Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $120.9 million on net sales of $196.0 million for the first quarter ended March 31, 2011. This compares to net earnings of $33.9 million on net sales of $118.8 million for the 2010 first quarter. Net earnings allocable to common units was $66.6 million ($3.60 per common unit) and $32.9 million ($1.78 per common unit) for the 2011 and 2010 first quarters, respectively.

Results for the first quarter of 2011 included an unrealized non-cash mark-to-market gain on natural gas derivatives of $1.2 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.

Analysis of Results

Net sales for the 2011 first quarter totaled $196.0 million, compared to net sales of $118.8 million for the 2010 first quarter. This increase was due to higher ammonia and urea ammonium nitrate (UAN) selling prices and volumes. The increase in prices resulted from an improved global supply/demand balance for nitrogen products and higher expected crop plantings in North America. The increase in volumes reflected primarily the higher expected crop plantings.

From the 2010 to the 2011 first quarter, TNCLP’s:
  • UAN and ammonia selling prices increased by 39 and 34 percent, respectively.
  • UAN and ammonia sales volumes increased by 24 and 108 percent, respectively.
  • Realized natural gas unit costs decreased by 19 percent.

Cash Distribution

TNCLP reported today that its Board of Directors has declared a cash distribution for the quarter ended March 31, 2011, of $4.84 per common limited partnership unit payable May 27, 2011, to holders of record as of May 16, 2011.

Cash distributions depend on TNCLP's earnings, which can be affected by nitrogen fertilizer selling prices, natural gas costs, seasonal demand, production levels and weather, as well as cash requirements for working capital needs and capital expenditures. Cash distributions per limited partnership unit also vary based on increasing amounts allocable to the General Partner when cumulative distributions exceed targeted levels.

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