Home / Businesswire / Ciner Resources LP Announces Fourth Quarter and Year Ended 2018 Financial Results

Ciner Resources LP Announces Fourth Quarter and Year Ended 2018 Financial Results

ATLANTA–(BUSINESS WIRE)–Ciner Resources LP (NYSE: CINR) today reported its financial and
operating results for the fourth quarter and year ended December 31,
2018.

Fourth Quarter and Year Ended 2018 Financial Highlights:

  • Net sales of $132.2 million increased 2.9% over the prior-year fourth
    quarter; year-to-date net sales of $486.7 million decreased 2.1% over
    the prior-year.
  • Net income of $28.6 million increased 5.1% over the prior-year fourth
    quarter; year-to-date net income of $103.0 million, including a $27.5
    million litigation settlement gain, increased 19.2% over the
    prior-year.
  • Adjusted EBITDA of $37.0 million increased 6.0% over the prior-year
    fourth quarter; year-to-date Adjusted EBITDA of $136.5 million,
    including a $27.5 million litigation settlement gain, increased 13.7%
    over the prior-year.
  • Basic and diluted earnings per unit of $0.70 for the quarter increased
    4.5% and 6.1% over the prior-year fourth quarter of $0.67 and $0.66;
    full year basic and diluted earnings per unit of $2.48, including a
    $27.5 million litigation settlement, increased 19.2% and 19.8% over
    the prior-year.
  • Quarterly distribution declared per unit of $0.567 remained flat
    compared to each of the prior-year quarter.
  • Net cash provided by operating activities for the quarter of $30.8
    million decreased 9.7% over prior-year fourth quarter; year-to-date
    net cash provided by operating activities of $162.2 million increased
    by 104.5% over the prior-year.
  • Distributable cash flow for the quarter of $13.9 million was down 4.8%
    compared to the prior-year fourth quarter, full year distributable
    cash flow of $58.4 million was up 12.3% over the prior year. The
    distribution coverage ratio was 1.22: 1.00 and 1.28: 1.00 for the
    three months ended December 31, 2018 and 2017, respectively; and 1.28:
    1.00 and 1.14: 1.00 for the twelve months ended December 31, 2018 and
    2017.

Kirk Milling, CEO, commented: “Coming off two difficult quarters where
we experienced lower ore grade and an unplanned extended outage, I’m
proud our team persevered and finished the year on a high note. We set a
new quarterly record of 709k tons produced. This represents a 2.5%
improvement in overall production compared to Q4 2017 primarily driven
by better ore quality and improving equipment reliability. Although we
experienced better than expected international pricing, increasing
maintenance capital expenditure costs caused a 4.8% decline in DCF
compared to last year.”

“As we look ahead to 2019, we are increasing our maintenance capital to
$25 million for the year. While this will have some near term impact on
our DCF, our goal is to improve the reliability and sustainability of
our production volumes which ultimately drives more consistency in our
DCF. Higher trending production volumes coupled with improving global
pricing leads us to anticipate continued improvement in our
operating performance for the year.”

