All Posts from November 4, 2022

CVR 3Q Results Down on Turnarounds; CEO Bullish on Fall Application Season

Ammonia, Earnings, News, UAN

CVR Partners LP reported a third-quarter net loss of $19.8 million ($1.87 per diluted unit) on net sales of $156.5 million, down from the year-ago positive $35 million ($3.28 per unit) and $144.7 million, respectively. EBITDA was off at $10.2 million from the year-ago $63.7 million. The company declared a third-quarter distribution of $1.77 per common unit.

“CVR Partners successfully completed turnarounds at both of its nitrogen fertilizer production facilities in the third quarter of 2022 and addressed a number of issues that had impacted reliability at the facilities during the past 12 months,” said Mark Pytosh, CVR CEO of CVR Partners’ general partner. “As a result, we are now posting record operating rates at both plants and are pleased to announce a quarterly distribution of $1.77 per unit.”

CVR does not expect another turnaround until 2024.

“Industry conditions remain strong, driven by attractive farmer economics in the United States and European imports of nitrogen fertilizer,” he added. “We expect these conditions to continue into the 2023 spring planting season.”

Pytosh told analysts that CVR expects the fall application season to be one of the largest that it has seen in history for nitrogen-based fertilizer based on the demand it has seen so far. He said that a couple of the large US UAN producers and Trinidad have been shipping a lot of that product to Europe, which has tightened the US market.

Nine-month net income was $191.4 million ($18.06 per unit) on sales of $623.4 million, up from the year-ago $16.7 million ($1.56 per unit) and $343.7 million. EBITDA was up at $280.9 million from the year-ago $119.9 million.

CVR        
Sales (000 st)  3Q-22 3Q-21 YTD-22 YTD-21
Ammonia        27 52 118 164
UAN 275 322 884 931
Plant Gate Price $/st 3Q-22 3Q-21 YTD-22 YTD-21
Ammonia        837 507 1,062 416
UAN 433 305 496 240
Production (000 st) 3Q-22 3Q-21 YTD-22 YTD-21
Ammonia – gross 114 205 494 610
Ammonia – net 36 65 137 205
UAN 184 314 832 920
Feedstock 3Q-22 3Q-21 YTD-22 YTD-21
Petroleum Coke 51.54 50.35 52.68 43.23
Natural Gas ($/mmBtu) 7.19 4.29 6.65 3.48

Startup Plans Giant $7.5 B Blue Ammonia Project for Louisiana

Blue Ammonia, Featured, Louisiana, News, Texas

Recent startup Clean Hydrogen Works (CHW), Grand Prairie, Texas, a project development company, has announced that it is exploring a plan to build a $7.5 billion large-scale hydrogen-ammonia production and export facility in Ascension Parish in Louisiana.

It would do business as Ascension Clean Energy (ACE), in partnership with Denbury Carbon Solutions – a subsidiary of Denbury Inc., Plano, Texas, and the largest CO2 pipeline operator in the US – and Hafnia, Singapore, a major oil product and chemical tanker company.

The project will include two world-scale ammonia blocks with estimated ammonia production totaling 7.2 million mt/y. Approximately 75% of the planned ammonia production volume is supported by letters of intent for offtake agreements with high-quality purchasers, according to the partners.

The two ammonia blocks are currently projected to start up in a staged approach, with Block 1 production anticipated to commence in 2027. A final investment decision on the project is anticipated in 2024.

The facilities are to be constructed on a 1,700-acre RiverPlex MegaPark site on the West Bank of the Mississippi River in Donaldsonville, La., with ready access for exports.

CHW, the majority shareholder in ACE, was formed in early 2021. It said it was established by an experienced team of project executives from leading global energy companies, with key members involved in a $3 billion gas-to-methanol project in the Pacific Northwest that was finally paused in 2021 due to regulatory uncertainties.

Denbury has a 12-year contract, with extension options, to transport and sequester CO2 captured from the project, which is anticipated to be built less than two miles from Denbury’s existing CO2 pipeline network. Captured CO2 volumes are estimated to be approximately 12 million mt/y.

Denbury expects to capture up to 98% of the CO2, with other technology being explored that could make the project net zero or even CO2negative. Permanent, secure underground storage of the CO2 is anticipated in one or more of Denbury’s sequestration sites located in proximity to Denbury’s CO2 pipeline infrastructure.

Denbury has invested $10 million into the ACE project through an investment in CHW and has committed to invest another $10 million when certain project milestones are achieved.

