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8-K - 8-K - East Dubuque Nitrogen Partners, L.P. | d582222d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Rentech Nitrogen Partners, L.P. Announces Results for Second Quarter 2013; Updates
2013 Guidance
LOS ANGELES, CA (August 8, 2013) Rentech Nitrogen Partners, L.P. (NYSE: RNF), which manufactures and sells nitrogen fertilizer products including ammonia, UAN solution and ammonium sulfate, today announced its results for the three and six months ended June 30, 2013, and updated its 2013 guidance.
Commenting on the results for the period, D. Hunt Ramsbottom, CEO of Rentech Nitrogen GP, LLC, stated, We reported good results this quarter, considering that demand and product prices were softer than forecasted, with unfavorable spring weather and significant offshore urea supplies affecting the entire industry. Mr. Ramsbottom continued, We took advantage of market liquidity and demand during the past month and have locked-in nearly all of the East Dubuque Facilitys forecasted deliveries for the year at competitive prices. Were also seeing a rebound of product margins at the Pasadena Facility, from the lower levels earlier this summer when product prices had dropped faster than input prices embedded in our cost of sales, and we had to absorb lower margins on some higher cost inventories carried over from the delayed spring season.
Mr. Ramsbottom added, While commodity prices can fluctuate, as weve recently seen, we believe that the nitrogen market remains fundamentally healthy. Factors such as farmer affordability of nitrogen and the expectation that well continue to see strong planted corn acres next year are expected to result in good nitrogen demand. We also continue to receive premium pricing for our two primary products, ammonia and ammonium sulfate. For these reasons, our expansion projects for these two product lines are still expected to generate strong returns once they are on-stream at the end of this year.
Financial Highlights
Three months ended June 30, 2013
Revenues for the three months ended June 30, 2013 were $104.0 million, compared to $70.6 million for the comparable period in the prior year. Revenues increased due to the contribution of $42.2 million from the facility in Pasadena, Texas (Pasadena Facility), partially offset by a 13% decline in revenues from the facility in East Dubuque, Illinois (East Dubuque Facility). Product deliveries from both facilities were negatively affected by a wet spring season which resulted in a delayed and abbreviated planting season and less nitrogen demand. Results of the quarter were further affected by significant increases in exports of urea from China that negatively impacted urea and other nitrogen prices. Lower urea prices also prompted some late season switching from UAN to urea due to the relative value of the two fertilizers.
During the three months ended June 30, 2013, Rentech Nitrogen generated operating income of $34.0 million, compared to $41.6 million during the comparable period in the prior year. Operating income in the current period was reduced by lower gross profits as well as higher selling, general and administrative (SG&A) expenses and depreciation and amortization expenses attributable to the addition of the Pasadena Facility.
Adjusted EBITDA for the three months ended June 30, 2013 was $38.4 million, compared to $44.9 million in the corresponding period in 2012. Adjusted EBITDA excluding Partnership level expenses totaled $40.9 million for the current period. The East Dubuque Facility and the Pasadena Facility contributed $38.9 million and $2.0 million in EBITDA, respectively, during the three months ended June 30, 2013. Further explanation of Adjusted EBITDA, a non-GAAP financial measure, has been included below in this press release.
Gross margins for the three months ended June 30, 2013 were 38%, compared to 65% for the same period last year, primarily due to the addition of the Pasadena Facility, which realizes lower gross margins than the East Dubuque Facility, and the effects of allocating fixed costs to lower volumes of delivered products. Gross margins at the East Dubuque Facility were 61% for the current period, compared to 65% for the prior-year period. Gross margins at the Pasadena Facility were 6% for the current period, which reflected inventory write-downs and sales of products that were produced from higher-cost raw materials purchased earlier in the year. During the three months ended June 30, 2013, the Partnership incurred a write-down of ammonium sulfate inventories of approximately $1.8 million for product not shipped due to the reduced application from the prolonged wet weather.
Page 1 of 13
SG&A expenses were $4.9 million for the three months ended June 30, 2013, compared to $3.9 million for the prior-year period. The increase was primarily due to the addition of $1.3 million of SG&A expenses from the Pasadena Facility, partially offset by a 28% decline in expenses at the East Dubuque Facility primarily due to lower unused credit facility fees, legal expenses and other professional fees.
Interest expense was $3.9 million for the three months ended June 30, 2013, compared to $0 for the prior-year period. The increase was attributable to debt incurred for the purchase of the Pasadena Facility and expansion projects at the East Dubuque and Pasadena Facilities.
