Attached files
| file | filename |
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| 8-K - FORM 8-K - CVR PARTNERS, LP | d410772d8k.htm |
 Investor Presentation
September 2012
Exhibit 99.1 |
 2
Safe Harbor
The following information contains forward-looking statements based
on management’s current expectations and beliefs, as well
as a number of assumptions concerning future events. These
statements are subject to risks, uncertainties, assumptions and
other important factors. You are cautioned not to put
undue reliance on such forward-looking statements (including
forecasts and projections regarding our future performance) because
actual results may vary materially from those expressed or
implied as a result of various factors, including those noted in
the Company’s filings with the Securities and Exchange
Commission. CVR Partners, LP assumes no obligation to, and
expressly disclaims any obligation to, update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
|
 3
Key Strategic Drivers
Experienced management team
Fully utilized capacity
High run time rates
Strategically located assets
Solid market fundamentals supports
future growth
•
Growth oriented partnership formed by CVR Energy, Inc. in June 2007,
with IPO in April 2011 •
Manufacturing facility produces ammonia and Urea Ammonium Nitrate
(UAN) •
Facility
located
in
Coffeyville,
Kansas
and
produces
5%
of
total
UAN
demand
in
United
States |
 4
Experienced Management |
 5
Fully Utilized Capacity &
High Run Rates
(1) Adjusted for third-party outage.
|
 Strategically Located Assets
•
Located in corn belt
•
56% of corn planted in 2011
was within $40/UAN ton
freight rate of plant
•
$25/ton transportation
advantage to corn belt vs.
U.S. Gulf Coast
•
No intermediate transfer,
storage, barge freight or
pipeline freight charges
6 |
 7
Solid Market Fundamentals
Key Demand Drivers |
 8
Solid Market Fundamentals
Consistent Fertilizer Demand Growth
•
Nitrogen represents ~63%
of fertilizer consumption
(1)
•
Nitrogen based fertilizers
have most stable demand
because must be applied
annually
–
Primary determinant of crop yield
(1) Per the International Fertilizer Industry Association.
|
 9
Solid Market Fundamentals
Farmer Profitability Supports Fertilizer Price
•
Corn consumes the largest
amount of nitrogen fertilizer
•
Farmers are expected to generate
substantial proceeds at currently
forecasted corn prices
•
Farmer incentivized to use
nitrogen at corn price much lower
than current spot
•
Nitrogen fertilizer represents
small portion of farmer’s total
input costs |
 10
Solid Market Fundamentals
Supply/Demand Supports Increased Planting
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
16,000
2000
2004
2008
2012E
2016E
2020E
Production
Imports
Exports
Consumption
U.S. Nitrogen Production
& Consumption
Source:
Fertecon.
14,000
0
30
60
90
120
150
180
0
20
40
60
80
100
Planted
Yield
Yield Trendline
U.S. Corn Planted
& Yields
Source:
USDA. |
 11
Solid Market Fundamentals
UAN Demand & U.S.
Imports
Country
2007
2008
2009
2010
2011
Trinidad & Tobago
0
0
0
777
1,010
Russia
749
953
658
749
674
Canada
685
487
427
437
617
Romania
472
185
29
254
487
Egypt
176
174
0
123
117
Lithuania
514
431
69
79
489
Ukraine
344
173
0
73
30
Poland
142
123
0
0
0
Estonia
0
13
30
117
92
Netherlands
18
28
0
44
144
Bulgaria
58
58
0
33
21
Germany
55
13
69
30
153
Belarus
96
0
0
0
0
Rest of world
38
3
3
2
29
Total
3,347
2,641
1,285
2,718
3,853
U.S. Imports of UAN
(000’s of UAN Tons)
U.S. imports for UAN expected to be ~26% of total demand in 2020
Source:
USDA.
U.S.
World
2011
Demand
Supply
0
5,000
10,000
15,000
20,000
25,000
U.S.
World
Source:
Fertecon.
2020E
UAN Demand/Supply |
 12
Growth Strategies
Current
12-24
Months
3-5
Years
Operational efficiency
Plant expansion
Specialty products
Distribution
Mergers and acquisitions
Plant development |
 13
UAN Expansion
Overview
–
Increase exposure to strong UAN market
dynamics
–
Expand UAN capacity by 330K tons
per year (~50%) to ~1MM tons/year
–
Upgrade 100% of ammonia to UAN
–
On-line at beginning of 2013
Total cost of $125MM-$130MM
–
$78MM spent through 06/30/12
Annualized incremental impact
–
EBITDA: ~$20MM
–
Available for distribution: ~$0.25/unit
UAN Price Premium to Ammonia |
 14
Financial Statistics
See page 21 for a reconciliation of net income to EBITDA.
See page 21 for a reconciliation of net income to EBITDA less maintenance capital.
|
 15
Solid Start for 2012
YTD 6/30/12
YTD 6/30/11
Change
Sales
$159.7
$138.1
15.6%
EBITDA
(1)
$78.1
$65.4
19.4%
Adjusted EBITDA
(2)
$82.1
$70.9
15.8%
Operating Income
$67.5
$56.1
20.3%
Distributable Cash
Flow
(3)
$82.0
$29.7
n/a
DCF/Unit
(3)
$1.123
$0.407
n/a
$US millions, except per unit data
Expect DCF/Unit of $1.65 to $1.85 for 2012 Full Year
--
Benefit to 2013 Cash Available for Distribution of ~$0.50/Unit from UAN
Expansion and No Turnaround -- (1)
See page 21 for a reconciliation of net income to EBITDA.
