News Column

OCI RESOURCES LP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

August 6, 2014

You should read the following management's discussion and analysis of financial condition and results of operations in conjunction with the historical unaudited condensed consolidated financial statements, and notes thereto, included elsewhere in this Report. Cautionary Statements Regarding Forward-Looking Statements This Report contains forward-looking statements relating to the financial condition, results of operations, plans, objectives, future performance and business of the Partnership. We have based such forward-looking statements on management's beliefs and assumptions and on information currently available to us. Forward-looking statements include all statements that are not historical facts and may be identified by the use of forward-looking terminology such as the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "predict," "forecast," "potential," "continue," "may," "will," "should" or the negative of these terms or similar expressions. In particular, forward-looking statements in this Report include statements concerning future distributions, if any, and such distributions are subject to the approval of the board of directors of our general partner and will be based upon circumstances then existing. You are cautioned not to place undue reliance on any forward-looking statements. Actual results may vary materially. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements and, therefore, affect our ability to distribute cash to unitholders, include:



changes in general economic conditions in the United States and globally;

changes in our relationships with our customers or the loss of or adverse

developments at major customers, including the American Natural Soda Ash Corporation, or ANSAC;



the demand for soda ash and the development of glass and glass making

products alternatives;

changes in soda ash prices;

changes in demand for glass in the construction, automotive and beverage

industries;

shifts in glass production from the United States to international locations;

the ability of our competitors to develop more efficient mining and processing techniques;



operating hazards and other risks incidental to the mining, processing and

shipment of trona ore and soda ash; natural disasters, weather-related delays, casualty losses and other matters beyond our control;



increases in electricity and natural gas prices paid by us;

inability to renew our mineral leases and license or material changes in

lease or license royalties;

inability to renew our rail leases and contracts, disruption in railroad

service or increases in rail, vessel and other transportation costs;

deterioration in our labor relations;

large customer defaults;

the price and availability of debt and equity financing;

changes in interest rates;

changes in the availability and cost of capital;

our lack of asset and geographic diversification, including reliance on a

single facility for conducting our operations;

our reliance on insurance policies that may not fully cover an accident or

event that causes significant damage to our facility or causes extended

business interruption;

anticipated operating and recovery rates at our facility;

shutdowns (either temporary or permanent), including, without limitation,

the timing and length of planned maintenance outages;

increased competition and supply from international soda ash producers,

especially in China and Turkey; potential increases in costs and distraction resulting from the requirements of being a publicly traded partnership; exemptions we rely on in connection with NYSE corporate governance requirements;



risks relating to our relationships with Enterprises or its affiliates;

control of our general partner by Enterprises;

the conflicts of interest faced by our senior management team, which

operates both us and our general partner and are employed by Enterprises

or its other affiliates;

limitations on the fiduciary duties owed by our general partner to us and

our limited partners which are included in the partnership agreement;

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changes in our treatment as a partnership for U.S. federal income or state

tax purposes; and

the effects of existing and future laws and governmental regulations.

These factors should not be construed as exhaustive and we urge you to carefully consider the risks described in this Report, our most recent Form 10-K, and subsequent reports filed with the Securities and Exchange Commission (the "SEC"). You may obtain these reports from the SEC's website at www.sec.gov. All forward-looking statements included in this Report are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. References Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the "Predecessor," "we," "our," "us," or like terms, when used in a historical context (periods prior to September 18, 2013, the closing date of our IPO), refer to OCI Wyoming Holding Co. ("OCI Holdings") and its subsidiary, our predecessor for accounting purposes. References in this Report to "OCIR," "the Partnership," "we," "our," "us," or like terms, when used in the present tense or prospectively (starting September 18, 2013), refer to OCI Resources LP and its subsidiary, OCI Wyoming LLC, ("OCI Wyoming"). References to "our general partner" or "OCI GP" refer to OCI Resource Partners LLC, the general partner of OCI Resources LP and a wholly-owned subsidiary of OCI Holdings. References to "our sponsor" or "Enterprises" refer to OCI Enterprises Inc., which owns 100% of the capital stock of OCI Chemical Corporation ("OCI Chemical"), which in turn owns 100% of the capital stock of OCI Holdings. Introduction and Overview We are a Delaware limited partnership formed by OCI Holdings to own a 51.0% membership interest in, and to operate the trona ore mining and soda ash production business of, OCI Wyoming. OCI Wyoming is currently one of the world's largest producers of soda ash, serving a global market from its facility in the Green River Basin of Wyoming. Our facility has been in operation for more than 50 years. On June 30, 2014, OCI Wyoming converted from a Delaware limited partnership to a Delaware limited liability company. NRP currently owns an indirect 49.0% membership interest in OCI Wyoming. NRP acquired its interest in OCI Wyoming in January 2013 from Anadarko, who held an antecedent interest for all periods presented in this discussion. Factors Affecting Our Results of Operations Soda Ash Supply and Demand Our net sales, earnings and cash flow from operations are primarily affected by the global supply of, and demand for soda ash, which, in turn, directly impacts the prices we and other producers charge for our products. Demand for soda ash in the United States is driven in large part by general economic growth and activity levels in the end-markets that the glass-making industry serve, such as the automotive and construction industries. Because the United States is a well-developed market, we expect that domestic demand levels will remain stable for the near future. Because future U.S. capacity growth is expected to come primarily from the four major producers in the Green River Basin, we also expect that U.S. supply levels will remain relatively stable in the near term. Soda ash demand in international markets has increased steadily over the last several years, primarily due to economic growth in emerging markets, especially those in Asia and South America. We expect that continued economic growth in these markets will fuel further increases in demand, which will likely result in increased exports primarily from the United States and to a limited extent, from China, the first and second largest suppliers of soda ash to international markets, respectively. Sales Mix Because demand for soda ash in the United States has remained relatively stable in recent years, we have focused on international markets to expand our business, and we expect to continue to do so in the near future. As a result, our operations have been and continue to be sensitive to fluctuations in freight and shipping costs and changes in international prices, which have historically been more volatile than domestic prices. Our gross profit will be impacted by the mix of domestic and international sales as a result of changes in input costs and our average selling prices. Energy Costs One of the primary drivers of our profitability is our energy costs. Because we depend upon natural gas and electricity to power our trona ore mining and soda ash processing operations, our net sales, earnings and cash flow from operations are sensitive to changes in the prices we pay for these energy sources. Our cost of energy, particularly natural gas, has been relatively low in recent years, and, despite the historic volatility of natural gas prices, we believe that we will continue to benefit from relatively low prices in the near future. 19