Rentech Nitrogen realized a non-cash gain of $4.8 million for the three months ended June 30, 2013 as a result of a decrease in the potential earn-out consideration related to the acquisition of Agrifos. The decrease in fair value was primarily due to lower results and expectations in 2013 caused by a delayed and abbreviated spring application season and higher levels of urea exports from China suppressing prices.
Net income was $28.7 million or $0.74 per basic unit, for the current period. Excluding loss on debt extinguishment of $6.0 million and gain on fair value adjustment to earn-out consideration of $4.8 million, net income allocated to common unit holders for the current period was $29.8 million or $0.77 per basic unit. This compares to net income of $41.2 million or $1.08 per basic unit for the same period last year.
Six months ended June 30, 2013
Revenues for the six months ended June 30, 2013 were $163.5 million, compared to $109.1 million for the comparable period in the prior year. Revenues increased due to the contribution of $67.3 million of revenues from the Pasadena Facility, partially offset by a 12% decline in revenues from the East Dubuque Facility. Product deliveries from both facilities were negatively affected by a wet spring which resulted in a delayed and abbreviated planting season and less nitrogen demand. Results of the quarter were further affected by significant increases in exports of urea from China that negatively impacted urea and other nitrogen prices. Lower urea prices also prompted some late season switching from UAN to urea due to the relative value of the two fertilizers.
During the six months ended June 30, 2013, Rentech Nitrogen generated operating income of $51.1 million compared to $61.1 million during the comparable period in the prior year. Operating income in the current period was reduced by lower gross profits as well as higher SG&A expenses and depreciation and amortization expenses attributable to the addition of the Pasadena Facility.
Adjusted EBITDA for the six months ended June 30, 2013 was $59.1 million, compared to $66.8 million in the corresponding period in 2012. Adjusted EBITDA excluding Partnership level expenses, totaled $63.7 million for the current period. The East Dubuque Facility and the Pasadena Facility contributed $58.5 million and $5.2 million in Adjusted EBITDA, respectively, during the six months ended June 30, 2013. Further explanation of Adjusted EBITDA, a non-GAAP financial measure, has been included below in this press release.
Gross margins for the six months ended June 30, 2013 were 38%, compared to 63% for the same period last year, primarily due to the addition of the Pasadena Facility, which realizes lower gross margins than does the East Dubuque Facility, and the effects of allocating fixed costs to lower volumes of delivered products. Gross margins at the East Dubuque Facility were 58% for the current period, compared to 63% for the prior-year period. Gross margins at the Pasadena Facility were 9% for the current period, which reflected certain inventory write-downs and sales of products that were produced from higher-cost raw materials. During the six months ended June 30, 2013, the Partnership incurred write-downs of sulfur and sulfuric acid inventory of approximately $0.5 million and ammonium sulfate inventories of approximately $1.8 million.
SG&A expenses were $9.6 million for the six months ended June 30, 2013, compared to $6.5 million for the prior-year period. The increase was primarily due to the addition of $2.6 million of SG&A expenses and an increase in Partnership level expenses to support the Pasadena Facility, partially offset by a 13% decline in expenses at the East Dubuque Facility primarily due to lower unused credit facility fees, legal expenses and other professional fees.
Interest expense was $5.7 million for the six months ended June 30, 2013, compared to $0.1 million for the prior-year period. The increase was attributable to debt incurred for the purchase of the Pasadena Facility and expansion projects at the East Dubuque and Pasadena Facilities.
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Rentech Nitrogen realized a non-cash gain of $4.6 million for the six months ended June 30, 2013 as a result of a decrease in the potential earn-out consideration related to the acquisition of Agrifos. The decrease in fair value was primarily due to lower results and expectations in 2013 caused by a delayed and abbreviated spring application season and higher levels of urea exports from China suppressing prices.
Net income was $43.7 million or $1.12 per basic unit, for the current period. Excluding loss on debt extinguishment of $6.0 million and the gain on fair value adjustment to earn-out consideration of $4.6 million, net income allocated to common unit holders for the current period was $44.9 million or $1.16 per basic unit. This compares to net income of $60.6 million or $1.58 per basic unit for the same period last year.
