Provides Commentary on 2014
The Partnership’s results for 2013 were heavily affected by significant unanticipated declines in nitrogen prices, which ended the year 20% to 30% below price levels at the beginning of the year. Unusually high volumes of low-priced urea exports from
Rentech Nitrogen’s results for the fourth quarter were also affected by previously-disclosed production limitations at both of the Partnership’s facilities, which resulted in lost revenue and increased costs. The Pasadena Facility was off-line for approximately 2.5 weeks in
The Partnership has completed all repairs relating to the East Dubuque Facility’s compressor foundation and fire at lower cost and more quickly than the estimates disclosed when those problems occurred, and the Facility is currently running at nameplate capacity. The Partnership filed an insurance claim for approximately
Commentary on 2014
The Partnership believes that a number of factors may contribute to improved operating and financial results in 2014 compared to 2013. Capacity expansion projects have been completed that should increase production at both facilities, and projects to improve efficiency and reliability have been completed at the Pasadena Facility. Both facilities are forecasted to operate at upgraded capacity in 2014, with no scheduled down-time for East Dubuque and no scheduled interruptions to production of ammonium sulfate, other than normal scheduled maintenance for
Recent increases in prices for nitrogen products from lower levels experienced late in 2013 are encouraging. However, the current market environment is different this year relative to early 2013, with lower corn prices and somewhat lower, albeit strong, anticipated corn plantings. These factors and the dynamics that affect input prices could rapidly change based on weather patterns and other conditions, and could positively or negatively affect product prices, margins, deliveries and cash distributions. Cash distributions in 2014 may be significantly less than cash available for distribution if the Company elects to replenish working capital reserves that were diminished by the negative cash available for distribution in the fourth quarter of 2013.
To assist investors in assessing the impacts of possible changes in the pricing of key inputs and products on Rentech Nitrogen’s results for 2014, the Partnership has provided a sensitivity matrix below. The matrix uses independent forecasts from Blue Johnson for average 2014 product prices and NYMEX Henry Hub natural gas futures contract pricing as reference points; the matrix is not intended to show the Company’s forecast for 2014 prices or results. The high and low cases were constructed by changing only the prices for key products and raw materials by the amounts indicated in the table, with other important metrics such as fixed costs and product deliveries held constant. Product deliveries assumed in the matrix are those contained in the Partnership’s guidance issued on
Due to the current uncertainty about spring sales, and about pricing of products and natural gas,
|Major Product Pricing Sensitivities|
|($ stated in millions except for per unit figures)||-20||%||-10||%|
|Ammonia – Mid Cornbelt ($/st)(1)||$||412||$||464||$||515||$||567||$||618|
|Ammonium sulfate ($/st)(2)(3)||$||175||$||197||$||219||$||241||$||263|
|Input Pricing Sensitivities|
|($ stated in millions except for per unit figures)||+20||%||+10||%|
|Natural gas ($/MMBtu)(4)||$||5.48||$||5.03||$||4.57||$||4.11||$||3.66|
Ammonia – ||$||301||$||338||$||376||$||414||$||451|
|($ stated in millions except for per unit figures)|
Calculated EBITDA Under Various Pricing Scenarios
|RNP Consolidated EBITDA||$||55.9||$||89.3||$||123.1||$||156.9||$||190.7|
(1) Industry Forecast column reflects pricing forecasts by
(2) Assumes sales pricing is weighted 60% domestic / 40% international.
(3) Assumes Blue, Johnson Average Cornbelt less
(4) Industry Forecast column assumes NYMEX Henry Hub futures contract pricing as of 2/7/14.
(5) Assumes that
(6) Increasing price range utilized to be consistent with positive correlation to ammonium sulfate prices.
Note: Each column uses product deliveries as forecast in
Fourth Quarter and Full Year 2013 Results Conference Call
As previously announced,
Qualified Notice to Nominees and Brokers
This release is intended to serve as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of Rentech Nitrogen’s distributions to foreign investors is attributable to income that is effectively connected with a
Disclosure Regarding Non-GAAP Financial Measures
EBITDA is defined as net income (loss) plus interest expense, income tax expense and depreciation and amortization. EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to assess:
EBITDA should not be considered alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA may have material limitations as performance measures because they exclude items that are necessary elements of our costs and operations. In addition, EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently.
Safe Harbor Statement
This press release contains forward-looking statements about matters such as: expected improvements in the Company’s operating and financial results in 2014; estimated on-stream rates in 2014; expected positive EBITDA at the Pasadena Facility; working capital impacts on cash available for distribution; and receipt of future insurance proceeds. These statements are based on management’s current expectations and actual results may differ materially as a result of various risks and uncertainties. Other factors that could cause actual results to differ from those reflected in the forward-looking statements are set forth in the Partnership’s prior press releases and periodic public filings with the
Vice President of Investor Relations and Communications