Cvr Partners, Lp · NYSE:UAN
Cvr Partners, Lp — Investor Presentation (August 2014)
25 slides from Cvr Partners, Lp's investor presentation, Aug 20, 2014
Slide 1: Investor Presentation August 2014
Investor Presentation August 2014
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
• 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 -- Partnership formed by CVR Energy, Inc. in June 2007 … IPO in April 2011 -- -- Manufacturin
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: 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 Potash Note: Nutrient Tons; Fertilizer Years. Source: International Fertilizer
Slide 6: Corn Prices Continue to Support Fertilizer Use
Corn Prices Continue to Support Fertilizer Use Fertilizer is Smaller Component of Total Cost NYSE:UAN 6 Solid Industry Fundamentals 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2009 2010 2011 2012 2013 Fertilizer Portion of U.S. Farmer Total Input Costs Source: USDA. $2 $3 $4 $5 $6 $7 $8 $9 8 /1 4 /2 0 0 9 1 2
Slide 7: Nitrogen Supply/Demand Imbalance 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 Associates, Inc. • Fertilizer accounted for 72% of total nitrogen use in U.S
Slide 8: Excess Demand Driving Net Imports of UAN
U.S. Net Imports of UAN were 26% of Demand in 2013 (1) Country 2009 2010 2011 2012 2013 Trinidad & Tobago 0 777 1,010 852 719 Russia 658 749 674 750 1,315 Canada 427 437 617 402 333 Romania 29 254 487 284 238 Egypt 0 123 117 221 366 Lithuania 69 79 489 395 119 Ukraine 0 73 30 0 0 Poland 0 0 0 0 42 E
Slide 9: Fertilizer Prices Remain Attractive
$0 $200 $400 $600 $800 8 /1 7 /0 9 1 1 /1 7 /0 9 2 /1 7 /1 0 5 /1 7 /1 0 8 /1 7 /1 0 1 1 /1 7 /1 0 2 /1 7 /1 1 5 /1 7 /1 1 8 /1 7 /1 1 1 1 /1 7 /1 1 2 /1 7 /1 2 5 /1 7 /1 2 8 /1 7 /1 2 1 1 /1 7 /1 2 2 /1 7 /1 3 5 /1 7 /1 3 8 /1 7 /1 3 1 1 /1 7 /1 3 2 /1 7 /1 4 5 /1 7 /1 4 8 /1 7 /1 4 Ammonia Urea UA
Slide 10: Corn Inventory Impacts Planting Levels
USDA Estimates Ended 2013 with Corn Stocks-to-Use of 8.7% -- 45% Lower Than Initial Projection in February 2013 -- 0 30 60 90 120 150 180 0 20 40 60 80 100 Planted Yield Yield Trend Line Millions of Acres Bushels per Acre U.S. Corn Planted & Yields Source: USDA. U.S. Corn Supply & Use Note: 20-year
Slide 11: Blueprint for Success
Supported by Positive Industry Backdrop NYSE:UAN 11 Blueprint for Success • Leverage strategically located assets in key markets • Incrementally expand plant production and distribution capabilities • Selectively evaluate longer term opportunities • Focused on growing distributions – Investments to
Slide 12: 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 NYSE:UAN 12 Strategically Located Assets
Slide 13: Fully Utilized Capacity
(1) 1.0 ton of ammonia converts to approximately 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. Including these impacts, o
Slide 14: Feed Stock Benefits
• 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 parties available by truck and
Slide 15: Skilled Management Team
NYSE:UAN 15 Skilled Management Team Average More Than 30 Years of Experience Mark A. Pytosh: CEO & President 28 years William White: EVP Marketing & Operations 37 years Susan M. Ball: CFO & Treasurer 30 years Edmund S. Gross: SVP, General Counsel & Secretary 34 years
Slide 16: Multiple Growth Opportunities
• Operational efficiency • Plant expand/enhance • Specialty products • Distribution/offsite storage • Mergers and acquisitions Current 12-36 Months 4-5 Years NYSE:UAN 16 Multiple Growth Opportunities
Slide 17: Historical Financial Results
(1) Product price at 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. EBITDA 67.6 38.7 155.3
Slide 18: 2014 Results to Date
YTD 6/30/13 YTD 6/30/14 Decrease UAN Product Price at Gate Per Ton (1) $314 $267 15% Ammonia Product Price at Gate Per Ton (1) $668 $493 26% Net Sales $170.2 $157.5 7% EBITDA (2) $85.9 $55.4 36% Adjusted EBITDA (3) $87.9 $55.7 37% Operating Income $73.9 $41.9 43% Available Cash for Distribution $87.
Slide 19: Strong Financial Profile
($U.S. millions, unless otherwise noted) Capitalization As of 6/30/14 Cash & Equivalents $78.5 Credit Facility due April 2016: Term Loan $125.0 $25 million Revolver Total Debt $125.0 Total Partners' Equity 419.9 Total Capitalization (Book) $544.9 Last Twelve Months (LTM) EBITDA* $120.1 LTM Interest
Slide 20: A Bright Outlook
• Solid industry fundamentals • High-quality & strategically located assets • Premium product focus • Opportunities for growth • Experienced management team • Pay out 100% of available cash each quarter • General Partner has non-economic interest (no IDRs) NYSE:UAN 20 A Bright Outlook
Slide 21: Appendix
Appendix
Slide 22: Plant Process Flow Chart
Linde Air Separation Unit Oxygen Gasifier (2 Units) Pet Coke Pet Coke CVR Refining Refinery Third Party Supplier(s) Slag Ammonia Synthesis UAN Synthesis UAN Product Ammonia Product Nitrogen Syngas (Hydrogen) Ammonia 22 NYSE:UAN Plant Process Flow Chart
Slide 23: Non-GAAP Financial Measures
To supplement the actual results in accordance with U.S. generally accepted accounting principles (GAAP), for the applicable periods, the Partnership also uses certain non-GAAP financial measures, which are derived from our GAAP-based results. The use of non-GAAP adjustments are not in accordance wi
Slide 24: EBITDA and Adjusted EBITDA 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 covenants in our credit facili
Slide 25: Seasonality of Crops, Nitrogen Need and Pricing
25 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 Territories) Wheat Planting Nitroge