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| Statement |
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| While grain market conditions have softened recently, at current fertilizer price levels, we believe farmer economics remain attractive, and we expect to see continued strong demand for the upcoming spring planting season, which I will discuss further in my closing remarks |
| These grain prices, coupled with current fertilizer prices support attractive farmer economics, which should bode well for nitrogen fertilizer demand for spring 2024 |
| And there are -- I think there's really good synergy there |
| We are also proud to report continued improvement in our environmental and safety metrics in 2023 with only one environmental event for the entire year and 0 Tier 1 process safety incidents |
| Relative to the fourth quarter of 2022, UAN and ammonia sales volumes were higher, primarily due to strong demand for nitrogen fertilizers in the fall, driven by favorable weather conditions and lower fertilizer pricing relative to the past 2 years |
| Following the reset of nitrogen fertilizer prices in December 2023, we saw an increase in pricing in the fall, particularly for ammonia, driven by strong demand for application after the harvest |
| Our facilities operated extremely well for the year with ammonia utilization rates of 99% and 100% at Coffeyville and East Dubuque, respectively |
| And so we're very excited about it |
| We believe market conditions are steady, and we expect to see strong demand for nitrogen fertilizer for the spring 2024 planting season |
| We had another good quarter of production from our facilities and experienced solid demand for ammonia for fall application, one of the strongest periods we've seen in recent years |
| The fourth quarter continued to demonstrate the benefits of focusing on reliability and performance |
| Solid operating performance and delivery on our marketing and logistics plans resulted in a distribution of $1.68 per common unit for the fourth quarter and $17.80 per unit declared for 2023 |
| In closing, I would like to thank our employees for their excellent execution, achieving 94% ammonia utilization for the quarter and 100% for the year |
| In summary, we're pleased with our fourth quarter results |
| In the quarter, we executed on all of the critical elements of our business plan which includes safely and reliably operating our plants with a keen focus on the health and safety of our employees, contractors and communities, prudently managing costs, being judicious with capital, maximizing our marketing and our logistics capabilities and targeting opportunities to reduce our carbon footprint |
| Yield estimates for corn are increasing from 177 to 181 bushels per acre, and soybean yield estimates are increasing from 51 to 52 bushels per acre |
| While it's hard to predict the future, we believe we can continue to operate the plant safely and reliably at high utilization rates |
| We had record monthly production in December and shipped near record volumes of ammonia in November for the fall application |
| The Board elected to continue reserving capital that we expect to spend over the next 2 to 3 years, and we'll be focused on improving reliability and redundancy at the 2 plants that can provide better production rates and lower downtime in the future |
| So it actually matches very well with our production schedule |
| We believe that the length of this upward demand cycle will, in large part, be driven by grain prices staying at elevated levels, and we see fundamentals for grains remaining steady |
| Since the strike began, we have operated the plant in a safe and reliable manner with utilization of 94% in ammonia production for the fourth quarter with the only significant downtime in the quarter occurring in early October before the strike began |
| And -- and therefore, the plants that are already up and running have more value -- in my mind, have more value than they did 3 years ago |
| with that flexibility |
| If this project is approved by the Board and successfully implemented, it could give us the ability to choose the optimal feedstock mix and be the only nitrogen fertilizer plant in the U.S |
| We sincerely appreciate the hard work of our people at East Dubuque and supporting facilities to keep the plant running and meeting the needs of our customers |
| But I think that when you look at the purchase price relative to our assets, it certainly makes us feel like there's real value in the 2 plants that we have, particularly the plants that are located in the Midwest |
| Good morning, everyone |
| Overall, grain market conditions have softened |
| Excluding inventory and turnaround impacts, direct operating expenses declined by approximately $5 million from the fourth quarter of 2022, primarily related to lower electricity and natural gas costs, offset somewhat by increased repair and maintenance expenses |
| Statement |
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| Geopolitical risk continue to represent a wildcard for the nitrogen fertilizer industry with meaningful fertilizer production capacity residing in countries across the Middle East, North Africa and Russia |
| Natural gas prices in Europe have fallen since our last earnings call to $7 to $9 per MMBtu due to lower industrial demand and a warmer-than-expected winter, while the cost to produce nitrogen fertilizer in Europe is currently lower than in 2023, it is still at the high end of the global cost curve |
| We've had some issues with our ammonia converter, which is what Dane said in his remarks to you on the guidance for the utilization for the first quarter of the plant |
| Fourth quarter prices for UAN and ammonia declined approximately 47% and 52%, respectively, relative to the prior year period |
| Relative to the fourth quarter of 2022, EBITDA declined primarily due to lower UAN and ammonia sales prices, somewhat offset by higher sales volumes and lower natural gas prices |
| So the peak of the market seems to have subsided in pet coke and it's coming down |
| Grain prices are a little lower than last quarter with May corn at $4.30 per bushel and soybeans at nearly $11.90 per bushel |
| Inventory levels are lower than historical |
| And so as an aside, pet coke costs have come down and our pet coke costs will be down this year from last year |
| We are closely monitoring developments in the Middle East that could impact energy and fertilizer markets, and we expect 2024 will be another period of higher than historical volatility in the business |
| Current USDA estimates indicate 91 million acres of corn will be planted in the spring of 2024, a 4% decrease compared to 95 million acres in 2023 |
| In the U.S., natural gas prices have remained low in the range of $1.50 to $3 per MMBtu since December of 2023, placing the U.S |
| And so that work is going to get done -- bridged mostly in February, a little bit in March, and that's why the ammonia rates dipped back down |
| As I mentioned on the last several earnings calls, customer purchasing patterns have evolved to become more ratable due to higher inventory carrying costs from higher interest rates |
| Looking ahead to the first quarter of 2024, we estimate our ammonia utilization rate to be between 86% and 91%, which will be impacted by some planned downtime at Coffeyville in the quarter |
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