Rentech Nitrogen Revises Guidance

Rentech Nitrogen Revises Guidance

LOS ANGELES--(BUSINESS WIRE)-- Rentech Nitrogen Partners, L.P. (NYSE: RNF  ) , which manufactures and sells nitrogen fertilizer products including ammonia, urea ammonium nitrate solution (UAN) and ammonium sulfate (AS), today provided an update on its previously issued guidance.

Rentech Nitrogen now expects full-year 2012 consolidated EBITDA to be approximately $123 million as a result of $5.1 million in costs and lost operating income due to unscheduled maintenance downtime at its production facilities and $6.5 million of transaction costs and other items related to the recent acquisition of Agrifos LLC. Adjusted for the acquisition-related items, consolidated 2012 EBITDA for Rentech Nitrogen would be approximately $130 million. The Partnership had previously projected consolidated EBITDA to be in excess of $130 million for the twelve months ending December 31, 2012, as stated in its press release dated November 8, 2012.

Rentech Nitrogen also revised its expectation of cash available for distribution for the twelve months ending December 31, 2012, to approximately $3.27 per unit, as a result of the recent outages. The acquisition-related items are not expected to reduce cash available for distribution. The Partnership previously projected cash available for distribution to be in excess of $3.30 per unit for that period, as stated in its press release dated November 8, 2012.

Further explanation of EBITDA and Adjusted EBITDA, non-GAAP financial measures, a reconciliation of consolidated forecasted EBITDA and Adjusted EBITDA to net income, and an updated calculation of forecasted cash available for distribution have been included below in this press release.

In early December, the East Dubuque facility experienced a plant outage of approximately 15 days caused by a tube failure in a waste heat boiler in the ammonia plant at the facility. The boiler has since been repaired through a full replacement of the boiler tubes. In addition, the Partnership plans to replace the current boiler tube bundle with a larger bundle in its upcoming fall 2013 turnaround as part of the Partnership’s ongoing project to increase ammonia production and efficiency at its East Dubuque facility. The ammonia plant is currently operating at full capacity. The downtime is expected to reduce operating income from the East Dubuque facility by approximately $10 million, approximately $2.2 million of which is expected to impact the Partnership’s 2012 financial results. The remaining approximately $7.8 million is expected to be realized in 2013. The Partnership now expects 2012 EBITDA for the East Dubuque facility to be approximately $128.5 million, after taking into account the plant outage.

The downtime at the East Dubuque facility did not affect the timing of the expected completion of the urea and ammonia capacity expansions that are underway at the facility. Rentech Nitrogen noted that construction for the urea capacity expansion is now complete and the commissioning and start-up phase of the project to increase urea production capacity by 19,250 annual tons is underway. The Partnership continues to expect full production of the additional 19,250 annual tons of urea to come on-line by the end of this year. In addition, the Partnership accelerated certain work related to the ammonia capacity expansion during the recent plant downtime that was scheduled to be performed during the 2013 plant turnaround.

Outages recently occurred at the Pasadena facility’s sulfuric acid plant to repair and upgrade the lining of a sulfuric acid storage tank, replace a cooling tower fan, and make repairs to the tail gas heat recovery system.All repairs and upgrades are complete and the sulfuric acid plant is now in full operation. The outages are estimated to reduce 2012 operating income by approximately $2.9 million, while items related to the Agrifos acquisition are expected to reduce operating income by approximately $6.5 million in 2012. These items include approximately $4.2 million of non-capitalized transaction costs related to the Agrifos acquisition and an approximately $2.3 million reduction in 2012 operating income recognized by the Pasadena facility as a result of certain changes the Partnership is implementing to conform accounting policy at the Pasadena facility with Rentech Nitrogen’s accounting practices. As a result of the combined effect of the outages of the Pasadena facility and the other items, 2012 EBITDA for the Pasadena facility is expected to be approximately negative $5.4 million. Excluding these items, expected 2012 EBITDA for the Pasadena facility during the period since Rentech Nitrogen’s acquisition of the plant would be approximately $1.1 million.

Disclosure Regarding Non-GAAP Financial Measures

EBITDA is defined as net income plus interest expense and other financing costs, loss on debt extinguishment, loss on interest rate swaps, income tax expense and depreciation and amortization, net of interest income. Adjusted EBITDA is defined as EBITDA plus acquisition transaction costs and the effect of accounting policy changes. The Partnership calculates cash available for distribution as EBITDA, or Adjusted EBITDA when applicable, plus non-cash compensation expense, change in cash reserves for working capital and less maintenance capital expenditures, net cash interest expense and other financing costs. The Partnership presents EBITDA and Adjusted EBITDA because they are material components in its calculation of cash available for distribution. EBITDA, Adjusted EBITDA and cash available for distribution are used as supplemental financial measures by management and by external users of its financial statements, such as investors and commercial banks, to assess:

  • the financial performance of the Partnership’s assets without regard to financing methods, capital structure, historical cost basis, acquisition transaction costs or accounting policy changes; and
  • Rentech Nitrogen’s operating performance and return on invested capital compared to those of other publicly traded limited partnerships and other public companies, without regard to financing methods and capital structure.

