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8-K - 8-K - TERRA NITROGEN CO L P /DEa13-23050_18k.htm

Exhibit 99.1

 

FOR MORE INFORMATION, CONTACT:

Dan Swenson

Senior Director, Investor Relations &

 

Corporate Communications

847/405-2515

 

dswenson@cfindustries.com

 

Terra Nitrogen Company, L.P. Reports Third Quarter 2013 Results and Announces Cash Distribution

 

DEERFIELD, IL (November 4, 2013)—Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $72.7 million on sales of $128.4 million for the quarter ended September 30, 2013.  This compares to net earnings of $131.8 million on net sales of $181.1 million for the 2012 third quarter.  Net income allocable to common units was $46.6 million ($2.52 per common unit) and $73.9 million ($4.00 per common unit) for the 2013 and 2012 third quarters, respectively.

 

Results for the third quarter of 2013 included an unrealized mark-to-market loss on natural gas derivatives of $0.9 million compared to a gain of $7.1 million in the third quarter of 2012.

 

For the first nine months of 2013, TNCLP reported net earnings of $388.8 million on net sales of $567.9 million.  This compares to net earnings of $410.8 million on net sales of $573.6 million for the first nine months of 2012.  Net earnings allocable to common units was $222.8 million ($12.04 per common unit) and $230.3 million ($12.45 per common unit) for the first nine months of 2013 and 2012, respectively.  Results for the first nine months of 2013 included a $0.1 million unrealized mark-to-market loss on natural gas derivatives compared to a gain of $9.6 million for the first nine months of 2012.

 

Analysis of Results

 

Net sales for the 2013 third quarter totaled $128.4 million, compared to sales of $181.1 million for the 2012 third quarter.  The decreases in net sales and earnings were due to lower volume and prices.  The decreases in sales volume for both ammonia and UAN were due to planned plant turn around activities during the third quarter of 2013.  The decrease in ammonia prices was due to higher industry-wide inventory from lower spring usage as a result of the delay in the U.S. planting season.  The decrease in UAN prices was due to weak global nitrogen prices as a result of increased nitrogen exports, primarily from China.

 

Comparing the 2013 to the 2012 third quarter, TNCLP’s:

 

·                  Ammonia and UAN average selling prices decreased by 8 and 6 percent, respectively;

·                  Ammonia and UAN sales volume decreased by 37 and 20 percent, respectively; and

·                  Realized natural gas costs per MMBtu increased by 10 percent.

 

Cash Distribution

 

TNCLP reported today the declaration of a cash distribution for the quarter ended September 30, 2013, of $2.02 per common limited partnership unit payable November 29, 2013, to holders of record as of November 15, 2013.

 



 

Cash distributions depend on TNCLP’s earnings, which can be affected by nitrogen fertilizer selling prices, natural gas costs, seasonal demand factors, production levels and weather, as well as anticipated cash requirements for working capital needs and capital expenditures.  For all of 2012, capital expenditures were $47.7 million.  In 2013, TNCLP is expected to have capital expenditures of approximately $100 million.  The capital program includes a rail yard expansion, new ammonia and UAN storage tanks, and control and electrical system upgrades.  Some of these projects may extend beyond 2013.  Cash distributions per limited partnership unit also vary based on increasing amounts allocable to the General Partner when cumulative distributions exceed targeted levels.  With this distribution, TNCLP cumulative distributions continue to exceed targeted levels.

 

This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b).  Please note that 100 percent of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business.  Accordingly, the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.

 

About TNCLP

 

Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen fertilizer products.

 

TNCLP is the sole limited partner of Terra Nitrogen, Limited Partnership (TNLP), owner of the Verdigris, Oklahoma, manufacturing facility and related assets.  Terra Nitrogen GP Inc., an indirect, wholly-owned subsidiary of CF Industries Holdings, Inc., is the General Partner of TNCLP and exercises full control over all of TNCLP’s business affairs.

 

Forward-Looking Statements

 

All statements in this communication, other than those relating to historical facts, are forward-looking statements.  These forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond TNCLP’s control, which could cause actual results to differ materially from such statements.  Important factors that could cause actual results to differ materially from expectations include, among others:

 

·                  risks related to TNCLP’s reliance on one production facility;

·                  the cyclical nature of TNCLP’s business;

·                  the global commodity nature of TNCLP’s fertilizer products, the impact of global supply and demand on TNCLP’s selling prices, and the intense global competition from other fertilizer producers;

·                  conditions in the U.S. agricultural industry;

·                  the volatility of natural gas prices in North America;

·                  reliance on third party transportation providers;

·                  weather conditions;

·                  potential liabilities and expenditures related to environmental and health and safety laws and regulations;

·                  future regulatory restrictions and requirements related to greenhouse gas emissions, climate change or other environmental requirements;

·                  risks associated with cyber security;

 



 

·                  TNCLP’s inability to predict seasonal demand for its products accurately;

·                  risks involving derivatives and the effectiveness of TNCLP’s risk measurement and hedging activities;

·                  limited access to capital;

·                  acts of terrorism and regulations to combat terrorism;

·                  risks related to TNCLP’s dependence on and relationships with CF Industries;

·                  deterioration of global market and economic conditions;

·                  control of TNCLP’s General Partner by CF Industries;

·                  the conflicts of interest that may be faced by the executive officers of TNCLP’s General Partner, who operate both TNCLP and CF Industries; and

·                  changes in TNCLP’s treatment as a partnership for U.S. or state income tax purposes.

