Sisecam Resources LP (NYSE: SIRE) (“we,” “us, “our,” or the
“Partnership”) today reported its financial and operating results
for the fourth quarter ended December 31, 2021.
Fourth Quarter and Year Ended 2021 Financial
Highlights:
- Net sales of $156.0 million increased 50.9% over the prior-year
fourth quarter; year-end net sales of $540.1 million increased
37.7% over the prior-year.
- Soda ash volume produced and sold increased 1.6% and 25.6%,
respectively, over the prior-year fourth quarter; year-end soda ash
volume produced and sold increased 19.4% and 26.6%, respectively,
over the prior-year. This increase was primarily attributable to
the return of sales volumes to pre-COVID-19 pandemic levels. During
the fourth quarter of 2020, the Partnership experienced a slight
increase in sales volumes, production and pricing after the
significant decline in the first half of the year primarily due to
the COVID-19 and its variants (“the COVID-19“) pandemic. Fourth
quarter 2020 production included building inventory for our year
end exit from ANSAC, for which related international sales were
recognized in the following quarter therefore a smaller variance
compared to fourth quarter 2021 production versus sales for the
same periods. Since the third quarter of 2021, the sales volume
level returned to normalized pre-COVID-19 levels.
- Net income of $23.6 million increased $10.9 million over the
prior-year fourth quarter; year-end net income of $51.4 million
increased $24.5 million over the prior-year. This increase was
primarily attributable to the operating income increase resulting
from overall sales and production volume recovery to pre-COVID-19
levels with relatively consistent selling, general and
administrative expenses in the quarter ended December 31, 2021
compared to the quarter ended December 31, 2020.
- Adjusted EBITDA of $32.4 million increased 48.6% over the
prior-year fourth quarter; year-end Adjusted EBITDA of $88.5
million increased 43.7% over the prior-year. This increase is
primarily attributable to the operating income increase.
- Earnings per unit of $0.56 for the quarter increased 86.7% over
the prior-year fourth quarter of $0.30; year- end earnings per unit
of $1.19 increased 105.2% over the prior-year. Net income
attributable to the Partnership for the year ended December 31,
2021 was up due to significantly lower net income due to the
COVID-19 pandemic.
- Net cash provided by operating activities of $25.9 million
increased 1,026.1% over the prior-year fourth quarter; year-end net
cash provided by operating activities of $54.2 million decreased
0.9% over the prior-year. The increase in net cash provided by
operating activities in the fourth quarter is primarily due to the
significantly better net income in the current fourth quarter than
the same period in 2020. The slight decrease in net cash provided
by operating activities for 2021 is primarily due to higher
accounts receivables offset by improved net income during the year
ended at December 31, 2021 compared to the same period of 2020 as a
result of more direct international customers with longer repayment
terms in 2021 compared to ANSAC in 2020.
- Working capital used by operating activities increased $28.0
million from $2.4 million during the year ended December 31, 2020
to $30.4 million during the year ended December 31, 2021. The
increase was primarily due to higher accounts receivable balance at
December 31, 2021 as a result of higher net sales for the three
months ended December 31, 2021 compared to the same period ended
December 31, 2020. It is partly offset by the higher balances of
accounts payable and accrued expenses as of December 31, 2021.
- Distributable cash flow of $13.2 million increased 135.7% over
the prior-year fourth quarter; year-end distributable cash flow of
$29.0 million increased 70.6% over the prior-year.
- The distribution coverage ratio was 0.99 and N/A for the three
months ended December 31, 2021 and 2020, respectively; and 1.43 and
2.50 for the years ended December 31, 2021 and 2020,
respectively.
Oğuz Erkan, CEO, commented: “I want to first commend our team
for another outstanding year of safe operations. We continued to
add to our exemplary safety record in 2021, collecting multiple
awards that included IMA-North America’s safest large mine.
Moreover, we did a tremendous job navigating COVID-19 in 2021. An
unwavering commitment to COVID-19 safety protocols allowed us to
avoid operational disruptions and to maintain full production
rates, with 2.7 million tons produced in 2021 increasing 19% from
2020.
“In a year that began with a challenging market backdrop, we are
excited to report a strong finish to 2021 and the start of a new
strategic partnership. As previously announced, on December 21st
our sponsor completed the sale of a controlling stake in Ciner
Resources Corporation to the Sisecam Group, a Turkish manufacturing
conglomerate with a long history of glass and chemical production,
including 2.5 million tons of soda ash. As joint owners of Sisecam
Resources LP’s (former Ciner Resources LP) general partner, Sisecam
and Ciner bring together operational expertise and industry
leadership to advance natural soda ash production, which is a more
sustainable way of supplying the world’s growing demand for this
critical resource. We are excited to be an integral part of
Sisecam’s global presence and growth strategy and strengthen its
operations with environmentally-friendly natural soda ash mined in
Wyoming, home to the world’s largest trona deposits.
