OCI Resources LP (NYSE: OCIR) today reported its financial and
operating results for the first quarter ended March 31,
2015.
First Quarter 2015 Financial Highlights:
- Net sales of $120.4 million increased
3.6% over the prior-year first quarter.
- Adjusted EBITDA of $33.0 million
increased 17.0% over the prior-year first quarter.
- Earnings per unit were $0.64 for the
quarter, an increase of 23.1% over the prior-year first quarter of
$0.52.
- Quarterly distribution of $0.538 per
unit increased by 7.6% over the prior-year first quarter; and 1.2%
over fourth quarter 2014.
- Distributable cash flow increased by
3.8% over the prior-year first quarter. The distribution coverage
ratio was 1.27 for the first quarter 2015.
2015 Outlook:
- We are increasing our full year outlook
for volume sold to 3 to 5% over 2014 levels (previously 2 to
4%).
- Our outlook related to international
pricing and capital expenditures remains unchanged (previously
provided in conjunction with our year end 2014 results).
Financial Highlights Three Months Ended
March 31, ($ in millions, except per unit amounts)
2015 2014 % Change Soda
ash volume produced (millions of short tons) 0.6734 0.6486 3.8 %
Soda ash volume sold (millions of short tons) 0.6531 0.6552 (0.3 )%
Net sales $ 120.4 $ 116.2 3.6 % Net income $ 26.5 $ 21.6 22.7 %
Net income attributable to OCIR $ 12.8 $ 10.3 24.3 % Basic
and Diluted Earnings per Unit $ 0.64 $ 0.52 23.1 % Adjusted EBITDA
(1) $ 33.0 $ 28.2 17.0 % Adjusted EBITDA attributable to OCIR(1) $
16.3 $ 13.9 17.3 % Distributable cash flow attributable to OCIR(1)
$ 13.6 $ 13.1 3.8 % Distribution coverage ratio (1) 1.27 1.31 (3.1
)% (1) See non-GAAP reconciliations
Kirk Milling, CEO, commented "We are pleased with our start to
2015, as we set a new all-time quarterly production record. Our
investments to de-bottleneck our Green River facility drove
production volumes 3.8% higher than last year's first quarter.
Combining this with rising international prices and lower natural
gas costs, our Adjusted EBITDA rose 17%, despite some headwinds
from a stronger US dollar that negatively impacted our margins in
Europe. Our performance in the first quarter coupled with our
outlook, allowed us to increase our distribution for the third
consecutive quarter and continue executing on our target of
increasing our distributions by approximately 3 to 6% in 2015."
FIRST QUARTER 2015 FINANCIAL AND OPERATING RESULTS
Three Months Ended March 31, 2015 compared to Three Months
Ended March 31, 2014
Net sales
A summary of net sales, sales volumes and
average sales price, and the percentage change between the periods,
is as follows:
Three Months Ended March 31,
PercentIncrease/(Decrease)
($ in millions, except per ton data) 2015
2014 Net sales: Domestic $ 48.6 $ 48.6 — %
International $ 71.8 $ 67.6 6.2 % Total net sales $
120.4 $ 116.2 3.6 %
Sales volumes: Domestic
(thousands of short tons) 209.6 204.4 2.5 % International
(thousands of short tons) 443.5 450.8 (1.6 )% Total
soda ash volume sold (thousands of short tons) 653.1 655.2
(0.3 )%
Average sales price (per short ton): Domestic
$ 231.87 $ 237.87 (2.5 )% International $ 161.98 $ 149.99 8.0 %
Average $ 184.41 $ 177.41 3.9 %
Percent of net sales:
Domestic sales 40.4 % 41.8 % (3.3 )% International sales 59.6 %
58.2 % 2.4 % Total percent of net sales 100.0 % 100.0 %
Our net sales increased by 3.6% to $120.4 million for the three
months ended March 31, 2015 from $116.2 million for the three
months ended March 31, 2014, driven by an 8.0% increase in
international average sales price due to higher ANSAC prices,
partially offset by a decrease in international volumes sold of
1.6%. Domestic average sales price during the first quarter of
2015 decreased 2.5% over the first quarter of 2014, partially
driven by a change in one of our large customer contracts
to take delivery of product at the plant. Generally, we sell
soda ash on a delivered basis, inclusive of freight, which is
included both in net sales and cost of products sold.
