SUGAR LAND, Texas, Aug. 3, 2011 /PRNewswire/ -- CVR Partners, LP
(NYSE: UAN), a manufacturer of ammonia and urea ammonium nitrate
(UAN) solution fertilizer products, today announced second quarter
2011 net income of $38.2 million on
net sales of $80.7 million, compared
to $19.9 million net income on net
sales of $56.3 million for the second
quarter a year earlier.
(Logo:
http://photos.prnewswire.com/prnh/20080226/CVRLOGO)
Adjusted EBITDA for the second quarter 2011 was $45.0 million compared to $20.6 million adjusted EBITDA in the second
quarter 2010.
For the six-month period, net income was $54.9 million on net sales of $138.1 million compared to $26.0 million of net income on net sales of
$94.6 million for the comparable
period a year earlier. Adjusted EBITDA for the six month period in
2011 was $70.9 million compared to
adjusted EBITDA of $29.3 million for
the first six months a year earlier.
Net income for the abbreviated time frame between closing of the
CVR Partners initial public offering (IPO) on April 13, 2011, to the end of the second quarter
2011 was $30.8 million, or
42 cents per common unit. On
July 26, 2011, CVR Partners announced
its first-ever distribution based on available cash for the
abbreviated quarter of 40.7 cents per
common unit to unitholders of record on Aug.
5, 2011, payable on Aug. 12,
2011.
CVR Partners said that the company is well positioned to meet
the distributions guidance in its IPO prospectus of $1.92 per common unit for the four quarters
ending March 31, 2012.
"Despite being a publicly traded company for only part of the
second quarter, these earnings and rising prices for ammonia and
urea ammonium nitrate (UAN) let us reaffirm our distributions
guidance," said Byron Kelley,
president and chief executive officer. "In fact, had the
first 12 days of the second quarter counted toward common unit
results, net income would have been 52
cents per common unit.
"We are very pleased with these results," he added. "For
the second quarter, and indeed the entire first half of the year,
CVR Partners realized high reliability at its manufacturing
operations. This is a testament to the skill of our
employees, which let us take advantage of much improved product
prices year over year."
For the second quarter 2011, average realized plant gate prices
for ammonia and UAN were $574 per ton
and $300 per ton respectively,
compared to $312 per ton and
$205 per ton respectively for the
equivalent period in 2010.
CVR Partners produced 102,300 tons of ammonia during the second
quarter of 2011, of which 28,200 net tons were available for sale
while the rest was upgraded to 179,400 tons of more highly valued
UAN. In the 2010 second quarter, the plant produced 105,200
tons of ammonia with 38,700 net tons available for sale with the
remainder upgraded to 162,900 tons of UAN.
Ammonia production was down slightly in 2011 due to the sale of
$6.1 million of hydrogen under an
existing feedstock and shared services agreement with the refinery
located adjacent to the nitrogen fertilizer plant and operated by
Coffeyville Resources Refining & Marketing (CRRM). The
price realized for hydrogen sold to CRRM and included in CVR
Partners net sales was based on a ratio that approximates the value
of the hydrogen to CVR Partners had it been converted to
ammonia.
On-stream factors during the second period were 99.3 percent for
the gasifiers, 98.5 percent for the ammonia synthesis loop, and
97.6 percent for the UAN conversion facility.
On April 13, 2011, CVR Partners
closed its initial public offering and sold an aggregate 22.1
million common units, or 30.2 percent of the limited partnership
interests, to the public at $16 per
common unit.
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
You can generally identify forward-looking statements by our use of
forward-looking terminology such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "intend," "may,"
"might," "plan," "potential," "predict," "seek," "should," or
"will," or the negative thereof or other variations thereon or
comparable terminology. These forward-looking statements are only
predictions and involve known and unknown risks and uncertainties,
many of which are beyond our control. For a discussion of risk
factors which may affect our results, please see the risk factors
and other disclosures included in our Prospectus dated April 7, 2011, and filed with the SEC on
April 11, 2011, and other filings
with the SEC. These risks may cause our actual results,
performance or achievements to differ materially from any future
results, performance or achievements expressed or implied by these
forward-looking statements. Given these risks and uncertainties,
you are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included
in this press release are made only as of the date hereof. The
Partnership undertakes no duty to update its forward-looking
statements.
