Cvr Partners, Lp · NYSE:UAN
Cvr Partners, Lp — Investor Presentation (May 2014)
25 slides from Cvr Partners, Lp's investor presentation, May 20, 2014
Slide 1: Ready. Set. Grow. Maximizing Yields - Investor Presentation May 2014
READY. SET. GROW. MAXIMIZING YIELDS Investor Presentation May 2014 NYSE:UAN
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. Interested parties are cau
Slide 3: Overview & Strategic Factors
Overview & Strategic Factors • Solid long-term industry fundamentals • Strategically located assets • Fully utilized capacity & high run-time rates • Feed stock benefits • Experienced management team • Multiple opportunities for growth -- Growth-oriented partnership formed by CVR Energy, Inc. in Jun
Slide 4: Solid Industry Fundamentals: Key Demand Drivers
P o u n d s ( lb s ) 0 2 4 6 8 10 1950 1970 1990 2010 2030 2050 B ill io n s o f P e o p le World Population Source: USDA, Census Bureau, FAO (http://www.fao.org/docrep/005/AC911E/ac911e05.htm) & World Bank ( http://data.worldbank.org/indicator/AG.LND.ARBL.HA.PC). A c re s P e r P e rs o n World Far
Slide 5: Solid Industry Fundamentals: Consistent Growth in Fertilizer Demand
• Nitrogen represents ~62% of fertilizer consumption • Nitrogen fertilizers have the most stable demand – Must be applied annually – Primary determinant of crop yield • Corn consumes largest amount of nitrogen fertilizer Solid Industry Fundamentals Consistent Growth in Fertilizer Demand Potash Note:
Slide 6: Farmer Profitability Supports Fertilizer Price
Nitrogen Remains Small Portion of Farmer’s Cost Profile Solid Industry Fundamentals Farmer Profitability Supports Fertilizer Price 6 NYSE:UAN $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 2009 2010 2011 2012 2013 $3.53 $5.54 $4.20 $3.46 $4.31 Note: Fixed Costs include labor, machinery, land, taxes, insurance, and o
Slide 7: Supply/Demand Imbalance for Nitrogen in U.S.
Solid Industry Fundamentals Supply/Demand Imbalance for Nitrogen in U.S. -4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 Production Imports Exports Consumption 0 0 0 ’s o f N it ro g en T o n s Total U.S. Nitrogen Supply & Demand Source: Blue, Johnson and Ass
Slide 8: Excess Demand Driving Net Imports of UAN
U.S. Net Imports of UAN were 23% of Demand in 2012 (1) Solid Industry Fundamentals Excess Demand Driving Net Imports of UAN Country 2008 2009 2010 2011 2012 Trinidad & Tobago 0 0 777 1,010 852 Russia 953 658 749 674 750 Canada 487 427 437 617 402 Romania 185 29 254 487 284 Egypt 174 0 123 117 221 Li
Slide 9: Fertilizer Prices Remain Attractive
9 NYSE:UAN Solid Industry Fundamentals Fertilizer Prices Remain Attractive $0 $200 $400 $600 $800 $1,000 2008 2009 2010 2011 2012 2013 2014 Ammonia Urea UAN Weekly Spot Prices (U.S. Southern Plains) Ammonia Urea UAN 1/1/08 – 5/19/14 $546 $429 $313 5/16/11 – 5/19/14 (3 yr.) $600 $463 $337 5/20/13 – 5
Slide 10: Corn Inventory Impacts Planting Levels
USDA Estimates Ended 2013 with Corn Stocks-to-Use of 8.4% -- 47% Lower Than Initial Projection in February 2013 -- Solid Industry Fundamentals Corn Inventory Impacts Planting Levels 10 NYSE:UAN 0 30 60 90 120 150 180 0 20 40 60 80 100 Planted Yield Yield Trend Line Millions of Acres Bushels per Acre
Slide 11: Strategically Located Assets
Strategically Located Assets • Located in Farm Belt • 53% of corn planted in 2013 was within ~$45/UAN ton freight rate of plant • ~$15/UAN ton transportation advantage to Corn Belt vs. U.S. Gulf Coast 11 NYSE:UAN
Slide 12: Fully Utilized Capacity & High Run Rates
Fully Utilized Capacity & High Run Rates (1) 1.0 ton of ammonia converts to 2.44 tons of UAN. (2) Excludes planned downtime for replacement of damaged catalyst, unplanned Linde air separation unit outages, impact of UAN expansion coming on-line, and unplanned downtime associated with weather issues.