Outlook
The Partnership believes the outlook for nitrogen remains fundamentally healthy. Nitrogen fertilizer must be applied annually and given the forecasted pricing ranges of corn and nitrogen, the Partnership believes that farmers will continue to be incentivized to plant corn and apply nitrogen to maximize yields. Despite high anticipated ending corn inventories, forecasters continue to expect that 90-plus million acres of corn will be planted across the nation in the coming years, which should support good nitrogen demand.
Even with positive expectations for nitrogen fertilizer demand, the market has been experiencing price weakness. Significant offshore urea offered at aggressive prices has been driving down nitrogen prices across the board. Higher than anticipated producer inventory levels of nitrogen fertilizer due to lower demand during the excessively wet spring is placing additional pressure on nitrogen prices.
As a result of this pricing environment and similar to industry trends, Rentech Nitrogen has updated its guidance for cash available for distribution to a range of $2.05 to $2.20 per common unit for the twelve months ending December 31, 2013. The 2013 guidance includes the impact of two previously announced scheduled outages at its facilities during 2013, and the impact of lost revenue in 2013 due to the unscheduled outage at the East Dubuque Facility in December 2012. The Partnership has included an updated calculation of forecasted cash available for distribution below in this press release.
Rentech Nitrogen has locked-in most of the East Dubuque Facilitys forecasted deliveries for the year. The facility has locked-in or delivered 100% of forecasted UAN deliveries for 2013 at an average price of $293 per ton. The facility has locked-in or delivered 79% of forecasted ammonia deliveries for 2013 at an average price of $655 per ton. The midpoint of the new guidance assumes that the ammonia deliveries this year that are yet to be priced will average near $550 per ton, which is slightly above the current spot posted mid-Corn Belt price for ammonia of $545 per ton and below posted fall prices of $575 per ton. The facility has locked-in or consumed 83% of forecasted natural gas for 2013 in cost of sales at an average price of $4.17 per MMBtu, including transportation costs. The midpoint of the guidance assumes costs of $4.21 for natural gas not yet locked-in, including an average of $0.40 per MMBtu of transportation costs, which is currently above the forward NYMEX strip for this year when transportation costs are added.
For the Pasadena Facility, the midpoint of Rentech Nitrogens guidance assumes that weighted average domestic and international ammonium sulfate prices for remaining tons will average $242 per ton, which is consistent with prices at which current business has been booked. Ammonia purchase costs for the Pasadena Facility are derived from a formula that includes the trailing one-month Tampa index. The midpoint of the guidance assumes that Tampa-based ammonia prices will average $470 per metric ton, which is consistent with the current Tampa ammonia price. The midpoint of the guidance also assumes that sulfur prices, which have declined rapidly and significantly in recent weeks due to abundant offshore production, are expected to stay near current levels of $95 per long ton. Based on the product margins implied by these price levels for ammonium sulfate and its raw materials, the Pasadena Facility would have an annualized EBITDA run-rate of greater than $20 million, although the carryover inventory produced with higher-cost raw materials earlier this year will cause 2013 EBITDA to be well below that level.
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The Partnership provided guidance for the following additional key operating metrics, and progress against its 2013 guidance:
Locked-in or Delivered | ||
East Dubuque Facility |
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Deliveries1 |
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Ammonia |
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Tons |
101,000 or 79% | |
Average Price |
$655 | |
UAN |
||
Tons |
289,000 or 100% | |
Average Price |
$293 | |
Natural Gas in Cost of Sales2 | ||
(million MMBtus) |
8.6 or 83% | |
Average Cost Per million MMBtus |
||
(including transportation costs) |
$4.17 | |
Pasadena Facility |
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Deliveries |
||
Ammonium Sulfate |
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Tons1 |
328,000 or 62% | |
Average Price3 |
$299 | |
Sulfuric Acid2 |
||
Tons |
80,000 or 45% | |
Average Price |
$99 | |
Ammonium Thiosulfate2 |
||
Tons |
40,000 or 62% | |
Average Price |
$191 |
1 | Through July 31, 2013. |
2 | Through June 30, 2013. |
3 | Average pricing for 168,000 tons. Although pricing is firm, transportation costs and therefore netbacks for 160,000 tons are to be determined. |
Second Quarter Cash Distribution
On July 24, 2013, Rentech Nitrogen declared its second quarter 2013 cash distribution of $0.85 per unit, payable on August 14, 2013 to unit holders of record as of August 7, 2013. The calculation of cash available for distribution has been included below in this press release.