“Turning to our financial performance, the theme was steady
improvement in 2021. International pricing increases were moderated
during the first half of the year due to a slower pace of reopening
in many Asian economies that kept inventories elevated. However, in
the second half of the year, demand resurgence led to tighter
supply, driving substantial improvements in international pricing
levels. The impact of this upward trend was especially pronounced
in our average pricing for the fourth quarter, achieving a
sequential 16% increase over the third quarter of 2021 and 41%
increase year-over-year. By actively managing our export sales, we
were well positioned to better capitalize on tightness in Asian
markets in Q4 by reallocating some volumes at higher spot prices,
which bolstered margins in the quarter. Directly managing
international relationships and improved visibility into supply
chains and end markets contributed to last year’s success. On the
domestic side, consumption levels remained strong throughout the
year, and, due to longer-tenured contracts, reflected more stable
pricing levels than export.
“The surge in export pricing translated into the best quarterly
earnings since 2019. Record volumes of 743 thousand tons sold in Q4
2021 resulted in net sales of $156.0 million and net income of
$23.6 million. Adjusted EBITDA of $32.4 million was the highest
since Q3 2019 and was more than double the first quarter of 2021,
again reflecting the continued improvement in soda ash markets
throughout the year. Total global soda ash consumption in 2021 came
in higher than 2019, demonstrating the strength of soda ash
fundamentals and the resilient demand base that supports the
long-term potential of our business.
“We are also excited to pass along these profits to our
unitholders in the form of a $0.65 per common unit distribution,
the highest quarterly distribution on record.
“We continue to reduce our leverage, which was below 1.5x at
year-end, back to pre-pandemic levels as we achieve higher adjusted
EBITDA and strong cash flows. We completed the refinancing of our
credit facility late last year, in addition to closing a $29
million term loan secured by equipment installed for maintenance
capex projects in 2021, which enabled us to end the year with high
liquidity. Further, due to market tightness that persisted through
the end of the fourth quarter, we are optimistic around supportive
pricing levels and free cash flow in 2022; however, our Board of
Directors will continue to evaluate distributable cash flow
coverage and distributions on a quarter-by-quarter basis.
“Lastly, I’d like to thank our employees for their commitment to
our success in 2021 as well as to the ongoing vision for our
growth, as we welcome in a new era for Sisecam Resources LP as a
subsidiary of Sisecam Group. The partnership of Sisecam and Ciner
reinforces the position of Sisecam Resources LP as an industry
leader for the long-term production of natural soda ash.”
Financial Highlights
Three Months Ended
December 31,
Year Ended December
31,
(Dollars in
millions, except per unit amounts)
2021
2020
% Change
2021
2020
% Change
Soda ash volume produced (millions of
short tons)
0.697
0.686
1.6
%
2.721
2.279
19.4
%
Soda ash volume sold (millions of short
tons)
0.743
0.592
25.6
%
2.814
2.222
26.6
%
Net sales
$
156.0
$
103.4
50.9
%
$
540.1
$
392.2
37.7
%
Net income
$
23.6
$
12.7
85.8
%
$
51.4
$
26.9
91.1
%
Net income attributable to Sisecam
Resources LP
$
11.7
$
6.0
95.0
%
$
24.4
$
11.7
108.5
%
Earnings per Common Unit
$
0.56
$
0.30
86.7
%
$
1.19
$
0.58
105.2
%
Adjusted EBITDA(1)
$
32.4
$
21.8
48.6
%
$
88.5
$
61.6
43.7
%
Adjusted EBITDA attributable to Sisecam
Resources LP(1)
$
16.2
$
10.6
52.8
%
$
43.9
$
30.1
45.8
%
Net cash provided by operating
activities
$
25.9
$
2.3
1,026.1
%
$
54.2
$
54.7
(0.9
)%
Distributable cash flow attributable to
Sisecam Resources LP(1)
$
13.2
$
5.6
135.7
%
$
29.0
$
17.0
70.6
%
Distribution coverage ratio (1)
0.99
N/A
N/A
1.43
2.50
(42.8
) %
(1) See non-GAAP reconciliations
Three Months Ended December 31, 2021 compared to Three Months
Ended December 31, 2020
The following table sets forth a summary of net sales, sales
volumes and average sales price, and the percentage change between
the periods.
