Cvr Partners, Lp · NYSE:UAN
Cvr Partners, Lp — Investor Presentation (January 2012)
35 slides from Cvr Partners, Lp's investor presentation, Jan 13, 2012
Slide 1: January 2012
“Mw Ne January 2012
Slide 2: Safe Harbor
The following information contains forward-looking statements based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. You are cautioned not to p
Slide 3: Company Overview
Company Overview
Slide 4: IPO Closed on April 13, 2011
IPO Closed on April 13, 2011
Slide 5: Company Overview: Key Strategic Factors
Company Overview Key Strategic Factors Experienced management team Fully utilized capacity High run time rates Strategically located plant Favorable rail logistics Stable & economic feedstock
Slide 6: Experienced Management Team
Byron R. Kelley CEO Stan A. Riemann COO Frank A. Pici CFO and Treasurer Randal T. Maffett EVP Business Development Edmund S. Gross SVP, General Counsel & Secretary Kevan A. Vick EVP & GM Nitrogen Manufacturing Christopher G. Swanberg VP Environmental, Health & Safety Company Overview Experienced Man
Slide 7: Fully Utilized Capacity / High Utilization Rates
KS NE Company Overview Fully Utilized Capacity / High Utilization Rates 1) Adjusted for major scheduled turnaround, third-party outage on air separation unit and UAN vessel rupture. WA OR CA NV ID MT WY UT CO NM AZ TX OK SD ND MN IA MO AR LA WI IL Fertilizer Plant Corporate Headquarters LTM Q3 2011
Slide 8: Strategically Located Assets & Logistics
KS NE Additional Shipments East of the Mississippi Company Overview Strategically Located Assets & Logistics WA OR CA NV ID MT WY UT CO NM AZ TX OK SD ND MN IA MO AR LA WI IL Rail Distribution LTM Q3 2011 Tons Sold by State 100,000+ 10,000 to 100,000 Up to 10,000 Corporate Headquarters Fertilizer Pl
Slide 9: Stable & Economic Feedstock
Texas Gulf Coast Coke Production = 40,000 tons/day Company Overview Stable & Economic Feedstock Rail Distribution Corporate Headquarters Fertilizer Plant Abundant Supply of Third-Party Pet Coke in the Region Source: Oil & Gas Journal CVR Partners LP 2008 – 2010 average daily coke demand ~ 1,378 tons
Slide 10: Market Fundamentals
Market Fundamentals Market Fundamentals
Slide 11: Key Growth Factors
Market Fundamentals Key Growth Factors Fertilizer consumption is driven by: — Population growth — Decline in farmland per capita — Income growth in emerging markets, preference for proteins — Ethanol production
Slide 12: Key Growth Factors
Market Fundamentals Key Growth Factors Source: USDA, Census Bureau, World Bank, http://data.worldbank.org/indicator/AG.LND.ARBL.HA.PC
Slide 13: Consistent Fertilizer Demand Growth
Market Fundamentals Consistent Fertilizer Demand Growth 1) Per the International Fertilizer Industry Association Nitrogen represents ~63% of fertilizer consumption (1) Nitrogen based fertilizers have the most stable demand because they all must be applied annually — Primary determinant of crop yield
Slide 14: Global Shift in Cost of Production
Market Fundamentals Global Shift in Cost of Production Source: European prices converted from GBP/Therm to $/MMBtu, based on daily exchange rate Historical Sources: Capital IQ NBP Monthly Spot Rate, Henry Hub Monthly Spot Rate Forecast Sources: Capital IQ NBP Forward Rate 01/06/12, Henry Hub Futures
Slide 15: Supply Rationalization and Consolidation
Market Fundamentals Supply Rationalization and Consolidation (000 Tonnes N) Historical U.S. Nitrogen Production and Consumption Source: Fertecon Between 1999 to 2010, U.S. nitrogen fertilizer capacity was reduced by 34% as producers shut down less attractive plants Industry has also consolidated sig
Slide 16: Farmer Profitability Supports Fertilizer Pricing
Market Fundamentals Farmer Profitability Supports Fertilizer Pricing Corn Spot Prices Note: Fixed Costs include labor, machinery, land, taxes, insurance, an d other. 5-Yr Prior Avg. $2.17 5-Yr Avg. $4.67 Current $6.43* *As of Jan. 06, 2012 Source: CIQ *As of Jan. 06, 2012 Source: CIQ, USDA
Slide 17: Strong Pricing Environment
Source: Green Markets Data, Fertecon Market Fundamental Strong Pricing Environment