(2)
See page 21 for reconciliation of EBITDA to Adjusted EBITDA.
(3)
Reflects post IPO (April 13 – June 30).
|
 16
Strong Financial Profile
Financial Flexibility to
Support Growth Initiatives
(US$ in millions)
Capitalization
As of 6/30/12
Cash & Equivalents
$196.4
Credit Facility due April 2016
Term Loan
125.0
$25 million Revolver
Total Debt
$125.0
Partners' Equity
477.1
Total Capitalization
$602.1
LTM EBITDA
(1)
$168.0
LTM Interest Expense
(1)
5.0
Key Credit Statistics
Total Debt / LTM EBITDA
0.7x
LTM EBITDA / Interest Expense
33.6x
Total Debt / Book Cap.
20.8%
Liquidity
As of 6/30/12
Cash & Equivalents
$196.4
$25 million Revolver
25.0
Less: Drawn Amount
Less: Letters of Credit
Total Liquidity
$221.4
(1)
See page 21 for a reconciliation of LTM 06/30/12 EBITDA and interest expense .
|
 17
A Bright Outlook
Strong industry fundamentals
High-quality & strategically-located
assets
Premium product focus
Attractive growth opportunities
Pay out 100% of available cash
each quarter
No IDR’s
Experienced management team |
 Appendix |
 19
Fertilizer Plant Schematic |
 20
Non-GAAP Financial Measures
To supplement the actual results in accordance with U.S. generally
accepted accounting principles (GAAP),
for the applicable periods, the Company also uses certain non-GAAP
financial measures as discussed below, which are adjusted
for GAAP-based results. The use of non-GAAP adjustments
are not in accordance with or an alternative for GAAP. The adjustments
are
provided
to
enhance
the
overall
understanding
of
the
Company’s
financial
performance
for the
applicable periods and are also indicators that management utilizes for
planning and forecasting
future periods. The non-GAAP measures utilized by the
Company are not necessarily comparable to similarly titled
measures of other companies. The Company believes
that the presentation of non-GAAP financial measures provides useful
information to investors regarding the Company’s financial
condition and results of operations because these measures, when
used in conjunction with related GAAP financial measures (i)
together provide a more comprehensive view of the Company’s core
operations and ability to generate cash flow, (ii) provide
investors with the financial analytical framework upon which
management bases financial and operational planning decisions, and
(iii) presents measurements that investors and rating agencies
have indicated to management are useful to them in assessing the
Company and its results of operations. |
 21
Non-GAAP Reconciliation
EBITDA: Represents net income before the effect of interest expense,
interest income, income tax expense (benefit) and depreciation and amortization.
EBITDA is not a calculation based upon GAAP; however, the amounts
included in EBITDA are derived from amounts included in the consolidated
statement of operations of the Company.
See below for reconciliation of net income to EBITDA, EBITDA to
Adjusted EBITDA, & EBITDA less maintenance capital
See below for reconciliation of net income to EBITDA &
EBITDA to Adjusted EBITDA
Adjusted EBITDA: Represents EBITDA adjusted for the impact of
share-based compensation, and, where applicable, major scheduled turnaround expense
and loss on disposition of assets. We present Adjusted EBITDA because
it is a key measure used in material covenants in our credit facility. Adjusted
EBITDA is not a recognized term under GAAP and should not be
substituted for net income as a measure of our liquidity. Management believes that
Adjusted EBITDA enables investors and analysts to better understand our
liquidity and our compliance with the covenants contained in our credit facility.
See below for reconciliation of LTM 06/30/12 EBITDA & Interest
Expense (in $US millions)
For the Fiscal Years
2009
2010
2011
Net income
57.9
$
33.3
$
132.4
$
Interest expense
-
-
4.0
Interest (income)
(9.0)
(13.1)
-
Depreciation and amortization
18.7
18.5
18.9
Income tax expense
-
-
-
EBITDA
$ 67.6
$
Loss on disposition of assets
-
1.4
-
Turnaround
-
3.5
-
Share-based compensation
3.2
9.0
7.3
Adjusted EBITDA
70.8
$
52.6
$
162.6
$
EBITDA
67.6
$
38.7
$
155.3
$
Maintenance capital
2.3
8.6
6.2
EBITDA less maintenance capital
65.3
$
30.1
$
149.1
$
155.3
(in $US millions)
Interest
EBITDA
Expense
6 months ended 6/30/12
78.1
$
2.2
$
12 months ended 12/31/11
155.3
4.0
Less: 6 months ended 6/30/11
65.4
1.2
LTM 06/30/12
168.0
$
5.0
$
$ 38.7
(in $US millions)
2011
2012
Net income
54.9
$
65.3
$
Interest expense, net
1.2
2.2
Interest (income)
-
(0.1)
Depreciation and amortization
9.3
10.6
Income tax expense
-
0.1
EBITDA
65.4
$
$ 78.1
Share-based compensation
5.5
4.0
Adjusted EBITDA
70.9
$
82.1
$
Six Months Ended
June 30, |