Press Releases

OCI Partners LP Reports 2016 Third Quarter Results

Nov 7, 2016

NEDERLAND, Texas, Nov. 7, 2016 /PRNewswire/ -- OCI Partners LP, a Delaware limited partnership (the "Partnership"), announced its results for the three and nine months ended September 30, 2016. The Partnership owns and operates an integrated methanol and ammonia production facility that is strategically located on the Texas Gulf Coast near Beaumont.

OCI Partners LP.

Summary of Financial Results for the Three Months Ended September 30, 2016        

  • Revenues decreased 37% to $66 million compared to $104 million for the same period in 2015
  • EBITDA decreased 70% to $14 million compared to $46 million for the same period in 2015
  • Net income (loss) decreased to ($12) million compared to $23 million for the same period in 2015
  • EBITDA and net income margins were 21% and (18)% respectively, compared to 44% and 22%, respectively, during the same period in 2015

Summary of Financial Results for the Nine Months Ended September 30, 2016

  • Revenues decreased 13% to $192 million compared to $221 million for the same period in 2015
  • EBITDA decreased 49% to $43 million compared to $84 million for the same period in 2015
  • Net income (loss) decreased to ($33) million compared to $38 million for the same period in 2015
  • EBITDA and net income margins were 22% and (17)% respectively, compared to 38% and 17%, respectively, during the same period in 2015

Distributions                                    

Based on the results of the three months ended September 30, 2016, the Board of Directors of the general partner of the Partnership has not approved any cash distribution. The amount of any subsequent quarterly cash distributions will vary depending on our future earnings as well as our cash requirements for working capital, capital expenditures, debt service and other contractual obligations, and reserves for future operating or capital needs.

Run-Rate Quarterly Distribution Guidance

The decision to forgo our cash distribution for the three months ended September 30, 2016 reflects an average realized methanol price of $214 per metric ton, an average realized ammonia price of $235 per metric ton, and an average natural gas price of $2.88 per MMBtu.

To assist investors in making the linkage between these prices and potential future distributions, we provide below a sensitivity analysis:

  • A $0.50 per MMBtu change in natural gas prices results in an approximately $0.23 impact on annual distributions
  • A $10 per metric ton change in methanol prices results in an approximately $0.10 impact on annual distributions
  • A $10 per metric ton change in ammonia prices results in an approximately $0.04 impact on annual distributions

It is our intention to continue making distributions consistent with our run-rate guidance, but there can be no assurance we will be able to do so. In addition to the impact of commodity prices, our distributions are subject to fluctuations in capacity utilization, working capital, capital expenditures, debt service and other contractual obligations, reserves for future operating or capital needs and other factors, including overall business, regulatory and financial considerations that may affect the availability of cash to distribute. Please see "Forward-Looking Statements" below."

Statement from President and Chief Executive Officer – Frank Bakker

"During the quarter, our ammonia and methanol production units ran largely uninterrupted and were in operation for 91 days generating capacity utilization rates of 102% and 96%, respectively.

During the quarter, our average realized methanol price was $214 per metric ton. Market contract and spot methanol prices have increased materially in the last four consecutive months ending November. As a result of a pricing lag in our sales contracts, we expect the pricing increases to be first reflected in our revenues late in the fourth quarter.

During the quarter, our average realized ammonia price was $235 per metric ton. Ammonia prices decreased during the quarter reflecting low seasonal demand for agricultural application and market prices of ammonia have continued to be depressed through November.

Looking forward, the rebound in methanol prices should be supported by higher thermal coal prices in China, strong Methanol-to-Olefin (MTO) margins, high MTO utilization rates, new MTO facilities commissioning in China prior to year-end and general supply tightness globally. In addition, consistent natural gas curtailments in Trinidad as well as curtailments in Venezuela and Egypt should also provide support for pricing. Finally, we are on track to realize a 10% growth in methanol demand this year over last year. 

At present, the ammonia market in the United States remains weak as a result of strong supply and sluggish demand. We expect prices to remain subdued until the fall application commences and until the new ammonia production capacity is absorbed by the market. In the meantime, natural gas curtailments for ammonia producers in Trinidad are currently at 25%, which may reduce ammonia exports and alleviate some of the downward pressure on prices."

