All posts by mickeybarb@charter.net

Intrepid Reports Stronger 3Q Results on Lower Volumes, Higher Prices

Earnings, News, Potash Muriate, Southern Plains, Specialty

Intrepid Potash Inc. reported third-quarter net income of $13.1 million on sales of $74.8 million, up from the year-ago $4 million and $59.2 million, respectively. Adjusted EBITDA was $27 million, up from the year-ago $13.1 million.

“Intrepid continues to deliver strong execution in the backdrop of high fertilizer pricing and a broadly supportive agriculture market, with adjusted EBITDA of approximately $119 million in the first nine months of 2022 being 177% higher than the same prior year period,” said Bob Jornayvaz, Intrepid Executive Chairman and CEO.

“While farmer economics remain quite robust, we saw the trend of mostly just-in-time purchasing in agriculture markets continue through the third quarter and into the fall harvest,” he continued. “Moreover, lingering and persistent inflation in farmer cost inputs is driving some uncertainty, despite spot pricing for key crops remaining substantially higher than previous decade averages, with futures into the 2023 fall harvest and beyond also showing strength.

“Putting this together, while a more pronounced pickup in sales for our potash and Trio® in the second half of 2022 has been slower than we previously expected for timing reasons, the demand is still robust, and the outlook for agricultural and fertilizer markets into 2023 and longer-term remains overwhelmingly positive, with this view being supported by 71k shares repurchased in the third quarter under our $35 million share repurchase program,“ Jornayvaz added.

Nine-month net income was $68.2 million on sales of $270.9 million, up from the year-ago $26 million and $198.5 million, respectively. Adjusted EBITDA was $118.6 million, up from the year-ago $42.8 million.

Potash 3Q-22 3Q-21 YTD-22 YTD-21
Sales (000 st) 42,354 31,673 147,622 112,944
Gross Margin ($000) 19,872 4,525 73,862 23,329
Sales Volume (000 st) 46 62 172 270
Production Vol. (000 st) 36 37 164 201
Avg Realized Price ($/st) 734 381 718 319
Trio 3Q-22 3Q-21 YTD-22 YTD-21
Sales (000 st) 24,043 20,827 100,561 71,444
Gross Margin ($000) 6,503 5,436 35,694 8,528
Sales Volume (000 st) 39 46 169 191
Production Vol. (000 st) 52 56 175 175
Avg Realized Price ($/st) 488 336 482 271
Oilfield Solutions 3Q-22 3Q-21 YTD-22 YTD-21
Sales (000 st) 8,423 6,708 22,936 14,293
Gross Margin ($000) 395 647 6,201 2,058

Nutrien Delivers Record Results, Underperforms Analyst Expectations

Earnings, Featured, News, Nitrogen, Phosphate, Potash, Saskatchewan

Nutrien Ltd. reported third-quarter net earnings of $1.58 billion on sales of $8.19 billion, up from the year-ago $726 million and $6.02 billion, respectively. Adjusted EBITDA was $2.47 billion up from the year-ago $1.64 billion.

“Nutrien has delivered record earnings in 2022 due to the strength of agriculture fundamentals, higher fertilizer prices and excellent Retail performance,” said Ken Seitz, Nutrien President and CEO. “During the third quarter, we saw a temporary reduction in potash purchasing in North America and Brazil, which has impacted our sales volumes and realized prices in the second half of the year. However, the underlying demand drivers remain strong and global fertilizer supply challenges still persist, creating a supportive environment for Nutrien as we look ahead to 2023 and beyond.

“We are focused on efficiently supplying our customers with the products and services they need to help sustainably feed a growing world,” he added. “We continue to take a multi-year view of the market and remain confident that our additional low-cost potash and nitrogen production capability will be required to meet future demand.”

Despite the uptick in results, net income, sales, and adjusted EBITDA, all fell below the Bloomberg Consensus, the average analyst estimates of company performance. Analysts had projected $2.15 billion, $8.88 billion, and $3.58 billion, respectively.

Nutrien also adjusted its own guidance, with much of it going downward.

