All Posts from May 7, 2021

Nutrien’s Borger Plant in Major Turnaround, Redwater to Follow

Ammonia, News Briefs, Nitrogen, Saskatchewan, Urea

Nutrien Ltd., Saskatoon, reported that its Borger, Texas, nitrogen facility (ammonia and urea) began a 65-day turnaround starting May 3. However, the company said it will continue to ship inventory per its supply/demand plan. The Redwater, Alberta, facility is expecting a 68-day turnaround starting July 23, which will include the large ammonia plant and urea.

Nutrien CEO and President Mayo Schmidt said in the company’s earnings call on May 4 that it is normal to have one turnaround per year in the U.S. and Canada. Acknowledging these turnarounds, he noted that that company has been trying to take care of some large end-oflife issues where equipment is coming up on 40-50 years of service. Coming out of these turnarounds, the company expects to increase production capability and reliability.

CVR Reports 1Q Results; February Storm Negatively Impacted Shipments

Ammonia, Earnings, News, Texas, UAN

CVR Partners LP, Sugar Land, Texas, reported a first-quarter net loss of $25.4 million ($2.37 per diluted unit) on net sales of $60.9 million, compared to the year-ago loss of $20.7 million ($1.83 per unit) and net sales of $75.1 million. EBITDA was $4.67 million, down from the year-ago $10.7 million.

“During the first quarter 2021, CVR Partners continued to operate safely and reliably while responding to Winter Storm Uri, which negatively impacted shipments from both our East Dubuque and Coffeyville fertilizer facilities,” said Mark Pytosh, CEO of CVR Partners’ general partner.

“However, we were able to quickly react to the weather event, reducing throughput at East Dubuque and selling contracted natural gas to capitalize on market opportunities,” he continued. “In addition, our Coffeyville facility was one of the only plants capable of operating during the storm due to its use of petroleum coke as its feedstock.

“The nitrogen fertilizer industry reached an inflection point during the first quarter of 2021, where improved farmer economics translated into increased demand for nitrogen fertilizer as well as much higher pricing,” Pytosh added. “So far, the spring planting season has gone well, with nitrogen fertilizer prices materially higher in the second quarter compared to the first quarter.”

CVR Partners will not pay a cash distribution for the quarter.

Sales (000 st) 1Q-21 1Q-20
Ammonia        32 54
UAN 239 284
Plant Gate Price ($/st) 1Q-21 1Q-20
Ammonia        300 264
UAN 159 166
Production (000 st) 1Q-21 1Q-20
Ammonia – gross 188 201
Ammonia – net 70 78
UAN 272 317
Feedstock 1Q-21 1Q-20
Petroleum Coke ($/st) 42.91 44.68
Natural Gas ($/mmBtu) 3.10 2.42

Intrepid Pulls Into Plus Column

Earnings, News, Potash, Specialty

Intrepid Potash Inc., Denver, reported first-quarter net income of $2.45 million ($0.18 per diluted share), up from the year-ago loss of $7.4 million ($0.57 per share). Sales were up at $71.5 million from $64 million. Adjusted EBITDA was $12.9 million, up from $8.8 million.

The year-ago net loss was impacted by the accrual of a $10 million settlement payment agreed upon relating to litigation with The Mosaic Co., Tampa, which was partially offset by a gain of $4.7 million on the restricted sale of 320 acres of fee land at the Intrepid South property.

“First-quarter results benefited from strong potash and Trio® pricing and sales, leading to improvements in net income, gross margin and EBITDA compared to the prior year,” said Bob Jornayvaz, Intrepid’s Executive Chairman, President, and CEO.

“Under-application of fertilizer in prior years and strong commodity prices continue to support fertilizer demand across our markets, and we expect robust cash flow from operations will continue in the second quarter,” he said. “Above-average evaporation at our potash facilities during the summer of 2020 will extend our production season into the second quarter and will allow us to meet the continued strong demand for fertilizer.

“We made substantial progress on our expansion into full-cycle water management during the quarter, increasing our recycling infrastructure and working to expand our current relationships with operators to include additional brine and recycled volumes,” Jornayvaz added. “Oilfield activity continues to improve in the Delaware Basin, with rig counts and permits steadily increasing throughout the first quarter, which we expect will lead to improved oilfield segment results in future periods.”

