Favorable weather conditions allowed farmers in Rentech Nitrogen’s core market area of the Mid Corn Belt to apply spring ammonia earlier than is typical. This shifted meaningful volumes of ammonia deliveries into the first quarter that had been anticipated to occur in the second quarter of 2012. Robust projected corn plantings and tight inventories supported strong product pricing.
In the first quarter of 2012, Rentech Nitrogen achieved average prices for ammonia and UAN that were higher by 11% and 59%, respectively, compared to the same period last year. The higher product prices were a result of strong product demand during the first quarter, coupled with the fact that the partnership had secured a robust book of forward sales for spring delivery when prices were at a peak in September and October, 2011.
Rentech Nitrogen continues to benefit from relatively low North American natural gas prices, which, when coupled with strong nitrogen product prices, resulted in gross profit margin of 59% for the period, up from 43% for the comparable period in the prior year.
Selling, general and administrative (SG&A) expenses were $2.6 million for the three months ended March 31, 2012, compared to $1.1 million for the prior-year period. The increase in SG&A expenses was due to costs associated with having become a publicly traded limited partnership.On-stream factors during the period were 100.0% for both the ammonia and UAN plants. During the three months ended March 31, 2012, Rentech Nitrogen produced 78,000 tons of ammonia, of which 38,000 tons were available for sale as ammonia, 34,000 tons were upgraded into UAN, and 6,000 tons were upgraded into other nitrogen products. In the comparable period in the prior year, Rentech Nitrogen produced 75,000 tons of ammonia, of which 35,000 tons were available for sale as ammonia, 34,000 tons were upgraded into UAN, and 6,000 tons were upgraded into other nitrogen products. Production figures are rounded to the nearest thousand.