Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CVR PARTNERS, LP | uan8-kq22017earningspresen.htm |
CVR Partners, LP
2nd Quarter 2017 Earnings Report
July 27, 2017
1
The following presentation contains forward-looking statements based on management’s
current expectations and beliefs, as well as a number of assumptions concerning future
events. The assumptions and estimates underlying forward-looking statements are inherently
uncertain and, although considered reasonable as of the date of preparation by the
management team of our general partner, are subject to a wide variety of significant business,
economic, and competitive risks and uncertainties that could cause actual results to differ
materially from those contained in the prospective information. Accordingly, there can be no
assurance that we will achieve the future results we expect or that actual results will not differ
materially from expectations.
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, but not
limited to those set forth under “Risk Factors” in CVR Partners, LP’s Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and any other filings CVR Partners, LP makes 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, except as required by law.
Safe Harbor Statement
2
Consolidated Selected Financials
(All information in this earnings report is unaudited other than the balance sheet data as of December 31, 2016)
On April 1, 2016, CVR Partners, LP
(the "Partnership") completed the
merger (the "East Dubuque Merger")
whereby the Partnership acquired a
nitrogen fertilizer manufacturing facility
located in East Dubuque, Illinois (the
"East Dubuque Facility").
The consolidated financial statements
and key financial metrics contained in
this presentation include the results of
the East Dubuque Facility beginning
on April 1, 2016, the date of the
closing of the acquisition.
(1) Definition of this non-GAAP financial measure is on slide 7.
(2) Reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is on slide 8.
Consolidated Financial Results and Cash Flow Data
(In millions)
6/30/2017 6/30/2016 6/30/2017 6/30/2016
Net Sales 97.9$ 119.8$ 183.2$ 192.9$
Operating Income 12.2$ 3.7$ 17.5$ 23.4$
Net Income (Loss) (3.5)$ (17.0)$ (13.8)$ 1.0$
Adjusted EBITDA (1)(2) 32.3$ 29.1$ 53.1$ 57.0$
Cash Flow Provided By (Used In) Operations (23.0)$ 5.5$ 7.0$ 29.1$
Cash Flow Used In Investing Activities (4.5)$ (74.0)$ (8.6)$ (75.7)$
Cash Flow Provided By (Used In) Financing Activities (2.3)$ 92.8$ (2.3)$ 72.9$
Net Increase (Decrease) In Cash and Cash Equivalents (29.8)$ 24.3$ (3.9)$ 26.3$
Maintenance Capital Expenditures 4.4$ 4.1$ 8.4$ 4.9$
Growth Capital Expenditures 0.1$ 6.0$ 0.2$ 7.0$
Total Capital Expenditures 4.5$ 10.1$ 8.6$ 11.9$
Balance Sheet
(In millions)
6/30/2017 12/31/2016
Cash and Cash Equivalents 51.7$ 55.6$
Working Capital 87.9$ 71.5$
Total Assets 1,280.6$ 1,312.2$
Total Debt, including current portion 624.5$ 623.1$
Partners' Capital 608.9$ 624.9$
Second Quarter Year to Date
as of
3
Key Performance Indicators
Coffeyville On-Stream Rates(1) East Dubuque On-Stream Rates
Consolidated Sales (thousand tons) Consolidated Product Pricing at Gate ($ / ton)
(1) The Linde air separation unit experienced a shut down during the second quarter of 2017. Following the Linde outage, the Coffeyville Facility UAN unit experienced a number
of operational challenges, resulting in approximately 11 days of UAN downtime during the three months ended June 30, 2017. Excluding the impact of the Linde air separation
unit outage at the Coffeyville Facility, the UAN unit on-stream factors at the Coffeyville Facility would have been 99.5% and 98.1%, respectively, for the three and six months
ended June 30, 2017.
4
Capital Structure and Debt Metrics
(1) Amounts presented are gross debt not net of unamortized debt issuance costs or unamortized discount.
(2) Net debt is defined as total debt less cash and cash equivalents.
(3) Reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is on slide 9. The summary unaudited pro forma financial
information for the LTM period assumes CVR Partners owned the East Dubuque Facility for all periods presented and also assumes the $645M principal
balance of the 2023 senior secured notes was outstanding for all periods presented. Pro forma net income (loss) has also been adjusted to exclude $13.0
million of nonrecurring expenses related to the fair value adjustment to acquisition-date inventory and deferred revenue. Pro forma net income (loss)
includes incremental depreciation resulting from increased fair value of the property, plant and equipment. The summary pro forma financial information is for
informational purposes only and does not purport to represent what the Partnership's consolidated results of operations actually would have been if the East
Dubuque Merger or financing transactions had occurred at any date, and such data does not purport to project the Partnership's results of operations for any
future period.
