Business Services Industry
Terra Nitrogen Company, L.P. Reports Second Quarter Results; Declares Cash Distribution
Business Wire, July 28, 2005
SIOUX CITY, Iowa -- Terra Nitrogen Company, L.P. (TNCLP) (NYSE:TNH) today reported net income of $29.4 million, or $1.56 per limited partnership unit, on revenues of $120.2 million for the second quarter ended June 30, 2005. This compares with a net income of $14.6 million, or $.77 per unit, on revenues of $129.0 million for the 2004 second quarter. For the 2005 first half, TNCLP's net income was $46.6 million, or $2.47 per unit, on revenues of $226.1 million, compared to net income of $26.6 million, or $1.41 per unit on revenues of $237.3 million in the 2004 first half.
TNCLP also announced a cash distribution for the quarter ended June 30, 2005, of $1.45 per limited partnership unit payable August 24, 2005, to holders of record as of August 8, 2005.
Analysis of results
The second quarter profitability improvement was due primarily to higher product selling prices, partially offset by lower sales volumes and higher natural gas costs. Ammonia and nitrogen solutions selling prices for the 2005 second quarter were 19 and 31 percent higher, respectively, than 2004 second quarter selling prices.
TNCLP's second quarter ammonia, nitrogen solutions and urea sales volumes were 36, 8 and 100 percent lower, respectively, than those of the 2004 second quarter. The lower sales volumes were due primarily to TNCLP's having less product available for sale following the closure of its Blytheville, Ark. manufacturing facility on May 27, 2004.
TNCLP's natural gas unit costs for the 2005 second quarter, net of about $1.2 million of cost decreases from forward purchase contracts, were 15 percent higher than those incurred in the 2004 second quarter.
The improvement in TNCLP's first half net income was due to higher product selling prices, reflecting a more positive industry-wide supply/demand balance. Natural gas unit costs for the 2005 first half, net of about $2.5 million of cost increases realized from forward purchasing contracts, were about 18 percent higher than those incurred in the 2004 first half.
Forward natural gas position
TNCLP's forward purchase contracts at June 30, 2005, fixed prices for about 21 percent of its next 12 months' natural gas requirements at about $3.4 million below the published forward market prices at that date.
About TNCLP
Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen fertilizer products.
Forward-looking statements
This news release may contain forward-looking statements, which involve inherent risks and uncertainties. Statements that are not historical facts, including statements about TNCLP's beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations. Actual results may differ materially from those projected in such forward-looking statements and therefore you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements is set forth in TNCLP's most recent report on Form 10-K and TNCLP's other documents on file with the Securities and Exchange Commission. TNCLP undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Note: Terra Nitrogen Company, L.P. news announcements are also available on Terra Industries' web site, www.terraindustries.com.
Terra Nitrogen Company, L.P.
Condensed Consolidated Statements of Income
(in thousands except per-unit amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Product revenues $119,971 $128,714 $225,713 $236,927
Other income 186 299 347 370
--------- --------- --------- ---------
Total revenues 120,157 129,013 226,060 237,297
--------- --------- --------- ---------
Cost of goods sold 85,101 108,794 167,655 199,930
Depreciation and amortization 3,855 3,141 7,900 6,313
--------- --------- --------- ---------
Total cost of sales 88,956 111,935 175,555 206,243
--------- --------- --------- ---------
Total gross profit 31,201 17,078 50,505 31,054
Operating expenses 1,891 2,662 4,169 4,835
Interest expenses--net (128) (181) (308) (380)
--------- --------- --------- ---------
Net income (loss) $29,438 $14,597 $46,644 $26,599
========= ========= ========= =========
Earnings per limited
partnership unit $1.56 $0.77 $2.47 $1.41
========= ========= ========= =========
The amount of net income allocable to the Limited Partners' interest
is based on the Partnership's net income and the proportionate share
of cash distributed to the Limited Partners and the General Partner.
Nitrogen Volumes and Prices
2005 2004
--------------------- ---------------------
Sales Average Sales Average
Quarter Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
---------- ---------- ---------- ----------
Ammonia 75 313 117 263
UAN 542 160 590 122
Urea -- -- 90 180
2005 2004
--------------------- ---------------------
Sales Average Sales Average
First half Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
---------- ---------- ---------- ----------
Ammonia 161 306 198 266
UAN 1,077 146 1,093 117
Urea -- -- 212 181
Terra Nitrogen Company, L.P.
Consolidated Balance Sheets
(in thousands)
June 30,
-------------------
2005 2004
--------- ---------
ASSETS
Cash and short-term investments $42,422 $28,475
Accounts receivable 29,277 30,661
Inventories 25,722 15,820
Other current assets 4,281 4,033
--------- ---------
Total current assets 101,702 78,989
Property, plant and equipment, net 78,627 81,295
Other assets 11,965 7,515
--------- ---------
Total assets $192,294 $167,799
========= =========
LIABILITIES
Short-term note and current portion of long-
term debt $44 $61
Customer prepayments 2,381 1,031
Accounts payable and accrued liabilities 14,223 12,587
--------- ---------
Total current liabilities 16,648 13,679
Long-term debt 8,200 8,244
Other liabilities 149 1,600
--------- ---------
Total liabilities 24,997 23,523
PARTNERS' EQUITY 167,297 144,276
--------- ---------
Total liabilities and partners' equity $192,294 $167,799
========= =========
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