  Guidance Range as of:
  Nov. 2 Aug. 3
Adjusted net earnings per share 13.25-14.50 15.80-17.80
Adjusted EBITDA 12.2-13.2 14.0-15.5
Retail adjusted EBITDA 2.15-2.25 2.10-2.20
Potash adjusted EBITDA 5.8-6.2 7.6-8.2
Nitrogen adjusted EBITDA 4.1-4.4 4.0-4.7
Phosphate adjusted EBITDA 700-800 750-850
Potash sales mt (millions) 12.5-12.9 14.3-14.9
Nitrogen sales mt (millions)   10.4-10.5 10.6-11.0

*Billions of US dollars, except where otherwise noted.

After the news, shares of Nutrien, the world’s largest potash producer, fell as much as 16% to C$95.49 in Toronto on Thursday Nov. 3.

Nutrien lowered its global potash shipment forecast for 2022 to 60-62 million mt from 61-64 million mt due to the impact of “higher-than-expected” inventory and “cautious buying in North America and Brazil,” during the second half of 2022, the company said. Nutrien forecasts 2023 global shipments to be 64-67 million mt, with Nutrien volumes at 15 million mt.

“In potash, specifically, international buyers have become strikingly emboldened by six months of persistent price declines, electing to leverage time and defer purchases as long as possible,” Raymond James Financial Inc. analyst Steve Hansen wrote in a note.

Still, Nutrien expects “robust” agricultural fundamentals will support increased potash use in 2023 and “pent-up demand will emerge” as inventories are drawn down and prices stabilize. The company’s plan to increase potash production capacity to 18 million tons by 2025 has not changed, Seitz told analysts in an earnings call.

Nutrien lowered nitrogen sales volume guidance to reflect the impact of Trinidad gas curtailments during the second half.

The company recognized a non-cash impairment reversal of $330 million in the third quarter associated with the Phosphate operations and $780 million for the first nine months due to a more favorable outlook for phosphate margins.

Nine-month net earnings were $6.57 billion on sales of $30.4 billion, up from the year-ago $1.97 billion and $20.44 billion, respectively. Adjusted EBITDA was $10.1 billion, up from $4.7 billion.

Retail (millions) 3Q-22 3Q-21 YTD-22 YTD-21
Adjusted EBITDA 235 291 1,902 1,497
Gross Margin 917 917 4,102 3,427
Total Sales 3,980 3,347 17,263 13,856
CN Sales 1,605 1,194 7,740 5,255
CN Margins 214 246 1,417 1,169
CN Volume (000 mt) 1,848 2,010 9,018 10,562
Avg ($/mt) 869 595 858 498
CN gross margin per mt 117 124 157 111
Potash (millions) 3Q-22 3Q-21 YTD-22 YTD-21
Adjusted EBITDA 1,378 808 4,811 1,683
Gross Margin 1,618 816 5,432 1,636
Total Sales 2,004 1,188 6,522 2,616
Sales Volume (000 mt) 3,167 3,791 9,919 10,569
Avg ($/mt) 633 313 658 248
Nitrogen (millions) 3Q-22 3Q-21 YTD-22 YTD-21
Adjusted EBITDA 855 532 3,090 1,387
Gross Margin 664 406 2,582 972
Total Sales 1,507 973 4,849 2,528
Sales Volume (000 mt) 2,626 2,521 7,486 7,890
Avg ($/mt) 574 386 648 320
Gas Costs ($/mmBtu) 8.24 4.78 7.86 3.94
Phosphate (millions) 3Q-22 3Q-21 YTD-22 YTD-21
Adjusted EBITDA 143 135 556 344
Gross Margin 114 108 477 258
Total Sales 567 401 1,644 1,096
Sales Volume (000 mt) 640 620 1,847 1,908
Avg ($/mt) 886 648 890 575

CHS Results Break Records

Earnings, News, Northern Plains

CHS Inc. reported net income of $1.68 billion on revenues of $47.8 billion for the year ending Aug. 31, 2022, exceeding previous records. This compared to the prior year’s $553.6 million and $38.4 billion, respectively. CHS saw a significant uptick in pretax earnings for all three major segments – Ag, Nitrogen Production, and Energy.

Full-year Ag earnings were $657.6 million, up from the prior year $298.1 million. CHS said Ag’s global grain and processing and wholesale agronomy businesses benefited from strong global demand and increased margins. There were increased revenues from feed and farm supplies, despite less favorable weather during spring planting and application season. Oilseed processing was bolstered by robust meal and oil demand.

