Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) reported net earnings of $35.2 million on revenues of $136.0 million for the third quarter ended September 30, 2010. This compares to net earnings of $17.3 million on revenues of $101.5 million for the 2009 third quarter. Net income allocable to Common Units was $25.9 million ($1.40 per Common Unit) and $11.9 million ($0.64 per Common Unit) for the 2010 and 2009 third quarters, respectively.
Results for the third quarter of 2010 included an unrealized mark-to-market loss on natural gas derivatives of $7.2 million. Prior to the second quarter of 2010, results were not subject to mark-to-market adjustments because TNCLP employed hedge accounting. The company discontinued hedge accounting in the second quarter of 2010, but had no related adjustments in that period.
For the first nine months of 2010, TNCLP reported net earnings of $135.8 million on revenues of $421.7 million. This compares to net earnings of $121.4 million on revenues of $409.6 million for the first nine months of 2009. Net income allocable to Common Units was $99.9 million ($5.40 per Common Unit) and $77.4 million ($4.18 per Common Unit) for the first nine months of 2010 and 2009, respectively.
Analysis of ResultsRevenues for the 2010 third quarter totaled $136.0 million, compared to revenues of $101.5 million for the 2009 third quarter. This increase was due to higher ammonia and urea ammonium nitrate (UAN) selling prices and higher ammonia sales volume, offset partially by lower UAN sales volume. From the 2009 to the 2010 third quarter, TNCLP’s:
- Ammonia and UAN selling prices increased by 47 and 33 percent, respectively.
- Ammonia sales volume increased by 50 percent and UAN sales volume decreased by 6 percent.
- Realized natural gas unit costs increased by 22 percent.