About CVR Partners, LP
Headquartered in Sugar Land,
Texas, with manufacturing facilities located in Coffeyville, Kan., CVR Partners, LP is a
Delaware limited partnership
focused primarily on the manufacture of nitrogen fertilizers. The
CVR Partners nitrogen fertilizer manufacturing facility is the only
operation in North America that
uses a petroleum coke gasification process to produce nitrogen
fertilizer and includes a 1,225 ton-per-day ammonia unit, a 2,025
ton-per-day urea ammonium nitrate unit, and a dual-train gasifier
complex having a capacity of 84 million standard cubic feet per day
of hydrogen.
CVR
Partners, LP
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The following tables summarize
the financial data and key operating statistics for CVR Partners,
LP (the "Partnership") for the three and six months ended June 30,
2011 and 2010. Select balance sheet data is as of June 30,
2011 and December 31, 2010.
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Three Months
Ended
|
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Six Months
Ended
|
|
|
|
June
30,
|
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June
30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
Consolidated Statement of
Operations Data:
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$ 80.7
|
|
$ 56.3
|
|
$ 138.1
|
|
$ 94.6
|
|
Cost of product sold —
Affiliates*
|
|
2.9
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|
1.1
|
|
4.3
|
|
2.1
|
|
Cost of product sold — Third
parties*
|
|
6.8
|
|
10.8
|
|
12.9
|
|
14.8
|
|
Direct operating expenses —
Affiliates*
|
|
0.2
|
|
0.5
|
|
0.8
|
|
1.0
|
|
Direct operating expenses —
Third parties*
|
|
22.1
|
|
20.8
|
|
44.5
|
|
42.5
|
|
Insurance recovery - business
interruption
|
|
—
|
|
—
|
|
(2.9)
|
|
—
|
|
Selling, general and
administrative expenses — Affiliates*
|
|
3.3
|
|
1.5
|
|
9.7
|
|
4.4
|
|
Selling, general and
administrative expenses — Third parties*
|
|
1.4
|
|
0.4
|
|
3.4
|
|
1.0
|
|
Depreciation and
amortization
|
|
4.7
|
|
4.7
|
|
9.3
|
|
9.3
|
|
Operating
income
|
|
$ 39.3
|
|
$ 16.5
|
|
$ 56.1
|
|
$ 19.5
|
|
Interest expense and other
financing costs
|
|
(1.2)
|
|
—
|
|
(1.2)
|
|
—
|
|
Interest income
|
|
—
|
|
3.5
|
|
—
|
|
6.6
|
|
Other income (expense),
net
|
|
0.1
|
|
(0.1)
|
|
—
|
|
(0.1)
|
|
Income before income tax
expense
|
|
$ 38.2
|
-
|
$ 19.9
|
|
$ 54.9
|
-
|
$ 26.0
|
|
Income tax expense
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net
income
|
|
$ 38.2
|
$ -
|
$ 19.9
|
|
$ 54.9
|
$ -
|
$ 26.0
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_______________
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* Amounts shown are exclusive of
depreciation and amortization.
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|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
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|
Net income subsequent to initial
public offering
(April 13, 2011 through
June 30, 2011) **
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|
$ 30.8
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|
$ 30.8
|
|
|
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Net income per common unit -
basic **
|
|
$ 0.42
|
|
|
|
$ 0.42
|
|
|
|
Net income per common unit -
diluted **
|
|
$ 0.42
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|
|
|
$ 0.42
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|
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|
Weighted average, number of
common units outstanding (in thousands):
|
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|
|
|
|
|
|
|
|
Basic
|
|
73,001
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|
|
73,001
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|
|
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Diluted
|
|
73,044
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|
|
|
73,044
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**
|
Reflective of net income per
common unit since closing the Partnership's initial public offering
("Offering") on April 13, 2011. The Partnership has omitted net
income per unit for the periods in 2010 because the Partnership
operated under a different capital structure prior to the closing
of the Offering and, as a result, the per unit data would not be
meaningful to investors. Based upon the full quarter's net income,
net income per common unit would have been $0.52 per common
unit.
