Thank you, Jay. Good morning, everyone, and thank you for joining us for today's call. To summarize financial highlights for the first quarter of 2019 included net sales of $92 million, a net loss of $6 million, adjusted EBITDA of $26 million. The board of directors declared a first quarter distribution of $0.07 per common unit, which will be paid on May 13 to unit holders of record on May 6. During the first quarter of 2019, we had strong operational reliability at both facilities. At Coffeyville, the ammonia plant operated at 96% utilization for the quarter, consistent with utilization for the first quarter of 2018. At East Dubuque, the ammonia plant operated at 69% utilization compared to 90% in the prior year period, adjusted for turnarounds.
We lowered the ammonia rate at East Dubuque during the first quarter to manage our storage capacity levels at the plant due to the poor fall weather. For the first quarter of 2019, our combined operations produced approximately 179,000 gross tons of ammonia, 335,000 tons of UAN, and 41,000 net tons of ammonia available for sale, compared to production of 199,000 gross tons of ammonia, 339,000 tons of UAN, and 59,000 net tons of ammonia available for sale in the prior year period. We sold approximately 288,000 tons of UAN during the first quarter of 2019 at an average price of $222 per ton. UAN pricing for the quarter increased 45% over the prior year period. In addition, we sold approximately 36,000 tons of ammonia during the first quarter of 2019 at an average price of $367 per ton.
Ammonia pricing for the quarter increased 14% over the prior year period. UAN sales volumes were down 17% year-over-year in the first quarter of 2019 due to cold and wet weather throughout the Midwest, which caused spring planting and fertilizer application to be delayed. While spring fertilizer application was slow to get started, farmers are catching up rapidly. We have seen product movements pick up pace in April. I will discuss this further in my closing remarks, and will now turn the call over to Tracy to discuss our financial results.
Thank you, Mark. Turning to our results for the first quarter of 2019, we reported net sales for the period of $92 million, operating income of $9 million, a net loss of $6 million or $0.05 per common unit, and adjusted EBITDA of $26 million. This is compared to net sales of $80 million, operating losses of $3 million, a net loss of $19 million or $0.17 per common unit, and adjusted EBITDA of $13 million for the prior year period. These improvements were driven predominantly by improved UAN and ammonia pricing, partially offset by lower UAN sales volumes. The decrease in UAN sales volumes was primarily attributable to weather issues in the Midwest, as Mark just discussed. Direct operating expenses for the first quarter of 2019 decreased to $35 million from $39 million in the prior year period.
Excluding inventory impacts, direct operating expenses increased slightly by approximately half a million dollars year-over-year, primarily related to utility costs. Turning to capital spending, during the first quarter of 2019, we spent $3 million on capital projects, which was primarily maintenance capital. We continue to estimate total capital spending for 2019 to be approximately $20 million-$25 million, excluding turnaround spending. In the fall, we have a planned turnaround at East Dubuque, which we would expect will cost approximately $7 million. Looking at the balance sheet as of March 31st, we had approximately $97 million in cash, including approximately $63 million related to customer prepayments for the future delivery of product and full availability under our ABL facility of $50 million. We currently believe our total liquidity position of approximately $122 million at the end of the quarter is sufficient going forward.
Our long-term gross debt of $647 million, including current portion, remains unchanged. As a reminder, the majority of our gross debt position is comprised of our 9.250% Senior Notes due 2023. These notes become callable in June of this year at 104.6 of par. Available cash for distribution of $8 million is derived from our positive adjusted EBITDA for the quarter after consideration of reserves of $15 million for debt service and $3 million for environmental and maintenance capital expenditures. We are a variable distribution MLP. We will review our previously established reserves, evaluate future anticipated cash needs, and may reserve amounts for other future cash needs as determined by our general partner's board.
As a result, our distributions, if any, will vary from quarter-to-quarter due to several factors including but not limited to operating performance, fluctuations in the prices received for finished product, maintenance capital expenditures, and cash reserves deemed necessary or appropriate by the board of directors of our general partner. With that, I will turn the call back over to Mark.