Three Months Ended December
31,
Percent
Increase/(Decrease)
Net sales (Dollars in
millions):
2021
2020
Domestic
$
68.9
$
55.7
23.7%
International
87.1
47.7
82.6%
Total net sales
$
156.0
$
103.4
50.9%
Sales volumes (thousands of short
tons):
Domestic
319.0
264.7
20.5%
International
423.9
326.8
29.7%
Total soda ash volume sold
742.9
591.5
25.6%
Average sales price (per short
ton):
Domestic
$
215.99
$
210.43
2.6%
International
$
205.47
$
145.96
40.8%
Average
$
209.99
$
174.81
20.1%
Percent of net sales:
Domestic sales
44.2
%
53.9
%
(18.0)%
International sales
55.8
%
46.1
%
21.0%
Total percent of net sales
100.0
%
100.0
%
Percent of soda ash volume
sold:
Domestic volume
42.9
%
44.8
%
(4.2)%
International volume
57.1
%
55.2
%
3.4%
Total percent of soda ash volume sold
100.0
%
100.0
%
Consolidated Results
Net sales. Net sales increased by 50.9% to $156.0 million for
the three months ended December 31, 2021 from $103.4 million for
the three months ended December 31, 2020, primarily driven by an
increase in soda ash volumes sold of 25.6% due to continuing
recovery of domestic and international demand from the significant
negative impact from the COVID-19 pandemic. We operated at normal
pre-COVID-19 production capacity in the three months ended December
31, 2021 compared to levels that were suppressed due to COVID-19
pandemic during the three months ended December 31, 2020.
International average price was record high due to the higher ocean
freight cost, which is one of the major components of the sales
price, as a result of higher demand in the global market.
Cost of products sold. Cost of products sold, including
depreciation, depletion and amortization expense and freight costs,
increased to $125.8 million for the three months ended December 31,
2021 compared to $84.2 million for the three months ended December
31, 2020, primarily due to higher sales volumes. The increase in
cost of products sold is also due to supplier cost inflation as
well as significant increase in ocean freight rates primarily from
the very high demand in the global supply chain. The increases from
2020 to 2021 are partially attributable to an increase in non-ANSAC
international sales which include ocean freight in both net sales
and cost of product sold. In addition, the natural gas prices and
other raw material prices were higher in the three months ended
December 31, 2021 than the three months ended December 31,
2020.
Net income. As a result of the foregoing, net income increased
by 85.8% to $23.6 million for the three months ended December 31,
2021, compared to $12.7 million for the three months ended December
31, 2020.
Year Ended December 31, 2021 compared to Year Ended December
31, 2020
The following table sets forth a summary of net sales, sales
volumes and average sales price, and the percentage change between
the periods.
Year Ended December
31,
Percent
Increase/(Decrease)
Net sales (Dollars in millions, except
average sales price):
2021
2020
Domestic
$
276.8
$
208.8
32.6%
International
263.3
183.4
43.6%
Total net sales
$
540.1
$
392.2
37.7%
Sales volumes (thousands of short
tons):
Domestic
1,300.6
940.9
38.2%
International
1,512.9
1,281.0
18.1%
Total soda ash volume sold
2,813.5
2,221.9
26.6%
Average sales price (per short
ton):
Domestic
$
212.82
$
221.92
(4.1)%
International
$
174.04
$
143.17
21.6%
Average
$
191.97
$
176.52
8.8%
Percent of net sales:
Domestic sales
51.2
%
53.2
%
(3.8)%
International sales
48.8
%
46.8
%
4.3%
Total percent of net sales
100.0
%
100.0
%
Percent of soda ash volume
sold:
Domestic volume
46.2
%
42.3
%
9.2%
International volume
53.8
%
57.7
%
(6.8)%
Total percent of soda ash volume sold
100.0
%
100.0
%
Consolidated Results
Net sales. Net sales increased by 37.7% to $540.1 million for
the twelve months ended December 31, 2021 from $392.2 million for
the year ended December 31, 2020, primarily driven by an increase
in soda ash volumes sold of 26.6% and an increase in average sales
price per short ton of 8.8% primarily due to continuing recovery of
domestic and international demand from the significant negative
impact from the COVID-19 pandemic. We operated at normal production
capacity in the year ended December 31, 2021. Domestic average
price was lower than the prior year same period due to customer
mix, factoring in the overall volume growth as well as lower annual
market prices which were set during the slow economy in late 2020
affected by the COVID-19 pandemic. Sales prices, particularly when
considering the impact of rising logistics costs, in the year ended
December 31, 2021 had not fully recovered to pre-COVID-19 pandemic
levels. Increase in net sales and cost of product sold from 2020 to
2021 is also impacted by an increase in non-ANSAC international
sales which include ocean freight in both net sales and cost of
product sold.