Hafnia would export the ammonia to emerging energy markets overseas.

The parties said ACE would create 350 new direct jobs, and 1,500 at peak construction. The Louisiana Economic Development (LED) estimates that some 1,122 new indirect jobs would be created. LED said it has prepared a competitive incentive package, which includes its workforce development program, the state’s Industrial Tax Exemption and Quality Jobs program, and a performance-based award of up to $7 million to reimburse ACE for dock infrastructure expenses.

The Mosaic Co. – Management Brief

Management Briefs, Tampa

The Mosaic Co. Board of Directors on Oct. 30 elected João Roberto Goncalves Teixeira to serve as a Director and appointed him to serve as a member of the Audit Committee and the Environmental, Health, Safety, and Sustainable Development Committee, effective Nov. 1, 2022, for a term expiring at the annual meeting of shareholders in 2023 or until his successor is elected and qualified.

“Our board will benefit from João’s rich experience in agriculture and financial services, and from his remarkable breadth of knowledge of Brazilian institutions,” said Gregory E. Ebel, Mosaic Board Chairman.

Teixeira was CEO of Brazilian sugar and ethanol producer Copersucar from 2018 until earlier this year. Previously, he founded Inviste, a private investment firm, and served as CEO of Banco Votorantim. Earlier in his career, he held senior roles at Santander Group, ABN Amro, and Dresdner Kleinwort Wasserstein.

Teixeira serves on two other public company boards. He holds bachelor’s and master’s degrees from Pontifical Catholic University in Rio de Janeiro and an MBA from London Business School.

LSB Posts Profit Despite Turnarounds

Ammonia, Ammonium Nitrate, Earnings, News, Southern Plains, UAN

LSB Industries Inc. reported net income of $2.3 million on net sales of $184.3 million for the third quarter, up from the year-ago loss of $8.9 million on $127.2 million, respectively. Adjusted EBITDA was $49.9 million, up from the year-ago $37.7 million.

“We delivered strong top- and bottom-line growth as compared to last year despite executing two turnarounds in this year’s third quarter versus one in last year’s third quarter,” said Mark Behrman, LSB’s President and CEO. “We continued to benefit from higher selling prices compared to last year, and our strategic commercial initiatives that enabled us to optimize our sales mix in the face of a rapidly changing market environment. Pricing remains well above year-ago levels, and there are multiple supply and demand factors currently at play that we expect will continue to support strong pricing for the final two months of 2022 and for 2023, if not longer.

“Even with the reduced volumes resulting from our third-quarter scheduled maintenance activities at our Pryor and El Dorado facilities, we once again generated meaningful positive operating cash flow,” he added, noting that the company’s strong balance sheet enabled it to complete a total of $100 million of share repurchases since the program began in May. “As we head into the final months of 2022 we are highly enthusiastic about our near- and longer-term prospects for profitable growth, free cash flow generation, and increased shareholder value given the favorable outlook for our markets coupled with the company-specific initiatives we have underway.”

Nine-month net income was $164.5 million on sales of $688.1 million versus the year-ago positive $1.5 million and $366 million, respectively. Adjusted EBITDA was $309.2 million, up from the year-ago $100.9 million.

Product (Gross Sales $) 3Q-22 3Q-21 % Change
AN & Nitric Acid 66,161 47,453 39
UAN 50,459 26,034 94
Ammonia        52,075 42,307 23
Other 15,578 11,405 37
Total 184,273 127,199 45
Sales Volumes st 3Q-22 3Q-21 % Change
AN & Nitric Acid 125,446 135,279 (7)
UAN 115,352 82,555 40
Ammonia        55,825 80,001 (30)
Total 296,623 297,835 (0)
Avg Selling Price $/st 3Q-22 3Q-21 % Change
AN & Nitric Acid 458 290 58
UAN 417 305 37
Ammonia        906 515 76
Other Factors 3Q-22 3Q-21 % Change
Avg Nat Gas ($/mmBtu) 7.65 3.71 106
Tampa NH3 $/mt 1,093 610 79
UAN Southern Plains $/st  482 355 36

The Andersons Reports Improved 3Q Results; Plant Nutrients Off on Lawn Products

Earnings, Eastern Cornbelt, News, Specialty

The Andersons reported third-quarter net income from continuing operations attributable to the company of $17.4 million on sales of $4.2 billion, up from the year-ago $13.9 million and $3 billion, respectively. Adjusted EBITDA was $83 million, up from $56.3 million.