Thanks, Tracy. Weather continued to impact the business in the first quarter. Conditions were both wetter and colder than normal throughout the Midwest as spring has been late to arrive. We believe customers were already carrying higher than normal levels of inventory after the difficult fall application conditions. In the first quarter, demand for Nitrogen was lower until the spring application began. Barge and rail logistics have also been impacted by the flooding in Nebraska and on the Mississippi River. This has caused Urea imports to back up in NOLA and put pressure on Nitrogen prices. As products started to move in the past few weeks, the price of Urea has recovered. Because of the shortfall in ammonia application in the fall and the delayed start to spring application, we expect most customers to purchase more Urea and UAN as the spring progresses to reach target levels of Nitrogen.
We believe UAN prices are also being impacted by the European Union's imposition of duties on UAN exports from the U.S., Russia, and Trinidad into the EU. This has caused a resetting of trade flows from these three markets at a time when UAN application has not ramped up to full spring levels. We believe that over time, the trade flows should reset for UAN, with the likely result being higher UAN prices for European farmers. The spring fertilizer application season is now in full swing, and we have seen strong demand during the past few weeks. At East Dubuque in particular, we have had several days of record ammonia shipments in the past two weeks.
Even with the wet and cold conditions during the first quarter, we still expect planted corn acres for the 2019 planting season to be in the 92 million-94 million range, and the seasonal demand for nitrogen to be strong through the rest of the second quarter. We also believe that the market is still gradually recovering from the lows in 2017, and nitrogen pricing should continue to improve over the next one to two years. I want to reiterate that the partnership will continue to focus on maximizing free cash flow by safely operating our plants reliably and at high utilization rates, prudently managing our costs, being judicious with our capital, and maximizing our marketing and logistics activities.
In closing, I would like to thank all of our employees for their contributions in the first quarter to help us navigate challenging weather conditions and prepare for the spring planting season. With that, we are ready to answer any questions.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.
Yes, thanks. Good morning, everyone.
Morning, Adam.
I just wanted to dig a little bit more into the spring and just understand the impact on your business and the opportunities it's presented. Maybe first, Mark, if you could talk about the logistics, both the rail disruptions that you saw given some of the flooding in the Western Corn Belt, and more recently, some of the challenges along the river from a barge perspective, and the challenges and opportunities each of those have presented to you, and especially for East Dubuque, if that might actually help your realized pricing as we think about the second quarter.
Sure. Well, let's start with rail first, because rail's probably the easiest one. There are going to be some points in Nebraska in particular where we're probably going to be delivering product a little later. It's not going to affect the ultimate application of UAN, but it does affect the timing. We had to kind of re-rack our rail schedule to fit a later delivery into certain points in Nebraska. There are a number of those things that are alleviating pretty quickly here. We've changed our rail schedule, and that was really affecting product movement into Nebraska. In the other areas like Iowa, Kansas, Oklahoma, Texas, California, Pacific Northwest, there weren't any issues there. It was just the Nebraska market that had really severe flooding, and then we were seeing some difficult conditions for farmers in certain parts, particularly in the east of Nebraska.
On the river side, that's probably more of an opportunity for us given the location of East Dubuque being up at the top there. Most of the view of the market is that barges probably won't be able to get to Minneapolis until mid-May. There's going to be a little bit of a scramble for product up there in the earlier stages. Not the later season, but the earlier stages should be an opportunity for us to move some UAN up there. We won't see as much barge movement, and as I've said in my comments, that created a backup in New Orleans and affected pricing there. We really haven't seen that kind of impact on the pricing up at East Dubuque because customers are looking for product up there. That's really my answer for those two, Adam.
That's really helpful. Just to be clear on the rail side for Nebraska, did that actually push any shipments out of 1Q into 2Q or not? Just more timing in 2Q?
No, it was really just the timing of when it would go in there in 2Q. They might be putting some things in tanks in 1Q to be prepared for 2Q, but it's more of when is that kind of, I call it the refill cycle, going to go in? It's going to go in probably a few weeks later than normal there to replenish what they apply. There's already some product in tanks in Nebraska, but there's always a replenishment. That's going to be delayed this year.
