SIOUX CITY, Iowa, Oct. 24 /PRNewswire/ --
Terra Industries Inc. (NYSE: TRA) announced today a net loss of
$24.1 million for the third quarter ended September 30, 2001, or $.32 per
share, on revenues of $238 million. This compares to net income of
$6.2 million, or $.08 per share, on revenues of $265 million for the 2000
third quarter. The profit deterioration was due mainly to lower selling
prices and higher unit cost of sales. EBITDA (earnings before interest
expense, taxes, depreciation and amortization) was $3.0 million compared to
$55.3 million in the 2000 third quarter.
The net loss for the nine months ended September 30, 2001, was
$51.0 million, or $.68 per share, on revenues of $803 million compared to a
net loss of $14.3 million, or $.19 per share, on revenues of $791 million in
the comparable 2000 period. The increased loss was due largely to higher
natural gas costs and lower production and sales volumes, partially offset by
higher selling prices. Year-to-date 2001 EBITDA was $47.1 million compared to
$104.9 million in the same 2000 period.
The Nitrogen Products business segment recorded revenues of $209 million
and an operating loss of $21.3 million for the quarter compared with revenues
of $220 million and operating income of $17.5 million in the 2000 third
quarter. For 2001 year to date, Nitrogen Products posted revenues of
$661 million and an operating loss of $21.2 million compared with revenues of
$688 million and operating income of $19.3 million in 2000.
The Nitrogen Products third quarter profit deterioration was due to lower
selling prices and higher unit cost of sales. High import volumes and reduced
nitrogen fertilizer consumption in both North America and the United Kingdom
during the 2001 first half caused excess industry-wide inventories and reduced
selling prices. Terra's average selling prices for ammonia, nitrogen
solutions, urea and ammonium nitrate were 12, 8, 14 and 3 percent lower,
respectively, than selling prices realized in the 2000 third quarter. High
beginning inventory unit costs and reduced production volumes caused the
increase in the unit cost of sales. Terra's forward pricing contracts
increased third quarter natural gas costs by approximately $5.2 million.
Nitrogen Products' results for the nine months ended September 30, 2001,
as compared to the 2000 period were adversely affected by higher natural gas
costs and lower sales and production volumes, though these were partially
offset by higher selling prices. Natural gas costs for the 2001 period were
59 percent higher than in the 2000 period. Terra's forward pricing contracts
reduced natural gas costs for the first nine months of 2001 by approximately
$8.3 million. Sales and production volumes were lower because of reduced
nitrogen fertilizer consumption and North American production curtailments
driven by unprecedented natural gas costs. Terra's average selling prices for
ammonia, nitrogen solutions, urea and ammonium nitrate were 33, 44, 20 and 12
percent higher, respectively, than selling prices realized in the 2000 period.
The Methanol business reported 2001 third quarter revenues of $28 million
and an operating loss of $5.1 million compared with revenues of $43 million
and operating income of $10 million in the 2000 third quarter. The
$15.1 million decrease in operating profit was due primarily to the 31 percent
decline in Terra's average realized methanol selling prices. Terra's forward
pricing contracts increased third quarter natural gas costs by approximately
$3.1 million. Methanol's results for the nine months ended September 30,
2001, were revenues of $141 million and an operating loss of $6.1 million
compared to revenues of $97 million and operating income of $9.6 million in
the same 2000 period. The $15.7 million decrease in operating income was due
primarily to a 51 percent increase in natural gas costs, which was partially
offset by a 33 percent increase in selling prices. Terra's forward pricing
contracts increased natural gas costs for the first nine months of 2001 by
approximately $2.8 million.
Michael L. Bennett, Terra's President and CEO, said, "Like other nitrogen
producers' results, our third quarter results reflect the remnants of the
unprecedented high North American natural gas costs and large import volumes
experienced during the 12 months ended June 30, 2001. We are pleased that
North American natural gas costs have since moderated, making Terra's products
more competitive against imports. This competitiveness, coupled with
stabilized nitrogen products selling prices, allowed us to resume production
on October 1 at our Blytheville, Ark., facility that had been idle for the
entire third quarter. Our North American natural gas fixed priced forward
contracts at September 30, 2001, cover only 12 percent of expected
requirements for the next 12 months. Terra's total September 30, 2001,
natural gas forward pricing position represents 16 percent of our next 12
months' requirements at amounts that approximate the published forward prices
at that date.