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As of June
30,
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As of
December 31,
|
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|
2011
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|
2010
|
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(in
millions)
|
|
|
(unaudited)
|
|
|
|
Balance Sheet
Data:
|
|
|
|
|
Cash and cash
equivalents
|
$
229.8
|
|
$
42.7
|
|
Working capital
|
231.6
|
|
27.1
|
|
Total assets
|
640.7
|
|
452.2
|
|
Total debt
|
125.0
|
|
—
|
|
Partners' capital
|
484.2
|
|
402.2
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
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|
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Other Financial
Data:
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in)
operating activities
|
|
$
18.0
|
|
$
(3.6)
|
|
$
50.2
|
|
$
29.6
|
|
Cash flows used in investing
activities
|
|
(4.0)
|
|
(0.8)
|
|
(5.8)
|
|
(1.9)
|
|
Cash flows provided by (used in)
financing activities
|
|
144.4
|
|
4.4
|
|
142.6
|
|
(29.5)
|
|
Net cash flow
|
|
$
158.4
|
|
$
—
|
|
$
187.0
|
|
$
(1.8)
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
4.0
|
|
$
0.8
|
|
$
6.0
|
|
$
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
Non-GAAP
Measures:
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|
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|
|
Reconciliation of Net Income to
Adjusted Net Income and to Adjusted EBITDA:
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|
|
|
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|
|
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|
|
|
|
|
Net Income
|
|
$
38.2
|
|
$
19.9
|
|
$
54.9
|
|
$
26.0
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation (1)
|
|
0.9
|
|
(0.5)
|
|
5.5
|
|
0.6
|
|
Adjusted net income (2)
|
|
$
39.1
|
|
$
19.4
|
|
$
60.4
|
|
26.6
|
|
Major scheduled
turnaround expense
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Depreciation and
amortization
|
|
4.7
|
|
4.7
|
|
9.3
|
|
9.3
|
|
Interest (income)
expense
|
|
1.2
|
|
(3.5)
|
|
1.2
|
|
(6.6)
|
|
Adjusted EBITDA (3)
|
|
$
45.0
|
|
$
20.6
|
|
$
70.9
|
|
$
29.3
|
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|
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|
|
|
|
|
|
|
|
|
|
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|
|
Three Month
Ended
|
|
|
|
June 30,
2011
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Cash flows from operations
(4)
|
$
18.0
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Less: Deferred revenue balance
at June 30, 2011
|
(3.0)
|
|
|
|
|
Plus: Deferred revenue balance
at March 31, 2011
|
26.7
|
|
|
|
|
Less: Maintenance capital
expenditures, April 1 thru June 30, 2011
|
(3.0)
|
|
|
|
|
|
|
|
|
|
Available cash flow for full
quarter
|
$
38.7
|
|
$ 0.530
|
|
|
|
|
|
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|
|
Less: Cash Flows from Operations
April 1 through April 12, 2011
|
(3.9)
|
|
|
|
|
Less: Change in deffered revenue
balance from March 31, 2011
to April 12,
2011
|
(5.1)
|
|
|
|
|
|
|
|
|
|
Available cash flow for
distribution after IPO (April 13 - June 30)
|
$
29.7
|
|
$ 0.407
|
|
|
|
|
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|
|
Common units
outstanding
|
73,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(unaudited)
|
|
Nitrogen Fertilizer Key
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production (thousand
tons):
|
|
|
|
|
|
|
|
|
|
Ammonia (gross produced)
(5)
|
|
102.3
|
|
105.2
|
|
207.6
|
|
210.3
|
|
Ammonia (net available
for sale) (5)
|
|
28.2
|
|
38.7
|
|
63.4
|
|
76.9
|
|
UAN
|
|
179.4
|
|
162.9
|
|
350.0
|
|
326.7
|
|
|
|
|
|
|
|
|
|
|
|
Petroleum coke consumed
(thousand tons)
|
|
135.8
|
|
115.5
|
|
259.9
|
|
233.1
|
|
Petroleum coke (cost per
ton)
|
|
$
30
|
|
$
17
|
|
$
23
|
|
$
15
|
|
|
|
|
|
|
|
|
|
|
|
Sales (thousand
tons):
|
|
|
|
|
|
|
|
|
|
Ammonia
|
|
33.6
|
|
50.6
|
|
60.9
|
|
81.8
|
|
UAN
|
|
166.1
|
|
172.2
|
|
345.4
|
|
327.9
|
|
Total
sales
|
|
199.7
|
|
222.8
|
|
406.3
|
|
409.7
|
|
|
|
|
|
|
|
|
|
|
|
Product pricing (plant gate)
(dollars per ton) (6):
|
|
|
|
|
|
|
|
|
|
Ammonia
|
|
$
574
|
|
$
312
|
|
$
570
|
|
$
300
|
|
UAN
|
|
$
300
|
|
$
205
|
|
$
252
|
|
$
187
|
|
|
|
|
|
|
|
|
|
|
|
On-stream factors
(7):
|
|
|
|
|
|
|
|
|
|
Gasification
|
|
99.3%
|
|
92.2%
|
|
99.6%
|
|
94.0%
|
|
Ammonia
|
|
98.5%
|
|
90.4%
|
|
97.6%
|
|
92.3%
|
|
UAN
|
|
97.6%
|
|
89.1%
|
|
95.4%
|
|
