Rentech Nitrogen Partners, L.P. Announces Selected Results and Cash Distribution for Second Quarter 2014

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The partnership is completing its review of impairments of goodwill of its Pasadena facility. The partnership expects an impairment of goodwill, a non-cash item, related to the Pasadena facility in the second quarter of 2014 of up to the remaining balance of approximately $27 million. The partnership currently expects to file its form 10-Q on schedule on Monday, with complete financial results for the periods. In the interest of timely disclosure, the partnership elected to disclose the partial results contained in this press release.D. Hunt Ramsbottom, CEO of Rentech Nitrogen, said, “Market conditions have improved for our East Dubuque facility, leading us to issue 2014 guidance today of approximately $100 million of Adjusted EBITDA for that facility. The same strength in ammonia prices that is helping results at East Dubuque is hurting our margins at Pasadena. Significantly lower product margins for Pasadena in recent weeks have led us to reduce our outlook for the year, to an Adjusted EBITDA loss of approximately $10 million. We expect to implement a restructured operating plan designed to generate positive Adjusted EBITDA from Pasadena’s fertilizer operations, even in a pricing environment as unfavorable as today’s. Additionally, we have engaged an advisory firm to help us evaluate terminalling proposals we have received, and consider other opportunities to maximize the value of our site along the Houston Ship Channel.”Mr. Ramsbottom continued, “The East Dubuque facility had a seasonally strong quarter, driven by robust demand and the increased output at that plant. We have locked in the majority of our sales and natural gas purchases for the year for East Dubuque.”Summary of Selected ResultsThe partnership currently expects to record in the second quarter an impairment of goodwill related to the Pasadena facility of up to the remaining balance of approximately $27 million. The partnership is completing its review of the goodwill and its impairment related to the Pasadena plant. The partial results reported below do not reflect the impact of any goodwill impairment in the second quarter.Three Months Ended June 30, 2014Revenues for the three months ended June 30, 2014 were $113.6 million, compared to $104.0 million for the same period in the prior year. Revenues increased 20% from the prior-year quarter at the East Dubuque, Illinois facility; they decreased 6% over the prior-year quarter at the Pasadena, Texas facility.Gross margin for the three months ended June 30, 2014 was 25%, compared to 38% for the same period last year.Adjusted EBITDA, which excludes the impact of the expected impairment of goodwill, for the three months ended June 30, 2014 was $30.7 million. This compares to $38.4 million in the corresponding 2013 period. A further explanation of Adjusted EBITDA, a non-GAAP financial measure, appears below in this press release.East Dubuque FacilityRevenues for the three months ended June 30, 2014 were $73.9 million, compared to $61.7 million for the same period last year. The increase was the result of higher ammonia and UAN deliveries, partially offset by lower sales prices for ammonia and UAN.Average sales prices per ton for the three months ended June 30, 2014 were 26% lower for ammonia and 14% lower for UAN, as compared with the same period last year. These two products comprised 88% of the total revenues for the three months ended June 30, 2014 and 84% of total revenues for the same period last year. The decreases in sales prices for ammonia and UAN were consistent with the decline in global nitrogen fertilizer prices between the two periods. These decreases were caused by significantly higher levels of low-priced urea in the global market, particularly from China. Prices were also affected by additional nitrogen fertilizer production brought on line in North America over the last 12 months.Gross profit was $33.0 million for the three months ended June 30, 2014; this compares to $37.5 million for the same period last year. Gross profit margin for the three months ended June 30, 2014 was 45%, compared to 61% for the same period last year.Adjusted EBITDA for the three months ended June 30, 2014 for the East Dubuque facility was $36.8 million. This compares to Adjusted EBITDA of $38.9 million in the corresponding period in 2013. A further explanation of Adjusted EBITDA, a non-GAAP financial measure, appears below in this press release.Pasadena FacilityRevenues for the three months ended June 30, 2014 were $39.7 million, compared to $42.2 million for the same period last year. A reduction in