OCI Resources LP (NYSE: OCIR) today reported its financial and
operating results for the first quarter ended March 31,
2014.
First Quarter 2014 Financial Highlights:
- Net sales of $116.2 million increased
7.4% over the prior-year first quarter.
- EBITDA of $28.2 million increased 15.6%
over the prior-year first quarter.
- Earnings per unit were $0.52.
- Distributable cash flow was $13.1
million. Distribution coverage ratio was 1.31 for the three months
ended March 31, 2014; and 1.27 since completion of our initial
public offering ("IPO").
Outlook:
- We are maintaining our prior outlook
for soda ash volumes to increase 2% to 4% over 2013 levels, and
international prices to rise 3% to 5% in 2014.
- We continue to expect 2014 expansion
capital expenditures to be in the range of $24 to $30 million.
- We continue to expect 2014 maintenance
capital expenditures to be in the $12 to $15 million range, with
planned maintenance outages in the second and third quarters.
Financial Highlights
Three Months Ended March
31,
($ in millions, except per unit amounts) 2014
2013 (Predecessor) Soda ash
volume sold (millions of short tons) 0.655 0.626 Net sales $ 116.2
$ 108.2 Net income $ 21.6 $ 14.9
Net income attributable to
OCIR/Predecessor $ 10.3 $ 4.0 Basic and Diluted Earnings per
Unit $ 0.52 ** EBITDA (1) $ 28.2 $ 24.4 EBITDA attributable to
OCIR/Predecessor (1) $ 13.9 $ 10.5 Distributable cash flow
attributable to OCIR(1) $ 13.1 ** (1) See non-GAAP reconciliation
of EBITDA ** Information is not applicable for the pre-IPO
periods.
Kirk Milling, CEO, commented “We’re off to a great start in
2014, as our Wyoming facility had its best first quarter operating
performance in the site’s history. Increased production volumes,
better ore to ash ratio, and international pricing improvements led
to a 15.6% EBITDA improvement."
"As we move into the second quarter, our volumes will be lower
than first quarter levels due to a planned maintenance outage
during May. The volume impact from this outage is built into our
prior guidance, which we still maintain will be up 2-4% versus
2013. Even with the outage, we anticipate our 1st half production
levels will remain on a record setting pace."
FIRST QUARTER 2014 FINANCIAL AND OPERATING RESULTS
OCI Resources LP completed its IPO on September 18, 2013.
Reported results of operations for the three months ended March 31,
2014 are the results of the Partnership and its subsidiary,
however, the three months ended March 31, 2013, are the results of
the Partnership's predecessor, OCI Wyoming Holding Co. and its
subsidiary (the "Predecessor"). Unless otherwise noted, financial
information for the Predecessor and the Partnership is presented
before non-controlling interest and all significant intercompany
balances have been eliminated in consolidation.
Net sales were $116.2 million in the first quarter 2014,
compared to $108.2 million in the prior-year first quarter, an
increase of 7.4% over the comparable period. Domestic sales for the
three months ended March 31, 2014 totaled $48.6 million, while
international sales totaled $67.6 million for the same period. In
the three months ended March 31, 2013, domestic sales were
$50.9 million, and international sales were $57.3 million.
International sales volume, including non-ANSAC sales, increased by
8.7% over the prior-year first quarter and average sales price per
ton increased 8.5%. Domestic sales in the three months ended
March 31, 2014 were lower than the corresponding 2013 quarter
as volumes were down 3.1% coupled with a decrease of 1.4% in
average sales price over the same period.
Sales volume in short tons was 655.2 thousand during the three
months ended March 31, 2014 versus 625.7 thousand during the
prior-year first quarter. International sales volume for the first
quarter 2014 and 2013 were 450.8 thousand and 414.7 thousand short
tons, respectively, while domestic sales volume over the same
periods were 204.4 thousand and 211.0 thousand short tons,
respectively.
Costs of products sold (including freight costs) were $84.0
million in the first quarter 2014, which represents an increase of
3.4% from prior-year first quarter. Cost of products sold during
2014 have increased primarily due to natural gas. Natural gas costs
increased $2.8 million over the prior-year first quarter, due to
pricing impact of $3.2 million which was partially offset by $0.4
million in cost reduction due to lower usage.