 

More detailed information about factors that may affect TNCLP’s performance may be found in its filings with the Securities and Exchange Commission, including its most recent periodic reports filed on Form 10-K and Form 10-Q, which are available through CF Industries’ website. Forward-looking statements are given only as of the date of this release and TNCLP disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

# # #

 

Terra Nitrogen Company, L.P. news announcements are also available on CF Industries’ website, www.cfindustries.com.

 



 

TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED BALANCE SHEETS

 

 

 

(unaudited)

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2013

 

2012

 

 

 

(in millions, except for units)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

70.5

 

$

149.4

 

Demand deposits with General Partner Affiliates

 

 

5.4

 

Due from affiliates of the General Partner

 

19.9

 

 

Accounts receivable

 

1.2

 

0.6

 

Inventories

 

5.0

 

5.8

 

Prepaid expenses and other current assets

 

 

1.6

 

Total current assets

 

96.6

 

162.8

 

 

 

 

 

 

 

Property, plant and equipment, net

 

199.0

 

128.1

 

Other assets

 

7.3

 

7.7

 

Total assets

 

$

302.9

 

$

298.6

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

40.8

 

$

24.3

 

Due to affiliates of the General Partner

 

5.3

 

 

Other current liabilities

 

1.5

 

1.0

 

Total current liabilities

 

47.6

 

25.3

 

 

 

 

 

 

 

Noncurrent liabilities

 

1.5

 

1.5

 

 

 

 

 

 

 

Partners’ capital:

 

 

 

 

 

Limited partners’ interests, 18,501,576 Common Units authorized, issued and outstanding

 

232.9

 

238.3

 

Limited partners’ interests, 184,072 Class B Common Units authorized, issued and outstanding

 

1.0

 

1.2

 

General partner’s interest

 

19.9

 

32.3

 

Total partners’ capital

 

253.8

 

271.8

 

Total liabilities and partners’ capital

 

$

302.9

 

$

298.6

 

 



 

TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(in millions, except per unit amounts)

 

Net sales:

 

 

 

 

 

 

 

 

 

Product sales to an affiliate of the General Partner

 

$

128.1

 

$

180.2

 

$

566.8

 

$

572.1

 

Other income from an affiliate of the General Partner

 

0.1

 

0.1

 

0.5

 

0.5

 

Other income

 

0.2

 

0.8

 

0.6

 

1.0

 

Total

 

128.4

 

181.1

 

567.9

 

573.6

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold:

 

 

 

 

 

 

 

 

 

Materials, supplies and services

 

44.3

 

39.6

 

146.5

 

133.5

 

Services provided by the affiliates of the General Partner

 

7.3

 

5.5

 

19.0

 

16.1

 

Gross margin

 

76.8

 

136.0

 

402.4

 

424.0

 

Selling, general and administrative services provided by the affiliates of the General Partner

 

3.9

 

3.8

 

11.4

 

11.3

 

Other general and administrative expenses

 

0.2

 

0.4

 

2.2

 

1.9

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

72.7

 

131.8

 

388.8

 

410.8

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

72.7

 

$

131.8

 

$

388.8

 

$

410.8

 

 

 

 

 

 

 

 

 

 

 

Allocation of net earnings:

 

 

 

 

 

 

 

 

 

General Partner

 

$

25.4

 

$

56.6

 

$

162.2

 

$

176.5

 

Class B Common Units

 

0.7

 

1.3

 

3.8

 

4.0

 

Common Units

 

46.6

 

73.9

 

222.8

 

230.3

 

Net earnings

 

$

72.7

 

$

131.8

 

$

388.8

 

$

410.8

 

 

 

 

 

 

 

 

 

 

 

Net earnings per common unit

 

$

2.52

 

$

4.00

 

$

12.04

 

$

12.45

 

 



 

TERRA NITROGEN COMPANY, L.P.

SUMMARIZED OPERATING INFORMATION

 

 

 

Three months ended

 

Nine months ended

 

 

 

 

September 30,

 

September 30,

 

 

 

 

2013

 

2012

 

2013

 

2012

 

 

Sales volumes by product (tons in thousands)

 

 

 

 

 

 

 

 

 

 

Ammonia

 

56

 

89

 

225

 

273

 

 

UAN (1)

 

400

 

497

 

1,435

 

1,524

 

 

 

 

 

 

 

 

 

 

 

 

 

Average selling prices (dollars per ton)

 

 

 

 

 

 

 

 

 

 

Ammonia

 

$

479

 

$

518

 

$

603

 

$

504

 

 

UAN

 

253

 

270

 

300

 

285

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas costs/MMBtu (2)

 

$

3.62

 

$

3.28

 

$

3.59

 

$

3.24

 

 

 


1    The nitrogen content of UAN is 32% by weight.

2    Includes the cost of natural gas purchases and realized gains and losses on natural gas derivatives.