sales prices for all products was partially offset by an increase in ammonium sulfate sales volumes. Production of ammonium sulfate increased after the completion of the debottlenecking project in December 2013, and sales increased due to favorable weather during the planting season, and an increase in international sales.Average sales prices per ton dropped by 30% for ammonium sulfate and by 3% for sulfuric acid for the three months ended June 30, 2014, as compared with the same period last year. These two products comprised 93% of the Pasadena facility’s revenues for the three months ended June 30, 2014 and 87% for the same period last year. A higher proportion of export sales, priced lower than domestic sales, contributed to the decline in average product price. A global decline in nitrogen prices, along with higher exports of ammonium sulfate from China, put downward pressure on ammonium sulfate prices. The additional supplies from China originate from new plants that produce ammonium sulfate as a by-product of caprolactam.Gross loss was $4.7 million for the three months ended June 30, 2014, compared to gross profit of $2.4 million for the same period last year. Gross loss margin for the three months ended June 30, 2014 was 12% compared to gross profit margin of 6% for the same period last year. The decreases in gross profit and gross profit margin were primarily due to declines in average sales prices for ammonium sulfate, increases in the cost of raw materials and a write-down of inventories. For the three months ended June 30, 2014, the partnership wrote down ammonium sulfate inventory by $2.8 million because production costs exceeded estimated selling prices for that inventory. During the same period last year, the partnership wrote down ammonium sulfate inventory by $1.8 million.Adjusted EBITDA, which excludes the impact of the expected impairment of goodwill, for the three months ended June 30, 2014 for the Pasadena facility was a loss of $3.8 million. This compares to Adjusted EBITDA of $2.0 million in the corresponding period in 2013. A further explanation of Adjusted EBITDA, a non-GAAP financial measure, appears below in this press release.Six Months Ended June 30, 2014Revenues for the six months ended June 30, 2014 were $169.9 million, compared to $163.5 million for the same period in the prior year. Revenues increased 6% over the first six months in the prior year at the East Dubuque, Illinois facility; they remained flat over the prior-year six months at the Pasadena, Texas facility.Gross margin for the six months ended June 30, 2014 was 25%, compared to 38% for the same period last year.Adjusted EBITDA, which excludes the impact of the expected impairment of goodwill, for the six months ended June 30, 2014 was $42.2 million. This compares to $59.1 million in the corresponding 2013 period. A further explanation of Adjusted EBITDA, a non-GAAP financial measure, appears below in this press release.East Dubuque FacilityRevenues for the six months ended June 30, 2014 were $102.4 million, compared to $96.3 million for the same period last year. Increases in ammonia and UAN deliveries and natural gas sales were partially offset by lower sales prices for ammonia and UAN.Average sales prices per ton for the six months ended June 30, 2014 were 26% lower for ammonia and 11% lower for UAN, as compared with the same period last year. These two products comprised 80% of the total revenues for the six months ended June 30, 2014 and 81% of total revenues for the same period last year.Gross profit was $45.4 million for the six months ended June 30, 2014, compared to $56.2 million for the same period last year. Gross profit margin for the six months ended June 30, 2014 was 44%, compared to 58% for the same period last year.Adjusted EBITDA for the six months ended June 30, 2014 for the East Dubuque facility was $50.2 million. This compares to Adjusted EBITDA of $58.5 million in the corresponding period in 2013. A further explanation of Adjusted EBITDA, a non-GAAP financial measure, appears below in this press release.Pasadena FacilityRevenues for the six months ended June 30, 2014 were $67.5 million, compared to $67.3 million for the same period last year. An increase in ammonium sulfate sales volumes was almost completely offset by lower sales prices for all products and lower sales volumes for sulfuric acid and ammonium thiosulfate.A scarcity of rail cars throughout North America during the first half of 2014 hampered ammonium sulfate deliveries during the period. The Pasadena facility leased rail cars directly to help alleviate the problem, but the inability to move product affected opportunities to pursue additional business. The lack of rail cars also caused storage