Terra Nitrogen Company, L.P. Reports Third Quarter
DEERFIELD, IL (November 2, 2016)—Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $28.8 million on net sales of $90.2 million for the quarter ended September 30, 2016. This compares to net earnings of $69.4 million on net sales of $150.2 million for the 2015 third quarter. Net earnings allocable to common units was $19.2 million ($1.04 per common unit) and $41.2 million ($2.23 per common unit) for the 2016 and 2015 third quarters, respectively. Results for the third quarter of 2016 included an unrealized net mark-to-market loss on natural gas derivatives of $3.3 million compared to a loss of $17.0 million in the third quarter of 2015. The derivative portfolio at September 30, 2016 includes natural gas derivatives that hedge a portion of natural gas purchases through 2018.
For the first nine months of 2016, TNCLP reported net earnings of $165.2 million on net sales of $324.9 million. This compares to net earnings of $227.7 million on net sales of $430.4 million for the first nine months of 2015. Net earnings allocable to common units was $105.6 million ($5.71 per common unit) and $140.0 million ($7.57 per common unit) for the first nine months of 2016 and 2015, respectively. Results for the first nine months of 2016 included an unrealized net mark-to-market gain on natural gas derivatives of $21.7 million compared to an unrealized net mark-to-market loss of $10.5 million for the first nine months of 2015.
Analysis of Results
Net sales for the third quarter of 2016 totaled $90.2 million, compared to $150.2 million for the third quarter of 2015, as lower average realized selling prices for ammonia and UAN, decreased sales volumes of UAN and higher natural gas costs were partially offset by increased sales volumes of ammonia. Ammonia and UAN average selling prices were lower in the third quarter of 2016 due to greater nitrogen supply driven by global capacity additions, lower manufacturing and ocean freight costs, delays in customer purchases, and softer global ammonia demand from industrial users including phosphate fertilizer production. UAN sales volume decreased 24 percent and ammonia sales volume increased 37 percent in the third quarter of 2016 compared to the third quarter of 2015. The decrease in UAN sales volumes was due primarily to delays in customer purchases of our products resulting from oversupplied global nitrogen market conditions. The increase in ammonia sales volume was due to favorable demand for ammonia compared to UAN.
Comparing the third quarter of 2016 to 2015, TNCLP’s:
Ammonia average selling prices decreased by 35 percent and UAN average selling prices decreased by 33 percent;
Ammonia sales volume increased by 37 percent and UAN sales volume decreased by 24 percent; and
Realized natural gas cost per MMBtu increased by 4 percent.
Cash distributions depend on TNCLP’s earnings as well as cash requirements for working capital needs and capital expenditures. For the first nine months of 2016, capital expenditures were $24.8 million as compared to $81.9 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 $35 million to $40 million.
TNCLP reported on November 2, 2016, the declaration of a cash distribution for the quarter ended September 30, 2016, of $1.77 per common unit payable November 30, 2016 to holders of record as of November 15, 2016. This compares to a cash distribution of $2.81 per common unit for the quarter ended September 30, 2015.
The following information was filed by Terra Nitrogen Co L P De (TNH) on Wednesday, November 2, 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.
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Ticker: TNH CIK: 879575 Form Type:10-Q Quarterly Report Accession Number: 0000879575-16-000037 Submitted to the SEC: Thu Nov 03 2016 12:39:03 PM EST Accepted by the SEC: Thu Nov 03 2016 Period: Friday, September 30, 2016 Industry: Agricultural Chemicals