Earnings from the Nitrogen Production segment moved up to $478 million from $121 million. This included the CHS stake in CF Nitrogen, where stronger results came from strong global demand for urea and UAN, coupled with decreased global supply.

The Energy segment posted earnings of $616.6 million, pulling out of a prior year loss of $10.6 million. CHS said refining margins were higher and drove the increase due to the tightening global supply and demand landscape.

Nutrien to Acquire Brazil’s Safra Rica

Brazil, Featured, News, Saskatchewan

Nutrien Ltd. has announced an agreement to acquire Brazilian agricultural retailer Safra Rica, which has been operating in the Brazilian states of Minas Gerais and São Paulo for 19 years. It has nine retail units – seven in Northwest São Paulo state and two in Southwest Minas Gerais state – with access to more than 1,800 active customers.

“With Safra Rica, we will increase our presence, especially in São Paulo and Minas Gerais states, in regions with great potential expansion not only in grains, but also other crops, such as sugarcane and citrus fruits,” said André Dias, President at Nutrien for Latin America. “This acquisition will allow us to increase our reach in the field to provide integrated, individualized, and sustainable solutions to farmers in the region.”

With this acquisition, Nutrien said it will be one of the largest retail companies in Latin America. “We are building the best platform for agricultural solutions and transforming agricultural retail in Latin America,” added Dias. “We are proud of our trajectory, and we want to grow even more to fulfill our strategic plan.”

Pending approval by the Brazil’s Administrative Council for Economic Defense (CADE), Nutrien said it will have approximately 200 commercial locations, including stores and Experience Centers, distributed throughout Latin America, in addition to more than 1,000 specialized consultants operating throughout the region to serve more than 110,000 clients. Since 2020, Nutrien has completed seven acquisitions, which it said support its strategies of growth, expansion of locations, and implementation of new technologies that leverage its existing presence in Latin America.

Terms of the deal were not reported.

Amogy, Southern Devall Partner on Barge

Ammonia, Louisiana, News, News Briefs, Northeast

Ammonia power technology provider Amogy Inc., Brooklyn, N.Y., and Southern Devall (formerly Southern Towing Co. and Devall Towing), Sulphur, La., on Nov. 1 announced a strategic partnership and technology deployment project to integrate Amogy’s technology in a tank barge for the first time.

Southern Devall currently services a significant portion of the ammonia production market and delivers ammonia to terminals for export and agricultural and chemical customers along America’s inland waterways.

Amogy’s proprietary ammonia-to-power system converts ammonia into hydrogen for use in fuel cells or as a more energy dense method of long-distance hydrogen transportation. The system, already demonstrated in a farm tractor (GM June 3, p. 32) and an aerial drone, is now being scaled for use in larger applications, including ships and ammonia bunkering barges to support the maritime industry’s decarbonization efforts. Amogy said the partnership will provide it with access to vast ammonia infrastructure as well as the Southern Devall team’s expertise in handling ammonia and maritime operations.

A retrofit of a barge is anticipated to be completed by the end of 2023. An Amogy powerpack will generate the power needed to reliquefy ammonia as it heats up over the course of a voyage, instead of a diesel genset. The Amogy system will keep the ammonia tank pressure low, enabling Southern Devall to deliver ammonia to customers upon arrival and increase the utilization and profitability of their fleet.

Following the barge integration and demonstration, Amogy and Southern Devall plan to pursue retrofits of additional barges and tugboats, creating an ammonia-powered fleet that includes cargo transportation vessels as well as bunkering barges for efficient, emission-free refueling of ammonia-powered ships.

KBR Launches New Blue/Green Ammonia Offering

Blue Ammonia, Green Ammonia, Houston, TX, News, News Briefs

Technology provider KBR on Oct. 31 announced the launch of its mega 10,000 mt/d blue and green ammonia offering. The company said it leverages KBR’s proven leadership in capacity scale-up and integrates the company’s robust implemented designs with advanced digital technologies to provide owners the reliability, flexibility, and scale required to deliver clean ammonia and hydrogen demands for energy transition.

“We are truly excited to launch our mega ammonia technology for the green hydrogen and ammonia space,” said Doug Kelly, KBR President of Technology. “Given the projected volumes for green hydrogen and ammonia, capacity scale will play a defining role in helping owners implement projects with favorable economics, and we are confident mega plants will allow our clients to realize attractive returns on their low-carbon hydrogen investments.”