The Plant Nutrient segment saw a seasonal pretax loss of $11.6 million on sales of $163.9 million versus the year-ago loss of $5.8 million and $142.1 million, respectively. Third-quarter segment EBITDA was a negative $3.1 million compared to a year-ago positive $1.8 million.

The company said margins remain strong in the core wholesale nutrients, farm centers, and specialty liquid products. However, in granular and contract manufactured products, sales volume and margin declined on lower demand, production challenges, and inventory write-downs.

The company expects good fall weather and strong farm income will support fall application rates and 2023 purchase decisions in the core ag businesses. However, the company expects lawn products to remain challenged.

Nine-month Plant Nutrient income was $37.4 million on sales of $844.2 million, up from the year-ago $26.7 million and $632.7 million. EBITDA was $62.5 million, up from $49.4 million.

Company-wide nine-month net income from continuing operations attributable to the company was $104 million on sales of $12.6 billion, up from the year-ago $66.9 million and $8.8 billion, respectively. Adjusted EBITDA was $308.2 million, up from $222.5 million.

Martin Midstream Posts 3Q Loss on Weak Sulfur/NGL Segments, Takes Inventory Writedown

Earnings, News, Texas

Martin Midstream Partners LP (MMLP) reported third-quarter net loss of $28.0 million on revenues of $229.3 million, below the year-ago loss of $6.9 million and $211.3 million, respectively. Adjusted EBITDA stood at $18.8 million, falling from the prior-year $21.5 million. The company took a $21.8 million inventory writedown in the third quarter, citing volatility in both its Sulfur Services and Natural Gas Liquids (NGL) segments.

“During the third quarter, which is typically the partnership’s weakest quarter due to seasonal lows in the fertilizer and butane businesses, both the Transportation and the Terminalling and Storage segments continued to outperform our internal projections,” said Bob Bondurant, President and CEO of Martin Midstream GP LLC, the general partner of MMLP. “On the marine side, rates have now recovered to pre-pandemic levels and asset utilization has improved.

“However, the Sulfur and Natural Gas Liquids segments experienced volatility during the third quarter. In the Sulfur segment, both the fertilizer and sulfur groups faced pricing instability, resulting in lower fertilizer sales volumes. In addition, the pure sulfur business was impacted by unplanned maintenance expense related to the marine assets deployed in support of the business.”

MMLP’s Sulfur Services segment reported a third-quarter operating loss of $6.7 million on revenues of $28.9 million, down from the year-ago income of $2.3 million income and revenues of $30.8 million, respectively. Adjusted EBITDA was posted at (-)$4.2 million, down from the year-ago $4.9 million. The quarterly operating loss included a $3.3 million inventory valuation writedown.

Third-quarter sulfur volumes were counted at 95,000 lt, off 34% from the year-ago 145,000 lt. Fertilizer volumes stood at 24,000 lt, falling 58% from the year-ago 57,000 lt.

Nine-month Sulfur Services operating income was $15.1 million on revenues of $144.9 million, up from $15.0 million and $104.0 million, respectively, in the prior year.

Sulfur volumes were down 10% for the nine-month period, falling to 327,000 lt from the year-ago 364,000 lt. Fertilizer volumes were off 28%, to 170,000 lt from 236,000 lt.

MMLP reported a company-wide net loss of $10.0 million through the first nine months of the year, an improvement on the year-ago $11.0 million net loss. Adjusted nine-month EBITDA was posted at $97.1 million, up from the year-ago $74.9 million. The company also reported a $24 million inventory writedown for the nine-month period. Revenues were $775.5 million, up from the year-ago $596.5 million.

MMLP revised fourth-quarter adjusted EBITDA guidance to $19-$24 million, resulting in a revised full-year adjusted EBITDA guidance of $116-$121 million, down from its previous $126-$135 million guidance. The company opted not to provide guidance beyond 2022.

Hocking International Announces Name Change

News, News Briefs, Specialty

Agricultural chemicals manufacturer Hocking International, Houston, Texas, announced on Oct. 31 that it has changed its name to Synsus Private Label Partners LLC, effective immediately. The company said the rebrand fits its “transformation into the country’s leading private label manufacturer of fertilizer products” for the agriculture and turf and ornamental markets.

The company said the name Synsus represents its ability to “synthesize” unique formulas using specialized equipment, while developing “consensus”with customers to ensure the products developed reflect the needs of the customers’ brands. Synsus said it will continue to invest heavily in nutrient use efficiency technologies.