Cost of products sold. Cost of products sold, including
depreciation, depletion and amortization expense and freight costs,
increased by 36.1% to $460.1 million for the year ended December
31, 2021 from $338.1 million for the year ended December 31, 2020,
primarily due to significant increases in overall soda ash sales
volumes. The increase in cost of products sold is also due to
supplier cost inflation as well as significant increases in ocean
freight rates primarily from the high demand in the global supply
chain as well as price increases in natural gas. In addition, the
increases from 2020 to 2021 are also attributable to an increase in
non-ANSAC international sales which include ocean freight in both
net sales and cost of product sold.
Selling, general and administrative expenses. Our selling,
general and administrative expenses increased 8.3% to $23.5 million
for the year ended December 31, 2021, compared to $21.7 million for
the year ended December 31, 2020. The increase was primarily due to
developing our internal international sales, marketing, and
logistics infrastructure while additionally incurring an
incremental fixed rate cost per ton on sales to ANSAC in 2021.
Operating income. Operating income increased by 74.4% to $56.5
million for the year ended December 31, 2021, compared to $32.4
million for the year ended December 31, 2020. The increase is
primarily due to the sales volume improvement to the pre-COVID
pandemic level, the international sales price improvement to the
pre-COVID pandemic level, and the domestic sales price slow
recovery toward the pre-COVID pandemic level. Despite the sales
recovery from the negative impact of the COVID-19 pandemic, the
operating income has not yet recovered to the pre-pandemic level as
supply chain costs have increased at a much faster pace than
sales.
Net income. As a result of the foregoing, net income increased
by 91.1% to $51.4 million for the year ended December 31, 2021,
compared to $26.9 million for the year ended December 31, 2020.
CAPEX AND ORE METRICS
The following table summarizes our capital expenditures, on an
accrual basis, ore grade and ore to ash ratio:
Three Months Ended December
31,
Year Ended December
31,
(Dollars in
millions)
2021
2020
2021
2020
Capital Expenditures
Maintenance
$
6.2
$
6.2
$
27.0
$
22.9
Expansion
0.2
0.2
0.8
14.5
Total
$
6.4
$
6.4
$
27.8
$
37.4
Operating and Other Data:
Ore grade(1)
86.5
%
85.7
%
86.3
%
86.6
%
Ore to ash ratio(2)
1.54: 1.0
1.56: 1.0
1.56: 1.0
1.60: 1.0
(1)
Ore grade is the percentage of raw trona
ore that is recoverable as soda ash free of impurities. A higher
ore grade will produce more soda ash than a lower ore grade.
(2)
Ore to ash ratio expresses the number of
short tons of trona ore needed to produce one short ton of soda ash
and includes our deca rehydration recovery process. In general, a
lower ore to ash ratio results in lower costs and improved
efficiency.
During the year ended December 31, 2021, capital expenditures
decreased $9.6 million compared to the year ended December 31,
2020. The decrease was primarily due to the COVID-19 pandemic
during which we tried to maintain sound financial liquidity by
postponing capital expenditures for expansion. The decrease was
also attributable to the completion of our new co-generation
facility, which became operational in March 2020.
FINANCIAL POSITION AND LIQUIDITY
As of December 31, 2021, we had cash and cash equivalents of
$2.7 million. In addition, as of December 31, 2021, we had
approximately $155.0 million ($225.0 million, less $70.0 million
outstanding) of remaining capacity under our Sisecam Wyoming Credit
Facility. As of December 31, 2021, our leverage and interest
coverage ratios, as calculated pursuant to the credit agreement for
the Sisecam Wyoming Credit Facility was 1.36: 1.0 and 18.06: 1.0,
respectively. As of December 31, 2021, our balance under the
Sisecam Wyoming Equipment Financing Arrangement was $53.6
million.
CASH FLOWS AND QUARTERLY CASH DISTRIBUTION
Cash Flows
Operating Activities
Cash provided by operating activities decreased to $54.2 million
during the year ended December 31, 2021 compared to $54.7 million
of cash provided during the year ended December 31, 2020, primarily
as a result of the following:
- an increase of 91.1% of net income of $51.4 million during the
year ended December 31, 2021, compared to $26.9 million during the
year ended December 31, 2020, and
- an increase of $28.0 million in working capital used by
operating activities from $2.4 million during the year ended
December 31, 2020 to $30.4 million year ended December 31, 2021.
The increase was primarily due to higher accounts receivable
balance at December 31, 2021 as a result of higher net sales for
the three months ended December 31, 2021 compared to the same
period ended December 31, 2020. It is partly offset by the higher
balances of accounts payable and accrued expenses as of December
31, 2021.
Investing Activities
We used cash flows of $24.9 million in investing activities
during the year ended December 31, 2021, compared to $42.2 million
used the year ended December 31, 2020, primarily related to capital
projects as described in “Capital Expenditures” above.