EBITDA, Adjusted EBITDA and cash available for distribution 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, Adjusted EBITDA and cash available for distribution may have material limitations as performance measures because they exclude items that are necessary elements of Rentech Nitrogen’s costs and operations. In addition, EBITDA, Adjusted EBITDA and cash available for distribution presented by other companies may not be comparable to Rentech Nitrogen’s presentation, since each company may define these terms differently.

The table below reconciles forecasted EBITDA, Adjusted EBITDA and cash available for distribution to forecasted net income for the twelve months ending December 31, 2012. (Stated in thousands, except per unit data.)

          For the Twelve
Months Ending
December 31, 2012
Net income $ 99,400
Add:
Net interest expense 1,200
Loss on interest rate swaps 400
Loss on debt extinguishment 8,800
Depreciation and amortization 12,700
Other   700  
EBITDA $ 123,200
Plus acquisition related items:
Acquisition transaction costs 4,200
Change in accounting policies   2,300  
Adjusted EBITDA $ 129,700
Plus: Non-cash compensation expense 3,100
Less: Maintenance capital expenditures (9,200 )
Less: Net cash interest expense and debt service (2,100 )
Plus: Distribution of cash reserves for working capital 1   5,400  
Cash available for distribution $ 126,900  
Cash available for distribution, per unit $ 3.27  
Common units outstanding 2 38,800
 

1Approximately $3.8 million is expected to be distributed in the fourth quarter.

2Includes 538,793 units issued in connection with the acquisition of the Pasadena facility.

 

The table below reconciles the East Dubuque and Pasadena facilities’ 2012 forecasted EBITDA and Adjusted EBITDA to operating income for the periods presented. (Stated in thousands.)

East Dubuque Facility:

          For the Twelve
Months Ending
December 31,
2012
Operating income $ 115,800
Plus: Depreciation and amortization   12,700
2012 estimated East Dubuque Facility EBITDA $ 128,500
 

Pasadena Facility:

         
For the Period
November 1,
2012 thru
December 31,
2012
Operating income $ (6,200 )
Plus: Depreciation and amortization   800  
2012 estimated Pasadena Facility EBITDA $ (5,400 )
Plus acquisition related items:
Acquisition transaction costs 4,200
Change in accounting policies   2,300  
Adjusted 2012 estimated Pasadena Facility EBITDA $ 1,100
 

About Rentech Nitrogen, L.P.

Rentech Nitrogen (www.rentechnitrogen.com) was formed by Rentech, Inc. to own, operate and expand its nitrogen fertilizer business. Rentech Nitrogen’s assets consist of two fertilizer production facilities owned by its operating subsidiaries. Rentech Nitrogen’s East Dubuque facility is located in the northwestern corner of Illinois, and uses natural gas as a feedstock to produce primarily anhydrous ammonia and urea ammonium nitrate solution for sale to customers in the Mid Corn Belt. Rentech Nitrogen’s Pasadena facility is located in Pasadena, Texas along the Houston Ship Channel. Rentech Nitrogen’s Pasadena facility is the largest producer of synthetic granulated ammonium sulfate fertilizer in North America, with sales in the United States and South America. The Pasadena facility’s other products, which are sold domestically, include ammonium thiosulfate fertilizer and sulfuric acid. The facility uses ammonia and sulfur as its primary feedstocks.

Forward Looking Statements

This press release contains forward-looking statements about matters such as: the impact and duration of plant outages at the East Dubuque and Pasadena facilities; the magnitude of transaction costs and accounting changes relating to the Pasadena facility; the timing of completion of the urea and ammonia capacity expansions; and forecasted financial information for 2012 and 2013. 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 Rentech Nitrogen’s prior press releases and periodic public filings with the Securities and Exchange Commission, which are available via Rentech Nitrogen’s website at www.rentechnitrogen.com. The forward-looking statements in this press release are made as of the date of this press release and Rentech Nitrogen does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.



Rentech Nitrogen Partners, L.P.
Julie Dawoodjee Cafarella
Vice President of Investor Relations and Communications
310-571-9800
ir@rnp.net

KEYWORDS:   United States  North America  California  Illinois  Texas

INDUSTRY KEYWORDS:

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