First-quarter potash sales volumes were up 18 percent, and the average net realized price 11 percent. However, Trio sales volumes decreased since the company opted to sell fewer tons into international markets as it focused on the higher-priced domestic market.

The company said potash production decreased 18 percent compared to the year-ago quarter due to lower brine grade at the HB facility and reduced run days at the Moab plant, as the company increased salt production to meet first-quarter demand.

Despite the decreased production, the company said it had sufficient inventory to meet the strong fertilizer demand in its markets and that it has significantly more inventory left to harvest in the solar evaporation ponds compared to the prior year. It expects to operate its potash facilities into second-quarter 2021, compared to the prior year, in which it ended spring production in mid-April.

Intrepid said its Oilfield Solutions water sales and sales of other oilfield products and services decreased as COVID-19 reduced oilfield activity from year-ago levels.

Potash 1Q-21 1Q-20
Sales (000 st) 43,578 33,791
Gross Margin ($000) 8,673 4,334
Sales Volume (000 st) 117 99
Production Volume (000 st) 113 137
Avg Realized Price ($/st) 282 255
Trio 1Q-21 1Q-20
Sales (000 st) 23,694 22,581
Gross Deficit ($000) (70) (3,555)
Sales Volume (000 st) 69 76
Production Volume (000 st) 56 50
Avg Realized Price ($/st) 233 193
Oilfield Solutions 1Q-21 1Q-20
Sales (000 st) 4,253 7,741
Gross Margin ($000) 505 4,844

The Andersons Reports Best 1Q Plant Nutrient Results Since 2008; Volumes Up 18 Percent

Earnings, Eastern Cornbelt, News, Specialty

The Andersons Inc., Maumee, Ohio, reported its Plant Nutrient segment had its best first quarter since 2008. Segment first-quarter pretax income was $8.5 million, compared to the year-ago loss of $1.2 million. Gross profit was $32.4 million, up from the year-ago $20.4 million. Segment adjusted EBITDA was $16 million, up from the year-ago $6.9 million.

“Plant Nutrient had its best first quarter since 2008, with increased volume and strong margins that we expect will continue into the peak planting season,” said President and CEO Pat Rowe.

The company said fertilizer demand was strong with an 18 percent increase in tons sold, in addition to stronger margins. Improvements were seen across all product lines and reflected demand from favorable early spring weather, strong grower income, and well-positioned inventory. The company expects fertilizer fundamentals to remain sold for all of its products.

Company-wide net income attributable to the company was $15.1 million, compared to a year-ago loss of $37.7 million. Gross profit was $122.7 million, up from $63.1 million. Adjusted EBITDA was $80.2 million, up from the year-ago $11.2 million.

“We are very pleased with the start of 2021 in this demand-driven agriculture rally,” said Rowe. “These results are our best first-quarter performance since 2014 and reflect good execution coupled with the results of our multi-year cost reduction program. Commodity price volatility and market dislocations have created merchandising opportunities in many of the commodity supply chains that we touch in our Trade business, and we expect that this will continue in the near term.

“Ethanol margins have improved significantly with ethanol prices reaching levels not seen in over six years, combined with strong margins on our newer high-protein feed and other co-products,” he added. “Finally, while Rail has been slower to recover, it has also seen improved results.”

Compass Reports 1Q Results

Earnings, News, Specialty

Compass Minerals, Overland Park, Kan., reported net income from continuing operations of $32.9 million ($0.96 per diluted share) on sales of $426 million, compared to the year-ago $33.9 million ($0.99 per share) and $346.9 million, respectively. Continuing businesses include its Salt and Plant Nutrition segments (formerly Plant Nutrition North America). Operating earnings were $63.6 million, up from $45.4 million Adjusted EBITDA was $97.3 million, up from $75.1 million.

Discontinued businesses, which have been or are being sold, include the North America micronutrient business and the South American plant nutrient business. Including these businesses, Compass had a net loss of $223.6 million ($6.60 per share), compared to year-ago income of $27.6 million ($0.80 per share).