Financing Activities
Cash used in financing activities was $27.1 million during the
year ended December 31, 2021, compared to $26.9 million used for
the year ended December 31, 2020. Higher repayments than borrowings
on debt offset by lower distributions for the year ended December
31, 2021 compared to December 31, 2020 resulted in slightly more
cash used in financing activities during the year ended December
31, 2021.
Quarterly Distribution
On January 27, 2022, the Partnership declared its fourth quarter
2021 quarterly distribution. On February 18, 2022, we paid a
quarterly cash distribution of $0.650 per limited partner unit to
unitholders of record on February 7, 2022. The total distribution
paid was $13.4 million with $12.9 million paid to our limited
partners and $0.3 million and $0.3 million paid to our general
partner for its general partner interests and incentive
distribution rights, respectively.
Change in Control Transaction
On December 21, 2021, Sisecam Chemicals USA Inc. ("Sisecam USA")
acquired 60% of the units in Sisecam Chemicals Resources LLC
(formerly known as Ciner Resources Corporation) (“Sisecam
Chemicals”) from Ciner Enterprises Inc.. Sisecam Chemicals owns
100% of the interests in Sisecam Chemicals Wyoming LLC (formerly
known as Ciner Wyoming Holding Co.) (“SCW LLC”), which in turn owns
approximately 74% of the common units in the Partnership and 100%
of the General Partner (collectively such transactions, the “CoC
Transaction”). As a result of the closing of the CoC Transaction,
Sisecam USA has an indirect controlling interest in the Partnership
and the general partner. As a part of the CoC Transaction, Ciner
Resources LP was renamed Sisecam Resources LP and Ciner Wyoming LLC
was renamed Sisecam Wyoming LLC (“Sisecam Wyoming”).
Green River Expansion Project
In connection with the CoC Transaction, management is evaluating
whether and when to pursue a potential new Green River Expansion
Project that, we believe, could increase production levels up to
approximately 3.5 million short tons of soda ash per year or up to
approximately 134% of the last five-year average of soda ash
produced per year. We have conducted the initial basic design and
secured certain related permits and are currently evaluating the
detailed cost and market analysis pursuant to the basic design. If
we proceed with this project, it will require capital expenditures
materially higher than have been recently incurred by Sisecam
Wyoming. The timing of the new Green River Expansion Project as
well as any other expansion capital expenditures may also be
impacted by the Partnership’s financial results including further
negative volatility caused by the ongoing COVID-19 pandemic,
including resurgences or subsequent variants of the virus.
COVID-19
COVID-19, including the Omicron variant, continues to cause
certain disruptions to the economy throughout the world, including
the United States and markets to which our products have
historically been exported. There have been extraordinary actions
taken by international, federal, state, and local public health and
governmental authorities to contain and combat the outbreak and
spread of COVID-19 in regions throughout the world, including
travel bans, many vaccine mandate policies, quarantines,
“stay-at-home” orders, and similar mandates for many individuals to
restrict daily activities and for many businesses to curtail or
cease normal operations. Vaccines for COVID-19 become widely
available globally and individuals over five years old are eligible
for the vaccine in the U.S.
Our Response to COVID-19
We continue to closely monitor the impact of the COVID-19
pandemic and all governmental actions in response thereto on all
aspects of our business, including how it impacts our customers,
employees, supply chain, distribution network, and cash flows. As
COVID-19 vaccines become broadly available, we have encouraged
employees to get vaccinated. We continue to use guidance from local
health organizations, including the Centers for Disease Control and
Prevention, to make decisions about our return to the workplace
policies. Our focus has been the safety of our teams and this will
continue to be our priority as we use data to address the COVID-19
pandemic. We continue to actively monitor and adhere to applicable
local, state, federal, and international governmental guideline
actions to better ensure the safety of our employees.
The Impact of COVID-19
As the impact of COVID-19 evolved, we saw continued recovery in
both domestic and international business in 2021. The soda ash
volume sold in the first, second, third, and fourth quarters for
2021 increased 21.7%, decreased 9.7%, increased 7.8%, and increased
6.0%, respectively, compared to the immediately preceding quarter.
The decline in the soda ash volume sold in the second quarter of
2021 compared to the first quarter of 2021 is primarily due to the
first quarter of 2021 including significant international sales
volumes associated with the initial impact of selling directly to
international customers as part of our December 31, 2020 ANSAC
exit. The production volumes in 2021 are at pre-COVID-19 pandemic
levels, which we consider to be production levels prior to the
second quarter 2020. The sales volumes in the second half of 2021
are at pre-COVID-19 pandemic levels. Sales volumes for the twelve
months ended December 31, 2021 and 2020 were 2.8 million short tons
and 2.2 million short tons, respectively.
