Ciner Resources LP Announces Third Quarter 2019 Financial Results

ATLANTA–(BUSINESS WIRE)–Ciner Resources LP (NYSE: CINR) (“we”, “us, “our”, or the “Partnership”) today reported its financial and operating results for the third quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights:

  • Net sales of $137.2 million increased 11.2% over the prior-year third quarter; year-to-date net sales of $397.4 million increased 12.1% over the prior-year.
  • Soda ash volume produced and sold increased 8.3% and 8.0% over the prior-year third quarter; year-to-date soda ash volume produced and sold increased 8.4% and 8.2% over the prior-year.
  • Net income of $29.9 million increased $10.9 million over the prior-year third quarter; year-to-date net income of $78.9 million increased $4.5 million over the prior-year. Net income for the year-to-date period ended September 30, 2018 includes a $27.5 million litigation settlement in the second quarter of 2018.
  • Adjusted EBITDA of $37.6 million increased 35.3% over the prior-year third quarter; year-to-date adjusted EBITDA of $103.6 million increased 4.1% over the prior-year. Adjusted EBITDA for the year-to-date period ended September 30, 2018 includes a $27.5 million litigation settlement in the second quarter of 2018.
  • Earnings per unit of $0.740 for the quarter increased 68.2% over the prior-year third quarter of $0.440; year-to-date earnings per unit of $1.910 increased 7.3% over the prior-year. Net income attributable to the Partnership for the year-to-date period ended September 30, 2018, the measure upon which earnings per unit is calculated, included a $27.5 million litigation settlement in the second quarter of 2018.
  • Quarterly distribution declared per unit of $0.340 decreased 40.0% compared to the prior-year third quarter and remained flat compared to the first and second quarters of 2019.
  • Net cash provided by operating activities of $40.6 million decreased 45.3% over prior-year third quarter; year-to-date net cash provided by operating activities of $68.4 million decreased by 47.9% over the prior-year.
  • Distributable cash flow of $16.2 million increased 38.5% compared to the prior-year third quarter; year-to-date distributable cash flow of $45.7 million increased 2.7% over the prior year. Distributable cash flow for the year-to-date period ended September 30, 2018 includes a $27.5 million litigation settlement in the second quarter of 2018.
  • The distribution coverage ratio was 2.35 and 1.03 for the three months ended September 30, 2019 and 2018, respectively; and 2.22 and 1.30 for the nine months ended September 30, 2019 and 2018, respectively.

Oğuz Erkan, CEO, commented: “ We are very excited to report that Q3 2019 was the best production quarter in the plant’s history, with 711,000 short tons produced and marking the fourth consecutive quarter of record production levels. This is the second time ever the plant generated over 700,000 short tons in a quarter, with the prior record set in Q4 2018 at 709,000 short tons. It is evident that our focus on operational reliability and higher overall utilization has continued to show its results in our production volumes.

This production profile, coupled with a strong pricing environment, has driven net sales to approximately $137 million in Q3 2019, an 11% increase over Q3 2018, and to nearly $400 million for the first nine months of 2019, a 12% increase over the same period in the prior year. Net income and Adjusted EBITDA as a result have also benefited, increasing by approximately 57% and 35%, respectively, from the prior year third quarter to $29.9 million and $37.6 million, respectively, and supporting approximately $107.5 million of net income and $141 million of Adjusted EBITDA generated in the last twelve months ended September 30, 2019.”