Okay. Just as we think about the impact of the broader market declines on, you've seen in at least NOLA UAN prices in the last couple of months, your pricing kind of held in quite strongly. Is that just some of the stuff that was pre-sold is from 4Q? Or is just really just the Midwest premium just holding that strongly that you feel like you're in a good place of pricing into the second quarter?
Well, Adam, it's a little bit of both. We sold forward in January and February a big chunk of the first quarter, and pricing was good then. There's usually a dip usually in the March timeframe before the season. We tend to try to sell and kind of get at least part of our production lined out for January, February. We were sort of patient during March. We sold some tonnage, but we've been patient to wait because we expected a dip. It was bigger than we thought, and then the recovery's starting to come now. This is typically when we would be looking to participate when there's a replenishment after the first run. It looks like the market's firming here, and we've been sort of patiently waiting for that to occur.
Okay. I just wanted to clarify some of the comments you made about the utilization rates at East Dubuque. It sounded like the utilization rates were good in the quarter, but it sounded like you consciously had to slow things down for a few days here and there because of tank space. You felt that the utilization theory could have been a couple of points better, if not for things in just storage constraints otherwise. Is that right?
Yeah. We basically ran at about 80% most of the quarter, because if you recall from last quarter, we were already carrying significant inventory because of the poor fall conditions. We backed rate off there. The plant's running well. We're in good shape. It allowed us to do a little bit of work on the plant during the first quarter, but we're back to full rate, and we intend to run full rate till we get to the turnaround.
Okay, great. That's all super helpful. I'll pass it on. Thanks.
Thank you. Our next question comes from the line of Roger Spitz with Bank of America. Please proceed with your question.
Thank you. Good morning. Excuse me. Could you say what you were thinking about the refinancing of the nine and a quarter bonds? I perhaps missed what you said in your prepared remarks.
They do become callable in June at 104.6%. We are evaluating the markets. They are available to us and open. We'll continue to watch the Fed movements and consider if we call those sometime after the call date passes.
Okay. You're just going to be opportunistic with market conditions. Is that the takeaway we should take?
Yes.
All right. Thank you very much.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Charles Neivert with Cowen. Please proceed with your question.
Morning, guys.
Morning, Charlie.
A bunch of things I got to ask. One, if we're looking at 2Q, the way it sounds like you haven't sold a lot into 2Q yet, you're sort of going to allow the pricing to rise and then play into it. You haven't pre-sold a lot at sort of the lowest levels of the first quarter into the second quarter. Did I read that right?
That's correct.
Is that going to be looked at as sort of normal behavior from here on forward? Is that the way you'll play? Assuming this was such a terrible sort of fall into early spring, I'm assuming that things would be a little bit different. Is that the way you would tend to play this going forward as well?
Well, typically, Charlie, the normal cycle is there is a big push in January and February for people to fill tanks and be ready. After that first run occurs, then they come back. That's typical. This year was exaggerated because they came in in January and February, the spring was late and the tanks were already full. It pushed out when they would come back for the replenishment. Our expectations were that they would come back, and we decided to be more patient this year maybe than normal and wait for the inevitable second wave of that. That's coming now. It's just a little bit later than normal, and we waited it out. The other thing about product pricing in the second quarter, we'd already pre-priced most of our ammonia coming into the season at good pricing.
That started back in December and carried into January, February. That was priced at a good time in the marketplace, and that was all prepaid. Tracy mentioned we had a bunch of prepaid dollars sitting on our balance sheet. The ammonia was priced earlier, and that all just is in the process of being delivered now, but the pricing occurred in December and January.
Okay. When I look at the East Dubuque operations, it looked like the UAN portion was running fairly full, but you only ran as much ammonia because you didn't want to build up an ammonia storage. Is that the way you looked at it, as you could run as pretty much normal for UAN, but you had to cut back because you didn't have storage for the ammonia piece of this?
Yeah, exactly. We ran full UAN rate, full upgrade, and 80% of ammonia was kind of where we were running.