Operating costs and expenses
Our cost of products sold, including depreciation, depletion and
amortization expense, decreased by 1.6% to $88.0 million for the
three months ended March 31, 2015 from $89.4 million for the
three months ended March 31, 2014, due primarily to a decrease
in energy costs as a result of lower natural gas prices, moderately
offset by an increase in compensation and benefits due in part to
higher pension costs.
Our selling, general and administrative expenses increased 16.7%
to $4.9 million for the three months ended March 31, 2015,
from $4.2 million for the three months ended March 31, 2014,
primarily due to higher ANSAC administrative costs.
CAPEX AND ORE TO ASH RATIO
The following table below summarizes our capital expenditures,
on an accrual basis, and ore to ash ratio for the three months
ended March 31, 2015 and 2014:
($ in millions, except for ratio data) Three
Months Ended March 31, 2015 2014
Capital Expenditures Maintenance $ 3.6 $ 0.6 Expansion 1.4
0.8 Total $ 5.0 $ 1.4
Operating and Other
Data: Ore to ash ratio (1) 1.51: 1.0 1.54: 1.0 (1) 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.
The increase in capital expenditures during first quarter 2015
compared to first quarter 2014 is due to project timing.
CASH FLOWS AND QUARTERLY CASH DISTRIBUTION
Cash Flows
Cash provided by operating activities was $34.7 million during
the three months ended March 31, 2015 compared to $14.3
million of cash generated during three months ended March 31,
2014, primarily driven by an increase of 22.7% in net income, and
$2.2 million of cash flows provided from working capital during the
first quarter of 2015 compared to $12.7 million of cash flows used
in working capital during the prior-year first quarter.
Cash provided by operating activities during the three months
ended March 31, 2015 and 2014 were partially offset by cash
distributions paid during the quarter of $21.5 million and $23.1
million, respectively. The higher distributions paid during the
first quarter of 2014 is related to the combined cash payout of the
fourth quarter 2013 and pro-rata portion of the stub period
following the initial public offering.
Quarterly Distribution
On April 17, 2015, the Partnership declared its first
quarter 2015 quarterly distribution of $0.538 per unit. This
represents an increase of 1.2% over the last quarterly distribution
and an increase of 7.6% over the distribution declared during the
first quarter of 2014. The quarterly cash distribution is payable
on May 15, 2015 to unitholders of record on May 1,
2015.
RELATED COMMUNICATIONS
OCI Resources LP will host a conference call tomorrow,
May 7, 2015 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 27549619. 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 27549619, and will remain
available for the following seven days. This conference call will
be webcast live and archived for replay on OCI Resources' website
at www.ociresources.com.
ABOUT OCI RESOURCES LP
OCI Resources LP, a master limited partnership, operates the
trona ore mining and soda ash production business of OCI Wyoming
LLC, ("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 a 51%
membership interest in OCI Wyoming LLC, ("OCI Wyoming"). Natural
Resource Partners L.P. ("NRP") owns a non-controlling interest
consisting of a 49% membership 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, 2014, 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. 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
OCI RESOURCES LP
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended March 31, ($ and units
outstanding in millions, except per unit data) 2015
2014 Net sales $ 120.4 $ 116.2
Operating costs and expenses: Cost of products sold
82.4 84.0 Depreciation, depletion and amortization expense 5.6 5.4
Selling, general and administrative expenses 4.9 4.2
Total operating costs and expenses 92.9 93.6
Operating income 27.5 22.6
Other income/(expenses):
Interest expense, net (0.9 ) (1.2 ) Other, net (0.1 ) 0.2
Total other income/(expense), net (1.0 ) (1.0 )
Net income $
26.5 $ 21.6 Net income attributable to
non-controlling interest 13.7 11.3
Net income
attributable to OCI Resources LP $ 12.8 $ 10.3
Other comprehensive income/(loss): Income/(loss) on derivative