Slide 13: Feed Stock Benefits
Feed Stock Benefits 13 NYSE:UAN • Utilize pet coke as feed stock versus natural gas • Anticipated lower production cost compared to competition when Henry Hub natural gas price is higher than approximately $4 per MMBtu • 70% of pet coke requirement contracted through 2027 – Abundant supply from 3rd
Slide 14: Experienced Management
Experienced Management 14 NYSE:UAN
Slide 15: Multiple Growth Opportunities
• Operational efficiency • Plant expand/enhance • Specialty products • Distribution/offsite storage • Mergers and acquisitions Multiple Growth Opportunities Current 12-36 Months 4-5 Years 15 NYSE:UAN
Slide 16: UAN Plant Expansion
• $130MM project completed in 2013 Q1 … full year of operations in 2014 • Capitalize on historical price premium of UAN to ammonia (NH3) UAN Plant Expansion UAN Price Premium to Ammonia* * Indicates price premium only (i.e., before incremental processing costs, etc.) based on weekly spot prices per
Slide 17: History of Financial Success
History of Financial Success (1) Plant gate (netback) price per ton represents net sales less freight revenue divided by product sales volume in tons in the reporting period. Netback price per ton is shown in order to provide a pricing measure that is comparable across the fertilizer industry. EBITD
Slide 18: Solid Start for 2014
Solid Start for 2014 Low Corn Inventory Led to Expectation that More Than 95 Million Acres Would be Planted in 2013 -- Resulted in Higher Fertilizer Prices for 2013 Planting Season as Compared to 2014 -- 2013 Q1 2014 Q1 Decrease UAN Price/Ton (1) $295 $253 14.2% Ammonia Price/Ton (1) $663 $479 27.8%
Slide 19: Strong Financial Profile
Strong Financial Profile ($U.S. millions, unless otherwise noted) Capitalization As of 3/31/14 Cash & Equivalents $85.9 Credit Facility due April 2016: Term Loan $125.0 $25 million Revolver Total Debt $125.0 Total Partners' Equity 430.3 Total Capitalization (Book) $555.3 Last Twelve Months (LTM) EBI
Slide 20: A Bright Outlook
A Bright Outlook • Solid industry fundamentals • High-quality & strategically located assets • Premium product focus • Attractive growth opportunities • Experienced management team • Pay out 100% of available cash each quarter • No IDRs or management fees for General Partner 20 NYSE:UAN
Slide 21: Appendix
, APPENDIX = ; MAXIMIZING YIELDS " _
Slide 22: Plant Process Flow Chart
Plant Process Flow Chart 22 NYSE:UAN
Slide 23: Non-GAAP Financial Measures
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, which are derived from our GAAP-based results. The use of non-GAAP adjustments
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted EBITDA: Defined as EBITDA further adjusted for the impact of share-based compensation, non-cash and, where applicable, major scheduled turnaround expense and loss on disposition of assets. We present Adjusted EBITDA because it is a key measure used in material covena
Slide 25: Activities & Transactions seasonal calendar
Activities & Transactions 25 NYSE:UAN January-March April-June July-September October-December Season Dealer/Distributor Fill Orders & Wheat Topdress Spring Planting Dealer/Distributor Fill Orders Dealer/Distributor Fill Orders & Fall Planting Crop No Planting Corn Planting Wheat Planting (Southern