The ore to ash ratio (which includes our deca rehydration
recovery process) for the three months ended March 31, 2014
and 2013 was 1.54 and 1.60, respectively.
Selling, general and administrative expenses were $4.2 million
in the first quarter of 2014, which represents an increase of 35.5%
from prior-year first quarter. Selling, general and administrative
expenses during 2014 have increased primarily due to the costs
associated with being a public company.
Capital expenditures were $1.4 million and $2.1 million during
the three months ended March 31, 2014 and 2013, respectively.
Maintenance capital expenditures were $0.6 million during the three
months ended March 31, 2014 and $2.1 million during the
comparable 2013 first-quarter period, while expansion capital
expenditures were $0.8 million during the three months ended
March 31, 2014 and $0.0 million during the comparable 2013
first-quarter period.
The Partnership is a limited partnership and generally is not
subject to federal or certain state 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 period ended March 31,
2013 are those of the Predecessor.
CASH FLOWS AND QUARTERLY CASH DISTRIBUTION
Cash provided from operations was $14.3 million for the three
months ended March 31, 2014 compared to $23.4 million in
prior-year first quarter. The decrease was driven by an increase in
cash used in working capital of $12.7 million during the three
months ended March 31, 2014, compared to $2.8 million cash
generated during the three months ended March 31, 2013. This
was partly offset by an increase of 45% in net income to $21.6
million in the three months ended March 31, 2014 compared to $14.9
million in the comparable 2013 first-quarter period.
Our business objective is to generate stable cash flows,
allowing us to make quarterly cash distributions to our common and
subordinated unitholders and, over time, to increase those
quarterly cash distributions.
On April 17, 2014, the Partnership declared its first quarter
2014 cash distribution approved by the board of directors of its
general partner. The quarterly cash distribution of $0.5000 per
unit is payable on May 15, 2014 to unitholders of record on April
30, 2014.
RELATED COMMUNICATIONS
OCI Resources LP will host a conference call tomorrow,
May 8, 2014 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 31016187. 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 31016187, and will remain
available for the following six days. This conference call will be
webcast live and archived for replay on OCI Resources' website at
www.ociresources.com.
FILING OF ANNUAL REPORT ON FORM 10-K
OCI Resources LP filed its Annual Report on Form 10-K for the
period ended December 31, 2013 with the Securities and Exchange
Commission on March 14, 2014. An electronic copy of the Form 10-K
is available on the Partnership’s website at www.ociresources.com
as well as on the SEC’s website at www.sec.gov. Interested parties
also may receive a hard copy of the Form 10-K (which contains the
Partnership’s audited financial statements) free of charge upon
request to the secretary of our general partner at our principal
executive offices. Our principal executive offices are located at
Five Concourse Parkway, Suite 2500, Atlanta, Georgia 30328 and our
telephone number is (770) 375-2300.