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How We Evaluate Our Business Productivity of Operations Our soda ash production volume is primarily dependent on the following three factors: (1) operating rate, (2) quality of our mined trona ore and (3) recovery rates. Operating rate is a measure of utilization of the effective production capacity of our facilities and is determined in large part by productivity rates and mechanical on-stream times, which is the percentage of actual run times over the total time scheduled. We implement two planned outages of our mining and surface operations each year, typically in the second and third quarters. During these outages, which last approximately one week, we repair and replace equipment and parts. Periodically, we may experience minor unplanned outages caused by various factors, including equipment failures, power outages or service interruptions. The quality of our mine ore is determined by measuring the trona ore recovered as a percentage of the deposit, which includes both trona ore and insolubles. Plant recovery rates are generally determined by calculating the soda ash produced divided by the sum of the soda ash produced plus soda ash that is not recovered from the process. All of these factors determine the amount of trona ore we require to produce one short ton of soda ash and liquor, which we refer to as our "ore to ash ratio." Our ore to ash ratio for the three and six months ended June 30, 2014, was 1.52: 1.0 and 1.53: 1.0, respectively, and 1.60: 1.0 for both the three and six months ended June 30, 2013. Freight and Logistics The soda ash industry is logistics intensive and involves careful management of freight and logistics costs. These freight costs make up a large portion of the total delivered cost to the customer. Union Pacific is our largest provider of domestic rail freight services and accounted for 78.0% and 80.1% of our total rail freight costs in the United States during the three months ended June 30, 2014 and 2013, respectively; and 79.9% and 80.8% during the six months ended June 30, 2014 and 2013, respectively. Our agreement with Union Pacific generally requires that the freight rate we are charged be increased annually based on a published index tied to certain rail industry metrics. We generally pass on to our customers increases in our freight costs but we may be unsuccessful in doing so. Our contract with Union Pacific expires December 31, 2014, and we have begun negotiations to renew the contract. Sales Net sales include the amounts we earn on sales of soda ash. We recognize revenue from our sales when there is (i) persuasive evidence of an arrangement between us and the customer, (ii) products have been delivered to the customer, (iii) selling price is fixed, determinable or reasonably estimated and (iv) collection is reasonably assured. Substantially all of our sales are derived from sales of soda ash. A small amount of our sales is derived from sales of production purge, which is a by-product liquor solution containing soda ash that is produced during the processing of trona ore. For the purposes of our discussion below, we include these transactions in domestic sales of soda ash and in the volume of domestic soda ash sold. Sales prices for sales through ANSAC include the cost of freight to the ports of embarkation for overseas export or to Laredo, Texas for sales to Mexico. Sales prices for other international sales may include the cost of rail freight to the port of embarkation, the cost of ocean freight to the port of disembarkation for import by the customer and the cost of inland freight required for delivery to the customer. Cost of products sold Expenses relating to employee compensation, energy, including natural gas and electricity, royalties and maintenance materials constitute the greatest components of cost of products sold. These costs generally increase in line with increases in sales volume. Energy. A major item in our cost of products sold is energy, comprised primarily of natural gas and electricity. We primarily use natural gas to fuel our above-ground processing operations, including the heating calciners, and we use electricity to power our underground mining operations, including our continuous mining machines, or continuous miners, and shuttle cars. Natural gas prices have historically been volatile, ranging between $1.63 and $18.48 per MMBtu per Henry Hub Natural Gas Spot Price. Employee Compensation. Our employee compensation expenses are affected by headcount and salary levels, as well as incentive compensation paid. Retirement benefits for certain individuals that provide services to us are provided by OCI Enterprises under the OCI Pension Plan for Salaried Employees and OCI Pension Plan for Hourly Employees. OCI Enterprises accounts for post-retirement benefits provided to employees on an accrual basis over an employee's period of service. OCI Enterprises has the right to modify or terminate the benefits at will. We also reimburse OCI Enterprises for contributions it makes on our behalf to the OCI 401(k) Retirement Plan based upon specified percentages of employee contributions. See Part I, Item 1. "Financial Statements" - Note 6 - Employee Compensation for more information on the various plans. Royalties. We pay royalties to the State of Wyoming, the U.S. Bureau of Land Management and Anadarko Petroleum or its affiliates, which are calculated based upon a percentage of the value of soda ash produced, or a certain sum per each ton of such products. We also pay a production tax to Sweetwater County, and trona severance tax to the State of Wyoming that is calculated based on a formula that utilizes the volume of trona ore mined and the value of the soda ash produced. 20



