Rentech Nitrogen Partners, L.P. (NYSE: RFN) engages in the production of natural gas-based nitrogen fertilizer and industrial products for agricultural uses. The company primarily offers ammonia, urea ammonium nitrate, urea granule and urea solution, nitric acid, and liquid carbon dioxide. Rentech went public as a master limited partnership (MLP) on November 4, 2011 at $20.00 per share.
Rentech Nitrogen Partners recently reported second quarter earnings of $1.08 per share, which was $0.01 off the market consensus estimate of $1.09 per share. Reported revenues fell 5.1% year-over-year to $70.6 million versus the $75.99 million consensus expectation. Due to weather conditions this year, many farmers used fertilizer products in the 1st quarter that usually occur in the 2nd quarter.
Rentech also noted that the financial impact of weather conditions was largely offset by higher product prices, with ammonia and UAN prices higher by 9% and 21% respectively, compared to the second quarter of 2011.
Guidance for the twelve months ending December 31st was increased by the Company, stating that it expects cash available for distribution to be in excess of $126 million, or $3.30per unit, and EBITDA to be in excess of $130 million. Those figures compare to previous guidance of EBITDA in the range of $120 million and cash available for distribution in the range of $109 million, or $2.86 per unit.
With cash distributions at $3.30 per share, Rentech will have a dividend yield of 10%. Rentech paid a dividend on August 8, 2012 of $1.17 and a dividend of $1.06 on May 15, 2012. Rentech is an MLP so the majority of cash available will be paid to shareholders.
With regard to its 2013 Outlook, the Company expects 2013 to benefit from market dynamics similar to those of 2012, with the impact of the drought on ending corn stocks will likely result in continued high prices and significant acres planted next year. Low corn inventories should drive corn pricing throughout the year and support strong fertilizer demand, the company noted.
Currently, Rentech has started to sell ammonia for spring 2013 delivery at a price that exceeds the average price of $730 per ton that was achieved during the spring of this year.
Rentech is trading at $33.01 with a 12-month price target of $40. Rentech will benefit from high fertilizer prices and greater demand from its core market area of the Mid Corn Belt in the coming planting season.
On August 19, 2012 Ativo Research upgraded RENTECH NITROGEN PARTNERS LP from NEUTRAL to MOST FAVORABLE.
On August 15, 2012 Zacks Investment Research, Inc. upgraded RENTECH NITROGEN PARTNERS LP from HOLD to BUY.