capacity constraints at the plant that required a curtailment of production for five days in April. Rail availability is now back to normal.Average sales prices per ton dropped by 34% for ammonium sulfate and by 9% for sulfuric acid for the six months ended June 30, 2014, as compared with the same period last year. These two products comprised 89% of total revenues for the six months ended June 30, 2014 and 86% of total revenues for the same period last year.Gross loss was $3.4 million for the six months ended June 30, 2014, compared to gross profit of $6.3 million for the same period last year. Gross loss margin for the six months ended June 30, 2014 was 5%, compared to gross profit margin of 9% for the same period last year. The decreases in gross profit and gross profit margin were primarily due to declines in average sales prices for ammonium sulfate and a write-down of inventories. For the six months ended June 30, 2014, the partnership wrote down ammonium sulfate inventory by $2.8 million because production costs exceeded estimated selling prices for that inventory. During the same period last year, the partnership wrote down sulfur, sulfuric acid and ammonium sulfate inventory by $2.3 million.Adjusted EBITDA, which excludes the impact of the expected impairment of goodwill, for the six months ended June 30, 2014 for the Pasadena facility was a loss of $3.5 million. This compares to Adjusted EBITDA of $5.2 million in the corresponding period in 2013. A further explanation of Adjusted EBITDA, a non-GAAP financial measure, appears below in this press release.OutlookThird Quarter 2014 GuidanceRentech Nitrogen expects results for the third quarter of 2014 to be seasonally low. The partnership provided the following forecast for product deliveries, consumption of inputs and maintenance capital expenditures for the period.Rentech Nitrogen Partners, L.P. Announces Selected Results and Cash Distribution for Second Quarter 20141Reflects only maintenance capital expenditures to be funded by cash generated by operations. Includes approximately $4 million of SA plant maintenance projects expected to be completed during the SA plant turnaround.2014 ProgressThe partnership provided the following key operating metrics, progress against its forecasted product deliveries, and consumption of inputs for 2014 for the East Dubuque and Pasadena facilities:Second Quarter Cash Available for DistributionCash available for distribution for the quarter was $5.1 million, or $0.13 per unit, which reflects a retention of $18.1 million to complete the replenishment of working capital reserves that were diminished by negative cash available for distribution in the fourth quarter of 2013. The partnership announced on July 24 that it has secured a new revolving credit facility with $50.0 million of unused capacity.The distribution will be paid on August 29, 2014 to unit holders of record as of August 22, 2014. The calculation of the cash available for distribution appears below in this press release.Rentech Nitrogen’s quarterly cash available for distributions are variable, based on the seasonality of planting, growing and harvesting cycles, which are influenced by weather conditions.Conference Call with ManagementRentech Nitrogen will hold a conference call today, August 7, 2014 at 1:30 p.m. PDT, during which senior management will review the Partnership’s 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 800-774-6070 or 630-691-2753 and entering the pass code 9432139#. 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 4:00 p.m. PDT on August 7 through 11:59 p.m. PDT on August 17. The replay teleconference will be available by dialing 888-843-7419 or 630-652-3042 and entering the audience passcode 9432139#.Key Operating Statistics: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 Nitrogen’s 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; it 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. Get our daily Pasadena newspaper in your email box. Free.Get all the latest Pasadena news, more than 10 fresh stories daily, 7 days a week at 7 a.m. Community News Business Districts News Rentech Nitrogen Partners, L.P. Announces Selected Results and Cash Distribution for Second Quarter 2014 From STAFF REPORTS Published on Friday, August 8, 2014 | 12:06 pm faithfernandez More » ShareTweetShare on Google+Pin on PinterestSend with WhatsApp,Virtual Schools PasadenaHomes Solve Community/Gov/Pub SafetyPASADENA EVENTS & ACTIVITIES CALENDARClick here for Movie Showtimes Pasadena’s ‘626 Day’ Aims to Celebrate City, Boost Local Economy More Cool Stuff 7 recommended0 commentsShareShareTweetSharePin it Your email address will not be published. Required fields are marked *last_img read more