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Selling, general and administrative expenses Selling, general and administrative expenses incurred by OCI Enterprises and its affiliates on our behalf are allocated to us based on the time the employees of those companies spend on our business and the actual direct costs they incur on our behalf. Selling, general and administrative expenses incurred by ANSAC on our behalf are allocated to us based on the proportion of ANSAC's total volumes sold for a given period attributable to the soda ash sold by us to ANSAC. Results of Operations A discussion and analysis of the factors contributing to our results of operations is presented below. The accompanying unaudited condensed consolidated financial statements for the three and six months ended June 30, 2013, represent the Predecessor's results of operations, reflecting the ownership in OCI Wyoming previously held by the Predecessor and Wyoming Co. on a combined basis, adjusted for the effects of the restructuring and certain push down accounting effects. The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2014, are the results of operations for the Partnership. The financial statements, together with the following information, are intended to provide investors with a reasonable basis for assessing our historical operations, but should not serve as the only criteria for predicting our future performance. The following tables set forth our results of operations for the three and six months ended June 30, 2014 and 2013: Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013 (Predecessor) (Predecessor) ($ in millions; except for operating data and EBITDA per ton) Net sales $ 113.0$ 110.8$ 229.2$ 219.0 Operating costs and expenses: Cost of products sold 79.9 82.4 163.9 163.6 Depreciation and amortization expense 5.8 5.9 11.2 11.9 Selling, general and administrative expenses 5.1 3.5 9.3 6.6 Total operating costs and expenses 90.8 91.8 184.4 182.1 Operating income 22.2 19.0 44.8 36.9 Total other income/(expense), net (1.1 ) (0.6 ) (2.1 ) (0.5 ) Income before provision for income taxes 21.1 18.4 42.7 36.4 Provision for income taxes - 1.8 - 4.9 Net income $ 21.1 $ 16.6 $ 42.7 $ 31.5 Net income attributable to non-controlling interest 10.8 11.1 22.1 22.0 Net income attributable to OCI Resources LP/Predecessor $ 10.3 $



5.5 $ 20.6 $ 9.5

Operating and Other Data: Trona ore mined (thousands of short tons) 916.4 983.1 1,912.1 1,953.0 Ore to ash ratio(1) 1.52: 1.0 1.60: 1.0 1.53: 1.0 1.60: 1.0 Soda ash volume sold (thousands of short tons) 609.5 611.8 1,264.7 1,237.5 Domestic (thousands of short tons) 210.3 202.5 414.7 413.5 International (thousands of short tons) 399.2 409.3 850.0 824.0 EBITDA(2) $ 28.2 $ 24.6 $ 56.4 $ 49.0 EBITDA per short ton(3) $ 46.27$ 40.21$ 44.60$ 39.60



(1) Ore to ash ratio expresses the number of short tons of trona ore needed to

produce one short ton of soda ash and liquor and includes our deca rehydration recovery process. (2) For a discussion of the non-GAAP financial measure EBITDA, please read "Non-GAAP Financial Measures" of this Management's Discussion and Analysis.



(3) Reflects EBITDA divided by sales volumes.

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Three Months Ended June 30, 2014 compared to Three Months Ended June 30, 2013 Net sales Our average sales price increased 2.4% to $185.35 per short ton for the three months ended June 30, 2014, as compared to $181.03 per short ton for the three months ended June 30, 2013. For the three months ended June 30, 2014, our net sales increased by 2.0% to $113.0 million from $110.8 million for the three months ended June 30, 2013, as a result of the following: Domestic sales - Domestic sales increased by 5.1% to $51.7 million for the



three months ended June 30, 2014, compared to $49.2 million for the three

months ended June 30, 2013, primarily as a result a 3.8% increase in sales

volume of approximately 210.3 thousand short tons for the three months

ended June 30, 2014, from approximately 202.5 thousand short tons for the

three months ended June 30, 2013. The increase in volume was accompanied

by an increase of 1.1% in average sales price over the comparable period.