For the year ended December 31, 2021 and 2020, we have incurred
$1.8 million and $2.4 million, respectively, in costs directly
related to COVID-19 primarily in the form of costs related to
employee safety and retention and additional inventory storage and
logistics costs.
ABOUT SISECAM RESOURCES LP
Sisecam Resources LP, a master limited partnership, operates the
trona ore mining and soda ash production business of Sisecam
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
Sisecam Resources LP owns a controlling interest comprised of a
51% membership interest in Sisecam Wyoming. Natural Resource
Partners L.P. owns a non-controlling interest consisting of a 49%
membership interest in Sisecam 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. Forward-looking
statements include all statements that are not historical facts and
in some cases may be identified by the use of forward-looking
terminology such as the words “believe,” “expect,” “plan,”
“intend,” “seek,” “anticipate,” “estimate,” “predict,” “forecast,”
“project,” “potential,” “continue,” “may,” “will,” “could,”
“should” or the negative of these terms 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, changes
in the Partnership’s relationships with its customers, the domestic
and international 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 facility, 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 and processing of trona ore, and shipment
of soda ash, the impact of a cybersecurity event, the impact of our
exit from ANSAC effective as of December 31, 2020 and our change of
control effective December 21, 2021, and our ability to maintain or
increase our distributions, and the short- and long-term impacts of
the COVID-19 pandemic, including the resurgence or subsequent
variants and the impact of government orders on our employees and
operations, as well as the other factors discussed in the
Partnership’s Annual Report on Form 10-K for the year ended
December 31, 2021, and any additional subsequent reports filed with
the United States 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.
Supplemental Information
SISECAM RESOURCES LP
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
(In millions,
except per unit data)
2021
2020
2021
2020
Net sales:
Sales—affiliates
$
—
$
47.7
$
—
$
177.9
Sales—others
156.0
55.7
540.1
214.3
Net sales
$
156.0
$
103.4
$
540.1
$
392.2
Operating costs and expenses:
Cost of products sold (excludes
depreciation, depletion and amortization expense set forth
separately below)
118.0
76.2
428.5
309.3
Depreciation, depletion and amortization
expense
7.8
8.0
31.6
28.8
Selling, general and administrative
expenses—affiliates
4.2
4.5
17.2
17.5
Selling, general and administrative
expenses—others
1.4
0.7
6.3
4.2
Total operating costs and expenses
131.4
89.4
483.6
359.8
Operating income
24.6
14.0
56.5
32.4
Other income (expenses):
Interest income
—
—
—
0.1
Interest expense
(0.9
)
(1.3
)
(5.0
)
(5.3
)
Other, net
(0.1
)
—
(0.1
)
(0.3
)
Total other expense, net
(1.0
)
(1.3
)
(5.1
)
(5.5
)
Net income
$
23.6
$
12.7
$
51.4
$
26.9
Net income attributable to non-controlling
interest
11.9
6.7
27.0
15.2
Net income attributable to Sisecam
Resources LP
$
11.7
$
6.0
$
24.4
$
11.7
Other comprehensive loss:
Income/(loss) on derivative financial
instruments
(9.3
)
0.3
5.9
5.9
Comprehensive income
14.3
13.0
57.3
32.8
Comprehensive income attributable to
non-controlling interest
7.4
6.9
29.9
18.1
Comprehensive income attributable to
Sisecam Resources LP
$
6.9
$
6.1
$
27.4
$
14.7
Net income per limited partner
unit:
Net income per limited partner unit
(basic)
$
0.56
$
0.30
$
1.19
$
0.58
Net income per limited partner unit
(diluted)
$
0.56
$
0.30
$
1.19
$
0.58
Limited partner units
outstanding:
Weighted average limited partner units
outstanding (basic)
19.8
19.7
19.8
19.7
Weighted average limited partner units
outstanding (diluted)
19.8
19.8
19.8
19.8
SISECAM RESOURCES LP
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
As of
(In
millions)
December 31,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
2.7
$
0.5
Accounts receivable—affiliates
49.3
86.5
Accounts receivable, net
116.9
40.6
Inventory
30.1
33.5
Other current assets
9.0
4.1
Total current assets
208.0
165.2
Property, plant and equipment, net
304.2
307.4
Other non-current assets
31.1
25.4
Total assets
$
543.3
$
498.0
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
8.6
$
3.0
Accounts payable
21.9
16.4
Due to affiliates
