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OFFON

CINER RESOURCES LP

(CINR)
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CINER RESOURCES LP Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/03/2021 | 04:34pm EST
You should read the following management's discussion and analysis of financial
condition and results of operations in conjunction with the historical unaudited
condensed consolidated financial statements, and notes thereto, included
elsewhere in this Report.
Cautionary Statements Regarding Forward-Looking Statements
This Report contains, and our other public filings and oral and written
statements by us and our management may include, statements that constitute
"forward-looking statements" within the meaning of the United States securities
laws. Forward-looking statements include the information concerning our possible
or assumed future results of operations, reserve estimates, business strategies,
financing plans, competitive position, potential growth opportunities, potential
operating performance, the effects of competition and the effects of future
legislation or regulations. Forward-looking statements include all statements
that are not historical facts and may be identified by the use of
forward-looking terminology such as the words "believe," "expect," "plan,"
"intend," "anticipate," "estimate," "predict," "forecast," "project,"
"potential," "continue," "may," "will," "could," "should" or the negative of
these terms or similar expressions. Examples of forward-looking statements
include, but are not limited to, statements concerning cash available for
distribution and future distributions, if any, and such distributions are
subject to the approval of the board of directors of our general partner and
will be based upon circumstances then existing. We have based our
forward-looking statements on management's beliefs and assumptions and on
information currently available to us.
Forward-looking statements involve risks, uncertainties and assumptions. You are
cautioned not to place undue reliance on any forward-looking statements. Actual
results may vary materially. You should also understand that it is not possible
to predict or identify all such factors and should not consider the following
list to be a complete statement of all potential risks and uncertainties.
Factors that could cause our actual results to differ materially from the
results contemplated by such forward-looking statements and, therefore, affect
our ability to distribute cash to unitholders, include:
•the market prices for soda ash in the markets in which we sell;
•the volume of natural and synthetic soda ash produced worldwide;
•domestic and international demand for soda ash in the flat glass, container
glass, detergent, chemical and paper industries in which our customers operate
or serve;
•the freight costs we pay to transport our soda ash to customers or various
delivery points and recent disruptions in the global supply chain and overall
port congestion;
•the cost of electricity and natural gas used to power our operations;
•the amount of royalty payments we are required to pay to our lessors and
licensor and the duration of our leases and license;
•political disruptions in the markets we or our customers serve, including any
changes in trade barriers;
•our relationships with our customers and our sales agent's ability to renew
contracts on favorable terms to us;
•the creditworthiness of our customers;
•a cybersecurity event;
•the short and long term impact of the COVID-19 pandemic, including the impact
of government orders on our employees, suppliers, customers and operations and
the ultimate effectiveness of vaccines and related programs on new variants of
the virus, including the Delta variant;
•the impact of the ANSAC exit and our transition to the utilization of Ciner
Group's global distribution network for some of our export operations beginning
on January 1, 2021;
•regulatory action affecting the supply of, or demand for, soda ash, our ability
to mine trona ore, our transportation logistics, our operating costs or our
operating flexibility;
•new or modified statutes, regulations, governmental policies and taxes or their
interpretations; and
•prevailing U.S. and international economic conditions and foreign exchange
rates.
In addition, the actual amount of cash we will have available for distribution
will depend on other factors, some of which are beyond our control, including,
among other things:
•the level and timing of capital expenditures we make;
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•the level of our operating, maintenance and general and administrative
expenses, including reimbursements to our general partner for services provided
to us;
•the cost of acquisitions, if any;
•our debt service requirements and other liabilities;
•fluctuations in our working capital needs;
•our ability to borrow funds and access capital markets;
•restrictions on distributions contained in debt agreements to which we, Ciner
Wyoming or our affiliates are a party;
•the amount of cash reserves established by our general partner; and our ability
to reinstate distributions in the future; and
•other business risks affecting our cash levels.
