and in Q1 they will have a full quarter of production (utilization is expected to be 95% to 100%) of the more productive plant. I don't know how quickly higher production turns into higher sales - maybe immediately, maybe there is some lag. Direct expenses are expected to be $35m-$40m compared to $45m in Q4 2019. Natural gas prices are (I think) below what they were in Q4 2019, so that also should lower input costs. So we got higher production, probably higher sales, and lower expenses. They really should produce a dividend in that environment. The CEO bought shares in late Feb (before the oil, virus and stock market bloodbath). UAN's business, being in the food supply chain, should really be unaffected by the state of calamity of much of the US. The only thing that yells "no dividend" to me is the stock price. But.....the CEO bought stock when the quarter was 2/3rds finished. He probably wants a dividend. The first X-Factor is a possible reserve for the planned turnaround of the Coffeeville facility. Maybe Q1 shows enough distributable cash, but they reserve it to pay the planned turnaround expense. Ok, that makes distributions more likely later in the year as future expenses are prepaid. The second X-Factor is the price of fertilizer. Increased production and lower prices, it's sort of a wash. Depends on the magnitude of all the factors, but I remain optimistic that some distribution will appear.