“As our transformation work continues, it is time to establish an identity that more accurately represents who we are as a company and what we are to our customers,” said Greg Crawford, Synsus CEO. “We strive to always be a company that lives up to our promise of delivering premier services and unique products to our customers in their brand.”

Synsus has more than 47 years in the custom chemical manufacturing business, specializing in liquid fertilizer, nitrogen stabilizers, foliar micronutrients, adjuvants, surfactants, and utility products.

The privately-owned company operates three US manufacturing facilities at San Marcos, Calif., Pipestone, Minn., and Sylacauga, Ala., as well as three separate research laboratory sites in San Marcos, Ripley, Miss., and Raleigh, N.C. According to its website, Synsus will now be based in San Marcos.

CF Touts Outstanding Results, Sees Tight Markets into 2025, Misses Analyst Estimates

Ammonia, Ammonium Nitrate, Earnings, Eastern Cornbelt, Featured, News, UAN, Urea

CF Industries Holdings Inc. reported third-quarter net income attributable to common shareholders of $438 million on net sales of $2.32 billion, up from the year-ago loss of $185 million and sales of $1.36 billion. Adjusted EBITDA was $983 million, up from the year-ago $488 million.

CF missed the Bloomberg Consensus, the average estimate from major analysts on net income, sales, and adjusted EBITDA. Analysts had projected $686.4 million, $2.4 billion, and $1.16 billion, respectively.

CF shares fell as much as 7.5% in New York before reversing losses to trade 2.6% higher, Bloomberg reported. CF sees the current price declines as a short-term issue and remains bullish on the demand outlook.

“The CF Industries team continues to deliver outstanding results as we work safely, run our plants extremely well, and leverage our distribution and logistics capabilities to serve customers in North America and around the world,” said Tony Will, CF President and CEO.

“The conditions that have supported nitrogen prices for the last year – reduced global supply availability from lower operating rates due to high energy costs for marginal production in Europe and Asia – show no signs of abating,” Will added. “As a result, we expect the global nitrogen supply-demand balance to remain tight, with attractive margin opportunities for low-cost producers further into the future.”

CF expects the global nitrogen-supply balance will remain tight into 2025 due to agriculture-led demand and forward energy curves that point to persistently high energy prices in Europe and Asia. CF believes it will take at least two more seasons at trend yield to fully replenish global grain stocks, supporting strong grain plantings and incentivizing nitrogen fertilizer application over this time period.

Nine-month net earnings were $2.49 billion on sales of $8.58 billion, up from the year-ago $212 million and $4 billion, respectively. Adjusted EBITDA was $4.58 billion, up from $1.49 billion.

Production (000 st) 3Q-22 3Q-21 YTD-22 YTD-21
Ammonia        2,283 2,186 7,366 6,897
Gran Urea 1,187 987 3,418 3,139
UAN 32 1,381 1,311 4,879 4,628
AN 358 332 1,162 1,256
Ammonia 3Q-22 3Q-21 YTD-22 YTD-21
Net Sales ($/M) 531 344 2,286 1,009
Gross Margin ($/M) 178 82 1,211 334
Sales Volumes (000 st) 643 690 2,405 2,409
Avg Selling Price ($/st) 826 499 951 419
Gas Costs ($/mmBtu) 8.35 4.21 7.28 3.51
Gran Urea 3Q-22 3Q-21 YTD-22 YTD-21
Net Sales ($/M) 689 386 2,287 1,218
Gross Margin ($/M) 295 186 1,263 513
Sales Volumes (000 st) 1,262 860 3,539 3,272
Avg Selling Price ($/st) 546 449 646 372
UAN 3Q-22 3Q-21 YTD-22 YTD-21
Net Sales ($/M) 736 390 2,727 1,056
Gross Margin ($/M) 322 157 1,625 297
Sales Volumes (000 st) 1,644 1,283 5,098 4,746
Avg Selling Price ($/st) 448 304 535 223
AN 3Q-22 3Q-21 YTD-22 YTD-21
Net Sales ($/M) 180 118 656 359
Gross Margin ($/M) 44 (4) 198 22
Sales Volumes (000 st) 363 407 1,227 1,346
Avg Selling Price ($/st) 496 290 535 267
Other 3Q-22 3Q-21 YTD-22 YTD-21
Net Sales ($/M) 185 124 622 356
Gross Margin ($/M) 77 19 308 66
Sales Volumes (000 st) 496 544 1,598 1,749
Avg Selling Price ($/st) 373 228 389 204

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

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.

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