Financial Highlights

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(Dollars in millions, except per unit amounts)

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Soda ash volume produced (millions of short tons)

0.711

 

 

0.657

 

 

8.2

%

 

2.064

 

 

1.905

 

 

8.3

%

Soda ash volume sold (millions of short tons)

0.709

 

 

0.657

 

 

8.0

%

 

2.065

 

 

1.909

 

 

8.2

%

Net sales

$

137.2

 

 

$

123.4

 

 

11.2

%

 

$

397.4

 

 

$

354.5

 

 

12.1

%

Net income

$

29.9

 

 

$

19.0

 

 

57.4

%

 

$

78.9

 

 

$

74.4

 

 

6.0

%

Net income attributable to Ciner Resources LP

$

14.8

 

 

$

9.0

 

 

64.4

%

 

$

38.4

 

 

$

35.9

 

 

7.0

%

Earnings per Common Unit

$

0.74

 

 

$

0.44

 

 

68.2

%

 

$

1.91

 

 

$

1.78

 

 

7.3

%

Adjusted EBITDA(1)

$

37.6

 

 

$

27.8

 

 

35.3

%

 

$

103.6

 

 

$

99.5

 

 

4.1

%

Adjusted EBITDA attributable to Ciner Resources LP(1)

$

18.5

 

 

$

13.8

 

 

34.1

%

 

$

51.4

 

 

$

49.7

 

 

3.4

%

Net cash provided by operating activities

$

40.6

 

 

$

74.2

 

 

(45.3

)%

 

$

68.4

 

 

$

131.4

 

 

(47.9

)%

Distributable cash flow attributable to Ciner Resources LP(1)

$

16.2

 

 

$

11.7

 

 

38.5

%

 

$

45.7

 

 

$

44.5

 

 

2.7

%

Distribution coverage ratio (1)

2.35

 

 

1.03

 

 

128.2

%

 

2.22

 

 

1.30

 

 

70.8

%

(1)See non-GAAP reconciliations

Three Months Ended September 30, 2019 compared to Three Months Ended September 30, 2018

The following table sets forth a summary of net sales, sales volumes and average sales price, and the percentage change between the periods.

 

 

Three Months Ended

September 30,

 

Percent

Increase/(Decrease)

Net sales (Dollars in millions):

 

2019

 

2018

 

Domestic

 

$

56.8

 

 

$

60.0

 

 

(5.3)%

International

 

80.4

 

 

63.4

 

 

26.8%

Total net sales

 

$

137.2

 

 

$

123.4

 

 

11.2%

Sales volumes (thousands of short tons):

 

 

 

 

 

 

Domestic

 

237.7

 

 

267.9

 

(11.3)%

International

 

471.3

 

 

388.7

 

21.3%

Total soda ash volume sold

 

709.0

 

 

656.6

 

8.0%

Average sales price (per short ton):

 

 

 

 

 

 

Domestic

 

$238.96

 

$223.96

 

6.7%

International

 

$170.59

 

$163.11

 

4.6%

Average

 

$193.51

 

$187.94

 

3.0%

Percent of net sales:

 

 

 

 

 

 

Domestic sales

 

41.4

%

 

48.6%

 

(14.8)%

International sales

 

58.6

%

 

51.4%

 

14.0%

Total percent of net sales

 

100.0

%

 

100.0%

 

 

Percent of sales volumes:

 

 

 

 

 

 

Domestic volume

 

33.5

%

 

40.8

%

 

(17.9)%

International volume

 

66.5

%

 

59.2

%

 

12.3%

Total percent of volume sold

 

100.0

%

 

100.0

%

 

 

Consolidated Results

Net sales. Net sales increased by 11.2% to $137.2 million for the three months ended September 30, 2019 from $123.4 million for the three months ended September 30, 2018, primarily driven by an increase in soda ash volumes sold of 8.0% due to higher production for the three months ended September 30, 2019, as well as favorable domestic and international pricing for the third quarter of 2019 compared to the third quarter of 2018.

Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense and freight costs, increased by 3.5% to $100.7 million for the three months ended September 30, 2019 from $97.3 million for the three months ended September 30, 2018, primarily due to higher variable production costs for the quarter as a result of increased sales and production volumes for the third quarter 2019 compared to the third quarter of 2018. We also incurred higher compensation related expenses for the third quarter of 2019, which were partially offset by a decrease in consulting fees and overall maintenance expenses compared to the third quarter of 2018.

