CVR Partners (UAN) Q2 Earnings Trail Estimates, Sales Beat
CVR Partners UAN posted a loss of 15 cents per share in the second quarter of 2016, versus earnings of 37 cents reported a year ago. Adjusted earnings came in at a penny per share, missing the Zacks Consensus Estimate of 21 cents.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $29.1 million in the reported quarter, down from $36.1 million in the second quarter of 2015.
CVR Partners posted revenues of $119.8 million in the quarter, up around 48.3% year over year. Revenues also breezed past the Zacks Consensus Estimate of $109 million.
Operational Statistics
CVR Partners produced 171,500 tons of ammonia during the second quarter of 2016 and purchased an additional 5,000 tons, of which 45,600 net tons were available for sale while the rest was upgraded to 296,500 tons of urea ammonium nitrate (“UAN”).
In the reported quarter, CVR Partners completed the acquisition of Rentech Nitrogen Partners. The acquisition primarily consisted of the East Dubuque nitrogen production facility. A full turnaround of the East Dubuque facility was completed in the quarter as part of which a new ammonia converter was installed. The facility is now allowed to produce over 1,000 tons per day, an increase of more than 75 tons per day from the previous level.
On-stream factors during the reported quarter were 98.0% for gasification, 96.6% for the ammonia synthesis loop and 93.7% for the UAN conversion facility at the Coffeyville facility. At the East Dubuque facility on-stream factors during the quarter were 68.6% for the ammonia synthesis loop and 69.1% for the UAN conversion.
Distributions
CVR Partners has declared second-quarter 2016 distribution of 17 cents per common unit. The distribution, as set by the board of CVR GP, LLC, the general partner of CVR Partners, will be paid on Aug 15, to unit holders of record as of Aug 8, 2016.
Financials
CVR Partners ended the quarter with cash and cash equivalents of $76.3 million, up around 13.9% year over year. Operating cash flow was $5.5 million for the reported quarter, down roughly 82%. Capital spending for the quarter was $10.1 million. The company completed a $645 million bond offering in the quarter, which included refinancing of an interim debt facility for the acquisition of Rentech Nitrogen Partners.
Outlook
CVR Partners expects a capital expenditure in the range of $3−$5 million in the third quarter of 2016 for the final payment of the new ammonia converter at the East Dubuque facility. Full-year capital expenditure for the maintenance of the two facilities (9 months of the East Dubuque facility post acquisition) is projected at $19 million.
CVR Partners expects the industry to evolve over the next 1−3 years through consolidation. Management expects prices to fall due to seasonality. Additionally, it expects consumers to purchase more domestically produced tons to be able to take delivery in stages. The company is also optimistic about its market position due to a larger geographical presence post acquisition.
CVR PARTNERS LP Price, Consensus and EPS Surprise
CVR PARTNERS LP Price, Consensus and EPS Surprise | CVR PARTNERS LP Quote
Zacks Rank
CVR Partners currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked companies in the basic materials space include Chemical & Mining Co. of Chile Inc. SQM, E. I. du Pont de Nemours and Company DD and FMC Corp. FMC, all holding a Zacks Rank #2 (Buy),
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