2019 Outlook:

  • We expect our total volume sold to increase 2% to 4%.
  • We expect domestic volume to decrease by 140,000 to 160,000 short tons.
  • We expect domestic pricing to be up 5% to 7%.
  • We expect international prices to be up 2% to 4%.
  • Maintenance of business capital expenditures are planned to be in the
    range of $23 to $27 million.
  • Expansion capital expenditures are planned to be in the range of $35
    to $40 million.
Financial Highlights Three Months Ended
December 31,
Year Ended
December 31,
(Dollars in millions, except per unit amounts) 2018 2017 % Change 2018 2017 % Change
Soda ash volume produced (millions of short tons) 0.709 0.692 2.5 % 2.613 2.667 (2.0 )%
Soda ash volume sold (millions of short tons) 0.704 0.707 (0.3 )% 2.613 2.705 (3.4 )%
Net sales $ 132.2 $ 128.5 2.9 % $ 486.7 $ 497.3 (2.1 )%
Net income $ 28.6 $ 27.2 5.1 % $ 103.0 $ 86.4 19.2 %
Net income attributable to Ciner Resources LP $ 14.0 $ 13.3 5.3 % $ 49.9 $ 41.6 20.0 %
Earnings per Limited Partner Unit $ 0.70 $ 0.67 4.5 % $ 2.48 $ 2.08 19.2 %
Adjusted EBITDA (1) $ 37.0 $ 34.9 6.0 % $ 136.5 $ 120.1 13.7 %
Adjusted EBITDA attributable to Ciner Resources LP(1) $ 18.5 $ 17.6 5.1 % $ 68.2 $ 59.7 14.2 %
Net cash provided by operating activities $ 30.8 $ 34.1 (9.7 )% $ 162.2 $ 79.3 104.5 %
Distributable cash flow attributable to Ciner Resources LP(1) $ 13.9 $ 14.6 (4.8 )% $ 58.4 $ 52.0 12.3 %
Distribution coverage ratio (1) 1.22 1.28 (4.7 )% 1.28 1.14 12.3 %
(1)See non-GAAP reconciliations

Three Months Ended December 31, 2018 compared to Three Months
Ended December 31, 2017

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
December 31,

Percent
Increase/
(Decrease)

Net sales (Dollars in millions): 2018 2017
Domestic $ 57.8 $ 47.7 21.2%
International $ 74.4 $ 80.8 (7.9)%
Total net sales $ 132.2 $ 128.5 2.9%
Sales volumes (thousands of short tons):
Domestic 260.3 217.6 19.6%
International 444.1 489.1 (9.2)%
Total soda ash volume sold 704.4 706.7 (0.3)%
Average sales price (per short ton):
Domestic $ 222.05 $ 219.21 1.3%
International $ 167.53 $ 165.20 1.4%
Average $ 187.68 $ 181.83 3.2%
Percent of net sales:
Domestic sales 43.7 % 37.1 % 17.8%
International sales 56.3 % 62.9 % (10.5)%
Total percent of net sales 100.0 % 100.0 %
Percent of sales volumes:
Domestic volume 37.0 % 30.8 % 20.1%
International volume 63.0 % 69.2 % (9.0)%
Total percent of volume sold 100.0 % 100.0 %

Consolidated Results

Net sales. Net sales increased by 2.9% to $132.2 million for the
three months ended December 31, 2018 from $128.5 million for the three
months ended December 31, 2017, driven by an increase in average sales
prices of 3.2%, and partially offset by a slight decrease in soda ash
volumes sold of 0.3%. The increase in sales prices is primarily driven
by a shift in our sales mix between domestic and international sales
volumes compared to the prior year fourth quarter in addition to a
higher American Natural Soda Ash Corporation (“ANSAC”) sales price
during the three months ended December 31, 2018.

Cost of products sold. Cost of products sold, including
depreciation, depletion and amortization expense and freight costs
increased 1.8% to $96.9 million for the three months ended December 31,
2018 compared to $95.2 million for the three months ended December 31,
2017. The increase in our cost of products sold for the three months
ended December 31, 2018 compared to the prior year fourth quarter was
primarily driven by an increase in freight costs of 6.3% to $36.9
million for the three months ended December 31, 2018, compared to $34.7
million for the three months ended December 31, 2017 due to mix of
domestic versus international volumes sold in the current quarter.

Selling, general and administrative expenses. Our selling,
general and administrative expenses decreased 3.4% to $5.6 million for
the three months ended December 31, 2018, compared to $5.8 million for
the three months ended December 31, 2017. The decrease was primarily
driven by lower selling and administrative fees relating to our
affiliate, ANSAC, during the three months ended December 31, 2018.

Operating income. As a result of the foregoing, operating income
increased 8.0% to $29.7 million for the three months ended December 31,
2018, compared to $27.5 million for the three months ended December 31,
2017.

Net income. As a result of the foregoing, net income increased
5.1% to $28.6 million for the three months ended December 31, 2018,
compared to $27.2 million for the three months ended December 31, 2017.

Year Ended December 31, 2018 compared to Year Ended December 31,
2017

The following table sets forth a summary of net sales, sales volumes and
average sales price, and the percentage change between the periods.

