Cvr Partners, Lp · NYSE:UAN
Cvr Partners, Lp — Investor Presentation (November 2013)
25 slides from Cvr Partners, Lp's investor presentation, Nov 12, 2013
Slide 1: Ready. Set. Grow. Maximizing Yields
READY. SET. GROW. MAXIMIZING YIELDS Investor Presentation November 2013 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 market fundamentals • Strategically located assets • Fully utilized capacity & high run time rates • Feed stock advantages • Experienced management team • Multiple opportunities for growth -- Growth-oriented partnership formed by CVR Energy, Inc. in June 2007 … I
Slide 4: Solid Market 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 World Population: 1950-2050 Source: USDA, Census Bureau, World Bank, http://data.worldbank.org/indicator/AG.LND.ARBL.HA.PC. He c ta re s P e r P e rs o n ( 1 ) World Farmland Per Capita 0.15 0.20 0.25 0.30 0.35 1970 1980 19
Slide 5: Consistent Growth in Fertilizer Demand
• Nitrogen represents ~62% of fertilizer consumption • Nitrogen fertilizers have most stable demand – Must be applied annually – Primary determinant of crop yield • Corn consumes the largest amount of nitrogen fertilizer Solid Market Fundamentals Consistent Growth in Fertilizer Demand Potash Note: N
Slide 6: Farmer Profitability Supports Fertilizer Price
Nitrogen Remains Small Portion of Farmer’s Cost Profile Solid Market Fundamentals Farmer Profitability Supports Fertilizer Price 6 NYSE:UAN 0 1 2 3 4 5 6 7 8 9 2008 2009 2010 2011 2012 3.68 4.19 3.46 3.53 5.41 Note: Fixed Costs include labor, machinery, land, taxes, insurance, and other. U.S. Farmer
Slide 7: Supply/Demand Imbalance for Nitrogen in U.S.
Solid Market 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 Production Imports Exports Consumption 0 0 0 ’s o f N it ro g en T o n s U.S. Nitrogen Production & Consumption Source: Fertecon. 7 NYSE:UAN • To meet demand req
Slide 8: Excess Demand Driving Net Imports of UAN
U.S. Net Imports of UAN were 23% of U.S. Demand in 2012 (1) Solid Market 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
Slide 9: Fertilizer Prices Remain Attractive
9 NYSE:UAN Solid Market Fundamentals Fertilizer Prices Remain Attractive $0 $200 $400 $600 $800 $1,000 2008 2009 2010 2011 2012 2013 Ammonia Urea UAN Spot Prices (U.S. Southern Plains) Ammonia Urea UAN 1/1/08 – 11/11/13 $550.88 $429.37 $314.47 11/8/10 – 11/11/13 (3 yr.) $621.10 $459.07 $343.74 11/12
Slide 10: Corn Inventory Impacts Planting Levels
USDA’s 2013 Year Ending Stocks to Use Unchanged from Sept. 2013 -- Expect 90 Million Acres or More to be Planted in 2014 -- Solid Market 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 p
Slide 11: Strategically Located Assets
Strategically Located Assets • Located in Corn Belt • 54% of corn planted in 2012 was within $45/UAN ton freight rate of plant • ~$15/UAN ton transportation advantage to Corn Belt vs. U.S. Gulf Coast * * Impacted by major scheduled turnaround. 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 impact of major scheduled turnaround (scheduled to occur every two years) and third party air separation unit outage. Including impact of turnaround and third party outage, on-stream efficiency
Slide 13: Feed Stock Advantages
Feed Stock Advantages 13 NYSE:UAN • Utilize pet coke as feed stock versus natural gas • Lower production cost compared to competition – Advantage when natural gas price is higher than ~$3.65/MMBtu* * Reflects estimated Henry Hub price, which excludes transportation cost to plant gate. Delivered to p
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 • 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.). NYSE:UAN • Ability to upgrade 100% of NH3 to UAN (1) – Expanded U
Slide 17: Historical Financial Success
Historical Financial Success (1.) Plant gate (netback) price per ton represents net sales less freight costs and hydrogen revenue (from hydrogen sales to CVR Refining' refinery) divided by product sales volume in tons in the reporting period. Netback price per ton is shown in order to provide a pric
Slide 18: Continued Growth in 2013
Continued Growth in 2013 Distributable Cash Flow Per Unit of $1.85 to $2.00 for 2013 Full Year -- $1.81 Paid to Unitholders for 2012 Full Year -- YTD 9/30/13 YTD 9/30/12 Sales $239.4 $234.7 EBITDA (1) $113.8 $115.7 Adjusted EBITDA (2) $116.1 $121.1 Operating Income $95.2 $99.8 Distributable Cash Flo
Slide 19: Strong Financial Profile
Strong Financial Profile ($US millions, unless otherwise noted) Capitalization As of 9/30/13 Cash & Equivalents $ 87.2 Credit Facility due April 2016: Term Loan 125.0 $25 million Revolver Total Debt $125.0 Partners' Equity 438.5 Total Capitalization (Book) $563.5 LTM EBITDA (1) $134.7 LTM Interest E
Slide 20: A Bright Outlook
A Bright Outlook • Strong 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 as discussed below, which are adjusted for GAAP-based results. The use of non-GA
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation See below for reconciliation of net income to EBITDA, EBITDA to Adjusted EBITDA, & EBITDA less maintenance capital See below for reconciliation of net income to EBITDA & EBITDA to Adjusted EBITDA Adjusted EBITDA: Defined as EBITDA further adjusted for the impact of share-base
Slide 25: Activities & Transactions: Seasonality and UAN Netback Pricing
Activities & Transactions January-March April-June July-September October-December Average Season Dealer/Distributor Fill Orders & Wheat Topdress Spring Planting Dealer/Distributor Fill Orders Dealer/Distributor Fill Orders & Fall Planting Crop No Planting Corn Planting No Planting Wheat Planting Ni