KBR said it was the first to bring a 6,000 mt/d clean ammonia design to the market, and this new offering is a continuation of that innovation to deliver a net-zero hydrogen energy future.

Sri Lanka’s Hambantota Port to Start Fertilizer, Cement Storage

News, News Briefs, Sri Lanka

Sri Lanka’s Hambantota Port will start fertilizer and cement storage and handling services, according to Bloomberg, citing Nishantha Gamage, Senior Manager at the China-backed port.

Expectations are that a 10,000 square meter bonded cargo warehouse will serve the fertilizer market in first-quarter 2023. It will cater to Sri Lanka and regional markets. Cement raw materials will get a 17,000 square meter dry-bulk warehouse in fourth-quarter 2022.

Canpotex Acquires 1,300 Railcars

Canada, News, News Briefs, Potash, Saskatchewan, U.S.

Canpotex Ltd. announced on Oct. 27 that it is acquiring 1,300 custom railcars from National Steel Car (NSC) in Hamilton, Ont., increasing the Canpotex fleet to 8,000 cars by June 2023. The railcars will be used to help transport potash to overseas customers by delivering potash from Saskatchewan to three main terminals on the East and West Coasts of North America.

“This acquisition of railcars demonstrates Canpotex’s commitment to investing in our world-class supply chain and in global food security,” said Gord McKenzie, Canpotex President and CEO. “By adding capacity within our railcar fleet, we have greater flexibility in shipping options. This increased railcar capacity ensures our potash is reliably delivered to our customers overseas, ultimately helping the world’s farmers grow higher-yielding crops on each acre of land.”

The new railcars, valued at over US$155 million dollars, are a continued evolution of Canpotex’s custom design, which is meant to maximize productivity, enhance safety, and minimize maintenance. One notable feature on the new railcars is the enhanced steering system that reduces overall fuel consumption, maintenance, and enhances safety.

Climate Tech Investor Picks Nitricity

California, News, News Briefs

Climate tech investor Elemental Excelerator, San Francisco, announced on Nov. 2 their 11th cohort of investments, comprising 17 companies focused on climate technology and decarbonization. Renewable fertilizer technology company Nitricity, San Francisco, has been included in the cohort as part of Elemental Excelerator’s focus on climate resilience.

“Nitricity solves two crucial components of the food system’s emissions: removing fossil fuels from the production of fertilizer, and preventing the need to transport that fertilizer from across the world,” said Mitch Rubin, Director of Innovation, Elemental Excelerator. “We need local, renewable production of fertilizer to enhance our resilience to global fertilizer markets, given massive price increases this year. Nico and his team are extremely committed to improving how we grow food and providing better alternatives to farmers, and we’re very excited to be working with them.”

Nitricity said the funding will support its ability to produce agriculture-grade climate-smart nitrogen fertilizers, such as calcium nitrate, to be tested in the field, with one such trial to be conducted in almond orchards in partnership with Olam Food Ingredients (OFI).

“The support from Elemental Excelerator and membership in this esteemed cohort will be an important catalyst for Nitricity’s next phase of growth,” said Nicolas Pinkowski, CEO and Co-Founder of Nitricity. “Our focus is now on scaling our technology to establish regionalized fertilizer production for farmers.”

OCI 3Q Adjusted EBITDA & Revenue Beat Estimates

Ammonia, Ammonium Sulfate, Calcium Ammonium Nitrate, Earnings, Featured, Methanol, News, Northwestern Europe, UAN, Urea

OCI NV, Amsterdam, posted a 352% increase in adjusted net profit attributable to shareholders of the company to $257.1 million in the third quarter ended Sept. 30, 2022, up from $56.9 million the previous year.

Adjusted EBITDA rose 92% to $961.8 million, beating analysts’ average estimate of $896.2 million (Bloomberg Consensus). Year-ago adjusted EBITDA came in at $500.6 million.

Revenue was up 52% to $2.33 billion from $1.54 billion, also being the average analysts’ estimate of $2.17 billion (BloombergConsensus).