financial instruments (2.0 ) (0.2 ) Comprehensive income 24.5 21.4
Comprehensive income attributable to non-controlling interest 12.7
11.2
Comprehensive income attributable to OCI
Resources LP $ 11.8 $ 10.2 Net income per limited
partner unit: Common - Public and OCI Holdings (basic and diluted)
$ 0.64 $0.52 Subordinated - OCI Holdings (basic and diluted) $ 0.64
$0.52 Limited partner units outstanding: Weighted average
common units outstanding (basic and diluted) 9.8 9.8 Weighted
average subordinated units outstanding (basic and diluted) 9.8 9.8
OCI RESOURCES LP
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
As of ($ in millions)
March 31, 2015
December 31, 2014 ASSETS
Current assets: Cash and cash equivalents $ 36.4 $ 31.0
Accounts receivable, net 31.4 35.5 Accounts receivable - ANSAC 65.1
70.4 Due from affiliates, net 19.5 19.6 Inventory 49.3 43.2 Other
current assets 1.3 1.8 Total current assets 203.0
201.5 Property, plant and equipment, net 244.2 245.0 Other
non-current assets 0.8 0.9 Total assets $ 448.0
$ 447.4
LIABILITIES AND EQUITY Current
liabilities: Accounts payable $ 13.8 $ 13.1 Due to affiliates
4.6 7.1 Accrued expenses 28.7 29.5 Total current
liabilities 47.1 49.7 Long-term debt 145.0 145.0 Other non-current
liabilities 4.3 4.2 Total liabilities 196.4
198.9
Equity: Common unitholders - Public and
OCI Holdings (9.8 million units issued and outstanding at March 31,
2015 and December 31, 2014, respectively) 107.3 106.3 Subordinated
unitholders - OCI Holdings (9.8 million units issued and
outstanding at March 31, 2015 and December 31, 2014, respectively)
39.0 37.9 General partner unitholders - OCI Resource Partners LLC
(0.4 million units issued and outstanding at March 31, 2015 and
December 31, 2014, respectively) 3.9 3.8 Accumulated other
comprehensive loss (1.4 ) (0.4 ) Partners' capital attributable to
OCI Resources LP 148.8 147.6 Non-controlling interests 102.8
100.9 Total equity 251.6 248.5
Total liabilities and partners' equity
$ 448.0 $ 447.4
OCI RESOURCES LP
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three Months Ended March 31, ($ in
millions) 2015 2014 Cash
flows from operating activities: Net income $ 26.5 $ 21.6
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation, depletion and amortization
expense 5.7 5.4 Equity-based compensation expense 0.1 — Other
non-cash items 0.2 — Changes in operating assets and liabilities:
(Increase)/decrease in: Accounts receivable, net 4.1 1.6 Accounts
receivable - ANSAC 5.3 (5.2 ) Due from affiliates, net 0.1 (10.7 )
Inventory (6.0 ) (0.6 ) Other current and other non-current assets
0.4 0.7 Increase/(decrease) in: Accounts payable 2.9 (3.9 ) Due to
affiliates (2.4 ) 4.9 Accrued expenses and other liabilities (2.2 )
0.5 Net cash provided by operating activities 34.7
14.3
Cash flows from investing activities: Capital
expenditures (7.8 ) (2.7 ) Net cash used in investing activities
(7.8 ) (2.7 )
Cash flows from financing activities:
Distributions to common unitholders (5.2 ) (5.6 ) Distributions to
general partner (0.2 ) (0.2 ) Distributions to subordinated
unitholders (5.2 ) (5.6 ) Distributions to non-controlling interest
(10.9 ) (11.7 ) Net cash used in financing activities (21.5 ) (23.1
) Net increase/(decrease) in cash and cash equivalents 5.4 (11.5 )
Cash and cash equivalents at beginning of period 31.0 46.9
Cash and cash equivalents at end of period $ 36.4 $
35.4
Non-GAAP Financial Measures
We report our financial results in accordance with generally
accepted accounting principles in the United States ("GAAP"). We
also present the non-GAAP financial measures of:
- Adjusted EBITDA;
- Distributable cash flow; and
- Distribution coverage ratio.
We define Adjusted EBITDA as net income (loss) plus net interest
expense, income tax, depreciation, depletion and amortization 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 Adjusted 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.
Adjusted 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 Adjusted 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 Adjusted 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 Adjusted EBITDA and distributable cash flow
are net income and net cash provided by operating activities. Our
non-GAAP financial measures of Adjusted 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 GAAP.