Conference Call with Management
Rentech Nitrogen will hold a conference call today, August 8, 2013 at 1:30 p.m. PDT, during which senior management will review the Partnerships financial results for this period and provide an update on the business. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing 888-390-3983 or 862-255-5354. An audio webcast of the call will be available at www.rentechnitrogen.com within the Investor Relations portion of the site under the Presentations section. A replay will be available by audio webcast and teleconference from 5:30 p.m. PDT on August 8 through 5:30 p.m. PDT on August 18. The replay teleconference will be available by dialing 888-539-4649 or 908-379-8864 and the audience passcode 93570#.
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Note: The financial statements and key operating metrics below include results of the Pasadena Facility only for the three and six months ended June 30, 2013, as the closing of the acquisition of Agrifos LLC, occurred on November 1, 2012.
Rentech Nitrogen Partners, L.P.
Consolidated Statements of Income
(Stated in Thousands, Except per Unit Data)
For the Three Months | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Total Revenues |
$ | 103,956 | $ | 70,643 | $ | 163,520 | $ | 109,116 | ||||||||
Cost of Sales |
64,108 | 24,997 | 100,953 | 40,898 | ||||||||||||
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Gross Profit |
39,848 | 45,646 | 62,567 | 68,218 | ||||||||||||
Selling, general and administrative expense |
4,901 | 3,884 | 9,642 | 6,474 | ||||||||||||
Depreciation |
908 | 83 | 1,856 | 636 | ||||||||||||
Other |
(7 | ) | 75 | 8 | 47 | |||||||||||
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Operating Expenses |
5,802 | 4,042 | 11,506 | 7,157 | ||||||||||||
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Operating Income |
34,046 | 41,604 | 51,061 | 61,061 | ||||||||||||
Other Income (Expense), Net |
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Interest expense |
(3,926 | ) | (42 | ) | (5,729 | ) | (142 | ) | ||||||||
Loss on debt extinguishment |
(6,001 | ) | | (6,001 | ) | | ||||||||||
Gain on FV adjustments to earn-out contingent consideration |
4,823 | | 4,611 | | ||||||||||||
Other expense, net |
(96 | ) | (334 | ) | (7 | ) | (318 | ) | ||||||||
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Total Other Expenses, Net |
(5,200 | ) | (376 | ) | (7,126 | ) | (460 | ) | ||||||||
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Income Before Income Taxes |
28,846 | 41,228 | 43,935 | 60,601 | ||||||||||||
Income tax expense |
125 | | 205 | | ||||||||||||
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Net Income |
$ | 28,721 | $ | 41,228 | $ | 43,730 | $ | 60,601 | ||||||||
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Net Income per Common Unit - Basic |
$ | 0.74 | $ | 1.08 | $ | 1.12 | $ | 1.58 | ||||||||
Net Income per Common Unit - Diluted |
$ | 0.74 | $ | 1.08 | $ | 1.12 | $ | 1.58 | ||||||||
Weighted-Average Units: |
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Basic |
38,842 | 38,253 | 38,840 | 38,251 | ||||||||||||
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Diluted |
38,899 | 38,279 | 38,910 | 38,272 | ||||||||||||
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Rentech Nitrogen Partners, L.P.
