DEERFIELD, Ill.--(BUSINESS WIRE)--May. 3, 2012--
Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net
earnings of $124.2 million on sales of $196.9 million for the first
quarter ended March 31, 2012. This compares to net earnings of $120.9
million on sales of $196.0 million for the 2011 first quarter. Net
income allocable to Common Units was $69.9 million ($3.78 per Common
Unit) and $66.6 million ($3.60 per Common Unit) for the 2012 and 2011
first quarters, respectively.
Results for the first quarter of 2012 included an unrealized
mark-to-market loss on natural gas derivatives of $11.3 million compared
to a gain of $1.2 million in the first quarter of 2011.
Analysis of Results
Net sales for the 2012 first quarter totaled $196.9 million, compared to
sales of $196.0 million for the 2011 first quarter. This slight increase
was due to higher ammonia and UAN average selling prices, which were
partially offset by lower sales volumes. The increase in selling prices
resulted from a tight supply/demand balance for nitrogen products and
higher expected crop plantings in North America. The decrease in volumes
was due primarily to the impact of the implementation of a product
offtake agreement with CF Industries, which resulted in a one-time
acceleration of sales in the first quarter of 2011, and modestly lower
production during the first quarter of 2012.
Comparing the 2011 to the 2012 first quarter, TNCLP’s:
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Ammonia and UAN average selling prices increased by 25 and 13 percent,
respectively.
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Ammonia and UAN sales volumes decreased by 12 and 13 percent,
respectively.
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Realized natural gas unit costs decreased by 22 percent.
Cash Distribution
TNCLP reported today the declaration of a cash distribution for the
quarter ended March 31, 2012, of $4.00 per common limited partnership
unit payable May 30, 2012, to holders of record as of May 15, 2012.
This release serves 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 the Partnership's distributions to foreign investors
are attributable to income that is effectively connected with a United
States trade or business. Accordingly, the Partnership's distributions
to foreign investors are subject to federal income tax withholding at
the highest effective tax rate.
Cash distributions depend on TNCLP's earnings, which can be affected by
nitrogen fertilizer selling prices, natural gas costs, seasonal demand
factors, production levels and weather, as well as cash requirements for
working capital needs and capital expenditures. Cash distributions per
limited partnership 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.
About TNCLP
Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen
fertilizer products.
TNCLP is the sole limited partner of Terra Nitrogen, Limited Partnership
(TNLP), owner of the Verdigris, Oklahoma, manufacturing facility and
related assets. Terra Nitrogen GP Inc., an indirect, wholly-owned
subsidiary of CF Industries Holdings, Inc., is the General Partner of
TNCLP and exercises full control over all of TNCLP’s business affairs.
Forward-Looking Statements
All statements in this communication, other than those relating to
historical facts, are forward-looking statements. These forward-looking
statements are not guarantees of future performance and are subject to a
number of assumptions, risks and uncertainties, many of which are beyond
TNCLP’s control, which could cause actual results to differ materially
from such statements. Important factors that could cause actual results
to differ materially from expectations include, among others:
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risks related to TNCLP’s reliance on one production facility;
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the cyclical nature of TNCLP’s business;
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the global commodity nature of TNCLP’s fertilizer products, the impact
of global supply and demand on TNCLP’s selling prices, and the intense
global competition in the consolidating markets in which the
partnership operates;
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conditions in the U.S. agricultural industry;
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the volatility of natural gas prices in North America;
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reliance on third party transportation providers;
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weather conditions;
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potential liabilities and expenditures related to environmental and
health and safety laws and regulations;
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future regulatory restrictions and requirements related to greenhouse
gas emissions, climate change or other environmental requirements;
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CF Industries’ ability to implement a new enterprise resource planning
system and complete other system integration activities;
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TNCLP’s inability to predict seasonal demand for its products
accurately;
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risks involving derivatives and the effectiveness of TNCLP’s risk
measurement and hedging activities;
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limited access to capital;
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acts of terrorism and regulations to combat terrorism;
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deterioration of global market and economic conditions;
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risks related to TNCLP’s dependence on and relationships with CF
Industries;
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control of TNCLP’s General Partner by CF Industries;
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the conflicts of interest that may be faced by the executive officers
of TNCLP’s General Partner, who operate both TNCLP and CF Industries;
and
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changes in TNCLP’s treatment as a partnership for U.S. or state income
tax purposes.