LTM LTM LTM LTM
Q3 2016 Q4 2016 Q1 2017 Q2 2017
Cash and Cash Equivalents 65.3$ 55.6$ 81.5$ 51.7$
Total Debt, Including Current Portion
(1)
649.2$ 647.2$ 647.2$ 647.2$
Net Debt
(2)
583.9$ 591.6$ 565.7$ 595.5$
Partners' Capital 639.5$ 624.9$ 614.6$ 608.9$
Pro Forma Adjusted EBITDA
(3)
150.5$ 121.4$ 98.6$ 88.8$
Debt to Capital 50% 51% 51% 52%
Net Debt to Capital, Net of Cash 48% 49% 48% 49%
Debt to Pro Forma Adjusted EBITDA 4.3 5.3 6.6 7.3
Net Debt to Pro Forma Adjusted EBITDA 3.9 4.9 5.7 6.7
($ in millions, except ratios)
5
Capital Spending
YTD
$-
$5
$10
$15
$20
$25
2014 2015 2016 2017 Estimate
Maintenance Profit and Growth
2014 2015 2016
YTD Q2
2017
2017
Estimate
Maintenance 4.7$ 9.6$ 13.7$ 8.4$ 15.0$
Profit and Growth 16.4 7.4 9.5 0.2 0.2
Total Capital Spending 21.1$ 17.0$ 23.2$ 8.6$ 15.2$
Appendix
7
To supplement the actual results in accordance with GAAP for the applicable periods, the
Partnership also uses non-GAAP financial measures as discussed below, which are reconciled
to GAAP-based results. These non-GAAP financial measures should not be considered an
alternative for GAAP results. The adjustments are provided to enhance an overall
understanding of the Partnership’s financial performance for the applicable periods and are
indicators management believes are relevant and useful for planning and forecasting future
periods.
EBITDA and Adjusted EBITDA. EBITDA represents net income (loss) before (i) interest
expense and other financing costs, net of interest income, (ii) income tax expense and (iii)
depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for share-based
compensation, non-cash; major scheduled turnaround expenses; gain or loss on
extinguishment of debt; loss on disposition of assets; expenses associated with the East
Dubuque Merger and business interruption insurance recovery. We present Adjusted EBITDA
because it is the starting point for our calculation of available cash for distribution. EBITDA
and Adjusted EBITDA are not recognized terms under GAAP and should not be substituted for
net income or cash flow from operations. Management believes that EBITDA and Adjusted
EBITDA enable investors to better understand our ability to make distributions to our common
unitholders, help investors evaluate our ongoing operating results and allow for greater
transparency in reviewing our overall financial, operational and economic performance.
EBITDA and Adjusted EBITDA presented by other companies may not be comparable to our
presentation, since each company may define these terms differently.
Non-GAAP Financial Measures
8
Non-GAAP Financial Measures
(1) Definition of this non-GAAP financial measure is on slide 7
($ in millions) 6/30/2017 6/30/2016 6/30/2017 6/30/2016
Net Income (loss) (3.5)$ (17.0)$ (13.8)$ 1.0$
Interest expense and other financing costs, net 15.7 15.5 31.4 17.2
Depreciation and amortization 20.0 17.6 35.4 24.5
Income tax expense - 0.1 - 0.1
EBITDA
(1)
32.2$ 16.2$ 53.0$ 42.8$
Major scheduled turnaround expenses 0.1 6.6 0.1 6.6
Loss on extinguishment of debt - 5.1 - 5.1
Expenses associated with the East Dubuque Merger - 1.2 - 2.5
Adjusted EBITDA (1) 32.3$ 29.1$ 53.1$ 57.0$
Second Quarter Year to Date
9
Non-GAAP Financial Measures
Pro Forma(2)
(1) Definition of this non-GAAP financial measure is on slide 7
(2) The summary unaudited pro forma financial information for the LTM period assumes CVR Partners owned the East Dubuque Facility for all periods
presented and also assumes the $645M principal balance of the 2023 senior secured notes was outstanding for all periods presented. Pro forma net income
(loss) has also been adjusted to exclude $13.0 million of nonrecurring expenses related to the fair value adjustment to acquisition-date inventory and
deferred revenue and also excludes expenses associated with the East Dubuque Merger. Pro forma net income (loss) includes incremental depreciation
resulting from increased fair value of the property, plant and equipment. The summary pro forma financial information is for informational purposes only and
does not purport to represent what the Partnership's consolidated results of operations actually would have been if the East Dubuque Merger or financing
transactions had occurred at any date, and such data does not purport to project the Partnership's results of operations for any future period.
($ in millions) Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Net Income (loss) 13.1$ 9.0$ 2.5$ (12.8)$ (14.5)$ (10.3)$ (3.5)$
Interest expense and other financing costs, net 15.8 15.8 15.3 15.7 15.8 15.7 15.7
Depreciation and amortization 18.3 18.6 17.6 16.4 17.2 15.4 20.0
Income tax expense - - 0.1 0.2 - - -
EBITDA
(1)
47.2$ 43.4$ 35.5$ 19.5$ 18.5$ 20.8$ 32.2$
Major scheduled turnaround expenses - - 6.6 - - - 0.1
Share-based compensation, non-cash 0.2 0.2 - - - - -
(Gain) on extinguishment of debt - - - - (0.2) - -
Insurance recovery - business interruption - - - (2.1) - - -
Adjusted EBITDA
(1)
47.4$ 43.6$ 42.1$ 17.4$ 18.3$ 20.8$ 32.3$
LTM LTM LTM LTM
($ in millions) Q3 2016 Q4 2016 Q1 2017 Q2 2017
Net Income (loss) 11.8$ (15.8)$ (35.1)$ (41.1)$
Interest expense and other financing costs, net 62.6 62.6 62.5 62.9
Depreciation and amortization 70.9 69.8 66.6 69.0
Income tax expense 0.3 0.3 0.3 0.2
EBITDA(1) 145.6$ 116.9$ 94.3$ 91.0$
Major scheduled turnaround expenses 6.6 6.6 6.6 0.1
Share-based compensation, non-cash 0.4 0.2 - -
(Gain) on extinguishment of debt - (0.2) (0.2) (0.2)
Insurance recovery - business interruption (2.1) (2.1) (2.1) (2.1)
Adjusted EBITDA
(1)
150.5$ 121.4$ 98.6$ 88.8$