These factors should not be construed as exhaustive and we urge you to carefully
consider the risks described in this Report, our most recent Annual Report on
Form 10-K, and subsequent reports filed with the United States Securities and
Exchange Commission (the "SEC"). You may obtain these reports from the SEC's
website at www.sec.gov. All forward-looking statements included in this Report
are expressly qualified in their entirety by these cautionary statements. Unless
required by law, we undertake no obligation to publicly update or review any
forward-looking statement, whether as a result of new information, future
developments or otherwise.
References
References in this Quarterly Report on Form 10-Q ("Report") to the
"Partnership," "CINR," "Ciner Resources," "we," "our," "us," or like terms refer
to Ciner Resources LP and its consolidated subsidiary, Ciner Wyoming LLC, which
is referred to herein as "Ciner Wyoming." References to "our general partner" or
"Ciner GP" refer to Ciner Resource Partners LLC, the general partner of Ciner
Resources LP and a direct wholly-owned subsidiary of Ciner Wyoming Holding Co.
("Ciner Holdings"), which is a direct wholly-owned subsidiary of Ciner Resources
Corporation ("Ciner Corp"). Ciner Corp is a direct wholly-owned subsidiary of
Ciner Enterprises Inc. ("Ciner Enterprises"), which is a direct wholly-owned
subsidiary of WE Soda Ltd., a U.K. corporation ("WE Soda"). WE Soda is a direct
wholly-owned subsidiary of KEW Soda Ltd., a U.K. corporation ("KEW Soda"), which
is a direct wholly-owned subsidiary of Akkan Enerji ve Madencilik Anonim ?irketi
("Akkan"). Akkan is directly and wholly owned by Turgay Ciner, the Chairman of
the Ciner Group ("Ciner Group"), a Turkish conglomerate of companies engaged in
energy and mining (including soda ash mining), media and shipping markets. All
of our soda ash processed is sold to various domestic and international
customers, including American Natural Soda Ash Corporation ("ANSAC"), which was
an affiliate for export sales in 2020. As a result of terminating Ciner Corp's
membership in ANSAC, effective as of the end of day on December 31, 2020, ANSAC
is no longer an affiliate of the Partnership.
Overview
We are a Delaware limited partnership formed by Ciner Holdings to own a 51.0%
membership interest in, and to operate the trona ore mining and soda ash
production business of Ciner Wyoming. Ciner Wyoming is currently one of the
world's largest producers of soda ash, serving a global market from its facility
in the Green River Basin of Wyoming. Our facility has been in operation for more
than 50 years.
NRP Trona LLC, a wholly-owned subsidiary of Natural Resource Partners L.P.
("NRP") currently owns an indirect 49.0% membership interest in Ciner Wyoming.
Recent Developments
COVID-19
COVID-19 and its variants ("COVID-19), including the Delta variant, continue to
cause certain disruptions to the economy throughout the world, including the
United States and markets to which our products have historically been exported.
There have been extraordinary actions taken by international, federal, state,
and local public health and governmental authorities to contain and combat the
outbreak and spread of COVID-19 in regions throughout the world, including
travel bans, many vaccine mandate policies, quarantines, "stay-at-home" orders,
and similar mandates for many individuals to substantially restrict daily
activities and for many businesses to curtail or cease normal operations.
Vaccines for COVID-19 became first available on a limited basis in late December
2020. They are becoming more widely available globally and the age limit in the
U.S. continues to decline so that more individuals are eligible for the vaccine.
Our Response to COVID-19
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We continue to closely monitor the impact of COVID-19 pandemic and all
governmental actions in response thereto on all aspects of our business,
including how it impacts our customers, employees, supply chain, distribution
network and cash flows. As COVID-19 vaccines become more broadly available, we
have encouraged employees to get vaccinated. We continue to use guidance from
local health organizations, including the Centers for Disease Control and
Prevention, to make decisions about our return to the workplace policies. Our
focus has been the safety of our teams and this will continue to be our priority
as we use data to progressively return back to normal operations. We continue to
actively monitor and adhere to applicable local, state, federal, and
international governmental guideline actions to better ensure the safety of our
employees.