OCI CEO Ahmed El-Hoshy said the company is “very pleased” with the performance of its nitrogen operations in the US in particular. He noted the Iowa Fertilizer Co. (IFCo) is on a trajectory to demonstrate its potential with an LTM-adjusted EBITDA of about $700 million, and “one of the highest cash conversions in the group,” benefiting from its positioning in the US Midwest premium market with a state-of-the-art plant and logistics.

He noted that Diesel Exhaust Fuel (DEF) currently represents more than 40% of IFCo’s sales volumes and the OCI N-7 joint venture is now number two in the US DEF market.

IFCo achieved 56% growth in own-produced DEF sales to 662,800 mt and a total of 992,000 mt, including third-party sales through its N-7 joint venture, during the first nine months of 2022.

El-Hoshy said OCI’s European nitrogen operations continue to show “resilience in a difficult operating environment.” He noted that in the third quarter the ammonia facilities were operated at a utilization rate of around 40% and the company continued to import ammonia through OCI’s Rotterdam terminal “as a cost-effective alternative” to producing ammonia locally in Europe. As a result, he said, the company ran the downstream production profitably.

Own-product sales volumes increased 3% year-over-year in the third quarter to 2.585 million mt, up from 2.529 million mt the previous year. Own-produced nitrogen product sales volumes also increased 3% to 2.278 million mt, up from 2.22 million mt. Traded third party sales volumes increased by 30% to 1.141 million mt from the year-ago 879,800 mt.

For the nine months, own-product sales volumes were 6% lower year-over-year, falling to 8.245 million mt, down from 8.737 million mt, while total third party traded volumes were 30% up on the year, at 2.895 million mt versus the year-ago 2.223 million mt.

In regard to earnings in the nine months to Sept. 30, OCI posted an adjusted net profit attributable to shareholders of the company of $1.14 billion on revenue of $7.52 billion, up from the year earlier $284.4 million and $4.12 billion respectively. Adjusted EBITDA jumped 117%, to $3.22 billion from $1.49 billion. Revenues increased by 82%.

El-Hoshy said the outlook for the fundamentals of the company’s nitrogen end markets continues to be underpinned by tight supply, healthy farm economics, and decades-low grain stocks globally, “all of which incentivize the use of nitrogen fertilizers,” he said.

The CEO believes forward curves continue to imply that natural gas prices in Europe will remain at elevated levels through at least 2024, setting ammonia, urea, and nitrates breakeven pricing well above historical averages.

OCI plans to distribute a semi-annual cash return to shareholders of €3.5 per share (about $730 million, including a $200 million base) for the second-half of 2022, payable in April 2023.

OCI Product Sales Volumes

‘000 mt 3Q-2022 3Q-2021 % change 9M-2022 9M-2021 % change
Own product            
Ammonia 481.2 542.4 (11) 1,415.5 1,624.3 (13)
Urea 1,049.6 1,091.2 (4) 3,284.4 3,334.0 (1)
CAN 236.4 250.5 (6) 804.6 897.4 (10)
UAN 276.5 218.4 +27 1,032.2 942.1 +10
Total fertilizer 2,043.7 2,102.5 (3) 6,536.7 6,797.8 (4)
Melamine 15.4 29.7 (48) 76.5 96.7 (21)
DEF 218.9 88.0 +149 662.8 424.7 +56
Total nitrogen products 2.278.0 2,220.2 +3 7,276.0 7,319.2 (1)
Methanol1 317.1 308.6 +3 969.1 1,418.2 (32)
Total own products sold 2,585.1 2,528.8 +3 8,245.1 8,737.4 (6)
Traded third party            
Ammonia 163.2 65.0 +151 281.8 186.2 +51
Urea 465.2 320.0 +45 1,318.4 1,042.4 +26
UAN 125.5 11.1 +1,031 208.5 31.6 +560
Methanol 64.0 216.0 (70) 282.3 323.0 (13)
Ethanol and other 13.6 – nm 13.6 – nm
AS 175.5 110.5 +59 461.3 343.3 +34
DEF 133.5 157.2 (15) 329.2 296.0 +11
Total traded third party 1,140.5 879.8 +30 2,895.1 2,222.5 +30
Total own product and traded third party 3,735.6 3,408.6 +10 11,140.2 19,959.9 +2

1 Including OCI’s 50% share of Natgasoline volumes