SIOUX CITY, Iowa, April 29 /PRNewswire-FirstCall/ -- Terra Industries Inc.
(NYSE: TRA) announced today net income for the first quarter ended March 31,
2004, of $18.2 million, or $.23 a share, on revenues of $361 million. This
compares with the 2003 first quarter net loss of $14.3 million, or $.19 per
share, on revenues of $280 million. The 2004 net income includes
$10.4 million, or $.13 per share, for $15.5 million recovery of product claim
costs related to carbon dioxide produced in 1998 by Terra's Severnside,
England facility. The balance of the improvement was due to higher nitrogen
products selling prices and sales volumes, partially offset by higher natural
gas costs.
The Nitrogen Products business segment recorded revenues of $317.6 million
and an operating income, without recovery of product claim costs, of
$33.9 million, compared with revenues of $228.5 million and an operating loss
of $13.6 million for the 2003 first quarter. The $47.5 million earnings
increase is due to higher selling prices and sales volumes, partially offset
by higher natural gas costs. Ammonia, nitrogen solutions, ammonium nitrate
and urea selling prices for the 2004 first quarter were 29, 31, 49 and 20
percent higher, respectively, than 2003 first quarter prices. The 2004 sales
volume increase reflects lower first quarter 2003 North American ammonia
production in response to a sharp natural gas price spike in February 2003.
First quarter 2004 natural gas unit costs, net of $3.5 million of cost
reductions realized from forward purchase contracts, were 7 percent higher
than in the 2003 first quarter.
The Methanol business segment reported revenues of $42.9 million and an
operating loss of $2.0 million compared with revenues of $51.1 million and
operating income of $1.6 million in the 2003 first quarter. The profit
decrease was due to lower selling prices and sales volumes, partially offset
by lower natural gas costs. Average methanol selling prices decreased 14
percent, and natural gas unit costs, net of $0.7 million of cost reductions
realized on forward purchase contracts, decreased 3 percent.
Terra's forward purchase contracts at March 31, 2004, fixed prices for 21
percent of its next 12 months' natural gas needs at about $3.8 million below
the published forward market prices at that date.
Michael L. Bennett, Terra's President and CEO, said, "We are pleased with
our first quarter results. Demand in our nitrogen markets remained strong and
our plants ran fairly well. Our total merchant nitrogen production exceeded
last year's first quarter production by about 12 percent, about the same
increase as we realized in sales volumes.
"Nitrogen demand thus far in the second quarter has also been good,
bolstered by strong grain prices," Bennett continued. "However, continuing
high natural gas costs make it difficult to predict Terra's 2004 second half
results."
Terra management will conduct a conference call to discuss these first
quarter results on April 29, 2004, beginning at 3:00 ET. A live webcast of
the conference call will be available from Terra's web site at
http://www.terraindustries.com , and will be archived for playback through July 31,
2004.
Terra Industries Inc., with 2003 revenues of $1.4 billion, is a leading
international producer of nitrogen products.
Information contained in this release, other than historical information,
may be considered forward-looking. Forward-looking information reflects
management's current views of future events and financial performance that
involve a number of risks and uncertainties. The factors that could cause
actual results to differ materially include, but are not limited to, the
following: changes in financial markets, general economic conditions within
the agricultural industry, competitive factors and price changes (principally
nitrogen fertilizer selling prices and natural gas costs), changes in product
mix, changes in the seasonality of demand patterns, changes in weather
conditions, changes in governmental regulations and other risks described in
the "Factors That Affect Operating Performance" section of Terra's current
annual report.
Note: Terra Industries' news announcements are also available on its web
site, http://www.terraindustries.com .
Terra Industries Inc.