The Impact of COVID-19
In the first half of 2020 and primarily in the beginning of the second quarter
of 2020, we saw a decline in demand due to the COVID-19 pandemic adversely
impacting our sales and production volume, and price per ton; but, in the second
half of 2020 and thereafter, we saw the signs of recovery on our operations
domestically as well as internationally in the form of increased global demand,
notwithstanding certain pricing pressure. We experienced fluctuations in quarter
over quarter soda ash volume sold of 4.4% decline, 35.7% decline, 26.7%
increase, and 9.5% increase in the first, second, third and fourth quarters of
2020, compared to the immediately preceding quarter respectively. During the
nine months ended September 30, 2021, we saw continued recovery in both domestic
and international business. The soda ash volume sold in the first, second, and
third quarters for 2021 increased 21.7%, decreased 9.7%, and increased 7.8%,
respectively, compared to the immediately preceding quarter. The decline in the
soda ash volume sold in the second quarter of 2021 compared to the first quarter
of 2021 is primarily due to the first quarter of 2021 including significant
international sales volumes associated with the initial impact of selling
directly to international customers as part of our December 31, 2020 ANSAC exit.
Sales volumes for the three months ended September 30, 2021 are at pre-COVID-19
pandemic levels, which we consider to be sales levels prior to the second
quarter 2020. Sales volumes for the three months ended September 30, 2021 and
2020 were 0.7 million short tons and 0.5 million short tons, respectively. Sales
volumes for the nine months ended September 30, 2021 and 2020 were 2.1 million
short tons and 1.6 million short tons, respectively.
The COVID-19 Delta variant among other variants, is spreading rapidly in a
number of countries including the U.S and new COVID-19 confirmed cases increased
significantly during the summer. As the number of individuals who have been
vaccinated has increased, a downward daily trend of new COVID-19 confirmed cases
was observed recently. At this time, we still cannot predict the duration or the
scope of the COVID-19 pandemic and its impact on our operations, and the
potential negative financial impact to our results cannot be reasonably
estimated but could be material. We are actively managing the business to
maintain cash flow, and we believe we have enough liquidity to meet our
anticipated liquidity requirements.
For the nine months ended September 30, 2021, we have incurred $1.4 million in
costs directly related to COVID-19 primarily in the form of costs related to
employee safety and retention and additional inventory storage and logistics
costs. For the three months ended September 30, 2021 and 2020, we incurred $0.4
million and $0.7 million in costs directly related to COVID-19, respectively.
Termination of Membership in ANSAC
As previously disclosed as part of its strategic initiative to gain better
direct access and control of international customers and logistics and the
ability to leverage the expertise of Ciner Group, the world's largest natural
soda ash producer, effective as of the end of day on December 31, 2020, Ciner
Corp exited ANSAC. In connection with the settlement agreement with ANSAC, there
are sales commitments to ANSAC in 2021 and 2022 where Ciner Corp will continue
to sell, at substantially lower volumes, product to ANSAC for export sales
purposes, with a fixed rate per ton selling, general and administrative expense,
and will also purchase a limited amount of export logistics services in 2021.
The Partnership has made the necessary arrangements to manage the sale of its
export tons in 2022 through existing distribution channels.
Although ANSAC has historically been our largest customer, the impact of Ciner
Corp's exit from ANSAC on our net sales, net income and liquidity was limited.
With a low-cost position combined with more direct access and better control of
our international customers and logistics and the ability to leverage Ciner
Group's expertise in these areas, through a combination of ANSAC sales
commitments for 2021 and 2022 as part of the transition from ANSAC and new
customers, we have been able to adequately replace these net sales made under
the former agreement with ANSAC.
Reinstatement of Distributions
Our general partner has considerable discretion in determining the amount of
available cash, the amount of distributions and the decision to make any
distribution. Although our partnership agreement requires that we distribute all
of our available cash quarterly, there is no guarantee that we will make
quarterly cash distributions to our unitholders, and we have no legal obligation
to do so.
In an effort to achieve greater financial and liquidity flexibility during the
COVID-19 pandemic, on August 3, 2020, each of the members of the board of
managers of Ciner Wyoming approved a suspension of quarterly distributions to
its members. In addition, effective August 3, 2020, in connection with the
quarterly distribution for the quarter ended June 30, 2020, each of the members
of the board of directors of our general partner approved a suspension of
quarterly distributions to our unitholders that continued for each of the
quarters ended September 30, 2020, December 31, 2020, March 31, 2021, and
June 30, 2021.