Statements of Income by Business Segment
(Stated in Thousands)
For the Three Months | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Revenues |
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East Dubuque Facility |
$ | 61,717 | $ | 70,643 | $ | 96,266 | $ | 109,116 | ||||||||
Pasadena Facility |
42,239 | | 67,254 | | ||||||||||||
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Total Revenues |
$ | 103,956 | $ | 70,643 | $ | 163,520 | $ | 109,116 | ||||||||
Gross Profit |
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East Dubuque Facility |
$ | 37,493 | $ | 45,646 | $ | 56,239 | $ | 68,218 | ||||||||
Pasadena Facility |
2,355 | | 6,328 | | ||||||||||||
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Total Gross Profit |
$ | 39,848 | $ | 45,646 | $ | 62,567 | $ | 68,218 | ||||||||
Selling, General and Administrative Expenses |
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East Dubuque Facility |
$ | 1,097 | $ | 1,530 | $ | 2,442 | $ | 2,819 | ||||||||
Pasadena Facility |
1,342 | | 2,584 | | ||||||||||||
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Total Selling, General and Administrative Expenses |
$ | 2,439 | $ | 1,530 | $ | 5,026 | $ | 2,819 | ||||||||
Depreciation and Amortization |
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East Dubuque Facility |
$ | 33 | $ | 83 | $ | 106 | $ | 636 | ||||||||
Pasadena Facility |
875 | | 1,750 | | ||||||||||||
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Total Depreciation and Amortization Recorded in Operating Expenses |
$ | 908 | $ | 83 | $ | 1,856 | $ | 636 | ||||||||
Other Operating Expenses (Income) |
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East Dubuque Facility |
$ | (7 | ) | $ | 75 | $ | 8 | $ | 47 | |||||||
Pasadena Facility |
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Total Other Operating (Income) Expenses |
$ | (7 | ) | $ | 75 | $ | 8 | $ | 47 | |||||||
Operating Income |
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East Dubuque Facility |
$ | 36,370 | $ | 43,958 | $ | 53,683 | $ | 64,716 | ||||||||
Pasadena Facility |
138 | | 1,994 | | ||||||||||||
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Total Operating Income |
$ | 36,508 | $ | 43,958 | $ | 55,677 | $ | 64,716 | ||||||||
Interest Expense |
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East Dubuque Facility |
$ | | $ | 42 | $ | | $ | 142 | ||||||||
Pasadena Facility |
3 | | 6 | | ||||||||||||
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Total Interest Expense |
$ | 3 | $ | 42 | $ | 6 | $ | 142 | ||||||||
Net Income |
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East Dubuque Facility |
$ | 36,044 | $ | 43,930 | $ | 53,314 | $ | 64,604 | ||||||||
Pasadena Facility |
34 | | 1,850 | | ||||||||||||
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Total Net Income |
$ | 36,078 | $ | 43,930 | $ | 55,164 | $ | 64,604 |
Page 6 of 13
For the Three Months | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Reconciliation of Segment Net income to Consolidated Net Income |
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Segment Net Income |
$ | 36,078 | $ | 43,930 | $ | 55,164 | $ | 64,604 | ||||||||
Partnership and Unallocated Expenses Recorded as Selling, General, and Administrative Expense |
(2,462 | ) | (2,354 | ) | (4,616 | ) | (3,655 | ) | ||||||||
Partnership and Unallocated Income (Expenses) Recorded as Other Expenses, Net |
(1,178 | ) | 232 | (1,390 | ) | 232 | ||||||||||
Unallocated Interest Expense and Loss on Interest Rate Swaps |
(4,019 | ) | (580 | ) | (5,730 | ) | (580 | ) | ||||||||
Income Tax Benefit |
302 | | 302 | | ||||||||||||
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Consolidated Net income |
$ | 28,721 | $ | 41,228 | $ | 43,730 | $ | 60,601 |
Rentech Nitrogen Partners, L.P.
Balance Sheet Data
(Stated in Thousands)
As of June 30, 2013 |
As of December 31, 2012 |
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(unaudited) | ||||||||
Cash and Cash Equivalents |
$ | 112,764 | $ | 55,799 | ||||
Working Capital |
121,345 | 23,218 | ||||||
Construction in Progress |
87,075 | 61,147 | ||||||
Total Assets |
489,722 | 376,645 | ||||||
Credit Facilities and Term Loan |
| 193,290 | ||||||
Notes |
320,000 | | ||||||
Total Long-Term Liabilities |
323,197 | 192,961 | ||||||
Total Partners Capital |
105,549 | 109,404 |
Page 7 of 13
Key Operating Statistics:
Three Months Ended June 30, |
Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Production Tons (in thousands) |
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East Dubuque Facility: |
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Ammonia |
76 | 77 | 150 | 155 | ||||||||||||
Ammonia Available for Sale (included in line above) |
35 | 37 | 69 | 75 | ||||||||||||
UAN |
73 | 78 | 150 | 161 | ||||||||||||
Other Products (excludes CO2) |
78 | 76 | 153 | 152 | ||||||||||||
Pasadena Facility: |
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Ammonium Sulfate |
124 | | 251 | | ||||||||||||
Sulfuric Acid |
122 | | 254 | | ||||||||||||