Okay. Given this situation, and it's the likelihood that over time it'll probably repeat itself a few more times. Is there any thought to adding storage there to deal with that? Having more ammonia available for sale, even if it's sort of delayed, would likely be a better situation, especially considering you're a little isolated from the Gulf Coast. When situations arise, you guys are in a good position to sell it. Is there some thought to that at some point, adding storage capacity?
We debate that. We've only had this event this severe once in the last 20 years, so I'm not sure we would go out and spend the capital to plan for the one in 20-year cycle. I think that one of the things that we're considering there is looking at what the upgrade capacity is at that plant long-term, and there might be an avenue to do something a little different with production slate down the road. We think that's probably a better avenue than just putting another storage tank for ammonia there.
Got it. We're looking at the natural gas differential between East Dubuque and NYMEX. It seemed a little large. What was the reason for that? Is it just sort of occurred this year because of cold weather? I mean, is there something, can you bring that down or is it coming down?
It's come way down. It usually there's a spread in the winter. It actually trades at a discount to the NYMEX in the summer usually. If you recall, this is part of the reason why the planning conditions. We had the polar vortex up in East Dubuque in January, late January and February, and the consumption of gas in that market all the way to Chicago was pretty big draw in the system. That's a pretty unusual event. It was expensive in the quarter, by March it had dropped back to $270, $280 there. We're trading in and around NYMEX at this stage. It only trades at a premium in the winter.
Yeah. I mean, this premium was unusually large, obviously that's not the expected.
Yeah.
Lastly, on the petroleum coke side, with HollyFrontier supply coming back, is there going to be any benefit to you guys from that or you guys still not really that much?
No. Obviously, it's one of our big sources there. We're in the process of trying to replenish our inventory there with petroleum coke. Our costs are up some. The deal with the refinery on our petroleum coke is the pricing mechanism has a UAN component. The price of petroleum coke's a little higher. We do pay a little bit more for petroleum coke in a rising UAN market. It doesn't change the economics that much in a rising UAN market.
Okay. As you said, the operations in East Dubuque now, the ammonia is now running basically full out?
Full out.
As you can sell ammonia.
Definitely.
You expect to go into the spring with basically empty everything out by, let's say, end of 2Q? Is that the objective?
Our goal is always to try to be as close to the bottom by June 30th. We've gone through the tank in April, we've consumed what we had had sitting there for a few months. We're down there and we're going to keep moving into May. We're just going to try to move as much as we can. The same with UAN. We're always trying to get to the end of the planting season with as little as possible. We've been pretty successful in the last two years. I feel good about this year because I think that the season's going to extend further and hopefully draw into our inventories going into June 30th, so we go into summer with pretty light plants. Like we did last year was light too.
Yeah, I guess the late shipments up into the Minneapolis area play into your hands a bit.
It does. It'll help us because it'll, one, there'll be more people looking for product. I think generally that market probably goes longer this year into sidedress, topdress than it does typically. There's going to be need for nitrogen later. We feel pretty good about the northern stretch of the market this year.
Okay. I mean, if we're looking at 2Q for, let's say, UAN pricing and you did what you did this quarter, should we be looking at a similar level or somewhat five, 10% lower? I mean, again, obviously during the course of the first quarter, prices dropped. You guys avoided some of the worst of it. What are you guys looking at for 2Q? Any ideas about where it might be?
Well, we don't give forecasts on pricing. Quite honestly, Charlie, the market's still playing out. I don't think I'm smart enough to guess for you right now what May and June. The market's coming back up, I don't really know where we're going to settle, it's starting to come back towards us now. We'll have a better idea in another month.
Okay. All right. Well, that does it for me, guys. Thanks very much.
Thank you. We have reached the end of our question and answer session. I would like to turn the call back over to management for any closing remarks.
Well, again, I'd like to thank all of you for your interest in CVR Partners and our employees for their hard work and commitment towards safe, reliable, and environmentally responsible operations. We look forward to reviewing our second quarter 2019 results with you in July. Thank you very much for attending the call today.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.