CVR 4Q, Full-Year Results Improve; Fall NH3 Sales Volumes Off 45 Percent

Nitrogen producer CVR Partners LP, Sugarland, Texas, reported a fourth-quarter net loss of $1.37 million ($0.01 per diluted common unit) on net sales of $98.1 million, compared to a year-ago net loss of $27.4 million ($0.24 per unit) and $78.2 million, respectively. Increased UAN volumes, as well as higher ammonia and UAN prices, helped the company offset a 45 percent drop in ammonia volumes. Adjusted EBITDA was up at $32.8 million from $7.7 million. Fourth-quarter 2018 included $6 million from a 2017 insurance claim.

CVR had a full-year net loss of $50 million ($0.44 per unit) on sales of $351.1 million, versus 2017’s loss of $72.8 million ($0.64 per unit) and $330.8 million, respectively. Adjusted EBITDA was up at $90.5 million from 2017’s $66.8 million.

“Higher netback pricing and increased utilization rates led to improved 2018 fourth quarter and full-year results for CVR Partners,” said Mark Pytosh, CEO of CVR Partners’s general partner. “We also are pleased to report that CVR Partners generated positive distributable cash in the 2018 fourth quarter and declared a 12 cent per unit distribution.

“While a wet fall created unfavorable application conditions for nitrogen fertilizer, we currently expect the missed tonnage will be applied in the spring,” he added. “In addition, we anticipate the corn planted this spring should increase by 3 million to 5 million acres, leading to strong nitrogen fertilizer demand.”

Pytosh noted that the company completed a new rail loading rack at its Coffeyville, Kan., facility, and began loading UAN railcars during the second-half 2018, providing unit train capabilities to increase access to the Burlington Northern rail line and reduce distribution costs. He said it is one of the few facilities out there that is up on both the BN and Union Pacific rail lines, which opens up a whole set of geographic points that it was not able to serve economically with unit trains in the past.

During the fourth quarter, Coffeyville’s ammonia plant operated at a 96 percent utilization rate, up from the year-ago 94 percent, while East Dubuque’s was at 95 percent, up from 88 percent. The company said both locations completed 2018 turnarounds on time and on budget. CVR also identified, and is in the process of developing a plan to construct, a backup oxygen unit at Coffeyville in order to reduce the impacts of a possible third-party outage. He said the company also consolidated back office locations, reducing overhead costs and staffing.

As for 2019, Pytosh told analysts that the company has a significant spring order book for ammonia, with much fall ammonia shifted into spring at a higher price. He said most of the first-quarter UAN production volumes were sold in the fourth quarter. He said the company is in a very comfortable UAN inventory position. 

*Cost is per amount used in production; pet coke in $/st, natural gas per MMBtu.