Selling, general and administrative expenses. Our selling, general and administrative expenses decreased 16.4% to $5.1 million for the three months ended September 30, 2019, compared to $6.1 million for the three months ended September 30, 2018. The decrease was driven primarily by decreased employee benefit expenses, as well as lower professional fees incurred during the third quarter of 2019 compared to the third quarter of 2018.

Operating income. As a result of the foregoing, operating income increased by 57.0% to $31.4 million for the three months ended September 30, 2019, compared to $20.0 million for the three months ended September 30, 2018.

Net income. As a result of the foregoing, net income increased by 57.4% to $29.9 million for the three months ended September 30, 2019, compared to $19.0 million for the three months ended September 30, 2018.

Nine Months Ended September 30, 2019 compared to Nine Months Ended September 30, 2018

The following table sets forth a summary of net sales, sales volumes and average sales price, and the percentage change between the periods.

 

 

Nine Months Ended

September 30,

 

Percent

Increase/(Decrease)

Net sales (Dollars in millions, except average sales price):

 

2019

 

2018

 

Domestic

 

$

157.7

 

 

$

175.6

 

 

(10.2)%

International

 

239.7

 

 

178.9

 

 

34.0%

Total net sales

 

$

397.4

 

 

$

354.5

 

 

12.1%

Sales volumes (thousands of short tons):

 

 

 

 

 

 

Domestic

 

660.8

 

 

796.8

 

 

(17.1)%

International

 

1,403.7

 

 

1,112.0

 

 

26.2%

Total soda ash volume sold

 

2,064.5

 

 

1,908.8

 

 

8.2%

Average sales price (per short ton):

 

 

 

 

 

 

Domestic

 

$

238.65

 

 

$

220.38

 

 

8.3%

International

 

$

170.76

 

 

$

160.88

 

 

6.1%

Average

 

$

192.49

 

 

$

185.72

 

 

3.6%

Percent of net sales:

 

 

 

 

 

 

Domestic sales

 

39.7

%

 

49.5

%

 

(19.8)%

International sales

 

60.3

%

 

50.5

%

 

19.4%

Total percent of net sales

 

100.0

%

 

100.0

%

 

 

Percent of sales volumes:

 

 

 

 

 

 

Domestic volume

 

32.0

%

 

41.7

%

 

(23.3)%

International volume

 

68.0

%

 

58.3

%

 

16.6%

Total percent of volume sold

 

100.0

%

 

100.0

%

 

 

Consolidated Results

Net sales. Net sales increased by 12.1% to $397.4 million for the nine months ended September 30, 2019 from $354.5 million for the nine months ended September 30, 2018, primarily driven by an increase in soda ash volumes sold of 8.2% due to higher production for the nine months ended September 30, 2019, as well as an increase in average sales prices of 3.6%. The increase in sales prices was primarily driven by an increase in domestic and international pricing during the nine months ended September 30, 2019. The increase in sales prices was also affected by a shift in our sales mix between domestic and international sales volumes for the nine months ended September 30, 2019 compared to the same period in 2018.

Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense and freight costs, increased by 2.9% to $294.7 million for the nine months ended September 30, 2019 from $286.5 million for the nine months ended September 30, 2018, primarily due to higher variable production costs, as well as an increase in freight costs for the nine months ended September 30, 2019 primarily as a result of increased sales and production volumes compared to the nine months ended September 30, 2018. Our increased production and freight costs were partially offset by a decrease in consulting fees and overall maintenance related expenses incurred during the nine months ended September 30, 2019.

Litigation settlement. During the prior year, we recognized $27.5 million related to the settlement of an action filed against Rock Springs Royalty Company (“RSRC”) related to royalty overpayment under Ciner Wyoming’s mineral exploration license with RSRC. The case was settled on June 28, 2018. The recognition of this gain lowered our overall operating costs and expenses in the second quarter of 2018, which positively impacted our operating results for the nine months ended September 30, 2018.