89.8%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to net sales
(dollars in millions):
|
|
|
|
|
|
|
|
|
|
Freight in
revenue
|
|
$
5.4
|
|
$
5.2
|
|
$
10.2
|
|
$
8.8
|
|
Hydrogen
revenue
|
|
6.1
|
|
—
|
|
6.1
|
|
-
|
|
Sales net plant
gate
|
|
69.2
|
|
51.1
|
|
121.8
|
|
85.8
|
|
Total net
sales
|
|
$
80.7
|
|
$
56.3
|
|
$
138.1
|
|
$
94.6
|
|
|
|
|
|
|
|
|
|
|
|
Market
Indicators:
|
|
|
|
|
|
|
|
|
|
Natural gas NYMEX (dollars per
MMBtu)
|
|
$
4.38
|
|
$
4.35
|
|
$
4.29
|
|
$
4.67
|
|
Ammonia — Southern Plains
(dollars per ton)
|
|
$
604
|
|
$
359
|
|
$
605
|
|
$
345
|
|
UAN — Mid Cornbelt (dollars per
ton)
|
|
$
366
|
|
$
249
|
|
$
358
|
|
$
246
|
|
_______________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
CVR Partners has been allocated
non-cash share-based compensation expense from CVR Energy, Inc.,
its affiliates and former affiliates (collectively "CVR Energy").
CVR Energy accounts for share-based compensation in
accordance with Accounting Standards Codification ("ASC") Topic
718 Compensation – Stock
Compensation ("ASC 718") as well as guidance
regarding the accounting for share-based compensation granted to
employees of an equity method investee. In accordance with
ASC 718, CVR Energy applies a fair-value based measurement method
in accounting for share-based compensation. The Partnership
recognizes the costs of the share-based compensation incurred by
CVR Energy on its behalf, primarily in selling, general and
administrative expenses (exclusive of depreciation and
amortization), and a corresponding increase or decrease to
Partners' Capital, as the costs are incurred on its behalf,
following the guidance issued by the FASB regarding the accounting
for equity instruments that are issued to other than employees for
acquiring, or in conjunction with selling goods or services, which
require remeasurement at each reporting period through the
performance commitment period, or in the Partnership's case,
through the vesting period. Costs are allocated by CVR Energy based
upon the percentage of time a CVR Energy employee provides services
to CVR Partners. In accordance with a services agreement
between the entities, CVR Partners will not be responsible for the
payment of cash related to any share-based compensation allocated
to it by CVR Energy.
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
Six Months
Ended
June 30,
|
|
|
|
2011
|
|
2010
|
2011
|
|
2010
|
|
|
|
(in
millions)
|
|
|
|
(unaudited)
|
|
Share-based compensation
recorded in direct operating expenses:
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$
—
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$(0.1)
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$0.4
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$0.1
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Share-based compensation
recorded in selling, general and administrative
expenses:
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0.9
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(0.4)
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5.1
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0.5
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Total share-based
compensation
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|
$
0.9
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$(0.5)
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$5.5
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$0.6
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(2)
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Adjusted net income results from
adjusting net income for items that the Partnership believes are
needed in order to evaluate results in a more comparative analysis
from period to period. For the three and six months ended June 30,
2011 and 2010, net income was adjusted for the impact of
share-based compensation. Adjusted net income is not a
recognized term under GAAP and should not be substituted for net
income as a measure of our performance but rather should be
utilized as a supplemental measure of financial performance in
evaluating our business. Management believes that adjusted net
income provides relevant and useful information that enables
external users of our financial statements, such as industry
analysts, investors, lenders and rating agencies to better
understand and evaluate our ongoing operating results and allow for
greater transparency in the review of our overall financial,
operational and economic performance.