Year Ended
December 31,

Percent
Increase/
(Decrease)

Net sales (Dollars in millions): 2018 2017
Domestic $ 233.4 $ 192.8 21.1%
International 253.3 304.5 (16.8)%
Total net sales $ 486.7 $ 497.3 (2.1)%
Sales volumes (thousands of short tons):
Domestic 1,057.1 877.4 20.5%
International 1,556.1 1,828.0 (14.9)%
Total soda ash volume sold 2,613.2 2,705.4 (3.4)%
Average sales price (per short ton):
Domestic $ 220.79 $ 219.74 0.5%
International $ 162.78 $ 166.58 (2.3)%
Average $ 186.25 $ 183.82 1.3%
Percent of net sales:
Domestic sales 48.0 % 38.8 % 23.7%
International sales 52.0 % 61.2 % (15.0)%
Total percent of net sales 100.0 % 100.0 %
Percent of sales volumes:
Domestic volume 40.5 % 32.4 % 25.0%
International volume 59.5 % 67.6 % (12.0)%
Total percent of volume sold 100.0 % 100.0 %

Consolidated Results

Net sales. Net sales decreased by 2.1% to $486.7 million for the
twelve months ended December 31, 2018 from $497.3 million for the twelve
months ended December 31, 2017, driven by a decrease in soda ash volumes
sold of 3.4% primarily as a result of unexpected equipment repairs
needed, which were resolved during our second quarter as well as lower
production volume in the third quarter primarily due to ore grade
degradation. The decrease in international sales prices was driven by
the absence of international sales to Ciner Ic ve Dis Ticaret Anonim
Sirket (“CIDT”) in 2018. During 2017, international average sales prices
reflected the increase in freight costs driven by export sales volume to
CIDT.

Cost of products sold. Cost of products sold, including
depreciation, depletion and amortization expense and freight costs,
decreased slightly to $383.4 million for the twelve months ended
December 31, 2018 from $383.8 million for the twelve months ended
December 31, 2017, primarily due to a decrease in freight costs of 4.5%
to $139.1 million for the twelve months ended December 31, 2018,
compared to $145.7 million for the twelve months ended December 31,
2017. The decrease in freight costs was driven by no export sales
volumes to CIDT during the twelve months ended December 31, 2018
compared to the prior year in addition to lower volumes sold compared to
the prior year. The decrease in freight costs was partially offset by an
increase in employee compensation, medical claims, as well as higher
plant consulting fees, for the twelve months ended December 31, 2018
compared to the prior year.

Selling, general and administrative expenses. Our selling,
general and administrative expenses increased 9.4% to $24.5 million for
the twelve months ended December 31, 2018, compared to $22.4 million for
the twelve months ended December 31, 2017. The primary drivers for the
increase were higher annual selling and administrative fees relating to
our affiliate, ANSAC, which directly correlates with the volume we sell
to ANSAC; higher employee compensation expenses and higher expenses from
our Enterprise Resource Planning (“ERP”) project.

Litigation settlement gain. During the twelve months ended
December 31, 2018 we recognized $27.5 million gain related to the
settlement of an action initially filed against Rocks Spring Royalty
Company (“RSRC”) in 2016, related to royalty overpayment under Ciner
Wyoming’s mineral exploration license with RSRC. The case was settled on
June 28, 2018.

Operating income. As a result of the foregoing and primarily due
to the litigation settlement, operating income increased by 18.8% to
$106.3 million for the twelve months ended December 31, 2018, compared
to $89.5 million for the twelve months ended December 31, 2017.

Net income. As a result of the foregoing, net income increased by
19.2% to $103.0 million for the twelve months ended December 31, 2018,
compared to $86.4 million for the twelve months ended December 31, 2017.