2.3
2.9
Accrued expenses
41.0
33.6
Total current liabilities
73.8
55.9
Long-term debt
115.0
128.1
Other non-current liabilities
9.8
8.7
Total liabilities
198.6
192.7
Equity:
Common unitholders - Public and SCW LLC
(19.8 and 19.8 units issued and outstanding at December 31, 2021
and 2020)
187.4
170.0
General partner unitholders - Sisecam
Resource Partners LLC (0.4 units issued and outstanding at December
31, 2021 and 2020)
4.6
4.2
Accumulated other comprehensive loss
3.0
—
Partners’ capital attributable to Sisecam
Resources LP
195.0
174.2
Non-controlling interest
149.7
131.1
Total equity
344.7
305.3
Total liabilities and partners’ equity
$
543.3
$
498.0
SISECAM RESOURCES LP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended December
31,
(In
millions)
2021
2020
Cash flows from operating
activities:
Net income
$
51.4
$
26.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization
expense
32.2
29.2
Equity-based compensation expense
0.5
0.7
Other non-cash items
0.5
0.3
Changes in operating assets and
liabilities:
(Increase)/decrease in:
Accounts receivable, net
(34.3
)
(4.6
)
Accounts receivable - affiliates
(4.7
)
8.5
Inventory
0.3
(9.8
)
Other current and other non-current
assets
(1.8
)
(0.5
)
Increase/(decrease) in:
Accounts payable
5.0
2.2
Due to affiliates
(0.5
)
(0.1
)
Accrued expenses and other liabilities
5.6
1.9
Net cash provided by operating
activities
54.2
54.7
Cash flows from investing
activities:
Capital expenditures
(25.7
)
(42.2
)
Insurance proceeds
0.8
—
Net cash used in investing activities
(24.9
)
(42.2
)
Cash flows from financing
activities:
Borrowings on Revolving Credit
Facilities
84.5
212.5
Borrowings on Equipment Financing
Arrangements
29.0
30.0
Repayments on Revolving Credit
Facilities
(118.0
)
(238.5
)
Repayments on Equipment Financing
Arrangements
(3.0
)
(2.2
)
Debt issuance costs
(1.4
)
(0.6
)
Common units surrendered for taxes
(0.1
)
(0.2
)
Distributions to common unitholders
(6.7
)
(13.4
)
Distributions to general partner
(0.1
)
(0.3
)
Distributions to non-controlling
interest
(11.3
)
(14.2
)
Net cash used in financing activities
(27.1
)
(26.9
)
Net increase/(decrease) in cash and cash
equivalents
2.2
(14.4
)
Cash and cash equivalents at beginning of
period
0.5
14.9
Cash and cash equivalents at end of
period
$
2.7
$
0.5
Supplemental disclosure of cash flow
information:
Interest paid during the period
$
4.6
$
5.1
Supplemental disclosure of non-cash
investing activities:
Accrued capital expenditures
$
4.1
$
2.0
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,
equity-based compensation expense 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 Sisecam
Resources LP. The Partnership may fund expansion-related capital
expenditures with borrowings under existing credit facilities such
that expansion-related capital expenditures will have no impact on
cash on hand or the calculation of cash available for distribution.
In certain instances, the timing of the Partnership’s borrowings
and/or its cash management practices will result in a mismatch
between the period of the borrowing and the period of the capital
expenditure. In those instances, the Partnership adjusts designated
reserves (as provided in the partnership agreement) to take account
of the timing difference. Accordingly, expansion-related capital
expenditures have been excluded from the presentation of cash
available for distribution. 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 is a non-GAAP supplemental financial measure
that management and external users of our consolidated financial
statements, such as industry analysts, investors, lenders and
rating agencies, may use to assess the Partnership’s operating
performance and liquidity. Adjusted EBITDA may provide an operating
performance comparison to other publicly traded partnerships in our
industry, without regard to historical cost basis or financing
methods. Adjusted EBITDA may also be used to assess the
Partnership’s liquidity including such things as the ability of our
assets to generate sufficient cash flows to make distributions to
our unitholders and our ability to incur and service debt and fund
capital expenditures.
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 the Partnership’s liquidity, including:
- the ability of our assets to generate sufficient cash flow to
make distributions to our unitholders and
- our ability to incur and service debt and fund capital
expenditures.
