 Investor Presentation
November 2012
Exhibit 99.1 |
 2
Safe Harbor
The following information contains forward-looking statements based
on management’s current expectations and beliefs, as well
as a number of assumptions concerning future events. These
statements are subject to risks, uncertainties, assumptions and
other important factors. You are cautioned not to put
undue reliance on such forward-looking statements (including forecasts
and projections regarding our future performance) because actual
results may vary materially from those expressed or implied as a
result of various factors, including those noted in the
Company’s filings with the Securities and Exchange
Commission. CVR Partners, LP assumes no obligation to, and
expressly disclaims any obligation to, update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise. |
 3
Key Strategic Drivers
•
Experienced management team
•
Fully utilized capacity
•
High run time rates
•
Strategically located assets
•
Solid market fundamentals supports
future growth
•
Growth oriented partnership formed by CVR Energy, Inc. in June 2007,
with IPO in April 2011 •
Manufacturing facility produces ammonia and Urea Ammonium Nitrate
(UAN) •
Facility
located
in
Coffeyville,
Kansas
and
produces
5%
of
total
UAN
demand
in
United
States |
 Experienced Management
4 |
 5
Fully Utilized Capacity &
High Run Rates
(1) Adjusted for third-party outage.
|
 Strategically Located Assets
•
Located in corn belt
•
56% of corn planted in 2011
was within $40/UAN ton
freight rate of plant
•
$25/ton transportation
advantage to corn belt vs.
U.S. Gulf Coast
•
No intermediate transfer,
storage, barge freight or
pipeline freight charges
6 |
 7
Solid Market Fundamentals
Key Demand Drivers |
 8
Solid Market Fundamentals
Consistent Fertilizer Demand Growth
•
Nitrogen represents ~63%
of fertilizer consumption
(1)
•
Nitrogen based fertilizers
have most stable demand
because must be applied
annually
–
Primary determinant of crop yield
(1) Per the International Fertilizer Industry Association.
|
 9
Solid Market Fundamentals
Farmer Profitability Supports Fertilizer Price
•
Corn consumes the largest
amount of nitrogen fertilizer
•
Farmers are expected to generate
substantial proceeds at currently
forecasted corn prices
•
Farmer incentivized to use
nitrogen at corn price much lower
than current spot
•
Nitrogen fertilizer represents
small portion of farmer’s total
input costs |
 10
Solid Market Fundamentals
Supply/Demand Supports Increased Planting
U.S. Nitrogen Production & Consumption
Source:
Fertecon.
U.S. Corn Planted & Yields
Source:
USDA.
Yield Trendline |
 11
Country
2007
2008
2009
2010
2011
Trinidad & Tobago
0
0
0
777
1,010
Russia
749
953
658
749
674
Canada
685
487
427
437
617
Romania
472
185
29
254
487
Egypt
176
174
0
123
117
Lithuania
514
431
69
79
489
Ukraine
344
173
0
73
30
Poland
142
123
0
0
0
Estonia
0
13
30
117
92
Netherlands
18
28
0
44
144
Bulgaria
58
58
0
33
21
Germany
55
13
69
30
153
Belarus
96
0
0
0
0
Rest of world
38
3
3
2
29
Total
3,347
2,641
1,285
2,718
3,853
U.S. Imports of UAN
(000’s of UAN Tons)
Source:
USDA.
Source:
Fertecon.
U.S.
World
2011
Demand
Supply
0
5,000
10,000
15,000
20,000
25,000
U.S.
World
2020E
Source:
Fertecon.
U.S. imports for UAN expected to be ~26% of total demand in 2020
Solid Market Fundamentals
UAN Demand & U.S.
Imports
UAN Demand/Supply |
 12
Growth Strategies
Current
12-24
Months
3-5
Years
•
Operational efficiency
•
Plant expansion
•
Specialty products
•
Distribution
•
Mergers and acquisitions
•
Plant development |
 13
UAN Expansion
•
Overview
–
Increase exposure to strong UAN market
dynamics
–
Expand UAN capacity by 330K tons
per year (~50%) to ~1MM tons/year
–
Upgrade 100% of ammonia to UAN
–
On-line at beginning of 2013
•
Total cost of $125MM-$130MM
–
$93MM spent through 09/30/12
•
Annualized incremental impact
–
EBITDA: ~$20MM
–
Available for distribution: ~$0.25/unit
UAN Price Premium
to Ammonia
Note: UAN Mid Corn Belt to Ammonia Southern Plains. |
 14
Financial Statistics
See page 21 for a reconciliation of net income to EBITDA.
See page 21 for a reconciliation of net income to EBITDA less maintenance capital.
|
 15
Continued Success in 2012
YTD 9/30/12
YTD 9/30/11
Change
Sales
$234.7
$215.3
9.0%
EBITDA
(1)
$115.7
$107.6
7.5%
Adjusted
EBITDA
(2)
$121.1
$114.0
6.2%
Operating Income
$99.8
$93.6
6.6%
Distributable Cash
Flow (DCF)
(3)
$118.2
$71.5
n/a
DCF/Unit
(3)
$1.62
$0.98
n/a
$US millions, except per unit data
Expect DCF/Unit of $1.70 to $1.80 for 2012 Full Year
~
Benefit to 2013 Cash Available for Distribution of
~$0.50/Unit from UAN Expansion and No Turnaround ~
(1) See page 21 for a reconciliation of net income to EBITDA.