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In March 2021, the board of managers of Ciner Wyoming approved a special
$8.0 million distribution to, amongst other things, provide the Partnership with
funds to retire the Ciner Resources Credit Facility.
In October 2021, the board of managers of Ciner Wyoming approved a $15.0 million
distribution to the members of Ciner Wyoming.
On October 29, 2021, the Partnership declared its third quarter 2021 quarterly
cash distribution of $0.340 per unit. The quarterly cash distribution is payable
on November 19, 2021 to unitholders of record on November 9, 2021.
Factors Affecting Our Results of Operations
Soda Ash Supply and Demand
Our net sales, earnings and cash flow from operations are primarily affected by
the global supply of, and demand for, soda ash, which, in turn, directly impacts
the prices that we and other producers charge for our products.
Historically, long-term demand for soda ash in the United States has been driven
in large part by general economic growth and activity levels in the end-markets
that the glass-making industry serves, such as the automotive and construction
industries. Long-term soda ash demand in international markets has grown in
conjunction with Gross Domestic Product. We expect that over the long-term,
future global economic growth will positively influence global demand, which
will likely result in increased exports, primarily from the United States,
Turkey and to a limited extent, from China, the largest suppliers of soda ash to
international markets. Currently, and in the near- and mid-term, we expect that
COVID-19 will continue to have an impact on the supply chain of our customers
and customer segments which may have a negative impact on demand for our
products. Our international demand was impacted the most as different countries
continue to deal with different levels of the outbreak and shutdowns, but showed
signs of recovery internationally during the second half of 2020. The soda ash
volume sold to both domestic and international customers increased in the third
and fourth quarters of 2020 sequentially over the prior quarter. The soda ash
volume sold to international customers increased 23.8%, decreased 20.7% and
increased 13.5% in the first, second, and third quarters of 2021 compared to the
immediately preceding quarter, respectively. The soda ash volume sold to
domestic customers increased 19.2%, 4.5%, and 2.2% in the first, second, and
third quarters of 2021 compared to the immediately preceding quarter,
respectively. The increase in the soda ash volume sold in the first quarter of
2021 compared to the fourth quarter of 2020 is primarily due to the first
quarter of 2021 including significant international sales volumes associated
with the initial impact of selling directly to international customers as part
of our December 31, 2020 ANSAC exit. During the second quarter of 2021, the soda
ash volume sold to domestic customers and international customers was 68.7%
higher and 38.7% higher, respectively, than that of the second quarter of 2020.
During the third quarter of 2021, the soda ash volume sold to domestic customers
and international customers was 38.3% higher and 22.6% higher, respectively,
than that of the third quarter of 2020, as a further sign of recovery from the
COVID-19 pandemic.
Sales Mix
We will adjust our sales mix based upon what is the best margin opportunity for
the business between domestic and international. Our operations have been and
continue to be sensitive to fluctuations in freight and shipping costs and
changes in international prices, which have historically been more volatile than
domestic prices. Our gross profit will be impacted by the mix of domestic and
international sales as a result of changes in logistics costs and our average
selling prices.
International Export Capabilities
As previously disclosed, Ciner Corp exited ANSAC, effective as of the end of day
on December 31, 2020 as part of its strategic initiative to gain more direct
access to and better control of international customers and logistics, and to
leverage the expertise of Ciner Group, the world's largest natural soda ash
producer. In connection with the settlement agreement with ANSAC, Ciner Corp
will continue to sell in 2021 and 2022, at substantially lower volumes, product
to ANSAC for export sales purposes, with a fixed rate per ton selling, general
and administrative expense, and will also purchase a limited amount of export
logistics services in 2021. The Partnership has made the necessary arrangements
to manage the sale of its export tons in 2022 through existing distribution
channels.
Although ANSAC has historically been our largest customer, the impact of Ciner
Corp's exit from ANSAC on our net sales, net income and liquidity was limited.