"Our record third quarter nitrogen solutions sales volumes, which exceeded
2000 third quarter sales volumes by more than 11 percent, marked an
outstanding start for the fertilizer year. Our major goal at the beginning of
the quarter was to regain North American nitrogen solutions' market share over
the next 12 months."
Terra Industries Inc., with 2000 revenues of $1 billion, is a leading
international producer of nitrogen products and methanol.
Information contained in this news 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
selling prices of nitrogen and methanol products 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 Results" section of Terra's
current annual report.
Note: Terra Industries' news announcements are also available on its web
site, http://www.terraindustries.com , and by fax at no charge by calling
800-758-5804, code 437906.
TERRA INDUSTRIES INC.
Summarized Results of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except
per share amounts)
2001 2000 2001 2000
Revenues
Nitrogen products $209,224 $220,465 $661,065 $688,174
Methanol 28,000 42,710 141,011 96,995
Other, net of
intercompany
eliminations 481 1,934 1,001 5,960
$237,705 $265,109 $803,077 $791,129
Operating income
(loss)
Nitrogen products $(21,328) $17,506 $(21,153) $19,318
Methanol (5,109) 9,974 (6,082) 9,561
Product claim costs -- -- (14,023) --
Other expense - net 229 (223) 994 790
(26,208) 27,257 (40,264) 29,669
Interest settlement
costs -- (879) -- (5,529)
Interest income 977 1,231 2,852 2,090
Interest expense (12,034) (12,981) (37,857) (38,684)
Minority interest 2,785 (985) 2,468 (5,360)
Income tax provision 10,344 (7,447) 21,840 3,563
Net Income (loss) $(24,136) $6,196 $(50,961) $(14,251)
Basic and diluted
earnings (loss)
per share: $(0.32) $0.08 $(0.68) $(0.19)
Weighted average
shares outstanding
Basic 75,175 74,704 75,033 74,761
Diluted 75,175 75,995 75,033 74,761
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.
TERRA INDUSTRIES INC.
Summarized Financial Position
(in thousands)
(unaudited)
September 30,
Assets 2001 2000
Cash and short-term investments $44,132 $101,916
Accounts receivable, net 97,947 119,184
Inventories 123,627 92,865
Other current assets 32,414 21,633
Total current assets 298,120 335,598
Property, plant and equipment, net 849,188 919,258
Excess of cost over net assets of
acquired businesses 211,098 235,924
Other assets 39,959 56,836
Total assets $1,398,365 $1,547,616
Liabilities and Stockholders' Equity
Debt due within one year $5,108 $5,968
Other current liabilities 127,177 144,558
Total current liabilities 132,285 150,526
Long-term debt 453,921 469,101
Deferred income taxes 121,537 163,323
Other liabilities 50,115 50,197
Minority interest 98,947 108,629
Total liabilities 856,805 941,776
Stockholders' equity 541,560 605,840
Total liabilities and stockholders'
equity $1,398,365 $1,547,616
TERRA INDUSTRIES INC.
Summarized Information
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Other Financial Data
(in thousands)
Cost of sales
(includes
depreciation &
amortization) $255,783 $228,690 $803,611 $727,685
Selling, general
and administrative
expense (includes
depreciation &
amortization) 8,394 9,410 26,254 34,323
Depreciation and
amortization 26,433 29,923 84,870 86,147
Capital expenditures 2,772 4,967 11,136 11,019
Volumes, Prices
and Costs Three Months Ended September 30,
2001 2000
(quantities in
thousands) Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
Ammonia (tons) 315 $154 311 $175
Nitrogen solutions (tons) 989 80 887 87
Urea (tons) 65 128 69 149
Ammonium nitrate (tons) 257 124 283 128
Methanol (gallons) 64,982 0.43 68,551 0.62
Natural gas costs: (a)
North America $3.43 $3.56
United Kingdom $2.03 $1.82
Nine Months Ended September 30,
2001 2000
(quantities in
thousands)
Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
Ammonia (tons) 854 $204 1,130 $153
Nitrogen solutions
(tons)
2,324 108 3,066 75
Urea (tons) 294 157 353 131
Ammonium nitrate (tons) 490 129 819 114
Methanol (gallons) 220,978 0.64 200,017 0.48
Natural gas costs: (a)
North America $4.90 $2.97
United Kingdom $2.35 $1.95
(a) Per MMBtu. Includes all transportation and other logistical costs and
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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