More detailed information about factors that may affect TNCLP’s
performance may be found in its filings with the Securities and Exchange
Commission, including its most recent periodic reports filed on Form
10-K and Form 10-Q, which are available through CF Industries’ Web site.
Forward-looking statements are given only as of the date of this release
and TNCLP disclaims any obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
Terra Nitrogen Company, L.P. news announcements are also available on
CF Industries’ Web site, www.cfindustries.com.
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TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED BALANCE SHEETS
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(unaudited)
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March 31,
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December 31,
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2012
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2011
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(in millions, except for units)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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168.7
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$
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179.8
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Demand deposits with affiliates of the General Partner
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8.6
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Accounts receivable, net
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0.7
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0.6
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Inventories, net
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18.2
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17.3
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Prepaid expenses and other current assets
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0.2
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-
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Total current assets
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187.8
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206.3
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Property, plant and equipment, net
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89.8
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87.8
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Other assets
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6.9
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6.6
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Total assets
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$
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284.5
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$
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300.7
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LIABILITIES AND PARTNERS' CAPITAL
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Current liabilities:
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Accounts payable and accrued liabilities
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$
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14.6
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$
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18.4
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Due to affiliates of the General Partner
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2.7
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-
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Other current liabilities
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23.3
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12.0
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Total current liabilities
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40.6
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30.4
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Noncurrent liabilities
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1.6
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1.0
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Partners' capital:
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Limited partners' interests, 18,501,576 Common Units
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authorized, issued and outstanding
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220.8
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234.8
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Limited partners' interests, 184,072 Class B Common Units
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authorized, issued and outstanding
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0.9
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1.1
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General partner's interest
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20.6
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33.4
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Total partners' capital
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242.3
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269.3
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Total liabilities and partners' capital
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$
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284.5
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$
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300.7
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TERRA NITROGEN COMPANY, L.P.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(unaudited)
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Three months ended March 31,
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2012
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2011
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(in millions, except
per unit amounts)
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Net sales:
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Product sales to an affiliate of the General Partner
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$
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196.5
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$
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195.8
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Other income from an affiliate of the General Partner
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0.1
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0.1
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Other income
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0.3
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0.1
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Total
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196.9
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196.0
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Cost of goods sold:
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Materials, supplies and services
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62.8
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65.8
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Services provided by the affiliates of the General Partner
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4.9
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5.1
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Gross margin
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129.2
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125.1
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Selling, general and administrative services
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provided by the affiliates of the General Partner
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3.7
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3.5
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Other general and administrative expenses
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1.3
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0.7
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Earnings from operations
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124.2
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120.9
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Net earnings
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$
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124.2
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$
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120.9
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Allocation of net earnings:
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General Partner
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$
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53.1
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$
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53.2
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Class B Common Units
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1.2
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1.1
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Common Units
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69.9
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66.6
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Net earnings
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$
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124.2
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$
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120.9
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Net earnings per common unit
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$
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3.78
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$
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3.60
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TERRA NITROGEN COMPANY, L.P.
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SUMMARIZED OPERATING INFORMATION
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(unaudited)
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2012
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2011
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Sales
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Average
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Sales
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Average
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Three months ended
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Volumes
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Price
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Volumes
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Price
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March 31,
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(000 tons)
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($/ton)
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(000 tons)
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($/ton)
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Ammonia
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95
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$
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517
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108
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$
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414
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UAN1
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506
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$
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291
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584
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$
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258
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Three months ended
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March 31,
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2012
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2011
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Natural Gas Costs/MMBtu2
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$
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3.37
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$
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4.30
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1 The nitrogen content of UAN is 32% by weight.
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2 Includes the cost of natural gas purchases and realized
gains and losses on natural gas derivatives.
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Source: Terra Nitrogen Company, L.P.
Terra Nitrogen Company, L.P.
Dan Swenson
Senior Director,
Investor Relations & Corporate Communications
847/405-2515
dswenson@cfindustries.com