Domestic sales accounted for approximately 45.8% of our net sales for the

three months ended June 30, 2014, compared to 44.4% for the three months

ended June 30, 2013.

International sales - International sales decreased by 0.5% to $61.3

million for the three months ended June 30, 2014, compared to $61.6

million for the three months ended June 30, 2013, primarily as a result of

a decrease of 2.5% in international sales volume of approximately 399.2

thousand short tons in 2014 compared to approximately 409.3 thousand short

tons in 2013. The decrease in volume was offset by a 2.1% increase in

average sales price of $153.49 per short ton during the three months ended

June 30, 2014, compared to $150.34 per short ton for the three months

ended June 30, 2013. International sales accounted for approximately 54.2%

of our net sales for the three months ended June 30, 2014, compared to 55.6% for the three months ended June 30, 2013. Operating costs and expenses Our cost of products sold, excluding freight costs, decreased by 3.3% to $50.1 million for the three months ended June 30, 2014 from $51.8 million for the three months ended June 30, 2013, due primarily to: a decrease of 13.2% in salaries and benefits to $13.8 million for the



three months ended June 30, 2014, compared to $15.9 million for the three

months ended June 30, 2013, primarily due to a $2.7 million reduction in

pension expense driven by favorable actuarial discount rates and market

returns;

a decrease of 2.6% in raw material costs to $3.7 million for the three

months ended June 30, 2014, compared to $3.8 million for the three months

ended June 30, 2013, due to lower prices during the current year quarter;

and

a decrease of 2.2% in royalty expense to $4.4 million for the three months

ended June 30, 2014, compared to $4.5 million for the three months ended

June 30, 2013, due to a reduction in the federal royalty rate from 6% to

4%; partially offset by

an increase of 15.4% in natural gas costs to $9.0 million for the three

months ended June 30, 2014, compared to $7.8 million for the three months

ended June 30, 2013, due to higher rates; and

an increase of 1.5% in the cost of electricity from $6.4 million to $6.5

million for the three months ended June 30, 2014 compared to the three months ended June 30, 2013 due to higher rates during the current year second quarter. Freight costs. Our freight costs decreased 2.6% to $29.8 million for the three months ended June 30, 2014 from $30.6 million for the three months ended June 30, 2013, primarily due to a decrease international sales volumes. Selling, general and administrative expenses. Our selling, general and administrative expenses increased 45.7% to $5.1 million for the three months ended June 30, 2014, from $3.5 million for the three months ended June 30, 2013, primarily due to the incremental general and administrative costs associated with being a public company. Operating income. As a result of the foregoing, operating income increased by 16.8% to $22.2 million for the three months ended June 30, 2014, compared to $19.0 million for the three months ended June 30, 2013. Other income/(expense). net. Our other non-operating expense increased to $(1.1) million for the three months ended June 30, 2014, compared to $(0.6) million other income for the three months ended June 30, 2013. The increase in other non-operating expense is due to an increase in interest expense related to debt restructuring and the resulting higher principal balance in 2014. Provision for income taxes. The Predecessor was subject to income tax and was included in the consolidated income tax returns of OCI Enterprises. Income taxes were allocated to the Predecessor based on separate-company computations of income or loss. The income tax expense for the three months ended June 30, 2013 are those of the Predecessor. Due to our status as a master limited partnership subsequent to September 18, 2013, we will not be subject to U.S. federal income tax and certain state income taxes. 22



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Net income. As a result of the foregoing, net income increased by 27.1% to $21.1 million for the three months ended June 30, 2014, compared to $16.6 million for the three months ended June 30, 2013.

Six Months Ended June 30, 2014 compared to Six Months Ended June 30, 2013 Net sales Our average sales price increased 2.4% to $181.24 per short ton for the six months ended June 30, 2014, as compared to $176.96 per short ton for the six months ended June 30, 2013. For the six months ended June 30, 2014, our net sales increased by 4.7% to $229.2 million from $219.0 million for the six months ended June 30, 2013, as a result of the following: International sales - International sales increased by 8.4% to $128.9



million for the six months ended June 30, 2014, compared to $118.9 million

for the six months ended June 30, 2013, primarily as a result of a 5.1% increase in average sales price of $151.64 per short ton during the six



months ended June 30, 2014, compared to $144.28 per short ton for the six

months ended June 30, 2013. The increase in average international sales

price was primarily due to higher prices in Asia. The higher average sales

price was accompanied by an increase of 3.2% in international sales volume

to approximately 850.0 thousand short tons in 2014 compared to

approximately 824.0 thousand short tons in 2013. International sales

accounted for approximately 56.2% of our sales for the six months ended

June 30, 2014, compared to international sales of 54.3% for the six months

ended June 30, 2013.

