Mississippi Phosphates Corp. and its insurers recently agreed to a settlement of $55.2 million for claims related to Hurricane Katrina. Miss Phos had already received $40.9 million of the amount by the end of 2006, and expects to post the remainder, $14.3 million, in 2007 financials. Early estimates were that Katrina damage would cost $15-$20 million; however, by the end of 2006, it was $38 million.
Miss Phos net income for the year ending Dec. 31, 2006, was $33.1 million on net sales of $129.7 million, with EBITDA of $38.1 million. The results included a $34.6 million gain on the insurance recovery. Excluding the gain, net loss and EBITDA would have been $1.5 million and $3.5 million, respectively.
Miss Phos produced 597,755 st of DAP in 2006 and sold 584,277 st, with an average price of $222.03/st. While fourth quarter 2006 prices averaged $215.17/st, Miss Phos noted that since late December, NOLA DAP prices have gone from $220/st to $400/st FOB. As a result, the company’s average price for first quarter 2007 was $262.61/st FOB, with March coming in at $298.20/st FOB. Miss Phos is also producing more DAP now than a year ago. First quarter 2007 production was 183,360 st versus the year-ago 162,452 st.
According to a Miss Phos report to unitholders, we are now witnessing the strongest markets in the industry’s history. It expects the current bullishness will extend into the export market this summer as India, Pakistan, and South America come into the market.
Miss Phos is not just going to sit on its laurels. It is eyeing projects, such as expanded sulfuric acid capacity or more investments to expand terminaling at its Pascagoula facility. The company is already in an ammonia terminal expansion, which will allow ten railcars to be loaded per day, rather than four. This upgrade is expected to cost $795,000 and is to be completed by July 1, 2007. Minimum throughput obligations assumed by Transammonia help support the investment.
Miss Phos is also getting ready for another Katrina. It is spending $3 million for a levee around the Pascagoula plant that would be three feet higher than Katrina’s storm surge. The upgrade, which is expected to be substantially completed this summer, will lower insurance premiums.