Phosphate Holdings, Inc. (OTC: PHOS), today reported a fourth
quarter 2011 loss of $0.6 million, or $(0.07) per share of
common stock, compared to income of $0.9 million, or
$0.10 per share of common stock for the same period in 2010.
Net loss for the year ended December 31, 2011 was
$0.8 million, or $(0.10) per share of common stock, as
compared to income of $1.1 million, or $0.13 per share of
common stock for the same period last year.
Net sales for the fourth quarter of 2011 were $99.6 million, a
45 percent increase from net sales of $68.5 million for the
fourth quarter of 2010. The average sales price per short ton of
DAP during the fourth quarter of 2011 was $539, a 1 percent
increase from the prior-year period average sales price of $534.
During the fourth quarter, the Company sold 183,436 tons of DAP,
with 57,011 tons moving into domestic markets. The Company had
operating losses of $1.0 million for the fourth quarter of 2011,
compared to operating income of $1.3 million for the prior-year
period. Earnings before interest, taxes, depreciation, amortization
and accretion (EBITDA) for the fourth quarter of 2011 were
$3.5 million, compared to EBITDA of $5.2 million for the
fourth quarter of 2010.
Net sales for the year ended December 31, 2011 were $352.3
million, a 35 percent increase from net sales of
$261.1 million for the year ended December 31, 2010. The
Company had operating losses of $0.8 million for the year
ended December 31, 2011, compared to operating income of $2.3
million for the prior-year period. EBITDA for the year ended
December 31, 2011 was $15.9 million, compared to EBITDA of
$15.1 million for the same period in 2010.
Robert E. Jones, Chief Executive Officer, said, “Our fourth
quarter operating results were impacted by a planned maintenance
turnaround early in the quarter and by falling DAP prices late in
the quarter. DAP prices declined sharply late in the fourth
quarter. During December, posted DAP prices per short ton, FOB
NOLA, dropped from approximately $560 to approximately $450. With
sulfur prices fixed for the quarter and ammonia prices at elevated
levels, our margins contracted. This margin squeeze was partially
offset by very encouraging results from our October/November
turnaround. In December 2011, we had the highest DAP and sulfuric
acid production since mid-2008. We continue to experience
production improvements in 2012 as compared to recent historical
results.
“From a market perspective during the fourth quarter of 2011,
the average posted DAP price was $552 per short ton, NOLA, sulfur
prices were posted at $220 per long ton, CFR, Tampa, and ammonia
prices hit a peak of $705 per metric ton before closing at $555 per
metric ton, CFR, Tampa.”
In addressing the industry outlook, Jones added, “Agricultural
fundamentals for the U.S. farmer remain very attractive. The USDA
estimates 95.9 million acres of corn will be planted in the U.S.
this spring. This represents the largest planted corn acreage since
1937. Nonetheless, distributors and retailers were very reluctant
to stock inventories in advance of the planting season. This
reluctance has led to further price deterioration with the average
first quarter 2012 posted DAP price of $444 per short ton, NOLA,
and $516 per metric ton, U.S. Gulf. These depressed DAP prices will
negatively impact our first quarter results. However, in the first
two weeks of April, product movement has been brisk and DAP prices
are improving.”
As of December 31, 2011, the Company had a cash balance of
approximately $3.0 million and $15.0 million in borrowings
under its revolving credit agreement. Approximately $3.2 million
was spent on capital expenditures in the fourth quarter of 2011,
and $12.5 million for the year ended December 31, 2011.
Based on current phosphate market conditions, DAP production rates
and available credit facilities, the Company believes that it has
adequate liquidity to meet its operating and other cash flow needs
throughout 2012.
In late 2010, our Board of Directors appointed a special
committee of independent directors to initiate a comprehensive
review of strategic options. While this review is ongoing, we
will not hold an earnings call to discuss our fourth quarter and
year end 2011 financial results and will not otherwise discuss this
strategic process. When the strategic process is completed, we
intend to resume regular quarterly earnings calls.
The Company is a Delaware corporation and the sole stockholder
of Mississippi Phosphates Corporation. Mississippi Phosphates
Corporation is a Delaware corporation with its executive
headquarters in Madison, Miss. Mississippi Phosphates Corporation
owns and operates manufacturing facilities in Pascagoula, Miss.,
which produce diammonium phosphate, the most common form of
phosphate fertilizer used as a source of phosphate on all major row
crops.