“On the heels of a challenging year, we are pleased to have come out of the gate in 2021 with a very productive first quarter, while concurrently making meaningful progress executing on our strategic priorities,” said Kevin Crutchfield, President and CEO. “Our relentless focus on optimization has translated into improved per-unit operating costs within our Salt segment. In addition, continued solid demand for our Protassium+ product underpins our position as the North American SOP market leader.

“We also continue to focus on strengthening our balance sheet, which is expected to be aided by the proceeds from the sale agreement for our South America specialty plant nutrition business and the completed sale of certain North America micronutrient assets,” he added. “Our intent moving forward is to concentrate on our advantaged core assets and selectively pursue strategic opportunities for growth.”

Plant Nutrition first-quarter revenue totaled $54.2 million, down 4 percent from prior-year results. Sales volumes and average selling prices each decreased approximately 2 percent compared to first-quarter 2020 results. This was partially offset by a 9 percent improvement in per-unit logistics costs, primarily driven by a significantly higher mix of direct customer shipments compared to the same period a year ago.

First-quarter operating earnings declined $2.2 million from the first quarter of 2020 to $4.4 million, which reflects higher operating costs per ton, while EBITDA totaled $13.2 million compared to $16.4 million in the prior-year period.

On May 4, 2021, the company successfully closed its previously announced North America micronutrient sale to Koch Agronomic Services, Wichita, for approximately $60 million, subject to a closing working capital adjustment.

Company-wide, Compass gives guidance of full-year adjusted EBITDA of $270-$295 million.

Compass expects Plant Nutrition to see a modest year-over-year decrease in second-quarter sales volumes, with slightly higher average SOP selling prices compared to the year-ago period. It puts second-quarter segment EBITDA between $8-$13 million and revenue $40-$50 million. Full-year volumes are put at 350-380,000 st.

The company expects second-quarter Salt segment revenue to benefit from a mix-driven average selling price improvement, partially offsetting anticipated higher year-over-year logistics costs and sales mix related per-unit operating costs. Second-quarter segment EBITDA is put at $37-$47 million and revenue $110-$135 million. Full-year volumes are expected at 11.5-12.3 million.

Plant Nutrition 1Q-21 1Q-20
Sales ($/M) 54.2 56.4
Operating Earnings ($/M) 4.4 6.6
EBITDA ($/M) 13.2 16.4
Sales Volumes (000 st) 94 96
Avg Sales Price ($/st) 579 590
Salt 1Q-21 1Q-20
Sales ($/M) 369 287.8
Operating Earnings ($/M) 80.1 56.9
EBITDA ($/M) 98.1 71.5
Sales Volumes (000 st) 5,028 3,573
Avg Sales Price ($/st) 73.38 80.53

Koch Completes Micronutrient Acquisition

News, News Briefs, Southern Plains, Specialty, Sulfate of Potash

Koch Agronomic Services LLC, Wichita, said on May 4 it completed its acquisition of Compass Minerals’ North American micronutrient assets, the global intellectual property rights with trademarks and patents, and certain other assets associated with Wolf Trax®, Rocket Seeds®, and Hydro Bullet™ product platforms (GM April 9, p. 1).

“The agreement with Compass Minerals is consistent with Koch’s vision of providing our customers with innovative solutions focused on plant nutrition,” said Steve Coulter, Koch Senior Vice President. “We are excited to offer these products in conjunction with our current portfolio of nitrogen efficiency solutions to help growers across the globe meet their operational goals.

“We look forward to fully integrating the products into our existing portfolio, along with the addition of new team members to better support new customers and geographies,” added Coulter. “The Koch team will focus on delivering the entire portfolio of Koch products to new and current customers.”

Compass Minerals, Overland Park, Kan., which confirmed the close, said the sale was for approximately $60.25 million, payable at closing and subject to a closing inventory adjustment.

Compass also recently announced the sale of its South American plant nutrition business to ICL Group, Tel Aviv, for $418 million (GM March 26, p. 1). Still on the market is the company’s South American chemicals and water treatment assets. Compass will now focus on its core salt and sulfate of potash (SOP) businesses.

Sri Lanka Halts Fertilizer Imports

Ammonium Sulfate, Mono-Ammonium Phosphate, News, News Briefs, Specialty, Sri Lanka, Urea

The Sri Lankan government has halted the import of all fertilizers and is moving to increase the use of organic fertilizer by 30 percent in the next three years.