Ammonium Thiosulfate |
15 | | 31 | | ||||||||||||
Delivered Tons (in thousands) |
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East Dubuque Facility: |
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Ammonia |
41 | 40 | 52 | 70 | ||||||||||||
UAN |
59 | 92 | 120 | 126 | ||||||||||||
Other Products (excludes CO2) |
20 | 13 | 35 | 26 | ||||||||||||
Pasadena Facility: |
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Ammonium Sulfate |
114 | | 168 | | ||||||||||||
Sulfuric Acid |
39 | | 80 | | ||||||||||||
Ammonium Thiosulfate |
25 | | 40 | | ||||||||||||
Average Price per Delivered Ton |
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East Dubuque Facility: |
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Ammonia |
$ | 741 | $ | 695 | $ | 740 | $ | 686 | ||||||||
UAN |
$ | 360 | $ | 378 | $ | 330 | $ | 365 | ||||||||
Pasadena Facility: |
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Ammonium Sulfate |
$ | 289 | | $ | 299 | | ||||||||||
Sulfuric Acid |
$ | 99 | | $ | 99 | | ||||||||||
Ammonium Thiosulfate |
$ | 187 | | $ | 191 | | ||||||||||
Input Costs |
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East Dubuque Facility: |
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Natural Gas |
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Natural Gas Used in Production (Million MMBtus) |
2.7 | 2.8 | 5.5 | 5.6 | ||||||||||||
Average Natural Gas Cost per MMBtu, including transportation cost |
$ | 4.36 | $ | 3.12 | $ | 4.17 | $ | 3.67 | ||||||||
Natural Gas Cost in Cost of Sales |
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(Million MMBtus) |
2.8 | 3.0 | 4.4 | 4.9 | ||||||||||||
Average Natural Gas Cost per MMBtu, including transportation cost |
$ | 4.12 | $ | 3.64 | $ | 4.06 | $ | 3.95 |
Page 8 of 13
Three Months Ended June 30, |
Six Months Ended June 30, |
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2013 | 2012 | 2013 | 2012 | |||||||||||||
Input Costs |
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Pasadena Facility: |
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Ammonia |
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Ammonia Used in Production (Thousand Tons) |
34 | | 68 | | ||||||||||||
Ammonia in Cost of Sales (Thousand Tons) |
32 | | 48 | | ||||||||||||
Sulfur |
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Sulfur Used in Production (Thousand Tons) |
44 | | 92 | | ||||||||||||
Sulfur in Cost of Sales (Thousand Tons) |
48 | | 78 | | ||||||||||||
On-Stream Rates1: |
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East Dubuque Facility: |
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Ammonia |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
UAN |
97.8 | % | 100.0 | % | 99.1 | % | 100.0 | % | ||||||||
Pasadena Facility: |
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Ammonium Sulfate |
83.8 | % | | 82.9 | % | | ||||||||||
Sulfuric Acid |
95.5 | % | | 97.4 | % | |
1 | The on-stream factors for the ammonia, UAN, ammonium sulfate and sulfuric acid plants equal the total days the applicable plant operated in any given period, divided by the total days in that period. |
Disclosure Regarding Non-GAAP Financial Measures
Adjusted EBITDA is defined as net income plus interest expense and other financing costs, loss on debt extinguishment, loss on interest rate swaps, income tax expense and depreciation and amortization, net of gain in fair value adjustment to earn-out consideration. We calculate cash available for distribution as used in this table as Adjusted EBITDA plus non-cash compensation expense and distribution of cash reserves, less the sum of maintenance capital expenditures not funded by financing proceeds, net interest expense and other debt service. Adjusted EBITDA and cash available for distribution are used as supplemental financial measures by management and by external users of our financial statements, such as investors and commercial banks, to assess:
| the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; and |
| our operating performance and return on invested capital compared to those of other publicly traded limited partnerships and other public companies, without regard to financing methods and capital structure. |
Adjusted EBITDA and cash available for distribution should not be considered alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and cash available for distribution may have material limitations as performance measures because they exclude items that are necessary elements of our costs and operations. In addition, Adjusted EBITDA and cash available for distribution presented by other companies may not be comparable to our presentation, since each company may define these terms differently.
Page 9 of 13
The table below reconciles net income attributable to Rentech Nitrogen excluding loss on debt extinguishment and gain on fair value adjustment to earn-out contingent consideration to net income for the three and six months ended June 30, 2013 (stated in thousands, except per share data).
