CVR Partners (UAN) Swings to Loss in Q3, Sales Miss
CVR Partners UAN swung to a loss in the third quarter of 2015 on a double-digit decline in revenues. The results were impacted by expenses and production losses associated with a major plant turnaround during the quarter, unplanned outages at Linde LLC's air separation unit and costs related to CVR Partners’ proposed acquisition of Rentech Nitrogen Partners, L.P RNF. Linde’s air separation unit provides the company with oxygen and nitrogen required for production.
The company logged net loss of $13.5 million or 18 cents per share in the quarter versus a profit of $12.7 million or 17 cents per share a year ago. Barring one-time items, loss came in at 7 cents per share that compared unfavorably with the Zacks Consensus Estimate of earnings of 3 cents.
CVR Partners posted revenues of $49.3 million, down around 26% year over year, impacted by lower production volumes and pricing. That missed the Zacks Consensus Estimate of $51 million.
CVR Partners LP (UAN) - Earnings Surprise | FindTheCompany
Operational Statistics
CVR Partners produced 66,300 tons (down roughly 34%) of ammonia and purchased an additional 7,500 tons of ammonia during the quarter, of which 12,100 net tons were available for sale while the remainder was upgraded to 152,400 tons (down 32%) of urea ammonium nitrate (UAN).
Sales of ammonia were 7,800 tons in the quarter, a roughly 26% year over year rise. UAN sales fell around 21% year over year to 174,500 tons.
Average realized gate prices for UAN and ammonia were $227 per ton and $478 per ton, respectively, in the reported quarter versus $254 per ton and $503 per ton, respectively, a year ago.
During the third quarter, on-stream factors were 62.2% for the gasifiers, 57.8% for the ammonia synthesis loop and 56.7% for the UAN conversion facility.
Financials
CVR Partners ended the quarter with cash and cash equivalents of $33.2 million, down around 51% year over year. Total debt was $125 million at the end of the quarter, flat year over year. Operating cash flow was $1.1 million for the reported quarter. Capital spending for the quarter was $6.4 million.
Outlook
CVR Partners noted that it has installed several pieces of new equipment during the major plant turnaround in the third quarter that will enable it to run the facility at higher rates of production. The company is already seeing benefits of these actions as it is witnessing some of the highest production rates in the plant's history so far in the fourth quarter of 2015.
CVR Partners has agreed to buy nitrogen fertilizer maker Rentech Nitrogen Partners in a cash and stock deal worth $533 million. The merger offers a compelling opportunity as the integration of two pure-play, complementary nitrogen fertilizer makers would create an entity with larger scale, enhanced production capacity and increased operating reach. Following the deal closure, the combined company will be the second-biggest producer of UAN in North America. CVR Partners anticipates the deal to be double-digit accretive to distributable cash per unit before synergies.
CVR Partners currently sports a Zacks Rank #3 (Hold).
Better-ranked companies in the basic materials sector include Celanese Corporation CE and Orion Engineered Carbons SA OEC, both carrying a Zacks Rank #1 (Strong Buy).
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