Ciner Resources LP Announces Second Quarter 2016 Financial Results

Ciner Resources LP Announces Second Quarter 2016 Financial Results

Ciner Resources LP (NYSE: CINR) today reported its financial and operating results for the second quarter ended June 30, 2016.

Second Quarter 2016 Financial Highlights:

• Net sales of $116.7 million decreased 4.5% over the prior-year second quarter; year-to-date net sales of $231.1 million decreased 4.7% over the prior-year.
• Net income of $21.8 million decreased 11.0% over the prior-year second quarter; year-to-date net income of $42.9 million decreased 15.9% over the prior-year.
• Adjusted EBITDA of $29.1 million decreased 7.3% over the prior-year second quarter; year-to-date adjusted EBITDA of $57.3 million decreased 11.0% over the prior-year.
• Earnings per unit of $0.52 for the quarter decreased 11.9% over the prior-year second quarter of $0.59; year-to-date of $1.03 decreased 16.3% over the prior-year.
• Quarterly distribution declared per unit of $0.567 increased by 4.1% over the prior-year second quarter; and 0.5% over first quarter 2016.
• Net cash provided by operating activities of $29.3 million increased 9.3% over prior-year second quarter; year-to-date net cash provided by operating activities of $66.1 million increased by 7.5% over the prior-year.
• Distributable cash flow of $13.0 million increased 7.4% over the prior-year second quarter; year-to-date distributable cash flow of $25.5 million decreased by 0.4% over the prior-year. The distribution coverage ratio was 1.14 and 1.12 for the three and six months ended June 30, 2016, respectively; and 1.24 for the cumulative four quarters ended June 30, 2016.

2016 Outlook:

• Our full year outlook related to total volume sold, domestic volume sold, international pricing and maintenance and expansion capital expenditures remains unchanged (previously provided with fourth quarter and year end 2015 financial results).

Kirk Milling, CEO, commented, “I’m pleased to report the corrective actions we undertook earlier in the year to resolve production issues encountered from lower ore quality paid off in the form of higher production and sales volumes in the quarter. In fact, we set several new production records during the quarter as we came out of our maintenance outage in April and believe we are poised for even higher production levels in the second half of the year.

“International pricing was relatively flat compared to first quarter as higher Asian prices were offset by mix issues experienced in Latin America. We believe most of the Chinese production that was taken off-line earlier in the year is now running again and therefore we anticipate this will lead to slightly softer prices in Asia during the 3rd quarter. However, we should be able to offset any pricing impact with continued diligent cost management and higher production volumes. As a result, we remain comfortable with our 2016 outlook.”

Three Months Ended June 30, 2016 compared to Three Months Ended June 30, 2015

The following table sets forth a summary of net sales, sales volumes and average sales price, and the percentage change between the periods.

Consolidated Results

Net sales. Net sales decreased by 4.5% to $116.7 million for the three months ended June 30, 2016 from $122.2 million for the three months ended June 30, 2015, driven by a decrease in total average sales price of 6.8%, slightly offset by an increase in soda ash volumes sold of 2.5%.

Domestic average sales price declined 4.3% in the three months ended June 30, 2016, mostly due to freight. Our efforts to increase our domestic market share resulted in soda ash prices flat to slightly below 2015 levels. However, we had more volume in 2016 to customers who arrange their own freight, as well as one customer who switched volume to a closer location, resulting in lower freight costs. Lower freight costs resulted in a $9.77 reduction in domestic average price per short ton in the second quarter of 2016.

International average sales price declined 8.1% in the three months ended June 30, 2016, slightly lower than our full year outlook. Our international sales include both ANSAC and customers in Europe and South Africa. We made a decision to scale back our sales volume into Europe in 2016 due to unfavorable exchange rates, as our net profit from both ANSAC and domestic volumes are higher. The mix shift from Europe to additional ANSAC volume results in lower international prices as the Europe price includes freight all the way to the customer’s location.

Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense, decreased by 3.6% to $88.1 million for the three months ended June 30, 2016 from $91.4 million for the three months ended June 30, 2015, due primarily to a decrease in maintenance and operating costs, freight costs and compensation and benefit costs, partially offset by an increase in royalty rates and energy costs as a result of higher soda ash volume sold.

