On July 29, 2024, CVR Partners LP (UAN, Financial) released its 8-K filing for the second quarter of 2024. CVR Partners LP is a manufacturer and supplier of nitrogen fertilizer products, including Urea Ammonium Nitrate (UAN) and ammonia, primarily serving agricultural and industrial customers in the Midwest and Texas.
Performance Overview
For the second quarter of 2024, CVR Partners LP reported a net income of $26 million, or $2.48 per common unit, and EBITDA of $54 million on net sales of $133 million. This represents a significant decline from the second quarter of 2023, where the company achieved a net income of $60 million, or $5.66 per common unit, and EBITDA of $87 million on net sales of $183 million.
“CVR Partners reported solid operating results for the second quarter of 2024 driven by safe, reliable operations and a combined ammonia production rate of 102 percent,” said Mark Pytosh, Chief Executive Officer.
Financial Achievements and Challenges
Despite the operational efficiency, the company faced challenges due to lower average realized gate prices for its products. The average realized gate price for UAN decreased by 15% to $268 per ton, and ammonia prices fell by 26% to $520 per ton compared to the previous year. These pricing pressures significantly impacted the company's revenue and profitability.
Production at CVR Partners' fertilizer facilities remained consistent, with a combined output of 221,000 tons of ammonia, of which 69,000 net tons were available for sale, and 337,000 tons of UAN. This is comparable to the second quarter of 2023, where the facilities produced 219,000 tons of ammonia and 339,000 tons of UAN.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $133 million | $183 million |
| Net Income | $26 million | $60 million |
| EBITDA | $54 million | $87 million |
| Earnings per Common Unit | $2.48 | $5.66 |
Balance Sheet and Cash Flow
As of June 30, 2024, CVR Partners LP reported cash and cash equivalents of $47.5 million, up from $45.3 million at the end of 2023. The company's total assets stood at $959.4 million, with total liabilities of $655.8 million, resulting in total partners' capital of $303.6 million.
Net cash flow from operating activities for the second quarter of 2024 was $8.6 million, a sharp decline from $60.8 million in the same period last year. The company also reported net cash used in financing activities of $20.3 million, primarily due to distributions and debt service.
Distribution and Outlook
CVR Partners LP announced a second quarter 2024 cash distribution of $1.90 per common unit, payable on August 19, 2024, to common unitholders of record as of August 12, 2024. The company operates as a variable distribution master limited partnership, meaning distributions can vary based on several factors, including operating performance and market conditions.
“As we enter the new planting season, we have seen continued strong demand for nitrogen fertilizer for the remainder of 2024 at prices higher than 2023,” Pytosh said.
Conclusion
CVR Partners LP's second quarter 2024 results reflect the challenges of lower product pricing despite stable production levels. The company's focus on operational efficiency and cash flow generation remains critical as it navigates market fluctuations. Investors and stakeholders will be keenly watching the company's performance in the upcoming quarters, especially in light of the announced cash distribution and ongoing demand for nitrogen fertilizers.
Explore the complete 8-K earnings release (here) from CVR Partners LP for further details.