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(3)
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Adjusted EBITDA is defined as
net income before income tax expense, net interest (income)
expense, depreciation and amortization expense and certain other
items management believes affect the comparability of operating
results. For the three and six months ended June 30,
2011 and 2010, EBITDA was adjusted for the impact of share-based
compensation. Adjusted EBITDA is not a recognized term under
GAAP and should not be substituted for net income as a measure of
performance but should be utilized as a supplemental measure of
performance in evaluating our business. Management believes
that adjusted EBITDA provides relevant and useful information that
enables external users of our financial statements, such as
industry analysts, investors, lenders and rating agencies to better
understand and evaluate our ongoing operating results and allows
for greater transparency in the reviewing of our overall financial,
operational and economic performance. Management believes it
is appropriate to exclude certain items from EBITDA, such as
share-based compensation and major scheduled turnaround expenses
because management believes these items affect the comparability of
operating results.
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(4)
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CVR Partners has announced a
cash distribution of 40.7 cents per common unit for the second
quarter of 2011. This distribution is based on our available cash
flow and has been prorated for the portion of the quarter falling
after the closing of CVR Partners' initial public offering on April
13, 2011. We expect that "available cash"
for each quarter will generally be equal to our cash flow from
operations for the quarter, less cash needed for maintenance
capital expenditures, debt service and other contractual
obligations, and reserves for future operating or capital needs
that the board of directors of our general partner deems necessary
or appropriate. Additionally, the Partnership retained the cash on
hand associated with prepaid sales at the close of the Offering for
future distributions to common unitholders based upon the
recognition into income of the prepaid sales.
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Available cash is a
significant performance metric used by senior management to compare
cash flows generated by the Partnership (excluding maintenance
capital expenditures, debt service and other contractual
obligations, and reserves for future operating or capital needs as
deemed appropriate by the board of directors) to the cash
distributions expected to be paid to unitholders. Actual
distributions are set by the board of directors of our general
partner. The board of directors of our general partners may modify
our cash distribution policy at any time, and our partnership
agreement does not require us to make distributions at
all.
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Available cash is not a
calculation based on GAAP. Amounts derived in the
calculation are derived from amounts separately presented in our
consolidated financial statements; with the exception of
maintenance capital spend. The measure most directly
comparable to available cash is operating cash flow for which we
have reconciled to in this release. Available cash should not be
considered in isolation or as an alternative to net income or
operating income. It is presented here to support the quarterly
distribution. CVR Partners' available cash may not be comparable to
similarly titled measures of other entities.
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(5)
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The gross tons produced for
ammonia represent the total ammonia produced, including ammonia
produced that was upgraded into UAN. The net tons available
for sale represent the ammonia available for sale that was not
upgraded into UAN.
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(6)
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Plant gate sales per ton
represent net sales less freight and hydrogen revenue divided by
product sales volume in tons in the reporting period. Plant gate
pricing per ton is shown in order to provide a pricing measure that
is comparable across the fertilizer industry.
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(7)
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On-stream factor is the total
number of hours operated divided by the total number of hours in
the reporting period. Excluding the impact of the Linde air
separation unit outage, the on-stream factors would have been 97.8%
for gasifier, 96.8% for ammonia and 95.3% for UAN for the three
months ended June 30, 2010. There were no adjusting events to the
on-stream factors for the three and six months ended June 30,
2011.
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Use of Non-GAAP Financial
Measures
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To supplement the actual results
in accordance with GAAP for the applicable periods, the Partnership
also uses non-GAAP measures as discussed above, which are adjusted
for GAAP-based results. The use of non-GAAP adjustments are
not in accordance with or an alternative for GAAP. The
adjustments are provided to enhance an overall understanding of the
Partnership's financial performance for the applicable periods and
are indicators management believes are relevant and useful for
planning and forecasting future periods.
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SOURCE CVR Partners, LP