CVR Partners, LP (UAN), a distributor of nitrogen fertilizer, formed by CVR Energy, priced its IPO on April 7th, 2011 above the expected range at $16 per share and closed at +9.7% on first day trade.
Business Overview (from prospectus)
We are a Delaware limited partnership formed by CVR Energy to own, operate and grow our nitrogen fertilizer business. Strategically located adjacent to CVR Energy’s refinery in Coffeyville, Kansas, our nitrogen fertilizer manufacturing facility is the only operation in North America that utilizes a petroleum coke, or pet coke, gasification process to produce nitrogen fertilizer (based on data provided by Blue, Johnson & Associates, Inc., or Blue Johnson). Our facility includes a 1,225 ton-per-day ammonia unit, a 2,025 ton-per-day urea ammonium nitrate, or UAN, unit, and a gasifier complex with built-in redundancy having a capacity of 84 million standard cubic feet per day. We upgrade a majority of the ammonia we produce to higher margin UAN fertilizer, an aqueous solution of urea and ammonium nitrate which has historically commanded a premium price over ammonia. In 2010, we produced 392,745 tons of ammonia, of which approximately 60% was upgraded into 578,272 tons of UAN.
Offering: 19.2 million shares at $16 per share. Net proceeds of approximately $91.4 million will be used for capital expenditure and approximately $89.3 million to purchase Coffeyville Resources’ senior secured notes.
Nitrogen fertilizer net sales were $180.5 million for the year ended December 31, 2010, compared to $208.4 million for the year ended December 31, 2009...Cost of product sold for the year ended December 31, 2010 was $34.3 million, compared to $42.2 million for the year ended December 31, 2009...Nitrogen fertilizer direct operating expenses for the year ended December 31, 2010 were $86.7 million, as compared to $84.5 million for the year ended December 31, 2009...Operating income was $20.4 million for the year ended December 31, 2010, or 11% of net sales, as compared to $48.9 million for the year ended December 31, 2009, or 23% of net sales...For the year ended December 31, 2010, net income was $33.3 million as compared to $57.9 million of net income for the year ended December 31, 2009, a decrease of $24.6 million...
Our major competitors include Agrium (AGU), Koch Nitrogen, Potash Corporation (POT) and CF Industries (CF). Domestic competition is intense due to customers’ sophisticated buying tendencies and production strategies that focus on cost and service. Also, foreign competition exists from producers of fertilizer products manufactured in countries with lower cost natural gas supplies. In certain cases, foreign producers of fertilizer who export to the United States may be subsidized by their respective governments.