Domestic sales - Domestic sales increased by 0.2% to $100.3 million for

the six months ended June 30, 2014, compared to $100.1 million for the six

months ended June 30, 2013, primarily as a result of a 0.3% increase in volume to approximately 414.7 thousand short tons for the six months ended



June 30, 2014, compared to approximately 413.5 thousand short tons for the

six months ended June 30, 2013. The increase in sales was offset by a decrease of 0.1% in average sales price over the period. Domestic sales accounted for approximately 43.8% of our sales for the six months ended June 30, 2014, compared to 45.7% for the six months ended June 30, 2013. Operating costs and expenses Our cost of products sold, excluding freight costs, decreased by 0.7% to $102.6 million for the six months ended June 30, 2014 from $103.3 million for the six months ended June 30, 2013, due primarily to: a decrease of 8.7% in salaries and benefits to $28.2 million for the six



months ended June 30, 2014, compared to $30.9 million for the six months

ended June 30, 2013, is due to a $3.4 million reduction in benefit expense

driven by favorable actuarial discount rates and market returns;

a decrease of 3.1% in royalty expense to $9.3 million for the six months

ended June 30, 2014, compared to $9.6 million for the six months ended

June 30, 2013, due to a reduction in the federal royalty rate from 6% to

4%; and a decrease of 1.4% in raw material costs to $7.2 million for the six



months ended June 30, 2014, compared to $7.3 million for the six months

ended June 30, 2013. Raw material usage rates in the six months ended

June 30, 2014 were similar to the comparable period; partially offset by

an increase of 24.8% in natural gas costs to $20.6 million for the six

months ended June 30, 2014, compared to $16.5 million for the six months

ended June 30, 2013, due to higher rates.

Freight costs. Our freight costs increased 1.7% to $61.3 million for the six months ended June 30, 2014 from $60.3 million for the six months ended June 30, 2013, primarily due to increased international sales volumes. Selling, general and administrative expenses. Our selling, general and administrative expenses increased 40.9% to $9.3 million for the six months ended June 30, 2014, from $6.6 million for the six months ended June 30, 2013, primarily due to the incremental general and administrative costs associated with being a public company. Operating income. As a result of the foregoing, operating income increased by 21.4% to $44.8 million for the six months ended June 30, 2014, compared to $36.9 million for the six months ended June 30, 2013. Other income/(expense). net. Our other non-operating expense increased to $(2.1) million for the six months ended June 30, 2014, compared to $(0.5) million other income for the six months ended June 30, 2013. The increase in other non-operating expense is due to an increase in interest expense related to debt restructuring and the resulting higher principal balance in 2014. Provision for income taxes. The Predecessor was subject to income tax and was included in the consolidated income tax returns of OCI Enterprises. Income taxes were allocated to the Predecessor based on separate-company computations of income or loss. The income tax expense for the six months ended June 30, 2013 are those of the Predecessor. Due to our status as a master 23



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limited partnership subsequent to September 18, 2013, we will not be subject to U.S. federal income tax and certain state income taxes. Net income. As a result of the foregoing, net income increased by 35.6% to $42.7 million for the six months ended June 30, 2014, compared to $31.5 million for the six months ended June 30, 2013. Liquidity and Capital Resources Historically, sources of liquidity for OCI Wyoming included cash generated from operations, borrowings under a credit facility and capital calls from partners. We use cash and require liquidity primarily to finance and maintain our operations, fund capital expenditures for our property, plant and equipment, make cash distributions to holders of our partnership interests, pay the expenses of our general partner and satisfy obligations arising from our indebtedness. Our ability to meet these liquidity requirements will depend on our ability to generate cash flow from operations. Our sources of liquidity include: cash generated from our operations;



$10 million available for borrowing under the Revolving Credit Facility

(as defined below), subject to borrowing base availability;

$35 million out of $190 million, less standby letters of credit of $20

million, is available for borrowing and undrawn under the OCI Wyoming

Credit Facility (as defined below), subject to borrowing base

availability;

issuances of additional partnership units; and

the incurrence of additional debt.

We expect our ongoing working capital and capital expenditures to be funded by cash generated from operations and borrowings under the OCI Wyoming Credit Facility. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements, long-term capital expenditure requirements and to make quarterly cash distributions. However, we are subject to business and operational risks that could adversely affect our cash flow and access to borrowings under the Revolving Credit Facility and the OCI Wyoming Credit Facility. Our ability to satisfy debt service obligations, to fund planned capital expenditures and to make acquisitions will depend upon our future operating performance, which, in turn, will be affected by prevailing economic conditions, our business and other factors, some of which are beyond our control. On July 17, 2014, the Partnership declared a cash distribution approved by the board of directors of its general partner. The cash distribution for the second quarter 2014 of $0.50 per unit will be paid on August 14, 2014 to unitholders of record on August 1, 2014. We intend to continue to pay a minimum quarterly distribution of $0.50 per common, subordinated and general partner units per quarter, which equates to approximately $10.0 million per quarter, or $39.9 million per year, based on the number of common subordinated and general partner units outstanding, to the extent we have sufficient cash from our operations after establishment of cash reserves and payment of fees and expenses, including payments to our general partner and its affiliates. We do not have a legal obligation to pay this distribution. Capital Requirements Working capital is the amount by which current assets exceed current liabilities. As of June 30, 2014, we had a working capital surplus of $164.4 million as compared to a working capital surplus of $160.8 million as of December 31, 2013. Our working capital requirements have been, and will continue to be, primarily driven by changes in accounts receivable and accounts payable, which generally fluctuate with changes in the market prices of soda ash in the normal course of our business. We typically receive payment for our domestic sales 40 to 53 days following the date of shipment. For international sales, we typically receive payment 86 to 108 days following the date of shipment. Therefore, as international sales increase, our accounts receivable will also increase, which will result in an increase in our working capital requirements. Other factors impacting changes in accounts receivable and accounts payable could include the timing of collections from customers and payments to suppliers, as well as the level of spending for maintenance and growth capital expenditures. A material adverse change in operations or available financing under the Revolving Credit Facility and the OCI Wyoming Credit Facility could impact our ability to fund our requirements for liquidity and capital resources. Historically, we have not made working capital borrowings to finance our operations. Capital Expenditures Our operations require investments to expand, upgrade or enhance existing operations and to meet evolving environmental and safety regulations. We distinguish between maintenance and expansion capital expenditures. Maintenance capital expenditures (including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of existing capital assets) are made to maintain, over the long term, our operating income or operating capacity. Examples of 24



