CVR Energy Inc. reported operating income from its nitrogen fertilizer business at $10.6 million on sales of $46.4 million for the third quarter ending Sept. 30, compared to a year-ago loss of $3.9 million on sales of $45.9 million.
CVR is upbeat about fourth-quarter markets even though a high pressure vessel at the company’s UAN plant ruptured Sept. 30 (GM Oct. 4, p. 1). “Fortunately, we were preparing for our biannual turnaround at the fertilizer plant which thereby minimized downtime,” Jack Lipinski, chairman of the board, chief executive officer, and president, told analysts. He said the ammonia plant came back up the week of Oct. 25 and that the UAN plant is slated to be back up by the end of November.
While fourth-quarter operating rates will be reduced, prices are now higher. CVR said it would honor all UAN contracts and that it will not be forced to buy product to cover, that buyers will take product into next year. As contracted tons were priced lower than the current marketplace, Lipinski said no one is complaining. On the positive side, CVR now has excess ammonia without the UAN plant running, and it is able to sell that into a much higher ammonia marketplace that has moved to $575/st.
Lipinski expects repairs to be between $7-$10 million, adding that the company has insurance coverage.
During the third quarter, CVR sold 178,900 st of UAN at an average plant gate price of $168/st, compared to the year-ago 204,100 st and $133/st. It sold 33,400 st of ammonia at $317/st, versus the year-ago 50,100 st and $247/st.
Nine-month nitrogen income was $30 million on sales of $141.1 million, versus the year-ago income of $41.9 million on sales of $169 million.
Nine-month UAN sales were 506,900 st at $180/st, compared to the year-ago 508,900 st and $221/st. Nine-month ammonia sales were 115,200 st at $305/st, versus the year-ago 125,500 st and $318/st.
Company-wide, CVR reported third-quarter net income of $23.2 million ($.27 per diluted share) on sales of $1.03 billion, versus the year-ago loss of $13.4 million ($.16 per share) on sales of $811.7 million. Nine-month net income was $12 million ($.14 per share) on sales of $2.93 billion, down from the year-ago $59.9 million ($.69 per share) and sales of $2.2 billion.
CVR seeks to take nitrogen unit public again
CVR Energy Inc. said Nov. 2 in filings with the Securities and Exchange Commission that it intends to file a registration statement on Form S-1 with the SEC in the near term to take the company’s nitrogen fertilizer business public as a master limited partnership (MLP).
As a part of the transaction, CVR expects to acquire the general partner of the partnership that currently owns the nitrogen fertilizer business from its current owners at fair market value. A CVR filing earlier this summer made it easier for majority shareholders to sell their shares if they opted to do so (GM June 28, p. 1).
CVR pulled an earlier IPO attempt for the nitrogen unit, saying market conditions changed and no longer supported it (GM June 23, 2008), making it better for shareholders to keep it within CVR.