Phosphate Holdings Inc., which owns Mississippi Phosphates Corp., moved back into the plus column for the fourth quarter and year ending Dec. 31, 2010. For the fourth quarter, PHI reported net income of $853,000 ($.10 per diluted share) on sales of $68.5 million, up from the year-ago loss of $2.82 million ($.36 per share) on sales of $47.2 million. Fourth-quarter operating income was $1.3 million, compared to a year-ago loss of $4.4 million. Fourth-quarter EBITDA was $5.2 million, versus the year-ago negative $1.9 million.
The average sales price of DAP during the fourth quarter was $534/st, a 93 percent increase from the prior year’s $276/st. The company sold 126,560 st of DAP in the quarter, with 114,142 st of that moving to the domestic market.
“In November 2010, we performed a major maintenance turnaround,” said Robert Jones, PHI CEO. “This turnaround was designed to address all known issues constraining sulfuric acid, phosphoric acid, and DAP production. Upon completion of the turnaround, we saw improvements in our DAP production rates, as we produced approximately 55,000 st in December 2010. However, with operational issues at the beginning of the quarter and substantial downtime associated with the turnaround, our DAP production was limited to approximately 127,000 st in the fourth quarter of 2010. This production volume limited our participation in a favorable phosphate market.
“From a market perspective, the average posted DAP price was $551/st NOLA in the fourth quarter of 2010,” said Jones. “Sulfur prices in the fourth quarter were posted at $160/st per long ton, CFR Tampa. Ammonia prices began the fourth quarter at $465/st mt, CFR, Tampa, and closed the fourth quarter at $475/mt, CFR, Tampa.
“While we believe we have improved the operating performance of our plants, phosphate rock shortages have hindered first quarter 2011 production,” added Jones. “Severe flooding conditions in Morocco created logistical issues for our phosphate rock supplier, resulting in significant delays in the delivery of phosphate rock to our facility. Accordingly, we curtailed production during the latter half of January and early February to avoid a shutdown of our DAP granulation plant. With the curtailed production due to the phosphate rock shortage, we anticipate first quarter 2011 DAP production to be approximately 140,000-150,000 st. Currently, we are experiencing timely phosphate rock deliveries and our production rates are at satisfactory levels.”
Full-year net income was $1.06 million ($.13 per share) on sales of $261.1 million, up from the prior year’s loss of $13.55 million ($1.76 per share) on sales of $186.3 million. Year-ago results were impacted by inventory writedowns to net realizable value of approximately $10.4 million.
Full-year operating income was $2.3 million, versus the year-ago loss of $21.7 million. 2010 EBITDA was $15.1 million, versus 2009’s negative $10.9 million.
“Phosphate markets are expected to be very favorable through the spring season, weather permitting,” said Jones. “Producers’ inventories remain at manageable levels and grain prices remain strong. Currently, the U.S. corn-to-stock use ratio is at a 15-year low, with planted corn acreage in the U.S. projected at 92 million acres. Internationally, DAP prices are improving as China’s participation in the export market should be diminished and strong phosphate demand is anticipated from India and other parts of the world.”
PHI said that at the end of 2010, its board of directors appointed a special committee of independent directors to initiate a comprehensive review of strategic options. It said while this review is ongoing, PHI will not hold an earnings call to discuss fourth-quarter and year-end 2010 financial results, and will not otherwise discuss the strategic process. Generally when a company says it is looking at its strategic options, a possible sale of the compa