Phosphate Holdings Inc. (PHI), which owns Mississippi Phosphates Corp., moved into the loss column for the fourth quarter and year ending Dec. 31, 2011, citing weaker DAP prices and maintenance problems in the fourth quarter. PHI reported a net loss of $576 million ($.07 per diluted share) for the fourth quarter, versus a year-ago net income of $853,000 ($.10 per share). Operating losses were $1 million, versus the year-ago income of $1.3 million. EBITDA was $3.5 million, down from the year-ago $5.2 million.
For the year, losses were $808,000 ($.10 per share), versus net income of $1.06 million ($.13 per share) for 2010. Operating losses were $800,000, compared to 2010’s income of $2.3 million. EBITDA was up, at $15.9 million from 2010’s $15.1 million.
“Our fourth quarter operating results were impacted by a planned maintenance turnaround early in the quarter and by falling DAP prices late in the quarter,” said Robert Jones, PHI CEO. “During December, posted DAP prices per short ton, FOB NOLA, dropped from approximately $560 to approximately $450. With sulfur prices fixed for the quarter and ammonia prices at elevated levels, our margins contracted. This margin squeeze was partially offset by very encouraging results from our October/November turnaround. In December 2011, we had the highest DAP and sulfuric acid production since mid-2008. We continue to experience production improvements in 2012 as compared to recent historical results.
“From a market perspective,” added Jones, “during the fourth quarter of 2011, the average posted DAP price was $552 per short ton, NOLA, sulfur prices were posted at $220 per long ton, CFR, Tampa, and ammonia prices hit a peak of $705 per metric ton before closing at $555 per metric ton, CFR, Tampa.”
PHI fourth-quarter net sales were up 45 percent, to $99.6 million from the year-ago $68.5 million. PHI said the average DAP sales price for the quarter was $539/st, up 1 percent from the year-ago average of $534/st. PHI sold 183,436 st of DAP during the quarter, with 57,011 going to domestic markets.
PHI net sales for the year 2011 were up 35 percent, to $352.3 million from 2010’s $261.1 million.
Citing a positive outlook for U.S. corn acres in 2012 to 95.9 million acres, Jones noted that nonetheless, distributors and retailers were very cautious in stocking inventories for the planting season “This reluctance has led to further price deterioration with the average first quarter 2012 posted DAP price of $444 per short ton, NOLA, and $516 per metric ton, U.S. Gulf. These depressed DAP prices will negatively impact our first quarter results. However, in the first two weeks of April, product movement has been brisk and DAP prices improving.”
PHI continues to review strategic options and will not discuss earnings with analysts in a conference call until this review is complete. It said that as of Dec. 31, 2011, it had a cash balance of approximately $3 million, and $15 million in borrowings under its revolving credit agreement. Approximately $3.2 million was spent on capital expenditures in the fourth quarter of 2011, and $12.5 million for the year 2011. Based on current phosphate market conditions, DAP production rates and available credit facilities, PHI believes that it has adequate liquidity to meet its operating and other cash flow needs throughout 2012.