UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 25, 2013
CVR PARTNERS, LP
(Exact name of registrant as specified in its charter)
| Delaware | 001-35120 | 56-2677689 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
2277 Plaza Drive, Suite 500
Sugar Land, Texas 77479
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (281) 207-3200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01. Regulation FD Disclosure.
On March 25, 2013 CVR Partners, LP, or the “Company,” posted an investor presentation to its website at www.cvrpartners.com under the tab “Investor Relations”. The information included in the presentation provides an overview of the Company’s strategy and performance and includes, among other things, information concerning the fertilizer market. The presentation is intended to be made available to unitholders, analysts and investors, including investor groups participating in forums such as sponsored investor conferences, during the first and second quarter of 2013. The presentation is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto are being furnished pursuant to Item 7.01 of Form 8-K and will not, except to the extent required by applicable law or regulation, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following exhibit is being “furnished” as part of this Current Report on Form 8-K:
| 99.1 | Slides from management presentation. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 25, 2013
| CVR PARTNERS, LP | ||
| By: CVR GP, LLC, its general partner | ||
| By: | ||
| /s/ Susan M. Ball | ||
| Susan M. Ball | ||
| Chief Financial Officer and Treasurer | ||
Exhibit 99.1
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Maximizing Yields
CVR PARTNERS LP
Investor Presentation
March 2013
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Safe Harbor
CVR PARTNERS LP
| 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 |
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| 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. |
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Key Strategic Drivers
CVR PARTNERS LP
Maximizing Yields
Growth-oriented partnership formed by CVR Energy, Inc. in June 2007 … IPO in April 2011
General Partner has non-economic interest (no IDRs or management fees)
Manufacturing facility produces ammonia and urea ammonium nitrate (UAN)
Facility located in Coffeyville, Kansas … now produces ~9% of total UAN demand in the U.S.
Solid market fundamentals
Experienced management team
Fully utilized capacity
High run time rates
Strategically located assets
Multiple opportunities for growth
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Solid Market Fundamentals
Key Demand Drivers
CVR PARTNERS LP
Maximizing Yields
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Solid Market Fundamentals
Consistent Fertilizer Demand Growth
CVR PARTNERS LP
Maximizing Yields
Nitrogen represents ~63% of fertilizer consumption(1)
Nitrogen fertilizers have the most stable demand because must be applied annually
Primary determinant of crop yield
(1) Per the International Fertilizer Industry Association.
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Solid Market Fundamentals
Farmer Profitability Supports Fertilizer Price
CVR PARTNERS LP
Maximizing Yields
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
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Solid Market Fundamentals
Supply/Demand Supports Significant Planting
CVR PARTNERS LP
(1) Excludes recently announced or other potential significant capacity additions.
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Solid Market Fundamentals
Excess Demand Driving Imports of UAN
CVR PARTNERS LP
Maximizing Yields
U.S. imports for UAN were 28% of estimated total U.S. demand in 2012
(1) Excludes recently announced or other potential significant capacity additions.
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Experienced Management
CVR PARTNERS LP
Maximizing Yields
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Fully Utilized Capacity & High Run Rates
CVR PARTNERS LP
Maximizing Yields
(1) Adjusted for third-party outage. 2012 not shown as included biennial plant turnaround in October 2012. Next turnaround scheduled for 2014 Q4.
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Strategically Located Assets
CVR PARTNERS LP
Maximizing Yields
Located in Corn Belt
54% of corn planted in 2012 was within $45/UAN ton freight rate of plant
~$15/UAN ton transportation advantage to Corn Belt vs. U.S. Gulf Coast
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Multiple Growth Opportunities
CVR PARTNERS LP
Maximizing Yields
Operational efficiency
Plant expansion
Specialty products
Distribution
Mergers and acquisitions
New plant development
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UAN Plant Expansion
CVR PARTNERS LP
Maximizing Yields
Completed in March 2013
Overview
Increased exposure to strong UAN market dynamics
Ability to upgrade 100% of ammonia to UAN
Expanded UAN capacity by ~50% to ~1MM tons/year
Total cost of $130MM
Annualized incremental impact
EBITDA: ~$18MM
Available for distribution: ~$0.25/unit
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History of Financial Success
CVR PARTNERS LP
Maximizing Yields
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Significant Growth in 2013
CVR PARTNERS LP
Maximizing Yields
Seeing solid product pricing for first half of year
Have orders in place for substantial amount of product tons well into the second quarter
Full year also to benefit from UAN plant expansion, no turnaround, and partial settlement of property tax dispute
Expect Distribution of $2.15 to $2.45 Per Unit for 2013 Full Year
19% to 35% Higher than $1.81 Per Unit in 2012
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Strong Financial Profile
CVR PARTNERS LP
Maximizing Yields
($US millions)
Capitalization
As of 12/31/12
Cash & Equivalents
$127.8
Credit Facility due April 2016:
Term Loan
125.0
$25 million Revolver
–-
Total Debt
$125.0
Partners’ Equity
446.2
Total Capitalization (Book)
$571.2
LTM EBITDA(1)
$136.6
LTM Interest Expense(1)
3.8
Key Credit Statistics
As of 12/31/12
Total Debt / LTM EBITDA
0.9x
LTM EBITDA / Interest Expense
35.9x
Total Debt / Capitalization (Book)
21.9%
Liquidity
As of 12/31/12
Cash & Equivalents
$127.8
$25 million Revolver
25.0
Less: Drawn Amount
Less: Letters of Credit
Total Liquidity
$152.8
(1) See page 21 for a reconciliation of LTM 12/31/12 EBITDA and interest expense .
Financial Flexibility to Support Growth Initiatives
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A Bright Outlook
CVR PARTNERS LP
Maximizing Yields
Strong industry fundamentals
High-quality & strategically-located assets
Premium product focus
Attractive growth opportunities
Experienced management team
Pay out 100% of available cash each quarter
No IDRs or management fees for General Partner
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Appendix
CVR PARTNERS LP
Maximizing Yields
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Fertilizer Plant Schematic
CVR PARTNERS LP
Maximizing Yields
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Non-GAAP Financial Measures
CVR PARTNERS LP
Maximizing Yields
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.
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Non-GAAP Reconciliation
CVR PARTNERS LP
Maximizing Yields
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.
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 net income to EBITDA, EBITDA to Adjusted EBITDA, & EBITDA less maintenance capital
(in $US millions)
For the Fiscal Years
2009
2010
2011
2012
Net income
$57.9
$33.3
$132.4
$112.2
Interest expense
—
—
4.0
3.8
Interest (income)
(9.0)
(13.1)
—
(0.2)
Depreciation and amortization
18.7
18.5
18.9
20.7
Income tax expense
—
—
—
0.1
EBITDA
$67.6
$38.7
$155.3
$136.6
Loss on disposition of assets
—
1.4
—
—
Turnaround
—
3.5
—
4.8
Share-based compensation
3.2
9.0
7.3
6.8
Adjusted EBITDA
$70.8
$52.6
$162.6
$148.2
EBITDA
$67.6
$38.7
$155.3
$136.6
Maintenance capital
2.3
8.6
6.2
7.7
EBITDA less maintenance capital
$65.3
$30.1
$149.1
$128.9