 


Volume Weighted Average Price of




Volume Weighted Average Price of


Methanol and Ammonia




 Natural Gas 


 ($ per metric ton)




 ($ per MMBtu)

                                For Three-Months Ended September 30,



For Three-Months Ended September 30,


2016



2015




2016



2015

Ammonia

$235



$418




$2.88



$2.88

Methanol

$214



$330























Production




Capacity


 (in '000 tons)




Utilization











Rate %

                                For Three-Months Ended September 30,



For Three-Months Ended September 30,


2016



2015




2016



2015

Ammonia

85



73




102%



87%

Methanol

221



226




96%



98%








Volume Weighted Average Price of




Volume Weighted Average Price of


Methanol and Ammonia




 Natural Gas 


 ($ per metric ton)




 ($ per MMBtu)


For Nine-Months Ended September 30,




For Nine-Months Ended September 30,


2016



2015




2016



2015

Ammonia

$277



$447




$2.40



$2.91

Methanol

$199



$346























Production




Capacity


 (in '000 tons)




Utilization











Rate %


For Nine-Months Ended September 30,




For Nine-Months Ended September 30,


2016



2015




2016



2015

Ammonia

249



157




100%



88%

Methanol

620



441




91%



95%

 

Non-GAAP Financial Measure

EBITDA is defined as net income (loss) plus (i) interest expense and other financing costs, (ii) depreciation expense and (iii) income tax expense. EBITDA is used as a supplemental financial measure by management and by external users of our unaudited financial statements, such as investors and commercial banks, to assess:

  • the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; and
  • our operating performance and return on invested capital compared to those of other publicly traded partnerships, without regard to financing methods and capital structure.

EBITDA should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, EBITDA presented by other companies may not be comparable to our presentation because each company may define EBITDA differently.

EBITDA margin is defined as EBITDA divided by revenues. EBITDA margin is used as a supplemental financial measure by the Partnership's management in its analysis of our operating performance.

The table below reconciles EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended September 30, 2016.

 



Quarter Ended September 30,




2016


2015





(thousands)


Net income (loss)


$

(11,697)



23,143


Add:








Interest expense



10,104



7,278


Interest expense – related party



143



51


Income tax expense



556



353


Depreciation expense



15,253



15,547










EBITDA


$

14,359



46,372




















Nine-months Ended September 30,




2016


2015





(thousands)


Net income (loss)


$

(33,199)



37,513


Add:








Interest expense



28,869



11,569


Interest expense – related party



245



152


Income tax expense



589



646


Depreciation expense



46,144



34,279










EBITDA


$

42,648



84,159


















Conference Call with Management

The Partnership will hold a conference call on November 7, 2016, at 12:00pm EST, during which the Partnership's senior management will review the Partnership's financial results for the third quarter ended September 30, 2016 and provide an update on corporate developments. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (816) 287-5664 and entering the conference code 14670747. A replay of the conference call will be made available until December 7, 2016 and the replay can be accessed by dialing (855) 859-2056 or (404) 537-3406 and entering the same conference code 14670747.

About OCI Partners LP

OCI Partners LP (NYSE: OCIP) owns and operates an integrated methanol and ammonia production facility that is strategically located on the Texas Gulf Coast near Beaumont. The Partnership is headquartered in Nederland, Texas and currently has a methanol production design capacity of 912,500 metric tons per year and an ammonia production design capacity of 331,000 metric tons per year.

Notice to Foreign Investors

This release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that 100% of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not the Partnership, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Forward-Looking Statements

This press release contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements.  These forward-looking statements involve certain risks and uncertainties, including, among others, the following:  our business plans may change as the methanol and ammonia industry and markets warrant; the demand and sales prices for methanol, ammonia and their derivatives may decrease due to market, governmental and other factors; we may be unable to obtain economically priced natural gas and other feedstocks; we may be unable to successfully implement our business strategies, including the completion of significant capital programs; the occurrence of shutdowns (either temporary or permanent) or restarts of existing methanol and ammonia facilities (including our own facility); the timing and length of planned and unplanned downtime; and the occurrence of operating hazards from accidents, fire, severe weather, floods or other natural disasters. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of the Partnership's most recently filed Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed thereafter. The Partnership undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

Contacts:
Omar Darwazah
Director of Investor Relations & Strategy
Phone: +1 917-434-7734
omar.darwazah@oci.nl

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SOURCE OCI Partners LP


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