Slide 18: UAN Demand Growth
Market Fundamentals UAN Demand Growth Source: Integer Focus Report 2011: Global Outlook for UAN Demand Growth
Slide 19: Growth Opportunities
Growth Opportunities Growth Opportunities
Slide 20: Growth Opportunities: Current, 12-24 Months, 3-5 Years
Growth Opportunities Current 12-24 Months 3-5 Years
Slide 21: UAN Expansion
Growth Opportunities UAN Expansion (000’s Tons of UAN) UAN Upgrading Capacity 1) Excludes $5MM of capitalized interest UAN expansion project — Increase exposure to strong UAN market dynamics — Expand UAN capacity by 400,000 tons per year or by ~50% — Provides flexibility to upgrade 100% of ammonia t
Slide 22: Diesel Emission Fluid (DEF)
Growth Opportunities Diesel Emission Fluid (DEF) * FERTECON Ammonia Outlook – Issue (3) P. DEF is the most widely accepted technology for reducing NOX and particulate matter from diesel vehicle exhaust emissions Solution of 32.5% urea and 67.5% water injected at approximately 2% of fuel consumption
Slide 23: Enhanced Distribution
Growth Opportunities Enhanced Distribution Logistic assets are key to enhancing annual margin during the shift between application and fill season Target 60,000 – 70,000 tons per year of sales through off premise storage facilities Net margin increased by $15 per ton
Slide 24: Financial Statistics
Financial Statistics Financial Statistics
Slide 25: Financial Statistics
1) Plant gate price per ton represents net sales less freight costs and hydrogen revenue (from hydrogen sales to CVR Energy’s refinery) divided by product sales volume in tons in the reporting period. Plant gate price per ton is shown in order to provide a pricing measure that is comparable across t
Slide 26: Strong YTD Financial Performance
We expect our distribution for the 12 months ending March 31, 2012 to be at least $1.92 per common unit yielding 7.3% as of January 12, 2012. Financial Statistics Strong YTD Financial Performance
Slide 27: Forecasted Distributable Cash
Financial Statistics Forecasted Distributable Cash 1) Based on projected cost structure as provided in our prospectus dated April 7, 2011. 2) Based on year average Ammonia and UAN spot prices of $467/ton and $292/ton respectively and forecasted next twelve months cost structure.
Slide 28: Strong industry fundamentals
Strong industry fundamentals High quality, strategically located assets Premium product focus Attractive growth opportunities Pay out 100% of available cash each quarter to Common Unitholders No IDR’s Experienced management team
Slide 29: Q & A
Q & A
Slide 30: Appendix
Appendix Appendix
Slide 31: Process flow diagram
Linde Air Nitrogen Separation Unit ‘Syngas (Hydrogen) memo Ammonia Synthesis UAN synthesis Hydrogen Hydrogen
Slide 32: Non-GAAP Financial Measures
To supplement the actual results in accordance with U.S. generally accepted accounting principles (GAAP), for the applicable periods, the Company also uses certain non-GAAP financial measures as discussed below, which are adjusted for GAAP-based results. The use of non-GAAP adjustments are not in ac
Slide 33: EBITDA definition
EBITDA: EBITDA represents net income before the effect of interest expense, interest income, income tax expense (benefit) and depreciation and amortization. EBITDA is not a calculation based upon GAAP; however, the amounts included in EBITDA are derived from amounts included in the consolidated stat
Slide 34: Reconciliation of Net Income to EBITDA
Below is a reconciliation of Net Income to EBITDA (In USD Millions) LTM Q3 2011 Net Income $118.9 $57.9 $33.3 $85.0 Interest expense - - - 2.7 Interest (income) (2.0) (9.0) (13.1) (3.6) Depreciation and amortization 18.0 18.7 18.5 18.5 Income tax expense - - - - EBITDA $ 134.9 $ 67.6 $38.7 $102.6 No
Slide 35: Reconciliation of Net Income to EBITDA
Below is a reconciliation of Net Income to EBITDA Three Months Ended Nine Months Ended September 30, September 30, (in millions) (unaudited) Net Income $ 36.3 $ 13.5 $ 91.2 $ 39.5 Adjustments: Depreciation and amortization 4.7 4.5 13.9 13.9 Interest (income) expense 1.4 (3.0) 2.5 (9.6) Tax provision