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maintenance capital expenditures are expenditures to upgrade and replace mining equipment and to address equipment integrity, safety and environmental laws and regulations. Our maintenance capital expenditures do not include actual or estimated capital expenditures for replacement of our trona reserves. Expansion capital expenditures are incurred for acquisitions or capital improvements made to increase, over the long term, our operating income or operating capacity. Examples of expansion capital expenditures include the acquisition and/or construction of complementary assets to grow our business and to expand existing facilities, such as projects that increase production from existing facilities, to the extent such capital expenditures are expected to increase our long-term operating capacity or operating income. The following table summarizes our maintenance and expansion capital expenditures, including accruals, for the three and six months ended June 30, 2014 and 2013: Three Months Ended Three Months Ended Six Months Ended Six Months Ended Capital Expenditures June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013 ($ in millions) Maintenance $ 1.9 $ 1.4 $ 2.5 $ 3.5 Expansion 3.6 0.3 4.4 0.3 Total $ 5.5 $ 1.7 $ 6.9 $ 3.8 The increase in capital expenditures during 2014 compared to 2013 is driven by the increased capital budget during the current year to support various planned expansion projects to increase our operating income or operating capacity. Cash Flows Discussion The following is a summary of cash provided by or used in each of the indicated types of activities: Six Months Ended Six Months Ended June 30, 2014 June 30, 2013 ($ in millions) Cash provided by (used in): Operating activities $ 49.2 $ 45.8 Investing activities (6.4 ) (3.8 ) Financing activities (43.3 ) (61.3 ) Operating Activities Our operating activities during the six months ended June 30, 2014 provided cash of $49.2 million, an increase of 7.4% from the $45.8 million generated during the six months ended June 30, 2013. The increase in cash provided by operating activities was driven by a $11.2 million increase in net income, offset by cash used in working capital of $5.0 million during the six months ended June 30, 2014 compared to $2.8 million cash generated during the six months ended June 30, 2013. Investing Activities We used $6.4 million in cash during the six months ended June 30, 2014 in investing activities, which related primarily to funding capital expenditures as described in "Capital Expenditures" above. This amount represented an increase of 68.4% compared to $3.8 million during the six months ended June 30, 2013. Financing Activities Cash used in financing activities of $43.3 million during the six months ended June 30, 2014 decreased by $18.0 million from the $61.3 million for the six months ended June 30, 2013 due to distributions of $43.3 million during the six months ended June 30, 2014 compared to $59.3 million in the comparable period and a $2.0 million repayment of long term debt that occurred during the six months ended June 30, 2013. Debt OCI Wyoming Demand Revenue Bonds OCI Wyoming has two series of variable rate demand revenue bonds, which we refer to as the revenue bonds. One series of its revenue bonds, which we refer to as the 2018 revenue bonds, are due October 1, 2018 and have an aggregate principal amount of $11.4 million. Interest on the 2018 revenue bonds is payable monthly at an annual rate of 0.16% at both June 30, 2014 and December 31, 2013. OCI Wyoming's other series of revenue bonds, which we refer to as the 2017 revenue bonds, are due August 1, 2017 and have an aggregate principal amount of $8.6 million. Interest on these revenue bonds is payable monthly at a annual rate of 0.16% at both June 30, 2014 and December 31, 2013. OCI Wyoming's revenue bonds require it to maintain standby letters of credit 25



