The forward-looking statements in this call are made as of August 10
th, 2012. And Rentech does not undertake to revise or update these forward-looking statements except to the extent that it is required to do so under applicable law.
In addition, today’s presentation includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures including reconciliations to the most directly comparable GAAP financial measures are included in our 2012 second quarter earnings press release that is available on our website.
Now I would like to turn the call over to Hunt Ramsbottom, President and CEO of Rentech.
Good morning everyone, and thank you for joining us today.
We reported solid second quarter results and increased guidance for the year for our nitrogen segment. We generated consolidated net income of $.04 per share driven by strong fertilizer product prices, lower prices for natural gas, and reduced R&D expenses in the alternative energy segment.
Rentech Nitrogen generated strong cash flow resulting in second quarter cash distributions of $1.17 per unit. Average prices for delivered products were up significantly from last year. Ammonia at $695 per ton was 9% higher. And UAN at $378 per ton was 21% higher than last year. Higher product prices and relatively low natural gas prices by historical standards contributed to gross margins of 65%, up significantly from 50% in the same quarter last year.
The weather this spring, which was warmer than usual enabled farmers to apply ammonia about 15 days earlier than they usually do. This shifted significant ammonia deliveries and revenues from the second quarter into the first quarter. The high ammonia usage reduced the demand for UAN this spring. In addition, the hot dry weather resulted in poor soil and crop conditions, which led to reduced UAN application.
As the drought continued and damaged the corn crop, it became evident that yields and therefore ending inventories would be significantly lower than the early projections for the year. This prompted buyers to enter the market in last June for UAN purchases for the third and fourth quarter deliveries in preparation for the spring, 2013 season.