Selling, general and administrative expenses. Our selling, general and administrative expenses increased 3.2% to $19.5 million for the nine months ended September 30, 2019, compared to $18.9 million for the nine months ended September 30, 2018. The increase was primarily due to increased compensation expenses incurred during the nine months ended September 30, 2019 and higher selling and administrative fees relating to our affiliate, ANSAC, as a result of our increased sales volume for the nine months ended September 30, 2019 compared to the same period in 2018.

Operating income. As a result of the foregoing, operating income increased by 8.6% to $83.2 million for the nine months ended September 30, 2019, compared to $76.6 million for the nine months ended September 30, 2018.

Net income. As a result of the foregoing, net income increased by 6.0% to $78.9 million for the nine months ended September 30, 2019, compared to $74.4 million for the nine months ended September 30, 2018.

CAPEX AND ORE METRICS

The following table summarizes our capital expenditures, on an accrual basis, ore grade and ore to ash ratio:

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(Dollars in millions)

2019

 

2018

 

2019

 

2018

Capital Expenditures

 

 

 

 

 

 

 

Maintenance

$

4.6

 

$

2.6

 

$

9.8

 

$

7.5

Expansion

7.1

 

5.1

 

31.3

 

20.6

Total

$

11.7

 

$

7.7

 

$

41.1

 

$

28.1

Operating and Other Data:

 

 

 

 

 

 

 

Ore grade(1)

86.4%

 

84.7%

 

86.6%

 

85.7%

Ore to ash ratio(2)

1.53: 1.0

 

1.53: 1.0

 

1.51: 1.0

 

1.54: 1.0

(1)Ore grade is the percentage of raw trona ore that is recoverable as soda ash free of impurities. A higher ore grade will produce more soda ash than a lower ore grade.

(2)Ore to ash ratio expresses the number of short tons of trona ore needed to produce one short ton of soda ash and includes our deca rehydration recovery process. In general, a lower ore to ash ratio results in lower costs and improved efficiency.

We are increasing maintenance capital expenditures at our Wyoming facility to both adequately maintain the physical assets and to improve operational reliability at our Wyoming facility. The increase in expansion capital expenditures during the nine months ended September 30, 2019 as compared to the same period in 2018 was driven by starting phase one of our co-generation facility. Looking ahead, we will continue to invest to improve the sustainability of our existing assets and to increase production levels to approximately 3.5 million tons of soda ash per year.

FINANCIAL POSITION AND LIQUIDITY

As of September 30, 2019, we had cash and cash equivalents of $12.2 million. In addition, we have approximately $92.0 million ($225.0 million, less $133.0 million outstanding) of remaining capacity under our revolving credit facility. As of September 30, 2019, our leverage and interest coverage ratios, as calculated pursuant to the credit agreement for the Ciner Wyoming Credit Facility, were 0.92: 1.0 and 24.68: 1.0, respectively.

CASH FLOWS AND QUARTERLY CASH DISTRIBUTION

Cash Flows

Cash provided by operating activities decreased to $68.4 million during the nine months ended September 30, 2019 compared to $131.4 million of cash provided during the nine months ended September 30, 2018, primarily driven by $31.4 million of working capital used in operating activities during the nine months ended September 30, 2019, compared to $33.6 million of working capital provided by operating activities during the nine months ended September 30, 2018. The $65.0 million increase in working capital used in operating activities was primarily due to the $30.0 million increase in due from affiliates for the nine months ended September 30, 2019 compared to a $34.0 million decrease for the nine months ended September 30, 2018, which increase was primarily related to incremental sales levels to ANSAC and timing of collections. Additionally, due from affiliates increased as a result of the timing of our funding of pension benefits offered and administered by Ciner Corp for the Partnership and it’s subsidiary, Ciner Wyoming.

Cash provided by operating activities during the nine months ended September 30, 2019 was offset by cash used in investing activities of $49.3 million for capital expenditures and cash used in financing activities during the nine months ended September 30, 2019 of $17.1 million. The decrease in cash used in financing activities during the nine months ended September 30, 2019 was due to distributions paid of $50.6 million and net borrowings of long-term debt of $34.0 million during the nine months ended September 30, 2019 compared to the $38.5 million in net repayments of g-term debt during the nine months ended September 30, 2018. The increase in net borrowings for the period was primarily related to funding of capital expenditures.