We made this determination primarily based upon the belief that we will continue
to be one of the lowest cost producers of soda ash in the global market. With a
low-cost position combined with more direct access and better control of our
international customers and logistics and the ability to leverage Ciner Group's
expertise in these areas, through a combination of ANSAC sales commitments for
2021 and 2022 as part of the transition from ANSAC and new customers, we have
been able to adequately replace these net sales made under the former agreement
with ANSAC. Since January 1, 2021, Ciner Corp has managed the Partnership's
sales and marketing activities for exports with the ANSAC exit being complete.
Ciner Corp has leveraged the distributor network established by Ciner Group and
independent third-party distribution partners to optimize our reach into each
market.
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Energy Costs
One of the primary impacts to our profitability is our energy costs. Because we
depend upon natural gas and electricity to power our trona ore mining and soda
ash processing operations, our net sales, earnings and cash flow from operations
are sensitive to changes in the prices we pay for these energy sources. Our cost
of energy had been relatively low in recent years, primarily as a result of low
natural gas prices but those have been rising in 2021. The average monthly
Northwest Pipeline Rocky Mountain Index natural gas settlement prices for the
three months ended September 30, 2021 and 2020 were $3.97 and $1.74 MMBtu,
respectively; and for the nine months ended September 30, 2021 and 2020 were
$3.23 and $1.54 per MMBtu, respectively. Due to historic volatility of natural
gas prices, we expect to continue to hedge a portion of our forecasted natural
gas purchases to mitigate volatility.
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How We Evaluate Our Business
Productivity of Operations
Our soda ash production volume is primarily dependent on the following three
factors: (1) operating rate, (2) quality of our mined trona ore and (3) recovery
rates. Operating rate is a measure of utilization of the effective production
capacity of our facility and is determined in large part by productivity rates
and mechanical on-stream times, which is the percentage of actual run times over
the total time scheduled. We implement two planned outages of our mining and
surface operations each year, typically in the second and third quarters. During
these outages, which are scheduled to last approximately one week each, we
repair and replace equipment and parts. Periodically, we may experience minor
unplanned outages or unplanned extensions to planned outages caused by various
factors, including equipment failures, power outages or service interruptions.
The quality of our mine ore is determined by measuring the trona ore recovered
as a percentage of the deposit, which includes both trona ore and insolubles.
Plant recovery rates are generally determined by calculating the soda ash
produced divided by the sum of the soda ash produced plus soda ash that is not
recovered from the process. All of these factors determine the amount of trona
ore we require to produce one short ton of soda ash and liquor, which we refer
to as our "ore to ash ratio." Our ore to ash ratio was 1.55: 1.0 and 1.57: 1.0
for the three and nine months ended September 30, 2021, respectively, and 1.67:
1.0 and 1.62: 1.0 for the three and nine months ended September 30, 2020,
respectively.
Freight and Logistics
The soda ash industry is logistics intensive and involves careful management of
freight and logistics costs. These freight costs make up a large portion of the
total delivered cost to the customer. Delivery costs to most domestic customers
and ANSAC primarily relate to rail freight services. Some domestic customers may
elect to arrange their own freight and logistic services. Delivered costs to
non-ANSAC international customers primarily consists of both rail freight
services to the port of embarkation and the additional ocean freight to the port
of disembarkation.
Ciner Corp enters into contracts with one railroad company for the majority of
the domestic rail freight services that the Partnership receives and the related
freight and logistics costs are allocated to the Partnership. For the nine
months ended September 30, 2021, the Partnership shipped over 90% of our soda
ash to our customers initially via a single rail line owned and controlled by
the railroad company. The Partnership's plant receives rail service exclusively
from the railroad company and shipments by rail accounted for over 60% and over
80% of our total freight costs for the three months ended September 30, 2021 and
2020, respectively, and over 60% and over 80% of our total freight costs for the
nine months ended September 30, 2021 and 2020, respectively. The decrease in the
percentage of freight that is related to the railroad company is due primarily
to the increased ocean freight in the nine months ended September 30, 2021 of
direct international sales and their respective delivery locations.