For the Three Months Ended June 30, 2013 |
For the Six Months Ended June 30, 2013 |
|||||||
Net Income |
$ | 28,721 | $ | 43,730 | ||||
Less: Income Allocated to Unvested Units |
115 | 194 | ||||||
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|
|
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Net Income Allocated to Common Unit Holders |
$ | 28,606 | $ | 43,536 | ||||
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|
|
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Loss on Debt Extinguishment |
6,001 | 6,001 | ||||||
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Gain on Fair Value Adjustment to Earn-Out Contingent Consideration |
(4,823 | ) | (4,611 | ) | ||||
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Net Income Allocated to Common Unit Holders Excluding Loss on Debt Extinguishment and Gain on Fair Value Adjustment to Earn-Out Contingent Consideration |
$ | 29,784 | $ | 44,926 | ||||
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|
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Net Income per Unit Allocated to Common Unit Holders |
$ | 0.74 | $ | 1.12 | ||||
Loss Per Unit on Debt Extinguishment |
0.15 | 0.16 | ||||||
Gain per Unit on Fair Value Adjustment to Earn-Out Contingent Consideration |
(0.12 | ) | (0.12 | ) | ||||
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|
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Net Income per Unit Allocated to Common Unit Holders Excluding Loss on Debt Extinguishment and Gain on Fair Value Adjustment to Earn-Out Consideration |
$ | 0.77 | $ | 1.16 | ||||
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Weighted-Average Common Units Outstanding |
38,842 | 38,840 |
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The table below reconciles consolidated Adjusted EBITDA and cash available for distribution to net income for the three months ended June 30, 2013 (stated in thousands, except per unit data).
For the Three Months Ended June 30, 2013 | ||||||||||||||||
East Dubuque Facility |
Pasadena Facility |
Partnership Level |
Consolidated | |||||||||||||
Net Income |
$ | 36,044 | $ | 34 | $ | (7,357 | ) | $ | 28,721 | |||||||
Plus: Net Interest Expense |
| 3 | 3,923 | 3,926 | ||||||||||||
Plus: Loss on Debt Extinguishment |
| | 6,001 | 6,001 | ||||||||||||
Less: Gain on Fair Value Adjustment to Earn-Out Consideration |
| | (4,823 | ) | (4,823 | ) | ||||||||||
Plus: Loss on Interest Rate Swaps |
| | 96 | 96 | ||||||||||||
Plus: Income Tax Expense |
326 | 101 | (302 | ) | 125 | |||||||||||
Plus: Depreciation and Amortization |
2,483 | 1,905 | | 4,388 | ||||||||||||
Plus: Other |
| | | | ||||||||||||
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Adjusted EBITDA |
$ | 38,853 | $ | 2,043 | $ | (2,462 | ) | $ | 38,434 | |||||||
Plus: Non-Cash Compensation Expense |
| | 523 | 523 | ||||||||||||
Less: Maintenance Capital Expenditures1 |
(1,912 | ) | | | (1,912 | ) | ||||||||||
Less: Net Interest Expense and Other Debt Service |
| (3 | ) | (5,860 | ) | (5,863 | ) | |||||||||
Plus: Distribution of Cash Reserves for Working Capital |
| | 1,839 | 1,839 | ||||||||||||
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Cash Available for Distribution |
$ | 36,941 | $ | 2,040 | $ | (5,960 | ) | $ | 33,021 | |||||||
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Cash Available for Distribution, per Unit |
$ | 0.95 | $ | 0.05 | $ | (0.15 | ) | $ | 0.85 | |||||||
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Common Units Outstanding |
38,849 | 38,849 | 38,849 | 38,849 |
1 | Excludes $1.6 million of maintenance capital expenditures at the Pasadena Facility funded by debt. |
Page 11 of 13
The table below reconciles consolidated Adjusted EBITDA to net income for the six months ended June 30, 2013 (stated in thousands).
For the Six Months Ended June 30, 2013 | ||||||||||||||||
East Dubuque Facility |
Pasadena Facility |
Partnership Level |
Consolidated | |||||||||||||
Net Income |
$ | 53,314 | $ | 1,850 | $ | (11,434 | ) | $ | 43,730 | |||||||
Plus: Net Interest Expense |
| 6 | 5,723 | 5,729 | ||||||||||||
Plus: Loss on Debt Extinguishment |
| | 6,001 | 6,001 | ||||||||||||
Less: Gain on Fair Value Adjustment to Earn-Out Consideration |
| | (4,611 | ) | (4,611 | ) | ||||||||||
Plus: Loss on Interest Rate Swaps |
| | 7 | 7 | ||||||||||||
Plus: Income Tax Expense |
369 | 138 | (302 | ) | 205 | |||||||||||
Plus: Depreciation and Amortization |
4,788 | 3,207 | | 7,995 | ||||||||||||
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Adjusted EBITDA |
$ | 58,471 | $ | 5,201 | $ | (4,616 | ) | $ | 59,056 |
The table below reconciles EBITDA to net income for the three and six months ended June 30, 2012 (stated in thousands).
