TNH ==> The Houston Winner!

[mrmarket]

It hasn't seen 148 since I called the bottom!

[billyjoe]

TNH 3 month chart. Look at the higher lows. http://bigcharts.marketwatch.com/qui...ow=True&time=6

---------------billy

[tiedyed1]

It hasn't seen 148 since I called the bottom!

I know. You nailed the TNH Mr. Market bottom!

I bought a small amount originally at 216, then bought heavy at 155, then today my final installment at 165 as it is on the rise now...
weighted averaging I am almost break even while getting the dividends (so really ahead)

TNH is like a Galapagos Turtle moving its way up the hill and you are not worried it will eventually make it...

[mrmarket]

You have to love the 8.6% dividend!

Summary

• High dividend value at current pricing.
• Price decline due to dividend payout not threat to business.
• Currently at our buy target.

Terra Nitrogen (TNH) recently declared a Q1 dividend of $3.01 and posted $3.26 GAAP EPS. Although this is less than quarters past it marks an improvement over Q#3 2013 which signaled the bottom for share pricing and dividend payouts. The question following Q4 earnings, and another three months until the next dividend payment, centers on timing.
Our stance strategically on Terra Nitrogen has not changed. There have been headwinds of late, and we expect continued pressure due to both lower sales pricing, and higher input costs, but maintain that our thesis over the longer time frame is maintained. A previous article (here) outlines our thesis. Terra Nitrogen, historically a high dividend payer, has suffered mightily of late with a cascading share price. Currently trading down $3.00 to $140.32. $140 has been a buy signal target for us as we have watched share-pricing swing up from its previous lows only to revisit them today. Currently TNH pays $3.01 calculating to a yield of 7.78%.
Since we still support our ownership thesis, and THN is now at our buy target, we will add shares on this share price decline. We believe that today's drop is due to the Q#1 dividend payout and does not signal further threats to the business. Earnings as represented in the chart below reflect earnings at a high value to share pricing.
(click to enlarge)
When investing for dividends it's important to maintain a relative pricing perspective to the company, peers, the market and portfolio holdings. Taken by itself TNH looks to be a reasonable investment with high yield and a return to healthier earnings. The chart below reflects the relative stance of pricing compared to dividends.
(click to enlarge)
The press release outlining earnings and forward-looking statements is here. We expect to see further pricing pressure as the market digests Q#1 news. Calculating pricing probability out to November of 2014 shows a reasonable level of price risk. TNH pricing is influenced by many factors, natural gas pricing, weather, competition, input costs and market price product pressure to name a few. Our model is designed by recognia to only look at past pricing and project pricing probability. We are buyers at $140 and willing to wait for share value to climb. Earning a 7.78% dividend makes patient investing more tolerable and we still believe in the business merits of both their key products. Food supplies will need to increase and nitrogen fertilizer will likely play an important role in feeding the world.
(click to enlarge)

[mrmarket]

Terra Nitrogen Company, L.P. Reports Second Quarter 2014 Results and Announces Cash Distribution

Terra Nitrogen Company, L.P.36 minutes ago













DEERFIELD, Ill.--(BUSINESS WIRE)--
Terra Nitrogen Company, L.P. (TNCLP) (TNH) today reported net earnings of $100.1 million on sales of $167.5 million for the quarter ended June 30, 2014. This compares to net earnings of $149.3 million on sales of $215.4 million for the 2013 second quarter. Net income allocable to Common Units was $58.4 million ($3.16 per Common Unit) and $84.0 million ($4.54 per Common Unit) for the 2014 and 2013 second quarters, respectively.
Results for the second quarter of 2014 included an unrealized net mark-to-market loss on natural gas derivatives of $4.9 million compared to a loss of $2.9 million in the second quarter of 2013.
For the first six months of 2014, TNCLP reported net earnings of $203.0 million on net sales of $345.2 million. This compares to net earnings of $316.1 million on net sales of $439.5 million for the first six months of 2013. Net earnings allocable to Common Units was $118.8 million ($6.42 per Common Unit) and $176.2 million ($9.52 per Common Unit) for the first six months of 2014 and 2013, respectively. Results for the first six months of 2014 included an $8.9 million unrealized net mark-to-market loss on natural gas derivatives compared to a gain of $0.8 million for the first six months of 2013.
Analysis of Results
Net sales for the 2014 second quarter totaled $167.5 million, compared to sales of $215.4 million for the 2013 second quarter. This decrease was due to lower average selling prices and sales volume. The decrease in overall prices was due to lower global nitrogen prices driven by increased international supply. Ammonia prices also were lower than in the prior year period due to high industry-wide North American ammonia inventory levels coming into 2014 while UAN prices also decreased due to customers’ reluctance to hold inventory. The decrease in ammonia sales volume was due to the company having lower available inventory to sell due to strong shipments in the first quarter of 2014. UAN sales volume declined due to farmers’ preference for ammonia over UAN.
Net earnings for the 2014 second quarter totaled $100.1 million, compared to net earnings of $149.3 million for the 2013 second quarter. This decrease was due to lower revenue and higher realized natural gas costs.
Comparing the 2014 to the 2013 second quarter, TNCLP’s:

• Ammonia and UAN average selling prices decreased by 23 and 14 percent, respectively;
• Ammonia and UAN sales volume decreased by 14 and 5 percent, respectively; and
• Realized natural gas costs per MMBtu increased by 3 percent.

Cash Distribution
TNCLP reported today the declaration of a cash distribution for the quarter ended June 30, 2014, of $3.11 per common limited partnership unit payable August 29, 2014, to holders of record as of August 18, 2014.
Cash distributions depend on TNCLP's earnings as well as cash requirements for working capital needs and capital expenditures. In 2014, TNCLP is expected to have capital expenditures in the range of $70 million to $90 million. A turnaround of approximately 50 percent of the complex is anticipated to occur in the first quarter of 2015 and is expected to have an impact on cash available to fund distributions.
Cash distributions are made 99.975% to common and Class B common unitholders and 0.025% to the General Partner except when cumulative distributions of available cash exceed specified target levels above the minimum quarterly distributions of $0.605 per unit. Under such circumstances, the General Partner is entitled to receive Incentive Distribution Rights. With this distribution, TNCLP cumulative distributions continue to exceed targeted levels.
This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About TNCLP
Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen fertilizer products.
TNCLP is the sole limited partner of Terra Nitrogen, Limited Partnership (TNLP), owner of the Verdigris, Oklahoma, manufacturing facility and related assets. Terra Nitrogen GP Inc., an indirect, wholly-owned subsidiary of CF Industries Holdings, Inc., is the General Partner of TNCLP and exercises full control over all of TNCLP’s business affairs.
Forward-Looking Statements
All statements in this communication, other than those relating to historical facts, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond TNCLP’s control, which could cause actual results to differ materially from such statements. Important factors that could cause actual results to differ materially from expectations include, among others:
• risks related to TNCLP’s reliance on one production facility;
• the cyclical nature of TNCLP’s business;
• the global commodity nature of TNCLP’s fertilizer products, the impact of global supply and demand on TNCLP’s selling prices, and the intense global competition from other fertilizer producers;
• conditions in the U.S. agricultural industry;
• the volatility of natural gas prices in North America;
• reliance on third party transportation providers;
• weather conditions;
• potential liabilities and expenditures related to environmental and health and safety laws and regulations;
• future regulatory restrictions and requirements related to greenhouse gas emissions;
• risks associated with cyber security;
• TNCLP’s inability to predict seasonal demand for its products accurately;
• risks involving derivatives and the effectiveness of TNCLP’s risk measurement and hedging activities;
• limited access to capital;
• acts of terrorism and regulations to combat terrorism;
• risks related to TNCLP’s dependence on and relationships with CF Industries;
• deterioration of global market and economic conditions;
• risks related to TNCLP’s partnership structure and control of TNCLP’s General Partner by CF Industries;
• the conflicts of interest that may be faced by the executive officers of TNCLP’s General Partner, who operate both TNCLP and CF Industries; and
• tax risks to TNCLP’s common unit holders and changes in TNCLP’s treatment as a partnership for U.S. or state income tax purposes.
More detailed information about factors that may affect TNCLP’s performance may be found in its filings with the Securities and Exchange Commission, including its most recent periodic reports filed on Form 10-K and Form 10-Q, which are available through CF Industries’ web site. Forward-looking statements are given only as of the date of this release and TNCLP disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Terra Nitrogen Company, L.P. news announcements are also available on CF Industries’ website, www.cfindustries.com.

TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED BALANCE SHEETS
				(unaudited)
				June 30,			December 31,
				2014			2013
				(in millions, except for units)
ASSETS
Current assets:
	Cash and cash equivalents			$	115.9		$	86.9
	Due from affiliates of the General Partner				28.0			29.0
	Accounts receivable				0.6			1.0
	Inventories, net				7.8			5.9
	Prepaid expenses and other current assets				0.7			7.8
		Total current assets			153.0			130.6
Property, plant and equipment, net					228.8			214.1
Other assets					6.0			5.1
		Total assets		$	387.8		$	349.8
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
	Accounts payable and accrued liabilities			$	25.5		$	27.9
	Due to affiliates of the General Partner				5.0			3.7
	Other current liabilities				0.5			8.0
		Total current liabilities			31.0			39.6
Noncurrent liabilities					0.9			1.2
Partners' capital:
	Limited partners' interests, 18,501,576 Common Units
		authorized, issued and outstanding			288.7			264.5
	Limited partners' interests, 184,072 Class B Common Units
		authorized, issued and outstanding			2.0			1.5
	General Partner's interest				65.2			43.0
		Total partners' capital			355.9			309.0
		Total liabilities and partners' capital		$	387.8		$	349.8

TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
				Three months ended June 30,						Six months ended June 30,
				2014			2013			2014			2013
				(in millions, except per unit amounts)
Net sales:
	Product sales to an Affiliate of the General Partner			$	167.2		$	215.0		$	344.5		$	438.7
	Other income from an Affiliate of the General Partner				0.2			0.2			0.3			0.3
	Other income				0.1			0.2			0.4			0.5
Total					167.5			215.4			345.2			439.5
Cost of goods sold:
	Materials, supplies and services				57.4			55.6			122.0			102.2
	Services provided by the affiliates of the General Partner				5.9			6.1			11.5			11.7
Gross margin					104.2			153.7			211.7			325.6
Selling, general and administrative services
	provided by the affiliates of the General Partner				3.8			3.7			7.7			7.5
Other general and administrative expenses					0.3			0.7			1.0			2.0
Earnings from operations					100.1			149.3			203.0			316.1
Net earnings				$	100.1		$	149.3		$	203.0		$	316.1
Allocation of net earnings:
General Partner				$	40.7		$	63.8		$	82.2		$	136.8
Class B Common Units					1.0			1.5			2.0			3.1
Common Units					58.4			84.0			118.8			176.2
Net earnings				$	100.1		$	149.3		$	203.0		$	316.1
Net earnings per Common Unit				$	3.16		$	4.54		$	6.42		$	9.52

	TERRA NITROGEN COMPANY, L.P.
	SUMMARIZED OPERATING INFORMATION
(Unaudited)
						Three months ended							Six months ended
						June 30,							June 30,
						2014			2013				2014			2013
	Sales volumes by product (tons in thousands)
			Ammonia				71			83				169			169
			UAN (1)				470			495				1,000			1,035
	Average selling prices (dollars per ton)
			Ammonia			$	488		$	631			$	445		$	644
			UAN				282			327				269			318
	Natural gas costs/MMBtu (2)					$	3.87		$	3.74			$	3.95		$	3.58

[mrmarket]

How can you not like a 5% dividend?

Cash Distribution
TNCLP reported today the declaration of a cash distribution for the quarter ended September 30, 2014, of $1.78 per common limited partnership unit payable November 28, 2014, to holders of record as of November 17, 2014.

[tiedyed1]

TNH has been getting ugly and today it is really ugly.

Any insights here?

It looks oversold but shares continue to get dumped today.
May be time to add some more

[tiedyed1]

I just double downed on TNH at $104.01

[tiedyed1]

Yikes. Does anyone have any idea why TNH looks like a very sharp falling knife?

[mrmarket]

No idea...I am holding for the long run and meanwhile enjoying my 6% dividend.

[Lucavia123]

I couldn't help it anymore. I bought in at $103.00 even.

[mrmarket]

I couldn't help it anymore. I bought in at $103.00 even.

Not sure where else you can find a stock trading near its future floor price that pays a 7.70% dividend.

[jiesen]

A cyclical stock is cyclical. TNH should see $250 again, it's only a matter of time.

[tiedyed1]

Q1 historically looks good for TNH.
I would not be surprised if the next dividend is reduced as I remember the Q3 report mentioned the plant going offline for a month this quarter, but I did continue to accumulate on the drops (including Dec 8 at 91.60). While more heavily weighted than I prefer, my current full position is only down 11.30% today (and much less if factoring in the dividends).
Hopefully that weight will be rewarded in 2015

Happy New Year; -Adam
Old Hippy & Mortgage Pro

[Lucavia123]

Nice move today, decent volume.