Terra Nitrogen Company, L.P. Reports Second Quarter
DEERFIELD, IL (August 3, 2016)—Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $98.7 million on net sales of $126.7 million for the quarter ended June 30, 2016. This compares to net earnings of $99.3 million on net sales of $153.6 million for the 2015 second quarter. Net earnings allocable to common units was $59.7 million ($3.22 per common unit) and $61.3 million ($3.31 per common unit) for the 2016 and 2015 second quarters, respectively. Results for the second quarter of 2016 included an unrealized net mark-to-market gain on natural gas derivatives of $27.3 million compared to a gain of $2.6 million in the second quarter of 2015. The derivative portfolio at June 30, 2016 includes natural gas derivatives that hedge a portion of 2016, 2017 and 2018 natural gas purchases.
For the first six months of 2016, TNCLP reported net earnings of $136.4 million on net sales of $234.7 million. This compares to net earnings of $158.3 million on net sales of $280.2 million for the first six months of 2015. Net earnings allocable to common units was $86.4 million ($4.66 per common unit) and $98.8 million ($5.34 per common unit) for the first six months of 2016 and 2015, respectively. Results for the first six months of 2016 included an unrealized net mark-to-market gain on natural gas derivatives of $25.0 million compared to a gain of $6.5 million for the first six months of 2015.
Analysis of Results
Net sales for the second quarter of 2016 totaled $126.7 million, compared to $153.6 million for the second quarter of 2015, with lower average realized selling prices for ammonia and UAN as well as decreased sales volumes of ammonia partially offset by increased sales volumes of UAN. Ammonia and UAN average selling prices were lower in the second quarter of 2016 due to greater nitrogen supply driven by global capacity additions, coupled with lower manufacturing and ocean freight costs, and softer global ammonia demand from industrial users including phosphate fertilizer production. UAN sales volume increased 28 percent and ammonia sales volume decreased 11 percent in the second quarter of 2016 compared to the second quarter of 2015. The increase in UAN sales volumes was driven by greater supply availability in the current quarter compared to the prior year's period. The increase in availability resulted from higher UAN production in the second quarter of 2016 compared to the second quarter of 2015, which included plant turnarounds.
Comparing the second quarter of 2016 to 2015, TNCLP’s:
Ammonia average selling prices decreased by 27 percent and UAN average selling prices decreased by 26 percent;
Ammonia sales volume decreased by 11 percent and UAN sales volume increased by 28 percent; and
Realized natural gas cost per MMBtu decreased by 4 percent.
Cash distributions depend on TNCLP’s earnings as well as cash requirements for working capital needs and capital expenditures. In the first half of 2016, capital expenditures were $20.2 million as compared to $67.4 million in 2015, with the decrease primarily due to the large plant turnaround activities in 2015 that did not recur in 2016. For the full year 2016, TNCLP is expected to have capital expenditures in the range of $30 million to $40 million.
TNCLP reported on August 3, 2016, the declaration of a cash distribution for the quarter ended June 30, 2016, of $2.58 per common unit payable August 31, 2016 to holders of record as of August 15, 2016.
Cash distributions per common unit also vary based on increasing amounts allocable to the General Partner when cumulative distributions exceed targeted levels. With this distribution, TNCLP cumulative distributions continue to exceed targeted levels.
The following information was filed by Terra Nitrogen Co L P De (TNH) on Wednesday, August 3, 2016 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
View differences made from one quarter to another to evaluate Terra Nitrogen Co L P De's financial trajectory
Compare this 10-Q Quarterly Report to its predecessor by reading our highlights to see what text and tables were removed, and by Terra Nitrogen Co L P De.
Ticker: TNH CIK: 879575 Form Type:10-Q Quarterly Report Accession Number: 0000879575-16-000031 Submitted to the SEC: Thu Aug 04 2016 11:40:12 AM EST Accepted by the SEC: Thu Aug 04 2016 Period: Thursday, June 30, 2016 Industry: Agricultural Chemicals