Three Months Ended June 30, 2012 |
Six Months Ended June 30, 2012 |
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Net income |
$ | 41,228 | $ | 60,601 | ||||
Plus: |
||||||||
Net Interest Expense |
28 | 112 | ||||||
Depreciation and Amortization |
3,312 | 5,777 | ||||||
Loss on Interest Rate Swaps |
580 | 580 | ||||||
Other |
(232 | ) | (232 | ) | ||||
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|
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EBITDA |
$ | 44,916 | $ | 66,838 |
The table below reconciles forecasted EBITDA and cash available for distribution to forecasted net income for the twelve months ending December 31, 2013, for the upper and lower ends of the range of cash distributions contained in the Partnerships updated guidance for 2013 (stated in thousands, except per unit data).
Forecasted For the Twelve Months Ending December 31, 2013 |
||||||||||||
(Stated in thousands, except per unit data) |
||||||||||||
Net Income |
$ | 67,000 | | $ | 73,600 | |||||||
Plus: Net Interest Expense |
16,300 | | 16,300 | |||||||||
Plus: Loss on Debt Extinguishment |
6,000 | | 6,000 | |||||||||
Less: Gain on Fair Value Adjustment to Earn-Out Consideration |
(4,600 | ) | | (4,600 | ) | |||||||
Plus: Income Tax Expense |
300 | | 300 | |||||||||
Plus: Depreciation and Amortization |
16,900 | | 16,900 | |||||||||
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EBITDA |
$ | 101,900 | | $ | 108,500 | |||||||
Plus: Non-Cash Compensation Expense |
2,200 | | 2,200 | |||||||||
Less: Maintenance Capital Expenditures1 |
(10,200 | ) | | (10,200 | ) | |||||||
Less: Net Interest Expense and Other Debt Service |
(20,100 | ) | | (20,100 | ) | |||||||
Plus: Distribution of Cash Reserves for Working Capital |
5,700 | | 4,900 | |||||||||
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Cash Available for Distribution |
$ | 79,500 | | $ | 85,300 | |||||||
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Cash Available for Distribution, per Unit |
$ | 2.05 | | $ | 2.20 | |||||||
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Common Units Outstanding |
38,846 | | 38,846 |
1 | Excludes $15.8 million of maintenance capital expenditures at the Pasadena Facility funded by debt. |
Page 12 of 13
About Rentech Nitrogen, L.P.
Rentech Nitrogen (www.rentechnitrogen.com) was formed by Rentech, Inc. to own, operate and expand its nitrogen fertilizer business. Rentech Nitrogens assets consist of two fertilizer production facilities owned by its operating subsidiaries. The East Dubuque Facility is located in the northwestern corner of Illinois, and uses natural gas as a feedstock to produce primarily anhydrous ammonia and UAN solution for sale to customers in the Mid Corn Belt. The Pasadena Facility is located in Pasadena, Texas, along the Houston Ship Channel, and uses ammonia and sulfur as feedstocks to produce ammonium sulfate and ammonium thiosulfate fertilizers, and sulfuric acid. Rentech Nitrogen is the largest producer of synthetic granulated ammonium sulfate fertilizer in North America, with sales in the United States and internationally.
Forward-Looking Statements
This press release contains forward-looking statements about matters such as: our forecasted EBITDA and cash available for distribution for the twelve months ending December 31, 2013; the outlook for our nitrogen fertilizer businesses; and the timing of our expansion projects and growth opportunities for the facilities. These statements are based on managements current expectations and actual results may differ materially as a result of various risks and uncertainties. Other factors that could cause actual results to differ from those reflected in the forward-looking statements are set forth in Rentech Nitrogens prior press releases and periodic public filings with the Securities and Exchange Commission, which are available via Rentech Nitrogens website at www.rentechnitrogen.com. The forward-looking statements in this press release are made as of the date of this press release and Rentech Nitrogen does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.
Source: Rentech Nitrogen Partners, L.P.
Rentech Nitrogen Partners, L.P.
Julie Dawoodjee Cafarella
Vice President of Investor Relations and Communications
310-571-9800
ir@rnp.net
Page 13 of 13