Adjusted 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 Adjusted EBITDA,
distributable cash flow and distribution coverage ratio in
isolation or as a substitute for analysis of our results as
reported under GAAP. Because Adjusted EBITDA, distributable cash
flow and distribution coverage ratio may be defined differently by
other companies, including those in our industry, our definition of
Adjusted 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 Adjusted 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,
2015 2014 ($ in millions, except per unit
data) Reconciliation of Adjusted EBITDA to net income:
Net income $ 26.5 $ 21.6
Add backs: Depreciation,
depletion and amortization expense 5.6 5.4 Interest expense, net
0.9 1.2
Adjusted EBITDA $ 33.0 $ 28.2 Less: Adjusted
EBITDA attributable to non-controlling interest 16.7 14.3
Adjusted EBITDA attributable to OCI Resources LP $ 16.3
$ 13.9
Reconciliation of distributable cash flow
to Adjusted EBITDA attributable to OCI Resources LP: Adjusted
EBITDA attributable to OCI Resources LP $ 16.3 $ 13.9 Less: Cash
interest expense, net attributable to OCIR 0.5 0.5 Maintenance
capital expenditures attributable to OCIR(1) 2.2 0.3
Distributable cash flow attributable to OCI Resources LP $
13.6 $ 13.1 Cash distribution declared per unit $ 0.5380 $
0.5000 Total units outstanding 19.976 19.950
Total
distributions to unitholders and general partner $ 10.7
$ 10.0 Distribution coverage ratio 1.27 1.31
Reconciliation of Adjusted EBITDA to net cash from operating
activities: Net cash provided by operating activities $ 34.7 $
14.3 Add/(less): Amortization of long-term loan financing (0.1 ) —
Equity-based compensation expense (0.1 ) — Net change in working
capital (2.2 ) 12.7 Interest expense, net 0.9 1.2 Other non-cash
items (0.2 ) —
Adjusted EBITDA $ 33.0 $ 28.2 Less: Adjusted
EBITDA attributable to non-controlling interest 16.7 14.3
Adjusted EBITDA attributable to OCI Resources LP $ 16.3 $
13.9 Less: Cash interest expense, net attributable to OCIR 0.5 0.5
Maintenance capital expenditures attributable to OCIR(1) 2.2
0.3
Distributable cash flow attributable to OCI Resources LP
$ 13.6 $ 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.
The following table presents a reconciliation of the non-GAAP
financial measures of Adjusted EBITDA to GAAP financial measures of
net income for the periods presented:
Q1-2015 Q4-2014 Q3-2014
Q2-2014 Q1-2014 ($ in millions,
except per unit data) Reconciliation of Adjusted
EBITDA to net income: Net income $ 26.5 $ 27.6 $ 21.6 $
21.1 $ 21.6
Add backs: Depreciation, depletion and
amortization expense 5.6 5.9 5.3 5.8 5.4 Interest expense 0.9 1.3
1.4 1.3 1.2 Loss on disposal of assets, net — — 1.0
— —
Adjusted EBITDA $ 33.0 $ 34.8 $ 29.3 $
28.2 $ 28.2 Less: Adjusted EBITDA attributable to non-controlling
interest 16.7 17.5 14.8 14.2 14.3
Adjusted EBITDA attributable to OCI Resources LP $ 16.3
$ 17.3 $ 14.5 $ 14.0 $ 13.9
Adjusted EBITDA attributable to OCI Resources LP $ 16.3 $ 17.3 $
14.5 $ 14.0 $ 13.9 Less: Cash interest expense, net attributable to
OCIR $ 0.5 $ 0.3 $ 0.6 $ 0.8 $ 0.5 Maintenance capital expenditures
attributable to OCIR(1) $ 2.2 $ 2.7 $ 0.6 $
0.8 $ 0.3
Distributable cash flow attributable to OCI
Resources LP $ 13.6 $ 14.3 $ 13.3 $ 12.4
$ 13.1 Cash distribution declared per unit $ 0.5380 $
0.5315 $ 0.5250 $ 0.5000 $ 0.5000 Total distributions to
unitholders and general partner $ 10.7 $ 10.6 $ 10.5 $ 10.0 $ 10.0
Distribution coverage ratio 1.27 1.35 1.27 1.24 1.31
(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.
OCI Resources LPInvestor RelationsScott Humphrey,
770-375-2387Director of Finance and Investor
RelationsSHumphrey@ocienterprises.comorMediaAmy McCool,
770-243-9191AMcCool@ocienterprises.com
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