Quarterly Distribution

On October 29, 2019, the Partnership declared its third quarter 2019 quarterly cash distribution of $0.340 per unit. The quarterly cash distribution is payable on November 20, 2019 to unitholders of record on November 8, 2019. While we are working on finalizing our capital plans for a new expansion project that we believe will significantly increase production levels up to approximately 3.5 million tons of soda ash per year, such plans will require capital expenditures materially higher than have been incurred by Ciner Wyoming in recent years. To maintain a disciplined financial policy and what we believe is a conservative capital structure, we intend to pay for the investment in part through cash generated by the business and in part through debt. When considering the significant investment required by this expansion and the infrastructure improvements designed to increase our overall efficiency for each of the first three quarters of 2019, we lowered our quarterly cash distributions as compared to 2018 quarterly cash distributions in order to satisfy approximately 50% of the funding for the project, which we believe will continue for the next 8-10 quarters depending upon business performance. Subject to our business performance, we intend to maintain the Partnership quarterly cash distribution of $0.340 per unit, until such targets are met, though there can be no assurance that such level will be maintained for future quarters.

RELATED COMMUNICATIONS

Ciner Resources LP will host a conference call on November 5, 2019 at 8:30 a.m. ET. Participants can listen in by dialing 1-866-550-6980 (Domestic) or 1-804-977-2644 (International) and referencing confirmation 6366209. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection. A telephonic replay of the call will be available approximately two hours after the call’s completion by calling 1-800-585-8367 or 404-537-3406 and referencing confirmation 6366209, and will remain available for the following seven days. This conference call will be webcast live and archived for replay on Ciner Resources’ website at www.ciner.us.com.

ABOUT CINER RESOURCES LP

Ciner Resources LP, a master limited partnership, operates the trona ore mining and soda ash production business of Ciner Wyoming, one of the largest and lowest cost producers of natural soda ash in the world, serving a global market from its facility in the Green River Basin of Wyoming. The facility has been in operation for more than 50 years.

NATURE OF OPERATIONS

Ciner Resources LP owns a controlling interest comprised of a 51% membership interest in Ciner Wyoming. Natural Resource Partners L.P. owns a non-controlling interest consisting of a 49% membership interest in Ciner Wyoming.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. Statements other than statements of historical facts included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements may contain words such as “possible,” “believe,” “should,” “could,” “would,” “predict,” “plan,” “estimate,” “intend,” “may,” “anticipate,” “will,” “if,” “expect” or similar expressions. Such statements are based only on the Partnership’s current beliefs, expectations and assumptions regarding the future of the Partnership’s business, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Partnership’s control. The Partnership’s actual results and financial condition may differ materially from those implied or expressed by these forward-looking statements. Consequently, you are cautioned not to place undue reliance on any forward-looking statement because no forward-looking statement can be guaranteed. Factors that could cause the Partnership’s actual results to differ materially from the results contemplated by such forward-looking statements include: changes in general economic conditions, the Partnership’s ability to meet its expected quarterly distributions, changes in the Partnership’s relationships with its customers, including ANSAC, the demand for soda ash and the opportunities for the Partnership to increase its volume sold, the development of glass and glass making product alternatives, changes in soda ash prices, operating hazards, unplanned maintenance outages at the Partnership’s production facility, construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures, the effects of government regulation, tax position, and other risks incidental to the mining and processing of trona ore, and shipment of soda ash, as well as the other factors discussed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2018, and subsequent reports filed with the United States Securities and Exchange Commission. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Unless required by law, the Partnership undertakes no duty and does not intend to update the forward-looking statements made herein to reflect new information or events or circumstances occurring after this press release. All forward-looking statements speak only as of the date made.