Late last month President Gotabhaya Rajapaksa announced that the ban would come soon. This week, the government turned away two shipments of fertilizer from China. At the same time, the nation’s banks were ordered to not issue any new letters of credit for imported fertilizer.

Local media reported that the president first cited the negative health and environmental impact of non-organic fertilizer. Other sources said a need to limit the outflow of hard currency was also a factor in the decision.

Last year Sri Lanka imported a total of 659,000 mt of all types of fertilizers at a cost of US$188.6 million, according to Trade Data Monitor. The main import was urea, with the country bringing in 540,000 mt last year at a value of US$155 million.

Imports reported for the first quarter of the year, the latest available to Trade Data Monitor, showed total imports up about 26 percent to 78,500 mt from the same period last year at 62,000 mt. The value of those imports, however, jumped almost 30 percent, from US$18.7 million in the first quarter 2020 to US$24.2 million during the same time this year.

The main imports were urea, ammonium sulfate and MOP. Last year, Sri Lanka imported 97,000 mt of ammonium sulfate, 114,000 mt of MOP, and 540,000 mt of urea.

International fertilizer sources expressed concern that the conversion to organic fertilizer will have a detrimental impact on crop output. One trader said the nutrient content on processed fertilizers such as TSP and urea is much higher than organic substitutes. In some cases, this trader said, farmers will need to place 10 times the amount of fertilizer to achieve the same outcome using chemical fertilizers.

The government touted plans to work with Ceylon Fertilizer Co. to produce and distribute organic fertilizer in the near future. At the same time, it also announced that it would create an SSP production operation to serve as a substitute for the TSP it current imports. Sources estimated the TSP imports at just under 100,000 mt/year.

The domestic SSP operation, once built and operating, would be sourced by the country’s own phosphate rock reserves. However, international traders noted that the domestic reserves are not large.

Nutrien Beats Analyst Estimates, Raises Guidance

Earnings, News, Nitrogen, Phosphate, Potash, Saskatchewan

Nutrien Ltd., Saskatoon, announced first-quarter net earnings of $133 million ($0.22 per diluted share), up from the year-ago loss of $35 million ($0.06 per share) and beating $38.3 million, the Bloomberg Consensus average from major analysts.

Nutrien also posted adjusted EBITDA of $806 million, up from the year-ago $508 million and surpassing analyst projections of $666.6 million. Sales were $4.6 billion, beating both the year-ago $4.2 billion and analysts $4.4 billion.

“Our earnings and free cash flow1 results highlight the strength of our integrated business model, execution of strategic initiatives, and the recovery in global agricultural markets. Nutrien delivered a record first quarter for Retail and strong fertilizer volumes and margins,” said Mayo Schmidt, Nutrien’s President and CEO.

“Crop prices and cash margins are at multi-year highs and growers are responding accordingly with increased seeded acreage and a focus on maximizing yields, and our team at Nutrien is supporting them at every level,” Schmidt continued. “We are delivering the end-to-end services and products they need, including our full suite of crop inputs, digital tools, and innovative and sustainable solutions that help achieve higher yields.

This is a very exciting time for Nutrien, and the team is focused on executing Nutrien’s strategy and achieving operational excellence across our business,” he added.

The company said it expects U.S. corn and soybean acreage could be approximately four million acres above USDA’s Prospective Planting Report.

The company added that the cold weather in February slowed logistics and deferred offshore potash shipments by some 300,000 mt, which it expects to be recouped through the balance of the year. The company expects 2021 global potash demand at 68-70 million mt.

The company has bumped up its range for Chinese urea exports for the year, now seeing them at 4.0-5.5 million mt, with the top end of the range in line with 2020 exports.

As for speculation that a new, incoming leader might opt to spin off the company’s Retail segment, Schmidt told analysts he believes Wholesale and Retail were stronger together. He added that former President and CEO Chuck Magro’s departure was something Magro and the Board of Directors mutually agreed to after a decade of strong leadership.

Schmidt said the board is focused on an existing strategy to take the business to the next level. He said the company is putting a fresh set of eyes with leadership teams on the company’s operational excellence.

