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Terra Nitrogen Company, L.P. Reports Second Quarter
DEERFIELD, IL (August 2, 2017)—Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $39.5 million on net sales of $96.1 million for the quarter ended June 30, 2017. This compares to net earnings of $98.7 million on net sales of $126.7 million for the 2016 second quarter. Net earnings allocable to common units was $27.4 million ($1.48 per common unit) and $59.7 million ($3.22 per common unit) for the 2017 and 2016 second quarters, respectively. Results for the second quarter of 2017 included an unrealized net mark-to-market loss on natural gas derivatives of $2.9 million compared to a gain of $27.3 million in the second quarter of 2016. The derivative portfolio at June 30, 2017 includes natural gas derivatives that hedge a portion of natural gas purchases through December 2018.
For the first six months of 2017, TNCLP reported net earnings of $81.7 million on net sales of $215.1 million. This compares to net earnings of $136.4 million on net sales of $234.7 million for the first six months of 2016. Net earnings allocable to common units was $66.2 million ($3.58 per common unit) and $86.4 million ($4.66 per common unit) for the first six months of 2017 and 2016, respectively. Results for the first six months of 2017 included an unrealized net mark-to-market loss on natural gas derivatives of $10.8 million compared to an unrealized net mark-to-market gain of $25.0 million for the first six months of 2016.
Analysis of Results
Net sales for the second quarter of 2017 totaled $96.1 million, compared to $126.7 million for the second quarter of 2016, due to lower average selling prices for both ammonia and urea ammonium nitrate (UAN) as well as lower sales volume for UAN compared to the prior period.
Sales volumes for ammonia were flat year-over year while sales volumes for UAN decreased 10 percent as flooding on the Arkansas River limited shipments and unfavorable weather resulted in late planting and delayed UAN purchases and applications, exacerbated by customers increasingly favoring just-in-time deliveries rather than carrying inventory. Ammonia and UAN average selling prices declined in the second quarter of 2017 compared to the second quarter of 2016 due to greater global nitrogen supply availability.
Comparing the second quarter of 2017 to the second quarter of 2016, TNCLP’s:
Ammonia sales volume was flat and UAN sales volume decreased by 10 percent;
Ammonia average selling prices decreased by 18 percent and UAN average selling prices decreased by 19 percent; and
Realized natural gas cost per MMBtu increased by 15 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 six months of 2017, capital expenditures were $21.4 million as compared to $20.2 million in 2016.
For the full year 2017, TNCLP expects capital expenditures to be in the range of $30 million to $40 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 the third quarter of 2018 and expects it to cost approximately $40 million. The calculation of Available Cash for the three months ended June 30, 2017, included a reserve of approximately one-half of that amount.
TNCLP reported on August 2, 2017, the declaration of a cash distribution for the quarter ended June 30, 2017, of $1.60 per common unit payable August 29, 2017 to holders of record as of August 15, 2017. This compares to a cash distribution of $2.58 per common unit for the quarter ended June 30, 2016.
The following information was filed by Terra Nitrogen Co L P De (TNH) on Wednesday, August 2, 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.