Supplemental Information

CINER RESOURCES LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(In millions, except per unit data)

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

Net sales:

 

 

 

 

 

 

 

Sales—affiliates

$

 

80.4

 

 

$

 

63.4

 

 

$

 

239.7

 

 

$

 

178.9

 

Sales—others

 

56.8

 

 

 

60.0

 

 

 

157.7

 

 

 

175.6

 

Net sales

$

 

137.2

 

 

$

 

123.4

 

 

$

 

397.4

 

 

$

 

354.5

 

Operating costs and expenses:

 

 

 

 

 

 

 

Cost of products sold including freight costs (excludes depreciation, depletion and amortization expense set forth separately below)

 

93.9

 

 

 

90.0

 

 

 

274.7

 

 

 

265.1

 

Depreciation, depletion and amortization expense

 

6.8

 

 

 

7.3

 

 

 

20.0

 

 

 

21.4

 

Selling, general and administrative expenses—affiliates

 

4.4

 

 

 

4.3

 

 

 

15.2

 

 

 

13.5

 

Selling, general and administrative expenses—others

 

0.7

 

 

 

1.8

 

 

 

4.3

 

 

 

5.4

 

Litigation settlement

 

 

 

 

(27.5

)

Total operating costs and expenses

 

105.8

 

 

 

103.4

 

 

 

314.2

 

 

 

277.9

 

Operating income

 

31.4

 

 

 

20.0

 

 

 

83.2

 

 

 

76.6

 

Other income (expenses):

 

 

 

 

 

 

 

Interest income

 

0.1

 

 

 

0.3

 

 

 

0.3

 

 

 

1.7

 

Interest expense, net

 

(1.6

)

 

 

(1.3

)

 

 

(4.6

)

 

 

(3.8

)

Other, net

 

 

 

 

(0.1

)

Total other expense, net

 

(1.5

)

 

 

(1.0

)

 

 

(4.3

)

 

 

(2.2

)

Net income

$

 

29.9

 

 

$

 

19.0

 

 

$

 

78.9

 

 

$

 

74.4

 

Net income attributable to non-controlling interest

 

15.1

 

 

 

10.0

 

 

 

40.5

 

 

 

38.5

 

Net income attributable to Ciner Resources LP

$

 

14.8

 

 

$

 

9.0

 

 

$

 

38.4

 

 

$

 

35.9

 

Other comprehensive loss:

 

 

 

 

 

 

 

Income/(loss) on derivative financial instruments

 

(1.1

)

 

 

1.7

 

 

 

(0.7

)

 

 

(1.5

)

Comprehensive income

 

28.8

 

 

 

20.7

 

 

 

78.2

 

 

 

72.9

 

Comprehensive income attributable to non-controlling interest

 

14.6

 

 

 

10.9

 

 

 

40.2

 

 

 

37.8

 

Comprehensive income attributable to Ciner Resources LP

$

 

14.2

 

 

$

 

9.8

 

 

$

 

38.0

 

 

$

 

35.1

 

 

 

 

 

 

 

 

 

Net income per limited partner unit:

 

 

 

 

 

 

 

Net income per limited partner unit (basic)

$

 

0.74

 

 

$

 

0.44

 

 

$

 

1.91

 

 

$

 

1.78

 

Net income per limited partner unit (diluted)

$

 

0.73

 

 

$

 

0.44

 

 

$

 

1.90

 

 

$

 

1.78

 

 

 

 

 

 

 

 

 

Limited partner units outstanding:

 

 

 

 

 

 

 

Weighted average limited partner units outstanding (basic)

 

19.7

 

 

 

19.7

 

 

 

19.7

 

 

 

19.7

 

Weighted average limited partner units outstanding (diluted)

 

19.7

 

 

 

19.7

 

 

 

19.8

 

 

 

19.7

 

Contacts

Ciner Resources LP


Investor Relations
Ed Freydel

Vice President, Finance

(770) 375-2323

EFreydel@ciner.us.com

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