Nutrien also raised its guidance to full-year adjusted net earnings per share of $2.55-$3.25 per share from $2.05-$2.75 and adjusted EBITDA to $4.5-$4.9 billion, up from $4.0-4.5 billion. The company also tweaked up segment adjusted EBITDA expectations: Retail to $1.55-$1.65 billion from $1.5-$1.6 billion; Potash to $1.5-$1.7 billion from $1.4-$1.6 billion; Nitrogen to $1.3-$1.5 billion from $1.1-$1.3 billion, and Phosphate to $275-$375 million from $250-$350 million.

Retail (millions) 1Q-21 1Q-20
Adjusted EBITDA 109 7
Gross Margin 652 541
Total Sales 2,972 2,661
CN Sales 1,016 785
CN Margins 220 156
CN Vol. (000 mt) 2,400 2,025
Avg ($/mt) 423 387
CN gross margin per mt 92 77
Potash (millions) 1Q-21 1Q-20
Adjusted EBITDA 380 285
Gross Margin 320 252
Total Sales 611 517
Sales Vol. (000 mt) 3,157 2,877
Avg ($/mt) 194 180
Nitrogen (millions) 1Q-21 1Q-20
Adjusted EBITDA 300 236
Gross Margin 150 97
Total Sales 573 530
Sales Vol. (000 mt) 2,403 2,528
Avg ($/mt) 238 210
Gas Costs ($/mmBtu) 3.19 2.29
Phosphates (millions) 1Q-21 1Q-20
Adjusted EBITDA 97 46
Gross Margin 66 (7)
Total Sales 344 279
Sales Vol. (000 mt) 702 759
Avg ($/mt) 490 368

CF Income, EBITDA Beat Estimates

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

CF Industries Holding Inc., Deerfield, Ill, reported first-quarter net earnings of $151 million ($0.70 per diluted share), up from the year-ago $68 million ($0.31 per share) and ahead of analyst estimates of $119.9 million. Adjusted EBITDA was $398 million, also surpassing the average analyst estimate or Bloomberg Consensus survey of major analysts, which was $390.6 million.

Net sales were $1.05 billion, up from the year-ago $971 million but below analysts’ $1.1 billion projection.

“The CF team delivered solid results in the first quarter as increased global energy spreads and strong demand led to rising nitrogen prices,” said Tony Will, CF President and CEO. “We experienced a number of unusual negative impacts from weather and other factors that created challenges during the quarter, but we navigated those issues successfully in a way that mitigated a potentially negative outcome.

“I am particularly proud of the way the CF team responded to the challenging situation brought on by the lack of gas availability at our plants,’ he added. “This would have been an extremely costly event had the team not responded quickly and effectively mitigated the higher costs and lost production we were facing.”

Facing imminent shutdowns at several plants, management worked with gas suppliers to net settle certain gas contracts, with the move resulting in the company receiving prevailing market prices for the gas, which resulted in a gain of $112 million. While some of the plants were taken down entirely, some reduced capacity and sold the unused gas.

“We suffered some prolonged outages and increased maintenance expense, including fixed cost write-offs, as a result of the abrupt disruption and extreme cold, and of course, gas prices rose for the portion of the gas that was not hedged,” said Will.

Because of the lost production, CF said it bought urea barges to meet customer commitments. The barge costs ($1 million), higher gas costs ($48 million), and higher manufacturing and maintenance costs ($63 million) balanced out the $112 million gain.

The company expects 90-92 million acres of corn to be planted in the U.S. this year, and said it is seeing higher canola planting in Canada and rising industrial demand.

Going forward, CF cited two positives: low coarse-grain stocks, which it said will take more than one growing season to replenish; and increased energy prices in Europe and Asia, which have returned the sizeable differentials compared to Henry Hub natural gas prices in North America. It said forward curves suggest these energy spreads will continue through 2021 and into 2022.

CF also noted that India and Brazil both expect consistent long-term growth, which has led to rising import demand.

