CVR PARTNERS, LP Q3 FY2024 earnings call

• Third quarter financial highlights: net sales of $125 million, net income of $4 million, EBITDA of $36 million, and a third quarter distribution of $1.19 per common unit declared.
• Facilities performance: consolidated ammonia plant utilization of 97% in the third quarter of 2024.
• Pricing: ammonia prices increased 9% and UAN prices increased 3% compared to the third quarter of 2023.
• Capital spending: $10 million spent on capital projects in the third quarter of 2024, primarily maintenance capital; estimated total capital spending for 2024 to be $39 million to $42 million, with $31 million to $33 million as maintenance capital.
• Geopolitical risks: represent a wildcard for the nitrogen fertilizer industry, with monitoring of Middle East developments impacting energy and fertilizer markets.
• Coffeyville facility: progressing on detailed engineering studies for utilizing natural gas as an alternative feedstock; pet coke costs expected to decline in 2025 due to softening pet coke prices in the U.S. with crude oil prices down.
• Debottlenecking projects: began implementing certain debottlenecking projects at both plants to improve reliability and production rates.
• Capital reserve: Board reserved capital in the third quarter to spend over the next 2 to 3 years to improve reliability and redundancy at the plants.

In the third quarter of 2024, CVR Partners reported net sales of $125 million. Net income was $4 million and EBITDA was $36 million. Ammonia production for the quarter was 212,000 gross tons, with 61,000 net tons available for sale, and an average selling price of $399 per ton for approximately 62,000 tons sold. UAN production was 321,000 tons, with approximately 336,000 tons sold at an average price of $229 per ton. Relative to the third quarter of 2023, ammonia sales volumes were in line, while UAN sales volumes were lower due to unplanned downtime at upgrading units, but prices for both ammonia and UAN increased in the third quarter of 2024 compared to the prior year.

• For the fourth quarter of 2024, ammonia utilization rate is expected to be between 92% and 97%, with potential downtime from the third-party air separation unit at Coffeyville.
• Direct operating expenses, excluding inventory impacts, are expected to be between $60 million and $70 million in the fourth quarter of 2024.
• Total capital spending for the fourth quarter of 2024 is expected to be between $19 million and $23 million.

• Geopolitical risks: significant fertilizer production capacity in regions like the Middle East, North Africa, and Russia impact the nitrogen fertilizer industry.
• Europe natural gas market: faces structural natural gas market issues with prices remaining high, affecting nitrogen fertilizer production costs.
• Mississippi River levels: low water levels could potentially impact grain movements, though not currently significantly affecting UAN and ammonia prices.

Q: Good morning, gentlemen. A couple of questions for me. First off, just with the river levels on the Mississippi abnormally low again. Is that having a positive impact on Corn Belt prices for UAN and ammonia?

A: We haven't seen any major impacts on either of those. A lot of the ammonia is - was positioned already, and there's a lot of ammonia that moves into the Corn Belt from pipeline. And same on UAN, a lot of what's needed in Corn Belt moved by rail. So it hasn't had a big impact on the marketplace. We're watching it closely more for grain movements. So as harvest is nearing completion, the ability to move grain could be impacted. And so, we're following that closely to see, how high storage gets and the ability to move grain, from the Midwest to the Gulf.

Q: And just with the Coffeyville natural gas project, I know you said you're going to complete some of the front-end engineering studies this quarter. But any rough guesstimates on how much that would cost? And how the company would look to fund that investment?

A: I'll start with the second question first. We've been setting aside reserves for growth capital, and that capital would be taken out of the reserve, if it's approved. And we roughly think it's about a $10 million project. That's what we think now. But we've already - that would be part of the reserve that, we've set aside for growth projects for the plant.

Q: Earlier this year, there was a 13D filing on your sister company, CVR Energy, potentially about a large owner evaluating options for CVR Partners. Any developments there that you are able to discuss, or comment on?

A: We don't really have anything to report on that - the 8-K that was filed. And so nothing new, no new news this quarter to report on that.