If Ciner Corp does not ship at least a significant portion of our soda ash
production on the railroad company's rail line during a twelve-month period, it
must pay the railroad company a shortfall payment under the terms of our
transportation agreement. The Partnership assists the majority of its domestic
customers in arranging their freight services. During 2020 and the nine months
ended September 30, 2021, Ciner Corp had no shortfall payments and does not
expect to make any such payments in the future. Ciner Corp renewed its agreement
with the railroad company in October 2021, which now expires on December 31,
2025.
Net Sales
Net sales include the amounts we earn on sales of soda ash. We recognize revenue
from our sales when we satisfy the performance obligation defined in the
contract with the customer. The performance obligation for domestic sales is
typically met when goods are delivered to the carrier for shipment, which is the
point at which the customer has the ability to direct the use of and obtain
substantially all remaining benefits from the asset. The time at which delivery
and transfer of title occurs, for the majority of our contracts with customers,
is the point when the product leaves our facilities, thereby rendering our
performance obligation fulfilled. Since January 1, 2021, sales to ANSAC have
been fulfilled when delivered to ANSAC facilities. The performance obligation
for international sales is typically satisfied when goods are loaded onto the
vessel for shipment at the port of loading. Substantially all of our sales are
derived from sales of soda ash, which we sell through our exclusive sales agent,
Ciner Corp. A small amount of our sales is derived from sales of production
purge, which is a by-product liquor solution containing soda ash that is
produced during the processing of trona ore. For the purposes of our discussion
below, we include these transactions in domestic sales of soda ash and in the
volume of domestic soda ash sold.
Sales prices for sales through ANSAC include the cost of freight to the ports of
embarkation for overseas export or to Laredo, Texas for sales to Mexico. Sales
prices for other international sales may include the cost of rail freight to the
port of embarkation, the cost of ocean freight to the port of disembarkation for
import by the customer and the cost of inland freight required for delivery to
the customer.
Cost of Products Sold
Expenses relating to employee compensation, energy, including natural gas and
electricity, royalties and maintenance materials constitute the greatest
components of cost of products sold. These costs generally increase in line with
increases in sales volume.
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Energy. A major item in our cost of products sold is energy, comprised primarily
of natural gas and electricity. We primarily use natural gas to fuel our
above-ground processing operations, including the heating of calciners, and we
use electricity to power our underground mining operations, including our
continuous mining machines, or continuous miners, and shuttle cars. The monthly
Northwest Pipeline Rocky Mountain Index natural gas settlement prices, over the
past five years, have ranged between $1.29 and $5.70. The average monthly
Northwest Pipeline Rocky Mountain Index natural gas settlement prices for the
three months ended September 30, 2021 and 2020 were $3.97 and $1.74 MMBtu,
respectively; and for the nine months ended September 30, 2021 and 2020 were
$3.23 and $1.54 per MMBtu, respectively. However, we expect to continue to hedge
a portion of our forecasted natural gas purchases to mitigate volatility. In
order to mitigate the risk of gas price fluctuations, we hedge a portion of our
forecasted natural gas purchases by entering into physical or financial gas
hedges generally ranging between 20% and 80% of our expected monthly gas
requirements, on a sliding scale, for approximately the next three years.
Employee Compensation. See Part I, Item 1. Financial Statements - Note 6,
"Employee Compensation" for information on the various benefit plans offered and
administered by Ciner Corp.
Royalties. During the three and nine months ended September 30, 2021, we paid
royalties to the State of Wyoming, the U.S. Bureau of Land Management and
Sweetwater Royalties LLC. The royalties are calculated based upon a percentage
of the value of soda ash and related products sold at a certain stage in the
mining process. These royalty payments may be subject to a minimum domestic
production volume from our Green River Basin facility. We are also obligated to
pay annual rentals to our lessors and licensor regardless of actual sales. In
addition, we pay a production tax to Sweetwater County, and trona severance tax
to the State of Wyoming that is calculated based on a formula that utilizes the
volume of trona ore mined and the value of the soda ash produced.