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totaling $20.3 million at each of June 30, 2014 and December 31, 2013. As of June 30, 2014, OCI Wyoming was in compliance with these debt covenants. An event of default under the OCI Wyoming Credit Facility will cause an event of default under the reimbursement agreements. OCI Wyoming Credit Facility On July 18, 2013, OCI Wyoming entered into a $190.0 million senior unsecured revolving credit facility, the "OCI Wyoming Credit Facility", with Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer, and a syndicate of lenders, which will mature on July 18, 2018. The OCI Wyoming Credit Facility provides for revolving loans to refinance existing indebtedness, to fund working capital requirements and capital expenditures, to consummate permitted acquisitions and for all other lawful partnership purposes. As of June 30, 2014, OCI Wyoming had borrowings outstanding in the amount of $135.0 million under the OCI Wyoming Credit Facility. The OCI Wyoming Credit Facility has an accordion feature that allows OCI Wyoming to increase the available revolving borrowings under the facility by up to an additional $75.0 million, subject to OCI Wyoming receiving increased commitments from existing lenders or new commitments from new lenders and the satisfaction of certain other conditions. In addition, the OCI Wyoming Credit Facility includes a sublimit up to $20.0 million for same-day swing line advances and a sublimit up to $40.0 million for letters of credit. OCI Wyoming's obligations under the OCI Wyoming Credit Facility are unsecured. The OCI Wyoming Credit Facility also requires quarterly maintenance of a consolidated leverage ratio (as defined in the OCI Wyoming Credit Facility) of not more than 3.00 to 1.00 and a consolidated fixed charge coverage ratio (as defined in the OCI Wyoming Credit Facility) of not less than 1.00 to 1.00. Loans under the OCI Wyoming Credit Facility bear interest at OCI Wyoming's option at either: a Base Rate, which equals the highest of (i) the federal funds rate in



effect on such day plus 0.50%, (ii) the administrative agent's prime rate

in effect on such day and (iii) one-month LIBOR plus 1.0%, in each case,

plus an applicable margin; or

a LIBOR Rate plus an applicable margin.

The unused portion of the OCI Wyoming Credit Facility is subject to an unused line fee ranging from 0.275% to 0.350% per annum based on OCI Wyoming's then current consolidated leverage ratio. The OCI Wyoming Credit Facility contains various covenants and restrictive provisions. See Item 1, Note 4, "Debt", for additional information. Revolving Credit Facility On July 18, 2013, we entered into a $10.0 million senior secured revolving credit facility, the "Revolving Credit Facility", with Bank of America, N.A., as administrative agent, swingline lender and letter of credit Issuer, and a syndicate of lenders, which will mature on July 18, 2018. The Revolving Credit Facility provides for revolving loans to be available to fund distributions on our units and working capital requirements and capital expenditures, to consummate permitted acquisitions and for all other lawful partnership purposes. At June 30, 2014, we had no outstanding borrowings under the Revolving Credit Facility. The Revolving Credit Facility includes a sublimit up to $5.0 million for same-day swing line advances and a sublimit up to $5.0 million for letters of credit. Our obligations under the Revolving Credit Facility are guaranteed by each of our material domestic subsidiaries other than OCI Wyoming, and to the extent no material adverse tax consequences would result, foreign wholly owned subsidiaries. As of June 30, 2014, our only subsidiary was OCI Wyoming. In addition, our obligations under the Revolving Credit Facility are secured by a pledge of substantially all of our assets (subject to certain exceptions), including the partnership interests held in OCI Wyoming by us. The Revolving Credit Facility also requires quarterly maintenance of a consolidated fixed charge coverage ratio (as defined in the Revolving Credit Facility) of not less than 1.00 to 1.00. Loans under the Revolving Credit Facility bear interest at our option at either: a Base Rate, which equals the highest of (i) the federal funds rate in



effect on such day plus 0.50%, (ii) the administrative agent's prime rate

in effect on such day and (iii) one-month LIBOR plus 1.0%, in each case,

plus an applicable margin; or

a LIBOR Rate plus an applicable margin.

The unused portion of the Revolving Credit Facility is subject to an unused line fee ranging from 0.275% to 0.350% based on our then current consolidated leverage ratio. The Revolving Credit Facility contains various covenants and restrictive provisions. See Item 1, Note 4, "Debt", for additional information. 26



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Contractual Obligations During the six months ended June 30, 2014, there were no material changes with respect to the contractual obligations disclosed in our Annual Report on Form 10-K filed with the SEC on March 14, 2014. Off-Balance Sheet Arrangements We have a self-bond agreement with the Wyoming Department of Environmental Quality under which we commit to pay directly for reclamation costs. As of June 30, 2014, the amount of the bond was $33.9 million (December 31, 2013: $27.1 million), which is the amount we would need to pay the State of Wyoming for reclamation costs if we cease mining operations currently. The amount of this self-bond is subject to change upon periodic re-evaluation by the Land Quality Division. OCI Wyoming's revenue bonds require it to maintain stand-by letters of credit totaling $20.3 million as of June 30, 2014. Critical Accounting Policies During the six months ended June 30, 2014, there were no material changes with respect to the critical accounting policies disclosed in our Annual Report on Form 10-K filed with the SEC on March 14, 2014.



Recently Issued Accounting Standards

Accounting standards recently issued are discussed in Item 1. "Financial Statements" - Note 1 - Corporate Structure and Summary of Significant Accounting Policies, in the notes to condensed consolidated financial statements.

