Ciner Resources LP Announces First Quarter 2021 Financial Results
Ciner Resources LP (NYSE: CINR) reported Q1 2021 results with net sales of $127.8 million, an increase of 11.7% year-over-year, driven by an 8.5% rise in soda ash volume sold. However, net income fell 60.6% to $5.6 million, and adjusted EBITDA decreased 29.9% to $15.7 million. Earnings per unit dropped 64.7% to $0.12. Notably, cash used in operations was $(6.4) million, down 138.3% from the previous year. Despite these challenges, management remains optimistic about improving market conditions and plans to optimize logistics and sales.
- Net sales increased by 11.7% to $127.8 million.
- Soda ash volume sold rose by 8.5%, reaching a record 720 thousand tons.
- Management expects market demand for soda ash to improve.
- Net income decreased by 60.6% to $5.6 million.
- Adjusted EBITDA dropped by 29.9% to $15.7 million.
- Cash used in operating activities was $(6.4) million, a decrease of 138.3%.
Ciner Resources LP (NYSE: CINR) (“we,” “us,” “our,” or the “Partnership”) today reported its financial and operating results for the first quarter ended March 31, 2021.
First Quarter 2021 Financial Highlights:
-
Net sales of
$127.8 million increased11.7% from the prior-year first quarter. -
Soda ash volume produced decreased
4.7% from the prior-year first quarter and soda ash volume sold increased8.5% from the prior-year first quarter. -
Net income of
$5.6 million decreased$8.6 million from the prior-year first quarter. -
Adjusted EBITDA of
$15.7 million decreased29.9% from the prior-year first quarter. -
Basic earnings per unit of
$0.12 for the quarter decreased64.7% over the prior-year first quarter of$0.34 . -
Net cash used in operating activities of
$(6.4) million decreased138.3% over net cash provided in operating activities in the prior-year first quarter. -
Distributable cash flow of
$4.7 million decreased47.8% compared to the prior-year first quarter. - The distribution coverage ratio was N/A and 1.32 for the three months ended March 31, 2021 and 2020, respectively.
Oguz Erkan, CEO, commented: “I am happy to report favorable results in the first quarter, with the soda ash market continuing to show positive signals in most markets. Customer demand was strong in the first quarter, as evidenced by our highest ever quarterly sales volume of 720 thousand tons. This was despite a minor disruption to our operations in February when a major winter storm obstructed natural gas infrastructure, causing us to idle some of our production.
Our transition out of ANSAC has gone smoothly, and we are satisfied with our export performance three months into our new structure. We dispatched multiple vessels on our own account in the first quarter and we expect to continue to optimize our logistics and sales network for the remainder of the year. As the soda ash market and global supply chains continue to normalize, our added flexibility and established distributor network should allow for agile export planning and a focus on value generation.
Despite strong sales volumes in the quarter, we continue to face a challenging pricing environment. Due to pricing dropping at the end of last year, contracted domestic sales price in 2021 is down
In summary, net sales in the first quarter of 2021 were
Financial Highlights |
Three Months Ended March 31, |
|||||||||
(Dollars in millions, except per unit amounts) |
2021 |
|
|
2020 |
|
% Change |
||||
Soda ash volume produced (millions of short tons) |
0.648 |
|
|
0.680 |
|
|
(4.7 |
)% |
||
Soda ash volume sold (millions of short tons) |
0.720 |
|
|
0.664 |
|
|
8.5 |
% |
||
Net sales |
$ |
127.8 |
|
|
$ |
114.4 |
|
|
11.7 |
% |
Net income |
5.6 |
|
|
$ |
14.2 |
|
|
(60.6 |
)% |
|
Net income attributable to Ciner Resources LP |
$ |
2.4 |
|
|
$ |
6.7 |
|
|
(64.2 |
)% |
Earnings per limited partner unit |
$ |
0.12 |
|
|
$ |
0.34 |
|
|
(64.7 |
)% |
Adjusted EBITDA(1) |
$ |
15.7 |
|
|
$ |
22.4 |
|
|
(29.9 |
)% |
Adjusted EBITDA attributable to Ciner Resources LP(1) |
$ |
7.7 |
|
|
$ |
11.2 |
|
|
(31.3 |
)% |
Net cash (used) provided by operating activities |
