Rentech Nitrogen Partners, L.P. (NYSE: RNF), which manufactures and sells nitrogen fertilizer products including ammonia, UAN solution and ammonium sulfate, today provided an update on its outlook for 2013 and 2014. Details on results and forward-looking guidance will be provided when the Partnership releases third quarter operating results on November 7, 2013.
Results for Third Quarter 2013: For the East Dubuque Facility, results for the quarter largely reflected deliveries of fill tons of ammonia and UAN, which were at seasonally low prices, as expected. As is typical during a turnaround year, ammonia deliveries were lighter in the third quarter than in a non-turnaround year. Deliveries of UAN were higher than expected, shifting expected revenue from the fourth quarter to the third quarter.
For the Pasadena Facility, results for the quarter reflected a significant, recent worsening of the market for ammonium sulfate, and the margin impacts of high-cost inventory flowing through cost of sales for products sold at the spot prices negotiated at the end of the third quarter. Forward sales contracts have not developed for ammonium sulfate to the extent that they have for other nitrogen fertilizer products, so it is not possible to lock product prices and input prices at the same time, as has been our practice for a portion of the sales of the most important products of the East Dubuque plant. Since input prices for ammonium sulfate are typically fixed several months before the corresponding product price, margins may be compressed during a declining commodity market. A major factor that further reduced margins for the third quarter was a significant write-down of inventories calculated after the end of the quarter, based on transactions that occurred late in the quarter at prices below the costs of inventory. The Pasadena Facility generated positive EBITDA for the first half of the year, but negative EBITDA in the third quarter, with approximately three-quarters of that loss occurring in September due primarily to the size of the inventory write-down. The Pasadena Facility also experienced several relatively small disruptions in production that, in the aggregate, contributed to lower production and higher cost of sales during the quarter.