Forward-looking Statements
This release contains “forward-looking statements” within the
meaning of the federal securities law, which are intended to
qualify for the safe harbor from liability provided thereunder. All
statements which are not historical statements of fact are
“forward-looking statements” for purposes of these provisions and
are subject to numerous risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
in the forward-looking statements. Future events, risks and
uncertainties that could cause a material difference in such
results include, but are not limited to, (i) changes in
matters which affect the global supply and demand of phosphate
fertilizer products, phosphate rock, ammonia, sulfur and sulfuric
acid, (ii) a variety of conditions in the agricultural
industry such as grain prices, planted acreage, projected grain
stocks, U.S. government policies, weather, and changes in
agricultural production methods, (iii) changes in the availability
and cost of phosphate rock and our other primary raw materials,
(iv) changes in capital markets, (v) possible unscheduled
plant outages and other operating difficulties, (vi) price
competition and capacity expansions and reductions from both
domestic and international competitors, (vii) the concentration of
our sales with one large customer, (viii) foreign government
agricultural policies (in particular, the policies of the
governments of India and China), (ix) the relative
unpredictability of international and local economic conditions,
(x) international trade risks, (xi) political unrest in Northern
Africa and possible implications on phosphate rock availability
(xii) the relative value of the U.S. dollar,
(xiii) regulations regarding the environment and the sale and
transportation of fertilizer products, (xiv) our potential
inability to obtain or maintain required permits and governmental
approvals or to meet financial assurance requirements, (xv) loss of
key members of management, and (xvi) impact of future storms.
The Company undertakes no obligation to update any forward-looking
statement, whether as a result of new information, future events or
otherwise.
(TABLES FOLLOW)
PHOSPHATE HOLDINGS, INC. AND
SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
December 31, Assets 2011
2010 Current assets: Cash and cash equivalents
$ 3,024 2,261 Trade accounts receivable 14,871 11,414 Other
receivables 57 11 Inventories 25,075 26,141 Prepaid expenses and
other 13,338 8,329 Deferred income taxes 841 336
Total current assets 57,206 48,492 Freight deposits
3,947 5,636 Restricted investments held in trust, at fair value
6,318 5,657 Property, plant and equipment, net 63,650 61,402 Other
477 553 Total assets $ 131,598 121,740
Liabilities and
Stockholders’ Equity Current liabilities: Accounts payable $
3,376 1,804 Accrued expenses 32,313 29,783 Short-term financing
obligations 2,965 3,492 Revolving credit agreement 15,000 9,000
Total current liabilities 53,654 44,079 Asset retirement
obligations 17,627 16,307 Deferred income taxes 1,607 1,836 Total
liabilities 72,888 62,222 Stockholders’ equity:
Common stock ($0.01 par; 30,000,000 shares
authorized; 8,411,308 shares issued and outstanding)
84 84 Additional paid-in capital 35,660 35,660 Retained earnings
22,966 23,774 Total stockholders’ equity 58,710 59,518 Total
liabilities and stockholders’ equity $ 131,598 121,740
PHOSPHATE HOLDINGS, INC. AND
SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three
months
ended
December 31,
Twelve months
ended
December 31,
2011 2010 2011 2010 Net
sales: DAP $ 98,941 67,553 348,283 257,233 Other 685 986
4,050 3,863 Total net sales 99,626 68,539
352,333 261,096 Cost of sales 98,751 66,063 345,299
249,931 Gross profit 875 2,476 7,034 11,165 Selling,
general and administrative expenses 1,866 2,204 7,722 6,858
Environmental remediation — 297 159 4,028 Litigation recoveries,
net — (1,303 ) — (2,053 ) Operating income (loss)
(991 ) 1,278 (847 ) 2,332 Other income (expense): Interest, net
(276 ) (257 ) (1,045 ) (1,107 ) Other, net 365 356
(82 ) 534 Total other income (expense) 89 99
(1,127 ) (573 ) Income (loss) before income taxes (902 ) 1,377
(1,974 ) 1,759 Income tax expense (benefit) (326 ) 524
(1,166 ) 695 Net income (loss) $ (576 ) 853 (808 )
1,064 Earnings (loss) per share – basic $ (0.07 ) 0.10 (0.10
) 0.13 Earnings (loss) per share – diluted $ (0.07 ) 0.10 (0.10 )
0.13 Weighted average common shares outstanding – basic 8,411 8,411
8,411 8,411 Weighted average common shares outstanding – diluted
8,411 8,411 8,411 8,411
PHOSPHATE HOLDINGS, INC. AND
SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Years Ended
December 31,
2011 2010 Cash flows from operating
activities: Net income (loss) $ (808 ) 1,064
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation of property, plant and equipment 10,656 7,571
Amortization of prepaid maintenance turnaround costs 5,265 3,967
Accretion of asset retirement obligation 906 659 Deferred loan cost
amortization 74 229 Unrealized restricted investment (gain) loss