$ |
(6.4 |
) |
|
16.7 |
|
|
(138.3 |
)% |
|
Distributable cash flow attributable to Ciner Resources LP(1) |
$ |
4.7 |
|
|
$ |
9.0 |
|
|
(47.8 |
)% |
Distribution coverage ratio (1) |
N/A |
|
|
1.32 |
|
|
N/A |
|
||
(1)See non-GAAP reconciliations |
|
|
|
|
|
|||||
Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020
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 March 31, |
|
Percent Increase/(Decrease) |
|||||||
(Dollars in millions, except for average sales price data): |
2021 |
|
2020 |
|
||||||
Net sales: |
|
|
|
|
|
|||||
Domestic |
$ |
66.3 |
|
|
$ |
55.2 |
|
|
20.1 |
% |
International |
61.5 |
|
|
59.2 |
|
|
3.9 |
% |
||
Total net sales |
$ |
127.8 |
|
|
$ |
114.4 |
|
|
11.7 |
% |
Sales volumes (thousands of short tons): |
|
|
|
|
|
|||||
Domestic |
315.4 |
|
|
237.4 |
|
|
32.9 |
% |
||
International |
404.5 |
|
|
426.3 |
|
|
(5.1 |
)% |
||
Total soda ash volume sold |
719.9 |
|
|
663.7 |
|
|
8.5 |
% |
||
Average sales price (per short ton):(1) |
|
|
|
|
|
|||||
Domestic |
$ |
210.21 |
|
|
$ |
232.52 |
|
|
(9.6 |
)% |
International |
$ |
152.04 |
|
|
$ |
138.87 |
|
|
9.5 |
% |
Average |
$ |
177.52 |
|
|
$ |
172.37 |
|
|
3.0 |
% |
Percent of net sales: |
|
|
|
|
|
|||||
Domestic sales |
51.9 |
% |
|
48.3 |
% |
|
7.5 |
% |
||
International sales |
48.1 |
% |
|
51.7 |
% |
|
(7.0 |
)% |
||
Total percent of net sales |
100.0 |
% |
|
100.0 |
% |
|
|
|||
Percent of sales volumes: |
|
|
|
|
|
|||||
Domestic volume |
43.8 |
% |
|
35.8 |
% |
|
22.3 |
% |
||
International volume |
56.2 |
% |
|
64.2 |
% |
|
(12.5 |
)% |
||
Total percent of volume sold |
100.0 |
% |
|
100.0 |
% |
|
|
|||
|
|
|
|
|
|
|||||
(1) Average sales price per short ton is computed as net sales divided by volumes sold |
|
|
|
|
|
|||||
Consolidated Results
Net sales. Net sales increased by
Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense and freight costs, increased by
Selling, general and administrative expenses. Our selling, general and administrative expenses decreased
Operating income. Operating income decreased by
Net income. As a result of the foregoing, net income decreased by
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 March 31, |
||||||
(Dollars in millions) |
2021 |
|
2020 |
||||
Capital Expenditures |
|
|
|
||||
Maintenance |
$ |
7.5 |
|
|
$ |
6.5 |
|
Expansion |
0.3 |
|
|
5.1 |
|
||
Total |
$ |
7.8 |
|
|
$ |
11.6 |
|
Operating and Other Data: |
|
|
|
||||
Ore grade (1) |
85.1 |
% |
|
86.7 |
% |
||
Ore to ash ratio (2) |
1.65: 1.0 |
|
1.53: 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. |
|||||||
During the three months ended March 31, 2021, capital expenditures decreased
FINANCIAL POSITION AND LIQUIDITY
As of March 31, 2021, we had cash and cash equivalents of
CASH FLOWS
Cash Flows
Operating Activities
Our operating activities during the three months ended March 31, 2021 used cash of
-
$20.9 million of working capital used in operating activities during the three months ended March 31, 2021, compared to$4.4 million of working capital used in operating activities during the three months ended March 31, 2020. The$16.4 million increase in working capital used by operating activities was primarily due to the$34.3 million increase in accounts receivable as of March 31, 2021 compared to that of March 31, 2020, offset by the$8.9 million increase in accounts payable at March 31, 2021 compared to that of March 31, 2020. Due to the startup of direct sales to international customers who typically have longer payment terms, compared to the recent payment history from ANSAC, the accounts receivable balance increased significantly as of March 31, 2021 and contributed to lower cash flows from operating activities during this transition period of three months ended March 31, 2021. We expect this reduction in cash flow to be a one-time impact in the initial quarter that direct sales were made to these new international customers with longer payment terms; and -
a decrease of
60.6% in net income of$5.6 million during the three months ended March 31, 2021, compared to$14.2 million for the prior-year period.