Production (000 st) 1Q-21 1Q-20
Ammonia        2,479 2,670
Gran Urea 1,184 1,285
UAN 32 1,689 1,599
AN 475 515
Ammonia 1Q-21 1Q-20
Net Sales ($/M) 206 193
Gross Margin ($/M) 126 20
Sales Volumes (000 st) 683 762
Avg Realized Prices ($/st) 302 253
Gross Margin ($/st) 184 26
Gas Costs ($/mmBtu) 3.22 2.61
Urea 1Q-21 1Q-20
Net Sales ($/M) 399 337
Gross Margin ($/M) 135 113
Sales Volumes (000 st) 1,320 1,381
Avg Realized Prices ($/st) 302 244
Gross Margin ($/st) 102 82
UAN 1Q-21 1Q-20
Net Sales ($/M) 232 235
Gross Margin ($/M) 2 42
Sales Volumes (000 st) 1,514 1,390
Avg Realized Prices ($/st) 153 169
Gross Margin ($/st) 1 30
AN 1Q-21 1Q-20
Net Sales ($/M) 105 116
Gross Margin ($/M) 10 13
Sales Volumes (000 st) 438 547
Avg Realized Prices ($/st) 240 212
Gross Margin ($/st) 23 24
Other 1Q-21 1Q-20
Net Sales ($/M) 106 90
Gross Margin ($/M) 16 16
Sales Volumes (000 st) 609 608
Avg Realized Prices ($/st) 174 148
Gross Margin ($/st) 26 26

Mosaic Reports 1Q Income of $157 M; Phosphate Margins Return to Plus Column

DAP/MAP, Earnings, News, Potash, Tampa

The Mosaic Co., Tampa, reported first-quarter net income of $157 million ($0.41 per diluted share), up from the year-ago loss of $203 million ($0.54 per share). The company missed the Bloomberg Consensus for net income, the average estimate by major analysts, which was $234 million, however, the company reported that earnings were negatively impacted by notable items of $77 million.

Mosaic reported adjusted EBITDA of $560 million, a significant jump from the year-ago $214million and just below analyst projections of $562.3 million. However, the company noted that it was the highest first-quarter adjusted EBITDA since the company adopted a calendar fiscal year in 2013. It said it reflected its improved cost position, favorable markets, and the addition of Mosaic Fertilizantes.

Net sales were $2.3 billion, up from the year-ago $1.8 billion and matching analyst projections.

“Mosaic delivered excellent earnings for the first quarter of 2021, and our outlook for the year remains favorable,” said Joc O’Rourke, President and CEO. “We are demonstrating the earnings power resulting from the combination of our long-term cost structure improvements and strong global fertilizer markets.”

The company expects strengthening fundamental trends for the past three quarters to continue through the remainder of 2021. It said phosphate channel inventories are low and it expects Chinese exports to remain low, as that country has strong domestic demand and its industry is restructuring. It expects any demand risk from India could be offset by demand from Brazil.

Mosaic sees similar dynamics for potash, noting the recent boost to Indian prices to $280/mt CFR from $247/mt CFR.

“There will be a time soon, or in the next year or two I suspect, where Colonsay may be required, but it will also require a sustained price, probably a little higher than what it is even today,” said O’Rourke during a May 4 earnings call, referring to the idled potash mine in Canada. For now, Mosaic has been meeting demand with the K3 and Belle Plaine facilities

Due to the 60-day lag in market price changes and their appearance in company results, Mosaic expects second-quarter phosphate prices to improve an additional $80-$90/mt and potash $20-$30/mt. However, phosphate results will be partially offset by $30-$35/mt in higher raw materials costs.

Potash 1Q-21 1Q-20
Sales Volume (million mt) 2.0 1.9
Gross Margin (million $) 140 109
Gross Margin per $/mt 71 57
Sales (million $) 477 442
MOP Selling Price $/mt 200 200
Phosphates 1Q-21 1Q-20
Sales Volume (million mt) 2.1 1.9
Gross Margin (million $) 173 (83)
Gross Margin per $/mt 84 (43)
Sales (million $) 1,000 619
DAP Selling Price $/mt 426 274
Mosaic Fertilizantes 1Q-21 1Q-20
Sales Volume (million mt) 2.1 2.1
Gross Margin (million $) 103 66
Gross Margin per $/mt 50 32
Sales (million $) 763 731
Brazil MAP Price $/mt 421 330
Avg Finished Price (Dest.) 370 352
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