(2) See page 21 for reconciliation of EBITDA to Adjusted
EBITDA. (3) Reflects post IPO for 2011 (April 13 –
September 30). |
 16
Strong Financial Profile
(US$ in millions)
Capitalization
As of 9/30/12
Cash & Equivalents
$180.3
Credit Facility due April 2016:
Term Loan
125.0
$25 million Revolver
–-
Total Debt
$125.0
Partners' Equity
465.9
Total Capitalization
$590.9
LTM EBITDA
(1)
$163.4
LTM Interest Expense
(1)
4.5
Key Credit Statistics
Total Debt / LTM EBITDA
0.8x
LTM EBITDA / Interest Expense
36.3x
Total Debt / Book Cap.
21.2%
Liquidity
As of 9/30/12
Cash & Equivalents
$180.3
$25 million Revolver
25.0
Less: Drawn Amount
–-
Less: Letters of Credit
Total Liquidity
$205.3
Financial Flexibility to
Support Growth Initiatives
(1)
See page 21 for a reconciliation of LTM 09/30/12 EBITDA and interest expense.
–-
As of 9/30/12 |
 17
A Bright Outlook
•
Strong industry fundamentals
•
High-quality & strategically-located
assets
•
Premium product focus
•
Attractive growth opportunities
•
Pay out 100% of available cash
each quarter
•
No IDR’s
•
Experienced management team |
 Appendix |
 19
Fertilizer Plant Schematic |
 Non-GAAP Financial Measures
To supplement the actual results in accordance with U.S. generally
accepted accounting principles (GAAP), for the applicable
periods, the Company also uses certain non-GAAP financial
measures as discussed below, which are adjusted for
GAAP-based results. The use of non-GAAP adjustments are
not in accordance with or an alternative for GAAP. The adjustments are
provided to enhance the overall understanding of the Company’s
financial performance for the applicable periods and are also
indicators that management utilizes for planning and forecasting
future periods. The non-GAAP measures utilized by the Company
are not necessarily comparable to similarly titled measures of
other companies. The Company believes that the presentation of non-GAAP financial
measures provides useful information to investors regarding the
Company’s financial condition and results of operations
because these measures, when used in conjunction with related GAAP
financial measures (i) together provide a more comprehensive
view of the Company’s core operations and ability to
generate cash flow, (ii) provide investors with the financial
analytical framework upon which management bases financial and
operational planning decisions, and (iii) presents measurements
that investors and rating agencies have indicated to management are
useful to them in assessing the Company and its results of
operations. 20
|
    21
Non-GAAP Reconciliation
EBITDA: Represents net income before the effect of interest expense,
interest income, income tax expense (benefit) and depreciation and amortization.
EBITDA is not a calculation based upon GAAP; however, the amounts
included in EBITDA are derived from amounts included in the consolidated
statement of operations of the Company.
See below for reconciliation of net income to EBITDA, EBITDA to
Adjusted EBITDA, & EBITDA less maintenance capital
See below for reconciliation of net income to EBITDA &
EBITDA to Adjusted EBITDA
Adjusted EBITDA: Represents EBITDA adjusted for the impact of
share-based compensation, and, where applicable, major scheduled turnaround expense
and loss on disposition of assets. We present Adjusted EBITDA because
it is a key measure used in material covenants in our credit facility. Adjusted
EBITDA is not a recognized term under GAAP and should not be
substituted for net income as a measure of our liquidity. Management believes that
Adjusted EBITDA enables investors and analysts to better understand our
liquidity and our compliance with the covenants contained in our credit facility.
See below for reconciliation of LTM 09/30/12 EBITDA & Interest
Expense (in $US millions)
For the Fiscal Years
2009
2010
2011
Net income
57.9
$
33.3
$
132.4
$
Interest expense
-
-
4.0
Interest (income)
(9.0)
(13.1)
-
Depreciation and amortization
18.7
18.5
18.9
Income tax expense
-
-
-
EBITDA
67.6
$
38.7
$
155.3
$
Loss on disposition of assets
-
1.4
-
Turnaround
-
3.5
-
Share-based compensation
3.2
9.0
7.3
Adjusted EBITDA
70.8
$
52.6
$
162.6
$
EBITDA
67.6
$
38.7
$
155.3
$
Maintenance capital
2.3
8.6
6.2
EBITDA less maintenance capital
65.3
$
30.1
$
149.1
$
(in $US millions)
2011
2012
Net income
91.2
$
96.9
$
Interest expense, net
2.6
3.1
Interest (income)
(0.1)
(0.2)
Depreciation and amortization
13.9
15.8
Income tax expense
-
0.1
EBITDA
107.6
$
115.7
$
Major turnaround expense
-
0.2
Share-based compensation
6.4
5.2
Adjusted EBITDA
114.0
$
121.1
$
Nine Months Ended
September 30,
(in $US millions)
Interest
EBITDA
Expense
9 months ended 9/30/12
115.7
$
3.1
$
12 months ended 12/31/11
155.3
4.0
Less: 9 months ended 9/30/11
107.6
2.6
LTM 9/30/12
163.4
$
4.5
$ |