We believe that the presentation of Adjusted EBITDA provides
useful information to our investors in assessing our financial
conditions, results of operations and liquidity. Distributable cash
flow and distribution coverage ratio provide useful information to
investors in assessing our liquidity. The GAAP measures most
directly comparable to Adjusted EBITDA is net income and net cash
provided by operating activities. The GAAP measure most directly
comparable to distributable cash flow and distribution coverage
ratio is 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:
Three Months Ended December
31,
Year Ended December
31,
(Dollars in
millions, except per unit data)
2021
2020
2021
2020
Reconciliation of Net income to
Adjusted EBITDA:
Net income
$
23.6
$
12.7
$
51.4
$
26.9
Add backs:
Depreciation, depletion and amortization
expense
7.8
8.0
31.6
28.8
Interest expense, net
0.9
1.3
5.0
5.2
Equity-based compensation expense, net of
forfeitures
0.1
(0.2
)
0.5
0.7
Adjusted EBITDA
$
32.4
$
21.8
$
88.5
$
61.6
Less: Adjusted EBITDA attributable to
non-controlling interest
16.2
11.2
44.6
31.5
Adjusted EBITDA attributable to Sisecam
Resources LP
$
16.2
$
10.6
$
43.9
$
30.1
Reconciliation of distributable cash
flow to Adjusted EBITDA attributable to Sisecam Resources
LP:
Adjusted EBITDA attributable to Sisecam
Resources LP
$
16.2
$
10.6
$
43.9
$
30.1
Less: Cash interest expense, net
attributable to Sisecam Resources LP
0.5
0.7
2.3
1.4
Less: Maintenance capital expenditures
attributable to Sisecam Resources LP
2.5
4.3
12.6
11.7
Distributable cash flow attributable to
Sisecam Resources LP
$
13.2
$
5.6
$
29.0
$
17.0
Cash distribution declared per unit
$
0.650
$
—
$
0.990
$
0.340
Total distributions to limited partner
unitholders and general partner
$
13.4
$
—
$
20.3
$
6.8
Distribution coverage ratio (a)
0.99
N/A
1.43
2.50
Reconciliation of Net cash from
operating activities to Adjusted EBITDA:
Net cash provided by operating
activities
$
25.9
$
2.3
$
54.2
$
54.7
Add/(less):
Amortization of long-term loan
financing
(0.2
)
(0.3
)
(0.6
)
(0.4
)
Net change in working capital
6.0
18.6
30.4
2.4
Interest expense, net
0.9
1.3
5.0
5.2
Other non-cash items
(0.2
)
(0.1
)
(0.5
)
(0.3
)
Adjusted EBITDA
$
32.4
$
21.8
$
88.5
$
61.6
Less: Adjusted EBITDA attributable to
non-controlling interest
16.2
11.2
44.6
31.5
Adjusted EBITDA attributable to Sisecam
Resources LP
$
16.2
$
10.6
$
43.9
$
30.1
Less: Cash interest expense, net
attributable to Sisecam Resources LP
0.5
0.7
2.3
1.4
Less: Maintenance capital expenditures
attributable to Sisecam Resources LP
2.5
4.3
12.6
11.7
Distributable cash flow attributable to
Sisecam Resources LP
$
13.2
$
5.6
$
29.0
$
17.0
(a)
Distribution coverage ratio is calculated as distributable
cash flow attributable to Sisecam Resources LP divided by total
distributions to limited partners unitholders and general partners.
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:
(Dollars in
millions, except per unit data)
Cumulative Four Quarters ended
Q4- 2021
Q4-2021
Q3-2021
Q2-2021
Q1-2021
Q4-2020
Reconciliation of Net income to
Adjusted EBITDA:
Net income
$
51.4
$
23.6
$
15.4
$
6.8
$
5.6
$
12.7
Add backs:
Depreciation, depletion and amortization
expense
31.6
7.8
7.4
7.7
8.7
8.0
Interest expense, net
5.0
0.9
1.3
1.5
1.3
1.3
Equity-based compensation (benefit)
expense, net of forfeitures
0.5
0.1
—
0.3
0.1
(0.2
)
Adjusted EBITDA
88.5
32.4
24.1
16.3
15.7
21.8
Less: Adjusted EBITDA attributable to
non-controlling interest
44.6
16.2
12.1
8.3
8.0
11.2
Adjusted EBITDA attributable to Sisecam
Resources LP
$
43.9
$
16.2
$
12.0
$
8.0
$
7.7
$
10.6
Adjusted EBITDA attributable to Sisecam
Resources LP
$
43.9
$
16.2
$
12.0
$
8.0
$
7.7
$
10.6
Less: Cash interest expense, net
attributable to Sisecam Resources LP
2.3
0.5
0.6
0.7
0.5
0.7
Less: Maintenance capital expenditures
attributable to Sisecam Resources LP
12.6
2.5
3.2
4.4
2.5
4.3
Distributable cash flow attributable to
Sisecam Resources LP
$
29.0
$
13.2
$
8.2
$
2.9
$
4.7
$
5.6
Cash distribution declared per unit
$
0.990
$
0.650
$
0.340
$
—
$
—
$
—
Total distributions to unitholders and
general partner
$
20.3
$
13.4
$
6.9
$
—
$
—
$
—
Distribution coverage ratio
1.43
0.99
1.19
N/A
N/A
N/A
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220313005055/en/
Investor Relations Ahmet Tohma Chief Financial Officer (770)
375-2321 atohma@ciner.us.com
Sisecam Resources (NYSE:SIRE)
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