Six Months Ended June 30, 2016 compared to Six Months Ended June 30, 2015

The following table sets forth a summary of net sales, sales volumes and average sales price, and the percentage change between the periods.

Consolidated Results

Net sales. Net sales decreased by 4.7% to $231.1 million for the six months ended June 30, 2016 from $242.6 million for the six months ended June 30, 2015, driven by a decrease in total average sales price of 6.4%, slightly offset by an increase in soda ash volumes sold of 1.8%.

Domestic average sales price declined 5.5% in the six months ended June 30, 2016, mostly due to freight. Our efforts to increase our domestic market share resulted in soda ash prices flat to slightly below 2015 levels. However, we had more volume in 2016 to customers who arrange their own freight, as well as one customer who switched volume to a closer location, resulting in lower freight costs. Lower freight costs resulted in a $12.59 reduction in domestic average price per short ton for the six months ended June 30, 2016.

International average sales price declined 7.3% in the six months ended June 30, 2016, slightly lower than our annual outlook. Our international sales include both ANSAC and customers in Europe and South Africa. We made a decision to scale back our sales volume into Europe in 2016 due to unfavorable exchange rates, as our net profit from both ANSAC and domestic volumes are higher. The mix shift from Europe to additional ANSAC volume results in lower international prices as the Europe price includes freight all the way to the customer’s location.

Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense, decreased by 2.7% to $174.5 million for the six months ended June 30, 2016 from $179.4 million for the six months ended June 30, 2015, due primarily to a decrease in maintenance and operating costs, freight costs and compensation and benefit costs, partially offset by an increase in royalty rates.

CAPEX AND ORE TO ASH RATIO

The following table below summarizes our capital expenditures, on an accrual basis, and ore to ash ratio:

Capital expenditures during the three and six months ended June 30, 2016 and the three and six months ended June 30, 2015 reflect differences in the timing of capital expenditure programs in each year, respectively.

FINANCIAL POSITION AND LIQUIDITY

As of June 30, 2016, we had cash and cash equivalents of $16.8 million. In addition, we have approximately $104 million ($200 million, less $76 million outstanding and less standby letters of credit of $20 million) of remaining capacity under our revolving credit facilities. As of June 30, 2016, our leverage and fixed charge coverage ratios, as calculated per the Ciner Wyoming Credit Facility, were 0.89 and 1.20, respectively.

CASH FLOWS AND QUARTERLY CASH DISTRIBUTION

Cash Flows

Cash provided by operating activities increased to $66.1 million during the six months ended June 30, 2016 compared to $61.5 million of cash generated during six months ended June 30, 2015, primarily driven by an increase in cash flows provided from working capital of $9.8 million, partially offset by a decrease of $8.1 million in net income during the six months ended June 30, 2016 compared to six months ended June 30, 2015.

Cash provided by operating activities during the six months ended June 30, 2016 were partially offset by cash used in investing activities of $11.2 million for capital expenditures and cash used in financing activities during the six month period of $58.5 million, of which majority was due to distributions paid of $44.5 million and repayments on the Ciner Wyoming revolving credit facility of $14.0 million.

Quarterly Distribution

On July 14, 2016, the Partnership declared its second quarter 2016 quarterly distribution of $0.567 per unit. This represents an increase of 0.5% and 4.1% over the distributions declared during the first quarter 2016 and second quarter of 2015, respectively. The quarterly cash distribution is payable on August 12, 2016 to unitholders of record on July 29, 2016.

RELATED COMMUNICATIONS

Ciner Resources LP will host a conference call tomorrow, August 5, 2016 at 8:30 a.m. ET. Participants can listen in by dialing 1-866-550-6980 (Domestic) or 1-804-977-2644 (International) and referencing confirmation 38859356. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection. A telephonic replay of the call will be available approximately two hours after the call’s completion by calling 1-800-585-8367 or 404-537-3406 and referencing confirmation 38859356, and will remain available for the following seven days. This conference call will be webcast live and archived for replay on Ciner Resources’ website at www.cinerresources.com.

