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Terra Nitrogen Company L.P. Depositary R Reports Operating Results (10-K)

February 27, 2012 | About:
10qk

10qk

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Terra Nitrogen Company L.P. Depositary R (TNH) filed Annual Report for the period ended 2011-12-31.

Terra Nitrogen has a market cap of $4.07 billion; its shares were traded at around $222.68 with a P/E ratio of 13.8 and P/S ratio of 5.1. The dividend yield of Terra Nitrogen stocks is 8.2%. Terra Nitrogen had an annual average earning growth of 67.9% over the past 10 years.

Highlight of Business Operations:

Our net sales for 2011 were $798.9 million, an increase of $234.3 million, or 41%, from net sales of $564.6 million in 2010. The increase was due to both higher average selling prices and higher sales volumes. Selling prices for ammonia and UAN increased 28% and 55%, respectively, in 2011 as compared to 2010. Selling prices for ammonia increased from an average of $369 per ton in 2010 to $473 per ton in 2011, and selling prices for UAN increased from an average of $193 per ton in 2010 to $299 per ton in 2011. Selling prices increased primarily due to higher domestic demand for fertilizer as a result of higher planted acres in the spring season due to strong demand for corn and other grains which supported favorable farm economics, global fertilizer supply constraints which created upward

Cost of sales averaged approximately $113 per ton in 2011 compared to $151 per ton in the same period of 2010. The 25% decline in cost of sales per ton was primarily due to lower natural gas costs and the absence of outbound freight costs and transportation lease expense (since we now sell all of our fertilizer products on an F.O.B. plant basis) partially offset by higher depreciation and employee related costs at the Verdigris facility. Natural gas unit costs in 2011, net of derivatives gains and losses, decreased 7% to $4.31 per MMBtu in 2011 from $4.63 per MMBtu in 2010. There were no outbound freight costs incurred in 2011 compared to $61.4 million in 2010.

Our net sales for 2010 were $564.6 million, an increase of $56.9 million or 11%, from net sales of $507.7 million in 2009. The increase was primarily due to increases in UAN and ammonia sales volume of 11% and 9%, respectively. Sales volumes increased in 2010 due to a strong fertilizer application season primarily as a result of favorable U.S. weather conditions in the spring and fall application seasons and restocking effort by customer inventory levels in the fourth quarter due to expectations for a strong spring 2011 application season. Unit volume for ammonia increased from 307,000 tons in 2009 to 335,000 tons in 2010, while unit volume for UAN increased from 1,761,000 tons in 2009 to 1,958,000 in 2010.

Cost of sales averaged approximately $151 per ton in 2010 compared to $168 per ton in 2009. The 10% decrease in production costs was primarily due to lower natural gas costs, partially offset by natural gas hedging costs, higher depreciation and an increase in employee related costs at the Verdigris facility. Natural gas unit costs in 2010, net of derivatives gains and losses, decreased 4% to $4.63 per MMBtu in 2010 from $4.83 per MMBtu in 2009. Outbound freight costs totaled $61.4 million in 2010 compared to $54.8 million in 2009.

Net cash provided by operating activities was $513.0 million in 2011 compared to $259.1 million in 2010. The $253.9 million increase in cash provided by operating activities in 2011 was primarily due to a $306.4 million increase in net earnings, partially offset by a decrease in customer advances in 2011. On January 1, 2011, we began to sell all of our output to an affiliate of the General Partner and no longer receive customer advances. The $90.4 million increase in cash provided by operating activities in 2010 compared to 2009 was primarily due to a $57.3 million increase in net earnings and a $44.8 million increase in customer advances. Net earnings included noncash depreciation and amortization expense of $19.8 million, $17.1 million and $16.4 million in 2011, 2010 and 2009, respectively, and noncash loss (gain) on derivatives of $11.9 million, $(0.3) million and $0.4 million in 2011, 2010 and 2009, respectively.

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