RECENT DEVELOPMENTS

On November 9, 2018, we were informed that Ciner Resources Corporation
(“Ciner Corp”) had delivered a notice to terminate its membership in
ANSAC, a cooperative that serves as the primary international
distribution channel for us as well as two other U.S. manufacturers of
trona-based soda ash. The effective termination date is expected to be
December 31, 2021. ANSAC was our largest customer for the years ended
December 31, 2018, 2017 and 2016, accounting for 52.0%, 44.7% and 55.2%,
respectively, of our net sales. Although ANSAC has been our largest
customer for the years ended December 31, 2018, 2017, and 2016, we
anticipate that the impact of such termination on our net sales, net
income and liquidity will be 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 that has
historically seen demand for soda ash exceed supply of soda ash, and
therefore we anticipate being able to find export customers regardless
of market conditions. Between now and the termination date Ciner Corp
will continue to have full ANSAC membership benefits and services. After
the termination period, Ciner Corp will begin marketing soda ash
directly into international markets which are currently being served by
ANSAC and intend to utilize the distribution network that has already
been established by the global Ciner Group. We believe by combining our
volumes with Ciner Group’s soda ash exports from Turkey, our withdrawal
from ANSAC will allow us to leverage the larger, global Ciner Group soda
ash operations which we expect will eventually lower our cost position
and improve our ability to optimize our market share both domestically
and internationally. The ANSAC agreement provides that in the event an
ANSAC member exits or the ANSAC cooperative is dissolved, the exiting
members are obligated for their respective portion of the residual net
assets or deficit of the cooperative. As of December 31, 2018, we have
not recognized an asset or liability related to the exit from ANSAC as
such an amount is not currently probable or estimable.

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
December 31,
Year Ended
December 31,
(Dollars in millions) 2018 2017 2018 2017
Capital Expenditures
Maintenance $ 7.6 $ 4.2 $ 15.1 $ 11.1
Expansion 16.7 3.1 37.3 10.8
Total $ 24.3 $ 7.3 $ 52.4 $ 21.9
Operating and Other Data:
Ore grade(1) 85.6 % 87.7 % 85.8 % 88.4 %
Ore to ash ratio(2) 1.52: 1.0 1.53: 1.0 1.54: 1.0 1.50: 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.

We are currently increasing maintenance capital expenditures at our
Wyoming facility to both adequately maintain the physical assets and to
increase our operating income and operational reliability. The increase
in expansion capital expenditures during the year ended December 31,
2018 as compared to the same period ended 2017 is driven by starting
phase one of our co-generation facility and the execution of our ERP
implementation project. Looking ahead, we are evaluating our investment
plans to not only improve the sustainability of our existing assets, but
also to increase production levels up to at least 3 million tons per
year. We intend to maintain our disciplined financial policy with a
conservative capital structure. Improving operating performance should
give us more flexibility to use a balanced approach of both operating
cash flow and debt to fund these investments.

FINANCIAL POSITION AND LIQUIDITY

As of December 31, 2018, we had cash and cash equivalents of $10.2
million. In addition, we have approximately $126.0 million ($225.0
million, less $99.0 million outstanding) of remaining capacity under our
revolving credit facility. As of December 31, 2018, our leverage and
interest coverage ratios, as calculated per the Ciner Wyoming Credit
Facility, were 0.70: 1.0 and 27.94: 1.0, respectively.

CASH FLOWS AND QUARTERLY CASH DISTRIBUTION

Cash Flows

Cash provided by operating activities increased to $162.2 million during
the twelve months ended December 31, 2018 compared to $79.3 million of
cash provided during the twelve months ended December 31, 2017,
primarily driven by $28.4 million of working capital provided by
operating activities during the twelve months ended December 31, 2018,
compared to $37.8 million of working capital used in operating
activities during the twelve months ended December 31, 2017. The $66.2
million increase in working capital provided by operating activities
over the prior year was primarily due to the $28.2 million decrease in
accounts receivable-affiliate in 2018 compared to a $37.7 million
increase in 2017. The decline in accounts receivable-affiliate is
primarily caused by the absence of CIDT sales in 2018 versus the prior
year as our sales contract with CIDT terminated in 2017.