139 (507 ) Share-based compensation 12 697 Deferred income taxes
(734 ) 670 Other 2 8 Changes in operating assets and liabilities:
Trade and other accounts receivable (3,503 ) (8,361 ) Income taxes
receivable — 574 Inventories 1,066 (8,554 ) Prepaid expenses and
other (10,274 ) (7,442 ) Freight deposits 1,689 (5,636 ) Accounts
payable and accrued expenses 4,090 18,276 Net cash
provided by operating activities 8,580 3,215 Cash
flows from investing activities: Purchases of restricted
investments held in trust (800 ) (800 ) Purchases of property,
plant and equipment (12,490 ) (9,702 ) Net cash used in investing
activities (13,290 ) (10,502 ) Cash flows from financing
activities: Net borrowings (payments) on revolving credit agreement
6,000 9,000 Proceeds from financing obligations 2,965 4,836
Payments on financing obligations (3,492 ) (3,333 ) Payment of
deferred loan costs — (622 ) Payments on term loan — (2,400
) Net cash provided by financing activities 5,473 7,481
Net increase in cash and cash equivalents 763 194 Cash and
cash equivalents at beginning of year 2,261 2,067
Cash and cash equivalents at end of year $ 3,024 2,261
PHOSPHATE HOLDINGS, INC. AND
SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months
ended
December 31,
2011 2010 Cash flows from operating
activities: Net income (loss) $ (576 ) 853
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation of property, plant and equipment 2,487 2,063
Amortization of prepaid maintenance turnaround costs 1,374 1,185
Accretion of asset retirement obligation 244 282 Deferred loan cost
amortization 14 27 Unrealized restricted investment gain (365 )
(357 ) Share-based compensation (272 ) 304 Deferred income taxes
(326 ) 524 Changes in operating assets and liabilities: Trade and
other accounts receivable (5,989 ) (2,103 ) Inventories 3,006 1,057
Prepaid expenses and other (8,368 ) (3,851 ) Freight deposits 1,358
(1,054 ) Long-term prepaid insurance — 607 Accounts payable and
accrued expenses (242 ) 3,131 Net cash provided by (used in)
operating activities (7,655 ) 2,668 Cash flows from
investing activities: Purchases of restricted investments held in
trust (200 ) (200 ) Purchases of property, plant and equipment
(3,222 ) (3,764 ) Net cash used in investing activities (3,422 )
(3,964 ) Cash flows from financing activities: Net borrowings
(payments) on revolving credit agreement 7,500 (295 ) Proceeds from
financing obligations 2,965 1,052 Payments on financing obligations
(642 ) (839 ) Net cash provided by (used in) financing activities
9,823 (82 ) Net decrease in cash and cash equivalents (1,254
) (1,378 ) Cash and cash equivalents at beginning of year 4,278
3,639 Cash and cash equivalents at end of year $
3,024 2,261
PHOSPHATE HOLDINGS, INC. AND
SUBSIDIARIESReconciliation of Net Income (Loss) to EBITDA(In
thousands)(Unaudited)
We define EBITDA as net income (loss) before interest; income
taxes; depreciation, amortization and accretion. EBITDA is used as
a supplemental financial measure by our management and by external
users of our financial statements to assess:
- the financial performance of our assets
without regard to financing methods, capital structure or
historical cost basis;
- our operating performance and return on
capital as compared to other companies in the fertilizer business,
without regard to financing or capital structure; and
- the viability of acquisitions and
capital expenditure projects and the overall rates of return on
alternative investment opportunities.
We use EBITDA as a primary operating performance measure and an
important indicator of our ability to provide cash flows to meet
future debt service, if any, capital expenditures and working
capital requirements and to fund future growth.
The U.S. Generally Accepted Accounting Principles, or GAAP,
measure most directly comparable to EBITDA is net income (loss).
Our non-GAAP financial measure of EBITDA should not be considered
as an alternative to GAAP net income (loss). You should not
consider EBITDA in isolation or as a substitute for analysis of our
results as reported under GAAP. Because EBITDA excludes some, but
not all, items that affect income from continuing operations and is
defined differently by different companies in our industry, our
definition of EBITDA may not be comparable to similarly titled
measures of other companies.
We compensate for the limitations of EBITDA as an analytical
tool by reviewing the comparable GAAP measures, understanding the
differences between the measures and incorporating this information
into our decision-making processes.
The following table shows the reconciliation of net income
(loss) to EBITDA for the periods indicated:
Three Months
ended
December 31,
Twelve Months
ended
December 31,
2011 2010 2011 2010 Net
income (loss) $ (576 ) 853 (808 ) 1,064 Interest, net 276 257 1,045
1,107 Income tax expense (benefit) (326 ) 524 (1,166 ) 695
Depreciation, amortization and accretion 4,105 3,530 16,827
12,197 EBITDA
$
3,479 5,164
15,898
15,063
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