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Terra Nitrogen Company, L.P. Reports First Quarter
DEERFIELD, IL (May 3, 2017)—Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $42.2 million on net sales of $119.0 million for the quarter ended March 31, 2017. This compares to net earnings of $37.7 million on net sales of $108.0 million for the 2016 first quarter. Net earnings allocable to common units was $38.8 million ($2.10 per common unit) and $26.7 million ($1.44 per common unit) for the 2017 and 2016 first quarters, respectively. Results for the first quarter of 2017 included an unrealized net mark-to-market loss on natural gas derivatives of $7.9 million compared to a loss of $2.3 million in the first quarter of 2016. The derivative portfolio at March 31, 2017 includes natural gas derivatives that hedge a portion of natural gas purchases through 2018.
Analysis of Results
Net sales for the first quarter of 2017 totaled $119.0 million, compared to $108.0 million for the first quarter of 2016, as significantly higher sales volumes of ammonia and urea ammonium nitrate (UAN) were partially offset by lower average selling prices for both products.
Sales volumes for ammonia and UAN increased 40 percent and 47 percent, respectively, due to increased supply availability of both products. Production was higher as the entire complex ran well in the first quarter of 2017 compared to the first quarter of 2016 when one of the ammonia plants experienced an unplanned outage that resulted in lower volumes of ammonia and UAN available for sale. Additionally, the first quarter of 2017 saw favorable weather drive strong early season ammonia and UAN demand in the Southern Plains and lower Midwest.
Ammonia and UAN average selling prices declined in the first quarter of 2017 compared to the first quarter of 2016 due to greater global nitrogen supply availability.
Comparing the first quarter of 2017 to the first quarter of 2016, TNCLP’s:
Ammonia sales volume increased by 40 percent and UAN sales volume increased by 47 percent;
Ammonia average selling prices decreased by 23 percent and UAN average selling prices decreased by 24 percent; and
Realized natural gas cost per MMBtu increased by 5 percent.
Cash distributions depend on TNCLP’s earnings as well as cash requirements for working capital needs and capital and other expenditures. For the first three months of 2017, capital expenditures were $11.3 million as compared to $13.8 million in 2016. The decrease was primarily due to costs incurred in the first quarter of 2016 related to an unplanned outage of one of the facility's ammonia plants that did not recur in the first quarter of 2017.
For the full year 2017, TNCLP expects to make capital expenditures in the range of $25 million to $35 million. TNCLP previously announced that it expected to make capital expenditures for the full year 2017 in the range of $75 million to $85 million, with approximately $40 million of the projected capital expenditures related to a plant turnaround scheduled to start in the third quarter of 2017. Subsequent to that announcement, TNCLP postponed the turnaround due to a delay in receiving certain equipment. TNCLP anticipates the plant turnaround will occur in 2018 and expects it to cost approximately $40 million. The
calculation of Available Cash included a reserve of approximately one-half of that amount.
TNCLP reported on May 3, 2017, the declaration of a cash distribution for the quarter ended March 31, 2017, of $0.97 per common unit payable May 31, 2017 to holders of record as of May 15, 2017. This compares to a cash distribution of $1.51 per common unit for the quarter ended March 31, 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, May 3, 2017 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.