Cash provided by operating activities during the twelve months ended
December 31, 2018 were offset by cash used in investing activities of
$39.4 million for capital expenditures and cash used in financing
activities during the twelve month period of $142.8 million. The cash
used in financing activities during the twelve months ended December 31,
2018 was due to distributions paid of $92.1 million and net repayments
of long-term debt of $50.4 million during the twelve months ended
December 31, 2018 compared to the $50.3 million in net borrowings and
debt issuance costs during the twelve months ended December 31, 2017.

Quarterly Distribution

On January 31, 2019, the Partnership declared its fourth quarter 2018
quarterly distribution of $0.567 per unit. This is consistent with the
distribution declared during the fourth quarter of 2017. The quarterly
cash distribution is payable on February 28, 2019 to unitholders of
record on February 11, 2019.

RELATED COMMUNICATIONS

Ciner Resources LP will host a conference call tomorrow, February 15,
2019 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 2398415. 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 2398415, and will remain available for the
following seven days. This conference call will be webcast live and
archived for replay on Ciner Resources’ website at www.ciner.us.com.

ABOUT CINER RESOURCES LP

Ciner Resources LP, a master limited partnership, operates the trona ore
mining and soda ash production business of Ciner Wyoming LLC (“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 51%
membership interest in Ciner Wyoming. Natural Resource Partners L.P.
(“NRP”) owns a non-controlling interest consisting of a 49% membership
interest in Ciner 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 may 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 ANSAC and CIDT, 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, as well as the other factors discussed in the Partnership’s
Annual Report on Form 10-K for the year ended December 31, 2017, 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

CINER RESOURCES LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,

(In millions, except per unit data)

2018 2017 2018 2017
Net sales:
Sales—affiliates $ 74.4 $ 80.8 $ 253.3 $ 304.5
Sales—others 57.8 47.7 233.4 192.8
Net sales $ 132.2 $ 128.5 $ 486.7 $ 497.3
Operating costs and expenses:
Cost of products sold including freight costs (excludes
depreciation, depletion and amortization expense set forth
separately below)
89.9 88.3 355.0 356.7
Depreciation, depletion and amortization expense 7.0 6.9 28.4 27.1
Selling, general and administrative expenses—affiliates 4.1 4.5 17.6 16.9
Selling, general and administrative expenses—others 1.5 1.3 6.9 5.5
Impairment and loss on disposal of assets, net 1.6
Litigation settlement gain (27.5 )
Total operating costs and expenses 102.5 101.0 380.4 407.8
Operating income 29.7 27.5 106.3 89.5
Other income (expenses):
Interest income 0.2 0.9 1.9 1.7
Interest expense, net (1.3 ) (1.2 ) (5.1 ) (4.6 )
Other, net (0.1 ) (0.2 )
Total other expense, net (1.1 ) (0.3 ) (3.3 ) (3.1 )
Net income $ 28.6 $ 27.2 $ 103.0 $ 86.4
Net income attributable to non-controlling interest 14.6 13.9 53.1 44.8
Net income attributable to Ciner Resources LP $ 14.0 $ 13.3 $ 49.9 $ 41.6
Other comprehensive loss:
Income/(loss) on derivative financial instruments 1.3 (1.1 ) (0.2 ) (4.0 )
Comprehensive income 29.9 26.1 102.8 82.4
Comprehensive income attributable to non-controlling interest 15.2 13.4 53.0 42.9
Comprehensive income attributable to Ciner Resources LP $ 14.7 $ 12.7 $ 49.8 $ 39.5
Net income per limited partner unit:
Net income per limited partner units (basic) $ 0.70 $ 0.67 $ 2.48 $ 2.08
Net income per limited partner units (diluted) $ 0.70 $ 0.66 $ 2.48 $ 2.07
Weighted average limited partner units outstanding:
Weighted average limited partner units outstanding (basic) 19.7 19.6 19.7 19.6
Weighted average limited partner units outstanding (diluted) 19.7 19.7 19.7 19.7
Cash distribution declared per unit $ 0.567 $ 0.567 $ 2.268 $ 2.268

Contacts

Ciner Resources LP

Investor Relations
Ed Freydel
Vice President, Finance
(770)
375-2323
[email protected]

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