ABOUT OCI RESOURCES LP
OCI Resources LP, a master limited partnership, operates the
trona ore mining and soda ash production business of OCI Wyoming,
L.P. ("OCI 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
OCI Resources LP owns a controlling interest comprised of 40.98%
general partner interest and 10.02% limited partner interest in OCI
Wyoming, L.P. ("OCI Wyoming"). Natural Resource Partners LP ("NRP")
owns a non-controlling interest consisting of 39.37% general
partner interest and 9.63% limited partner interest in OCI
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 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 American Natural Soda Ash Corporation ("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 facilities, 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, processing, and shipment of trona ore and 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, 2013, and
subsequent reports filed with the Securities and Exchange
Commission. All forward-looking statements included in this press
release are expressly qualified in their entirety by such
cautionary statements. 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
OCI RESOURCES LP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
Three Months Ended March 31, ($ in
millions, except per unit data) 2014
2013 (Predecessor) Net
sales $ 116.2 $ 108.2
Operating costs and
expenses: Cost of products sold 84.0 81.2 Depreciation and
amortization expense 5.4 6.0 Selling, general and administrative
expenses 4.2 3.1 Total operating costs and expenses
93.6 90.3
Operating income 22.6 17.9
Other
income/(expenses): Interest expense (1.2 ) (0.4 ) Other, net
0.2 0.5 Total other income/(expense), net (1.0 ) 0.1
Income before provision for income taxes 21.6 18.0 Provision
for income taxes — 3.1
Net income $ 21.6
$ 14.9 Net income attributable to non-controlling
interest 11.3 10.9
Net income attributable to OCI
Resources LP/Predecessor $ 10.3 $ 4.0 Other
comprehensive (loss)/income: Interest rate swap (0.2 ) —
Comprehensive income 21.4 14.9 Comprehensive income attributable to
non-controlling interest 11.2 10.9
Comprehensive
income attributable to OCI Resources LP/Predecessor $ 10.2
$ 4.0 Net income per limited partner unit:
Common - Public and OCI Holdings (basic and diluted) $ 0.52 **
Subordinated - OCI Holdings (basic and diluted) $ 0.52 **
Limited partner units outstanding: Weighted average common units
outstanding (basic and diluted) 9.8 ** Weighted average
subordinated units outstanding (basic and diluted) 9.8 **
Cash distribution declared per unit 0.5000 **
** Information is not applicable for the
pre-IPO periods.
OCI RESOURCES LP CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited) As of
($ in millions) March 31, 2014
December 31, 2013 ASSETS Current
assets: Cash and cash equivalents $ 35.4 $ 46.9 Accounts
receivable - net 32.8 34.4 Accounts receivable - ANSAC 63.3 58.1
Due from affiliates - net 31.1 20.4 Inventory 42.3 41.7 Other
current assets 0.6 1.2 Total current assets 205.5
202.7 Property, plant and equipment - net 233.9 238.0 Other
non-current assets 1.3 1.3 Total assets $ 440.7
$ 442.0
LIABILITIES AND EQUITY Current
liabilities: Accounts payable $ 9.3 $ 13.2 Due to affiliates
7.2 2.3 Accrued expenses 25.7 26.4 Total current
liabilities 42.2 41.9 Long-term debt 155.0 155.0 Reclamation
reserve 3.9 3.8 Total liabilities 201.1 200.7
Equity: Common unitholders - Public and OCI
Holdings (9.8 million units issued and outstanding at March 31,
2014 and December 31, 2013, respectively) 104.0 104.5 Subordinated
unitholders - OCI Holdings (9.8 million units issued and
outstanding at March 31, 2014 and December 31, 2013, respectively)
36.0 36.6 General partner unitholders - OCI Resource Partners LLC
(0.4 million units issued and outstanding at March 31, 2014 and
December 31, 2013, respectively) 3.8 3.8 Accumulated other
comprehensive loss—interest rate swap (0.4 ) (0.3 ) Partners'
capital attributable to OCI Resources LP 143.4 144.6
Non-controlling interests 96.2 96.7 Total equity
239.6 241.3 Total liabilities and partners' equity $
440.7 $ 442.0
OCI RESOURCES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Three Months Ended March
31, ($ in millions) 2014
2013 (Predecessor) Cash flows from
operating activities: Net income $ 21.6 $ 14.9 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5.4 6.0 Deferred income taxes — (0.3