Investing Activities
We used cash flows of
Financing Activities
Cash provided by financing activities of
Quarterly Distribution
Each of the board of managers of Ciner Wyoming and the board of directors of our general partner have approved the continuation of the suspension of quarterly distributions to the members of Ciner Wyoming and our unitholders, as applicable, for each of the quarters ended September 30, 2020, December 31, 2020 and March 31, 2021 in a continued effort to achieve greater financial and liquidity flexibility during the COVID-19 pandemic. In March 2021, the board of managers of Ciner Wyoming approved a special
Green River Expansion Project
We continue to develop plans and execute the early phases for a potential new Green River Expansion Project that, we believe, could increase production levels up to approximately 3.5 million tons of soda ash per year or up to approximately
COVID-19
The global COVID-19 pandemic continues to cause certain disruptions to the economy throughout the world, including the United States and markets to which our products have historically been exported. There have been extraordinary actions taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions throughout the world, including travel bans, quarantines, “stay-at-home” orders, and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Vaccines for COVID-19 became first available on a limited basis in late December 2020. They are becoming more available globally and all U.S. adults are now eligible for the vaccine.
Our Response to COVID-19
We continue to closely monitor the impact of the outbreak of COVID-19 and all governmental actions in response thereto on all aspects of our business, including how it impacts our customers, employees, supply chain, distribution network and cash flows. We have taken strong proactive steps to keep the safety of our team and their families as the priority. We have been executing and continue to execute a comprehensive plan to help prevent the spread of the virus in our work locations and it appears to be having a positive impact. This plan includes multiple layers of protection for our employees, including but not limited to, social distancing, working from home for certain employees, splitting shifts, increased sanitation, restricted contractor and visitor access, temperature checks on all contractors and third-party vendors, travel restrictions, mask wearing requirements, and daily communication with our teams. We have conducted proactive quarantining and contact tracing from the early days of this pandemic and require self-reporting of any illness, in addition to a company doctor, weekly status meetings, tracking local resources, and industry wide efforts. We have also prepared strong contingency plans for all our operations with specific actions based on absentee rates. While we have not utilized any such plans to date as they have not been needed, they are continuously refined in case needed. As COVID-19 vaccines become more broadly available, we encourage employees to get vaccinated. We anticipate a re-opening of societies when the virus plateaus and diminishes, and we have completed re-entry plans to implement as they become appropriate. We are relying on science and data to guide our decisions related to COVID-19. Our focus prior to and during this pandemic has been the safety of our teams and this will continue to be our priority as we scale our operations back to normal as the data guides us to do so. We continue to actively monitor and adhere to applicable local, state, federal, and international governmental guideline actions to better ensure the safety of our employees.
The impact of COVID-19
In the first half of 2020 and primarily in the beginning of the second quarter of 2020, we saw a decline in demand due to the COVID-19 pandemic adversely impacting our sales and production volume, and price per ton; but, in the second half of 2020, we saw the signs of recovery on our operations domestically as well as internationally in the form of increased global demand, notwithstanding certain pricing pressure. We experienced fluctuations in quarter over quarter soda ash volume sold of
Although the number of individuals who have been vaccinated has increased, certain states and countries have again begun to see a plateau or upward daily trend of new COVID-19 confirmed cases. At this time, we cannot predict the duration or the scope of the COVID-19 pandemic and its impact on our operations, and the potential negative financial impact to our results cannot be reasonably estimated but could be material. We are actively managing the business to maintain cash flow, and we believe we have enough liquidity to meet our anticipated liquidity requirements.
For the three months ended March 31, 2021, we have incurred
Termination of Membership in ANSAC
As previously disclosed as part of its strategic initiative to gain better direct access and control of international customers and logistics and the ability to leverage the expertise of Ciner Group, the world’s largest natural soda ash producer, effective as of the end of day on December 31, 2020, Ciner Corp exited ANSAC. In connection with the settlement agreement with ANSAC, there are sales commitments to ANSAC in 2021 and 2022 where Ciner Corp will continue to sell, at substantially lower volumes, product to ANSAC for export sales purposes, with a fixed rate per ton selling, general and administrative expense, and will also purchase a limited amount of export logistics services in 2021. Through this transition, the Partnership has amongst other things: (i) obtained its own international customer sales arrangements for 2021, (ii) obtained third-party export port services, and (iii) chartered and executed its own international product delivery.
Although ANSAC has historically been our largest customer, we anticipate that the impact of Ciner Corp’s exit from ANSAC on our net sales, net income and liquidity is limited. We made this determination primarily based upon the belief that we will continue to be one of the lowest cost producers of soda ash in the global market. With a low-cost position combined with more direct access and better control of our international customers and logistics and the ability to leverage Ciner Group’s expertise in these areas, we believe we will adequately replace these net ANSAC sales. Since January 1, 2021, Ciner Corp has managed the Partnership’s sales and marketing activities for exports with the ANSAC exit being complete. Ciner Corp has leveraged the distributor network established by Ciner Group and independent third-party distribution partners to optimize our reach into each market.
