CVR Partners LP, Sugar Land, Texas, reported strong results for both the fourth-quarter and full-year ending Dec. 31, 2021, returning net income to the plus column.
The company posted full-year net income of $78.1 million ($7.31 per common unit) on net sales of $532.6 million, up from a year-ago loss of $98.2 million ($8.77 per unit) and $349.9 million, respectively. Operating income was $134.5 million, up from a loss of $34.9 million, while adjusted EBITDA was $212.7 million, up from $82.3 million.
Fourth-quarter net income was $61.5 million ($5.76 per unit) on sales of $189 million, up from the year-ago loss of $16.9 million ($1.53 per unit) and $90.3 million, respectively. Operating income was $71.8 million, up from a loss of $1 million, while adjusted EBITDA was $92.8 million, up from $18.1 million.
“CVR Partners achieved strong fourth-quarter and full-year 2021 results, led by solid production and a combined ammonia utilization rate of 92 percent for the year,” said Mark Pytosh, CEO of CVR Partners’ general partner. “Product pricing continued to strengthen into the fourth quarter of 2021, and we expect the momentum to continue into the spring 2022 planting season. With grain prices near multi-year highs and crop inventory levels near multi-year lows, farmer economics remain very attractive.
“During the past 12 months and upon today’s expected redemption of our 9.25 percent Senior Secured Notes due 2023, CVR Partners will have completed a refinancing of its outstanding debt, reducing the total by $95 million,” added Pytosh. “Combined, these actions are expected to reduce our annual interest expense by $26 million and provide the partnership greater flexibility going forward. We also are pleased to have declared distributions in each of the past three quarters, including today’s announcement of a fourth-quarter 2021 cash distribution of $5.24 per common unit.”
Pytosh told analysts that the company opted to maximize ammonia production at its East Dubuque plant during the fourth-quarter due to the strong pricing and demand environment. The company said the plant had 11 days of downtime during the quarter.
The Coffeyville plant experienced 10 day of downtime due to two separate outages at the third-party air separation plant and approximately seven days for turnaround work in October, when tie-ins were made for a urea upgrade project.
The company said it completed the installation of an additional CO2 compressor and ammonia pump at Coffeyville, which has led to an increase in UAN production. It said the increased production should provide a quick payback for that capital project.
Currently, Pytosh said CVR has a good book of business and can comfortably run full out 24/7. “We still have some more to sell for the second quarter, but we are in great shape, and the market pricing is much higher than it was in the second half of 2021.”
CVR said with the improvements in the nitrogen markets over the past year and the reductions in its annual debt service costs, it is evaluating opportunities to further improve and diversify its business. However, Pytosh added that CVR is not looking to diversify away from nitrogen, but noted that there is a pretty limited field of opportunities in nitrogen.
“We’re also going to look at internal projects, decarbonization projects, and brownfield expansions, not big ones, but potentially add-ons to the facility that give us capacity without having to spend a lot of capital,” he added.
| Sales (000 st) | 4Q-21 | 4Q-20 | 2021 | 2020 |
| Ammonia | 105 | 114 | 269 | 332 |
| UAN | 265 | 325 | 1,196 | 1,312 |
| Plant Gate Price $/st | 4Q-21 | 4Q-20 | 2021 | 2020 |
| Ammonia | 745 | 267 | 544 | 284 |
| UAN | 347 | 139 | 264 | 152 |
| Production (000 st) | 4Q-21 | 4Q-20 | 2021 | 2020 |
| Ammonia – gross | 197 | 220 | 807 | 852 |
| Ammonia – net | 70 | 75 | 275 | 303 |
| UAN | 288 | 335 | 1,208 | 1,303 |
| Feedstock | 4Q-21 | 4Q-20 | 2021 | 2020 |
| Petroleum Coke | 47.96 | 30.65 | 44.69 | 35.25 |
| Natural Gas ($/mmBtu) | 5.43 | 2.77 | 3.95 | 2.31 |