) Changes in operating assets and liabilities: (Increase)/decrease
in: Accounts receivable - net 1.6 (3.9 ) Accounts receivable -
ANSAC (5.2 ) 1.7 Due from affiliates - net (10.7 ) 6.1 Inventory
(0.6 ) 1.7 Other current and other non-current assets 0.7 (1.5 )
Increase/(decrease) in: Accounts payable (3.9 ) (2.7 ) Due to
affiliates 4.9 5.0 Accrued expenses and other liabilities 0.5
(3.6 ) Net cash provided by operating activities 14.3
23.4
Cash flows from investing activities: Capital
expenditures (2.7 ) (2.1 ) Net cash used in investing activities
(2.7 ) (2.1 )
Cash flows from financing activities:
Repayments of long-term debt — (1.0 ) Distributions to common
unitholders (5.6 ) — Distributions to general partner (0.2 ) —
Distributions to subordinated unitholders (5.6 ) — Distributions to
non-controlling interest (11.7 ) (3.6 ) Net cash used in financing
activities (23.1 ) (4.6 ) Net (decrease)/increase in cash and cash
equivalents (11.5 ) 16.7 Cash and cash equivalents at beginning of
period 46.9 22.7 Cash and cash equivalents at end of
period $ 35.4 $ 39.4
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 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, 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 March 31, 2014
2013 ($ in millions, except
per unit data) (Predecessor) Reconciliation of
EBITDA and distributable cash flow to net income and net cash
provided by operating activities: Net income $
21.6 $ 14.9
Add backs: Depreciation and amortization expense
5.4 6.0 Interest expense, net 1.2 0.4 Taxes — 3.1
EBITDA $ 28.2 $ 24.4 Less: EBITDA attributable to
non-controlling interest 14.3 13.9
EBITDA
attributable to OCI Resources LP/Predecessor $ 13.9 $ 10.5
Less: Cash interest expense, net attributable to OCIR 0.5 **
Maintenance capital expenditures attributable to OCIR(1) 0.3
**
Distributable cash flow attributable to OCI Resources LP
$ 13.1 ** Cash distribution declared per unit 0.5000 **
Total units outstanding 19.950 **
Total distributions to
unitholders and general partner $ 10.0 ** Distribution
Coverage Ratio 1.31 **
Net cash provided by operating
activities: $ 14.3 $ 23.4 Add/(less): Deferred income taxes —
0.3 Net change in working capital 12.7 (2.8 ) Interest expense -
net 1.2 0.4 Taxes — 3.1
EBITDA 28.2 24.4 Less:
EBITDA attributable to non-controlling interest 14.3 13.9
EBITDA attributable to OCI Resources LP/Predecessor
13.9 10.5 Less: Cash interest expense, net attributable to OCIR 0.5
** Maintenance capital expenditures attributable to OCIR(1) 0.3
**
Distributable cash flow attributable to OCI Resources
LP $ 13.1 ** (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.
** Information is not applicable for the
pre-IPO periods.
The following table is a rolling schedule of our reconciliation
of net income to EBITDA and distributable cash flow since the
completion of the IPO:
Rolling Non-GAAP Reconciliation Schedule Year
ended December 31,
Three monthsended March
31,
Total 2013 2014
($ in millions, except per unit data)
Reconciliation of net income to EBITDA and distributable cash
flow: Net income $ 70.6 $ 21.6 $ 92.2
Add backs:
Depreciation and amortization expense 23.9 5.4 29.3 Interest
expense, net 2.8 1.2 4.0 Taxes 7.1 — 7.1
EBITDA $ 104.4 $ 28.2 $ 132.6 Less: EBITDA attributable to
non-controlling interest 57.3 14.3 71.6
EBITDA
attributable to OCI Resources LP/Predecessor $ 47.1 $ 13.9 $
61.0 Less: EBITDA attributable to Predecessor through September 17,
2013 29.8 — $ 29.8
EBITDA attributable to OCI
Resources LP $ 17.3 13.9 $ 31.2 Less: Cash interest expense,
net attributable to OCIR 0.6 0.5 $ 1.1 Maintenance capital
expenditures attributable to OCIR(1) 2.7 0.3 $ 3.0
Distributable cash flow attributable to OCI Resources LP
(2) $ 14.0 13.1 $ 27.1 Cash distribution
declared per unit $ 0.5707 0.5000 1.0707 Total units outstanding
19.950 19.950 19.950
Total distributions to
unitholders and general partner $ 11.4 10.0 21.4
Distribution Coverage Ratio 1.23 1.31 1.27 (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. (2) Distributable cash flow is
only calculated subsequent to September 17, 2013.
OCI Resources LPInvestor RelationsScott Humphrey,
770-375-2387Director of Investor
RelationsSHumphrey@ocienterprises.comorMediaAmy McCool,
770-243-9191AMcCool@ocienterprises.com
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