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CVR Partners (UAN) Q4 Earnings Trail Estimates, Sales Down

Zacks Equity Research
Lower ammonia and UAN sales prices hurt CVR Partners' (UAN) revenues in Q4.

CVR Partners, LP UAN posted a loss of $27.4 million or 24 cents per share in the fourth quarter of 2017, higher than a loss of $14.5 million or 13 cents per share it logged a year ago. The reported loss per share was wider than the Zacks Consensus Estimate of a loss of 14 cents.

CVR Partners raked in net sales of $78.2 million in the reported quarter, down around 8% year over year. The decline is mainly attributable to reduced ammonia and urea ammonium nitrate (“UAN”) sales prices and lower UAN sales volumes that more than offset higher ammonia sales volumes.

The company’s results in the quarter were also affected by unscheduled downtime at the East Dubuque fertilizer facility and a few maintenance days on the UAN plant at Coffeyville.

CVR Partners, LP price-consensus-eps-surprise-chart | CVR Partners, LP Quote

FY17 Results

For 2017, loss was $72.8 million or 64 cents per share, wider than a loss of $26.9 million or 26 cents per share logged a year ago.

Net sales for the full year fell roughly 7% year over year to $330.8 million.

Operational Statistics

CVR Partners produced 199,500 tons of ammonia in the reported quarter of which 64,100 net tons were available for sale while the rest was upgraded to other fertilizers including 306,100 tons of UAN.

Consolidated average realized gate prices for UAN and ammonia were $132 and $264 per ton, respectively, in the reported quarter, down 10% and 25% year over year, respectively.

Financials

CVR Partners ended 2017 with cash and cash equivalents of $49.2 million, down around 12% year over year. Total debt was $625.9 million, essentially flat year over year.

The company noted that it will not pay a cash distribution for fourth-quarter 2017.

Outlook

CVR Partners said that it is witnessing lower nitrogen product imports, steady customer demand and higher prices for nitrogen so far this year. The company also noted that most industry participants are expecting around 90 million corn acres to be planted for the spring season.

The company expects its combined capital spending to be around $20 million in 2018.

Price Performance

CVR Partners’ shares have lost 38.4% over a year, underperforming the 10.2% gain of the industry it belongs to.

Zacks Rank and Stocks to Consider

CVR Partners currently carries a Zacks Rank #4 (Sell).

Better-ranked companies in the basic materials space include Olympic Steel, Inc. ZEUS, Methanex Corp. MEOH and The Mosaic Company MOS, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olympic Steel has an expected long-term earnings growth rate of 7.5%. Its shares rallied around 36% over the past six months.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained roughly 29% over the past six months.

Mosaic has an expected long-term earnings growth rate of 9.5%. Its shares have rallied around 36% over the past six months.

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