Phosphate Holdings Inc., the sole owner of Mississippi Phosphates Corp., reported a net loss of $2.8 million ($.36 per basic and diluted share) for the fourth quarter ending Dec. 31, 2009, compared to a year-ago loss of $58.1 million ($7.59 per diluted share). Total net sales for the quarter were up 32 percent, to $47.2 million from the year-ago $35.8 million.
“The fourth quarter of 2009 was one of transition in the phosphate market,” said Robert Jones, Phosphate Holdings CEO. “After an extended period of sluggish phosphate demand due, in part, to weather conditions, uncertainty of product prices, and inadequate credit availability, DAP prices began to recover. DAP prices increased from a low of $262 per short ton, NOLA, during mid-November of 2009, to $334 per short ton, NOLA, at year end. As of March 22, 2010, DAP prices approximate $425 per short ton, NOLA, while export prices are approximately $440 per metric ton, U.S. Gulf.
“The resurgence in DAP prices is attributable to both buyers and sellers realizing that phosphate stocks throughout the supply channel are low and the anticipation of a strong spring planting season,” continued Jones. “With depleted nutrients in the farmers’ soil, coupled with low fall 2009 application levels due to the late harvest, we expect strong demand for fertilizer throughout 2010.”
“With the improvements in DAP demand and price, we are experiencing raw material input cost increases and, in one case, availability issues,” he added. “Most notable has been the $60 increase in sulfur to $90 per long ton for the first quarter of 2010. More problematic has been near-term supply shortages of sulfur. Changes in oil refinery feedstock and product mix and recent turnarounds have led to a shortage of sulfur. While ammonia availability has not been an issue, prices in the U.S. Gulf have increased significantly since year end from $300 per metric ton, CFR, to $450 per metric ton, CFR, in March 2010.” Those prices did, however, decline to $415/mt for April.
The average sales price of DAP during the fourth quarter of 2009 was $276/st, a 42 percent decrease from the prior-year price of $478/st. During the fourth quarter, the company sold 168,078 st of DAP, with 84,324 st moving into export markets. The company had operating losses of $4.4 million, compared to the year-ago operating losses of $90.5 million. EBITDA was a negative $1.9 million, compared to the year-ago negative $88.5 million. Fourth-quarter 2008 EBITDA was negatively impacted by inventory write-downs to net realizable value of $84.8 million.
Full-year 2009 net losses were $13.6 million ($1.76 per share), as compared to 2008 losses of $3.5 million ($0.46 per share). Results for 2009 were impacted by inventory write-downs to net realizable value of approximately $10.4 million.
Full-year 2009 net sales were $186.3 million, a 58 percent decrease from 2008 net sales of $445.8 million. The company incurred an operating loss of $21.7 million compared to the year-ago loss of $4.5 million. EBITDA was a negative $10.9 million, versus 2008’s positive $5.9 million. EBITDA in 2009 and 2008 were negatively impacted by inventory write-downs of $10.4 million and $87.7 million, respectively.
Phosphate Holdings said operational issues have negatively impacted the fourth-quarter 2009 results, as well as first quarter 2010 to date. During the fourth quarter of 2009, the company produced 153,873 st of DAP, approximately 83 percent of planned production levels for the quarter. This shortfall resulted from various unplanned outages in its sulfuric acid operations. In late 2009, the company completed a comprehensive review of the operational issues hindering sulfuric acid production. Several of the key issues identified were addressed in a planned turnaround of the No. 2 sulfuric acid plant in January 2010, and an unplanned four-day outage in the No. 3 sulfuric acid plant in December 2009. The company said improvements in the operating factors were achieved in both sulfuric acid plants.
Various factors, including extreme cold temperatures and heavy rainfall events, negatively impacted operations during the first quarter of 2010. Subsequent to the turnaround on the No. 2 sulfuric acid plant, problems with the coolers in the interstage absorption towers developed, and the company is working to replace the applicable coolers. The planned turnaround, weather factors, and interstage absorption tower cooler problems will impact DAP production during the first quarter of 2010.
As of Dec. 31, 2009, the company had a cash balance of approximately $2.1 million and no outstanding borrowings under its revolving credit agreement. It spent approximately $0.3 million on capital expenditures in the fourth quarter of 2009, and $4.9 million for the year ended December 31, 2009.
Jones added that the company continues to fully cooperate with the Environmental Protection Agency (EPA) and the Mississippi Department of Environmental Quality (MDEQ) on their respective Administrative Order under Section 7003(a) of the Resource Conservation and Recovery Act (RCRA) and the Notice of Violation issued on Sept. 23, 2009 (GM Oct. 5, 2009). The company said Sept. 30 that corrective actions were initiated immediately after an inspection detected surface and groundwater contamination within the plant, and that additional work was underway. At the time, the company said surface water contamination within the plant was mitigated, and the company had confirmed through third-party testing that the groundwater contamination was localized and contained and that there has been no migration off site.
During 2009, the company expensed approximately $1.3 million and capitalized costs of approximately $0.1 million related to these matters. It estimates it will incur additional capital costs of $1.7 million to address the EPA and MDEQ requirements.
In other news, the company announced that Rex Deloach resigned from the company’s board of directors Feb. 24, 2010.