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

To: bruwin who wrote (66576)	2/19/2021 12:31:08 PM
From: Paul Senior	1 Recommendation Recommended By E_K_S Respond to of 78819

UAN. Something not right with the conclusion that revenue might need to be $1464M for a $7/sh dividend. Going back to 2008, revenue has never exceeded $404M. Yet there were many years when the dividend was over $7. Maybe some of this is because it's an L.P. so it's structured as a distribution, not a dividend?? I don't know. There were about 7M shares outstanding for many years. Past couple up to over 11M. So the forecast increase in revenue and in distribution amount will be spread over more shares (than in past), so it may indeed require much more revenue to get a $7/sh or better distribution again. How much more revenue and how much is forecasted, I don't know. ============================ I don't like the business or that it's one more L.P. for me to deal with. The fertilizer cycle has or will turn I read here, and maybe the stock's rise this year to multiples of the low already reflects that. Nevertheless, as the stock hits 12-mo highs I will take a few shares to hold to see if the dividend/distribution will be as good as some people here believe and are betting.

To: bruwin who wrote (66576)	2/19/2021 1:35:39 PM
From: JohnyP	2 Recommendations Recommended By E_K_S Lance Bredvold Read Replies (1) \| Respond to of 78819

I like the approach, I see 2 mistakes here. UAN is a MLP. They are not paying taxes on corporate income, so that 20% tax rate will be 0%. Then 30% of Net income as distribution is far too low, a MLP will distribute close to 100% as a payout ratio. Changing those 2 assumptions and using your logic the revenue needed will get to around $580Million, which seems reasonable.

To: bruwin who wrote (66576)	2/19/2021 1:49:57 PM
From: Elroy	Read Replies (1) \| Respond to of 78819

UAN pays out a measurement of cash flows, it's in their press releases, I forget the exact calculation. My $7.00 guess comes from this (very simplistic, but I think likely correct) calculation. UAN has some revenue level that is break even. Above that, they pay out all the excess cash flows in distributions. From Q4 2018 to Q3 2019 (4 quarters) UAN paid out $4.00. the below is a bit confusing as UAN is both the company ticker and name, and UAN fertilizer is one of the two fertilizers they sell (the other is ammonia). I'll call the fertilizer UAN fertilizer and if I write just UAN I mean the company. UAN reports each quarter the gate price received that quarter for the two fertilizers (UAN fertilizer and ammonia) which they sell. Eye balling it, at that four quarter period of distributions from Q4 2018 to Q3 2019, UAN fertilizer averaged $200/ton, and ammonia $390/ton. On those prices, UAN paid $4.00 over four quarters. Today UAN fertilizer is ~$260/ton and ammonia ~$525/ton. So....my complete guess is something like UAN fertilizer at $160 and ammonia at $320 = UAN breaks even UAN fertilizer at $200 and ammonia at $390 = UAN pay $4.00. This is a fact. UAN fertilizer at $260 and ammonia at $525 = ??? Who knows? I could EASILY be more than $7.00 as once they get above break even all the profits fall into distribution. It depends on exactly where the break even prices of fertilizer are. We gonna find out this year, that's the good thing (I hope).