long uan
TRANSCRIPT
![Page 1: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/1.jpg)
CVR Partners
(UAN)
Danny Swift
2/23/14
![Page 2: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/2.jpg)
Long UAN
Long CVR Partners at $19.82
CVR Partners produces fertilizers
(ammonia and urea ammonium nitrate)
from a plant in Kansas
239,300 tons urea ammonium nitrate,
104,200 tons ammonia
CVR Partners is transitioning to produce
only urea ammonium nitrate
![Page 3: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/3.jpg)
Thesis
CVR Partners had an unscheduled plant
shutdown in August
They also decreased their dividend in Q4
2013
CVR Partners is now oversold
CVR Partners is a small-cap company
($1.3B) in a market with growth potential
![Page 4: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/4.jpg)
Shutdown
Due to “external factors”, the ammonia
production facility experienced
unplanned downtime in late May-early
June
This damaged the catalyst in their reactor,
costing 50 tons/day through June/July
Was not announced until a July 29th 8K
![Page 5: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/5.jpg)
Growth Prospects
CVR Partners is transitioning to 100% urea
ammonium nitrate production
They currently meet 8% of domestic
demand, 23% is imported
![Page 6: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/6.jpg)
UAN 1 year chart
![Page 7: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/7.jpg)
Dividends
Total dividends for 2013 1.745/share
10% yield at current price
Q4 dividends were reduced to 0.36 from
0.583
Research has shown the market typically
overreacts to dividend decreases
![Page 8: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/8.jpg)
Financial Comparison
![Page 9: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/9.jpg)
Why UAN?
UAN has two major competitors: RNF &
TNH
RNF & TNH use natural gas as their primary
feedstock, while UAN uses petcoke
Petcoke has much more stable prices
than natural gas
UAN has contracts guaranteeing 70% of
their petcoke supply through 2027
![Page 10: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/10.jpg)
UAN vs competitors 1 year
![Page 11: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/11.jpg)
Downside Risk
Fertilizer prices crashed in 2013 due to
Chinese deregulation
Further price decreases could hurt
margins
![Page 12: LONG UAN](https://reader033.vdocument.in/reader033/viewer/2022060111/5562d32ad8b42a63498b4c06/html5/thumbnails/12.jpg)
Questions?