Non-GAAP Financial Measures We report our financial results in accordance with generally accepted accounting principles in the United States or GAAP. We also present the non-GAAP financial measures of: EBITDA;



distributable cash flow; and

distribution coverage ratio.

We define EBITDA as net income (loss) plus net interest expense, income tax, depreciation, depletion and amortization, unrealized derivative gains and losses and certain other expenses that are non-cash charges or that we consider not to be indicative of ongoing operations. Distributable cash flow is defined as EBITDA less net cash paid for interest, maintenance capital expenditures and income taxes. Distributable cash flow will not reflect changes in working capital balances. We define distribution coverage ratio as the ratio of distributable cash flow per outstanding unit (as of the end of the period) to cash distributions payable per outstanding unit with respect to such period.



EBITDA, distributable cash flow and distribution coverage ratio are non-GAAP supplemental financial measures that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess: our operating performance as compared to other publicly traded

partnerships in our industry, without regard to historical cost basis or, in the case of EBITDA, financing methods; the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; our ability to incur and service debt and fund capital expenditures; and the viability of capital expenditure projects and the returns on investment of various investment opportunities. We believe that the presentation of EBITDA, distributable cash flow and distribution coverage ratio provide useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and distributable cash flow are net income and net cash provided by operating activities. Our non-GAAP financial measures of EBITDA, distributable cash flow and distribution coverage ratio should not be considered as an alternatives to GAAP net income, operating income, net cash provided by operating activities, or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all items that affect net income and net cash provided by operating activities. Investors should not consider EBITDA, distributable cash flow and distribution coverage ratio in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Because EBITDA, distributable cash flow and distribution coverage ratio may be defined differently by other companies, 27



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including those in our industry, our definition of EBITDA, distributable cash flow and distribution coverage ratio may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. The table below presents a reconciliation of the non-GAAP financial measures of EBITDA and distributable cash flow to the GAAP financial measures of net income and net cash provided by operating activities: Three Months Ended Six Months Ended June 30, June 30, 2014 2013 2014 2013 ($ in millions, except per unit data) (Predecessor) (Predecessor) Reconciliation of EBITDA to net income: Net income $ 21.1 $ 16.6 $ 42.7$ 31.5 Add backs: Depreciation and amortization expense 5.8 5.9 11.2 11.9 Interest expense, net 1.3 0.3 2.5 0.7 Taxes - 1.8 - 4.9 EBITDA $ 28.2 $ 24.6 $ 56.4$ 49.0 Less: EBITDA attributable to non-controlling interest 14.2 14.1 28.5 28.0 EBITDA attributable to OCI Resources LP/Predecessor $ 14.0 $



10.5 $ 27.9$ 21.0

Reconciliation of distributable cash flow to EBITDA attributable to OCI Resources LP: EBITDA attributable to OCI Resources LP $ 14.0 ** $ 27.9 ** Less: Cash interest expense, net attributable ** ** to OCIR 0.8 1.3 Maintenance capital expenditures attributable ** ** to OCIR(1) 0.8 1.1 Distributable cash flow attributable to OCI ** ** Resources LP $ 12.4$ 25.5 Cash distribution declared per unit $ 0.5000 ** $ 1.0000 ** Total units outstanding 19.956 ** 19.956 ** Total distributions to unitholders and general ** ** partner $ 10.0$ 20.0 Distribution Coverage Ratio 1.24 ** 1.28 ** Reconciliation of EBITDA to net cash from operating activities: Net cash provided by operating activities $ 34.9 $ 22.4 $ 49.2$ 45.8 Add/(less): Amortization of long-term loan financing (0.2 ) ** (0.2 ) ** Equity-based compensation expense (0.1 ) - (0.1 ) - Deferred income taxes - 0.1 - 0.4 Net change in working capital (7.7 ) - 5.0 (2.8 ) Interest expense - net 1.3 0.3 2.5 0.7 Taxes - 1.8 - 4.9 EBITDA $ 28.2 $ 24.6 $ 56.4$ 49.0 Less: EBITDA attributable to non-controlling interest 14.2 14.1 28.5 28.0 EBITDA attributable to OCI Resources LP/Predecessor $ 14.0 $ 10.5 $ 27.9$ 21.0 Less: Cash interest expense, net attributable to OCIR 0.8 ** 1.3 ** Maintenance capital expenditures attributable to OCIR(1) 0.8 ** 1.1 ** Distributable cash flow attributable to OCI Resources LP $ 12.4 ** $ 25.5 ** ** Information is not applicable for the pre-IPO periods. (1) The Partnership may fund expansion-related capital expenditures with borrowings under existing credit facilities such that expansion-related capital expenditures will have no impact on cash on hand or the calculation of cash available for distribution. In certain instances, the timing of the Partnership's borrowings and/or its cash management practices will result in a mismatch between the period of the borrowing and the period of the capital expenditure. In those instances, the Partnership adjusts designated reserves (as provided in the partnership agreement) to take account of the timing difference. Accordingly, expansion-related capital expenditures have been excluded from the presentation of cash available for distribution. 28



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