ABOUT CINER RESOURCES LP

Ciner Resources LP, a master limited partnership, operates the trona ore mining and soda ash production business of Ciner Wyoming LLC (“Ciner Wyoming”), one of the largest and lowest cost producers of natural soda ash in the world, serving a global market from its facility in the Green River Basin of Wyoming. The facility has been in operation for more than 50 years.

NATURE OF OPERATIONS

Ciner Resources LP owns a controlling interest comprised of a 51% membership interest in Ciner Wyoming LLC (“Ciner Wyoming”). Natural Resource Partners L.P. (“NRP”) owns a non-controlling interest consisting of a 49% membership interest in Ciner Wyoming.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. Statements other than statements of historical facts included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements contain words such as “possible,” “believe,” “should,” “could,” “would,” “predict,” “plan,” “estimate,” “intend,” “may,” “anticipate,” “will,” “if,” “expect” or similar expressions. Such statements are based only on the Partnership’s current beliefs, expectations and assumptions regarding the future of the Partnership’s business, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Partnership’s control. The Partnership’s actual results and financial condition may differ materially from those implied or expressed by these forward-looking statements. Consequently, you are cautioned not to place undue reliance on any forward-looking statement because no forward-looking statement can be guaranteed. Factors that could cause the Partnership’s actual results to differ materially from the results contemplated by such forward-looking statements include: changes in general economic conditions, the Partnership’s ability to meet its expected quarterly distributions, changes in the Partnership’s relationships with its customers, including American Natural Soda Ash Corporation (“ANSAC”), the demand for soda ash and the opportunities for the Partnership to increase its volume sold, the development of glass and glass making product alternatives, changes in soda ash prices, operating hazards, unplanned maintenance outages at the Partnership’s production facilities, construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures, the effects of government regulation, tax position, and other risks incidental to the mining, processing, and shipment of trona ore and soda ash, as well as the other factors discussed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015, and subsequent reports filed with the Securities and Exchange Commission. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Unless required by law, the Partnership undertakes no duty and does not intend to update the forward-looking statements made herein to reflect new information or events or circumstances occurring after this press release. All forward-looking statements speak only as of the date made.

Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the United States (“GAAP”). We also present the non-GAAP financial measures of:

• Adjusted EBITDA;
• Distributable cash flow; and
• Distribution coverage ratio.

We define Adjusted EBITDA as net income (loss) plus net interest expense, income tax, depreciation, depletion and amortization and certain other expenses that are non-cash charges or that we consider not to be indicative of ongoing operations. Distributable cash flow is defined as Adjusted EBITDA less net cash paid for interest, maintenance capital expenditures and income taxes, each as attributable to Ciner Resources LP. Distributable cash flow will not reflect changes in working capital balances. We define distribution coverage ratio as the ratio of distributable cash flow as of the end of the period to cash distributions payable with respect to such period.

Adjusted EBITDA, distributable cash flow and distribution coverage ratio are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

• our operating performance as compared to other publicly traded partnerships in our industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods;
• the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
• our ability to incur and service debt and fund capital expenditures; and
• the viability of capital expenditure projects and the returns on investment of various investment opportunities.

We believe that the presentation of Adjusted EBITDA, distributable cash flow and distribution coverage ratio provide useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and distributable cash flow are net income and net cash provided by operating activities. Our non-GAAP financial measures of Adjusted EBITDA, distributable cash flow and distribution coverage ratio should not be considered as alternatives to GAAP net income, operating income, net cash provided by operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all items that affect net income and net cash provided by operating activities. Investors should not consider Adjusted EBITDA, distributable cash flow and distribution coverage ratio in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA, distributable cash flow and distribution coverage ratio may be defined differently by other companies, including those in our industry, our definition of Adjusted EBITDA, distributable cash flow and distribution coverage ratio may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

The table below presents a reconciliation of the non-GAAP financial measures of Adjusted EBITDA and distributable cash flow to the GAAP financial measures of net income and net cash provided by operating activities:

The following table presents a reconciliation of the non-GAAP financial measures of Adjusted EBITDA to GAAP financial measure of net income for the periods presented:

Ciner Resources LP
Investor Relations
Scott Humphrey, 770-375-2387
Director of Finance and Treasurer
SHumphrey@ciner.us.com

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