Summarized Results of Operations
(unaudited)
Three Months Ended
March 31,
(in thousands except per-unit amounts) 2004 2003
Revenues
Nitrogen products $317,557 $228,541
Methanol 42,904 51,114
Other, net of intercompany eliminations 568 488
$361,029 $280,143
Operating income (loss)
Nitrogen products $33,904 $(13,558)
Methanol (2,046) 1,633
Recovery of product claim costs 15,514 -
Other expense - net (1,785) (1,333)
Income (loss) from operations 45,587 (13,258)
Interest income 377 189
Interest expense (13,501) (12,552)
Minority interest (2,933) 1,718
Income tax (provision) benefit (11,300) 9,561
Net income (loss) $18,230 $(14,342)
Diluted income (loss) per share $0.23 $(0.19)
Basic and diluted weighted average shares
outstanding
Basic 75,814 75,624
Diluted 77,776 75,624
Because of the seasonal nature and effects of weather-related conditions
in several of Terra's marketing areas, results of operations for any
single reporting period should not be considered indicative of results for
a full year.
Terra Industries Inc.
Summarized Financial Position
(in thousands)
(unaudited)
March 31,
2004 2003
Assets
Cash and short-term investments $160,092 $14,958
Accounts receivable 106,088 102,176
Inventories 113,986 128,963
Other current assets 36,656 40,977
Total current assets 416,822 287,074
Property, plant and equipment, net 697,741 778,161
Deferred plant turnaround costs 22,425 23,919
Other assets 32,596 32,774
Total assets $1,169,584 $1,121,928
Liabilities and Stockholders' Equity
Debt due within one year $154 $147
Customer prepayments 80,780 40,252
Accrued and other liabilities 162,238 188,070
Total current liabilities 243,172 228,469
Long-term debt 402,164 400,319
Deferred income taxes 28,736 54,348
Other liabilities 113,897 108,922
Minority interest 90,842 95,961
Total liabilities and minority interest 878,811 888,019
Stockholders' Equity 290,773 233,909
Total liabilities and stockholders' equity $1,169,584 $1,121,928
Terra Industries Inc.
Summarized Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
2004 2003
Income (loss) from operations $18,230 $(14,342)
Non-cash charges and credits:
Depreciation and amortization 25,578 27,617
Deferred income taxes 11,323 (11,843)
Minority interest in earnings (loss) 2,933 (1,718)
Recovery of product claim costs (12,874) -
Change in current assets and liabilities 30,618 (26,115)
Net cash flows from operating activities 75,808 (26,401)
Purchase of property, plant and equipment (1,075) (3,578)
Plant turnaround costs (150) (12,318)
Distributions to minority interests (1,153) (1,153)
Other (672) (71)
Increase (decrease) in cash and short-term
investments 72,758 (43,521)
Cash and short-term investments at beginning of
period 87,334 58,479
Cash and short-term investments at end of
period $160,092 $14,958
Terra Industries Inc.
Summarized Information
(in thousands)
Three Months Ended
March 31,
2004 2003
Other Financial Data
Cost of sales
(includes
depreciation and
amortization) $323,647 $284,074
Selling, general &
administrative
expense
(includes
depreciation and
amortization) 7,309 9,327
Volumes and prices
Three months ended March 31,
2004 2003
Sales Average Sales Average
Volumes Unit Price(1) Volumes Unit Price(1)
Ammonia (tons) 310 $270 277 $210
Nitrogen solutions (tons) 877 113 756 86
Urea (tons) 157 188 152 157
Ammonium nitrate (tons) 247 188 248 126
Methanol (gallons) 63,906 0.65 67,505 0.76
Natural gas costs(2)
North America $5.37 $5.36
United Kingdom $4.74 $3.47
(1) After deducting outbound freight costs
(2) Per MMBtu. Includes all transportation and other logistical costs and
any gains or losses on financial derivatives related to natural gas
purchases.
Because of the seasonal nature and effects of weather-related conditions
in several of its marketing areas, results of operations for any single
reporting period should not be considered indicative of results for a full
year.
SOURCE Terra Industries Inc.
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