Post-ANSAC International Export Capabilities
In accordance with the ANSAC Early Exit Agreement, Ciner Corp began marketing soda ash on our behalf directly into international markets and building its international sales, marketing and supply chain infrastructure. We now have access to utilize the distribution network that has already been established by the global Ciner Group. We believe that by having the option of combining our volumes with Ciner Group’s soda ash exports from Turkey, Ciner Corp’s strategic exit from ANSAC has helped us leverage global Ciner Group’s, the world’s largest natural soda ash producer, soda ash operations which we expect will improve our ability to optimize our market share both domestically and internationally. Being able to work with the global Ciner Group provides us with the opportunity to better attract and more efficiently serve larger global customers. In addition, the Partnership is working to enhance its international logistics infrastructure that includes, among other things, a domestic port for export capabilities. These export capabilities are being developed by an affiliated company and options being evaluated range from continued outsourcing in the near term to developing its own port capabilities in the longer term.
Selling, general and administrative expenses also include amounts charged to the Partnership by its affiliates principally consisting of salaries, benefits, office supplies, professional fees, travel, rent and other costs of certain assets used by the Partnership. On October 23, 2015, the Partnership entered into a Services Agreement (the “Services Agreement”) with our general partner and Ciner Corp. Pursuant to the Services Agreement, Ciner Corp has agreed to provide the Partnership with certain corporate, selling, marketing, and general and administrative services, in return for which the Partnership has agreed to pay Ciner Corp an annual management fee and reimburse Ciner Corp for certain third-party costs incurred in connection with providing such services. In addition, under the limited liability company agreement governing Ciner Wyoming, Ciner Wyoming reimburses us for employees who operate our assets and for support provided to Ciner Wyoming. These transactions do not necessarily represent arm's length transactions and may not represent all costs if Ciner Wyoming operated on a standalone basis.
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
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. Forward-looking statements include all statements that are not historical facts and in some cases may be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “seek,” “anticipate,” “estimate,” “predict,” “forecast,” “project,” “potential,” “continue,” “may,” “will,” “could,” “should” or the negative of these terms 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, 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, the impact of a cybersecurity event, the impact of our agreement to exit ANSAC effective as of December 31, 2020 and our transition to the utilization of Ciner Group’s global distribution network for some of our export operations beginning on January 1, 2021, our ability to reinstate our distributions, and the short- and long-term impacts of the novel COVID-19 pandemic, including the impact of government orders on our employees and operations, as well as the other factors discussed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020, 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 |
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CINER RESOURCES LP
|
|||||||
|
|
||||||
|
Three Months Ended March 31, |
||||||
(In millions, except per unit data) |
2021 |
|
2020 |
||||
Net sales: |
|
|
|
||||
Sales—affiliates |
$ |
— |
|
|
$ |
54.0 |
|
Sales—others |
127.8 |
|
|
60.4 |
|
||
Net sales |
$ |
127.8 |
|
|
$ |
114.4 |
|
Operating costs and expenses: |
|
|
|
||||
Cost of products sold including freight costs (excludes depreciation, depletion and amortization expense set forth separately below) |
106.6 |
|
|
86.6 |
|
||
Depreciation, depletion and amortization expense |
8.7 |
|
|
6.5 |
|
||
Selling, general and administrative expenses—affiliates |
3.6 |
|
|
4.1 |
|
||
Selling, general and administrative expenses—others |
2.0 |
|
|
1.7 |
|
||
Total operating costs and expenses |
120.9 |
|
|
98.9 |
|
||
Operating income |
6.9 |
|
|
15.5 |
|
||
Other (expenses) income: |
|
|
|
||||
Interest expense, net |
(1.3 |
) |
|
(1.3 |
) |
||
Total other expense, net |
(1.3 |
) |
|
(1.3 |
) |
||
Net income |
$ |
5.6 |
|
|
$ |
14.2 |
|
Net income attributable to non-controlling interest |
3.2 |
|
|
7.5 |
|
||
Net income attributable to Ciner Resources LP |
$ |
2.4 |
|
|
$ |
6.7 |
|
Other comprehensive income: |
|
|
|
||||
Income/(loss) on derivative financial instruments |
1.5 |
|
|
(2.1 |
) |
||
Comprehensive income |
7.1 |
|
|
12.1 |
|
||
Comprehensive income attributable to non-controlling interest |
3.9 |
|
|
6.4 |
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