The royalty rates we pay to our lessors and licensor may change upon our renewal
or renegotiation of such leases and license. On June 28, 2018, Ciner Wyoming
amended its License Agreement, dated July 18, 1961 (the "License Agreement"),
with a predecessor in interest to Sweetwater Royalties LLC, to, among other
things, (i) extend the term of the License Agreement to July 18, 2061 and for so
long thereafter as Ciner Wyoming continuously conducts operations to mine and
remove sodium minerals from the licensed premises in commercial quantities; and
(ii) set the production royalty rate for each sale of sodium mineral products
produced from ore extracted from the licensed premises at eight percent (8%) of
the net sales of such sodium mineral products. Any increase in the royalty rates
we are required to pay to our lessors and licensor, or any failure by us to
renew any of our leases and license, could have a material adverse impact on our
results of operations, financial condition or liquidity, and, therefore, may
affect our ability to distribute cash to unitholders. On December 11, 2020, the
Secretary of the Interior authorized an industry-wide royalty reduction from
currently set rates by establishing a 2% federal royalty rate for a period of
ten years for all existing and future federal soda ash or sodium bicarbonate
leases. This change by the Secretary of the Interior reduces the rates on our
mineral leases with the U.S. Government from 6% to 2% as of January 1, 2021 and
for the following ten years. Our estimated proven and probable trona reserve
includes a significant amount from leases with the U.S. Government. See Item 1.
Business, Trona Reserve in our 2020 Annual Report for additional information on
leases.
Selling, General and Administrative Expenses
Selling, general and administrative expenses incurred by our affiliates on our
behalf are allocated to us based on the time the employees of those companies
spend on our business and the actual direct costs they incur on our behalf.
Until December 31, 2020, selling, general and administrative expenses incurred
by ANSAC on our behalf were allocated to us based on the proportion of ANSAC's
total volumes sold for a given period attributable to the soda ash sold by us to
ANSAC and were included in selling, general and administrative expense -
affiliates in the condensed consolidated statement of operations. Pursuant to
the ANSAC Exit agreement, beginning in 2021, we incur a fixed rate of selling,
general, and administrative expense for each ton we sell to ANSAC, which is
included in selling, general and administrative expense in the condensed
consolidated statement of operations.
The Partnership has a Services Agreement (the "Services Agreement"), with our
general partner and Ciner Corp. Pursuant to the Services Agreement, Ciner Corp
provides the Partnership with certain corporate, selling, marketing, and general
and administrative services. In return the Partnership pays Ciner Corp an annual
management fee, subject to quarterly adjustments, and reimburses Ciner Corp for
certain third-party costs incurred in connection with providing such services.
In addition, under the joint venture agreement governing Ciner Wyoming, Ciner
Wyoming reimburses us for employees who operate our assets and for support
provided to Ciner Wyoming.
Ciner Group also owns and operates port facilities in Turkey, and, since 2017,
one of its other North American subsidiaries has an arrangement to exclusively
import soda ash into a port on the U.S east coast. Ciner Corp, which is the
exclusive sales agent for the Partnership, also serves as the exclusive sales
agent of that material and receives a commission on those sales. We believe by
having access to that material, Ciner Corp is able to offer its customers an
improved level of service, greater certainty of supply to the Partnership's end
customers, and, as a result, lower its overall costs to serve, which are
subsequently charged to the Partnership.
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Third Quarter 2021 Financial Highlights:


•Net sales of $135.6 million increased 38.1% from the prior-year third quarter;
year-to-date of $384.1 million increased 33.0% over the prior year. During the
third quarter of 2020, the Partnership experienced a slight increase in sales
volumes, production and pricing after the significant decline in the previous
quarter during the COVID-19 pandemic. During the third quarter of 2021, the
sales volume level has returned back to a more normalized level.
•Soda ash volume produced increased 56.3% from the prior-year third quarter, and
soda ash volume sold increased 29.7% from the prior-year third quarter;
year-to-date soda ash volume produced increased 27.0% from the prior-year, and
soda ash volume sold increased 27.0% from the prior-year. During the third
quarter of 2020, the Partnership experienced a slight increase in sales volumes,
production and pricing after the significant decline in the previous quarter
during the COVID-19. During the third quarter of 2021, the sales volume level
has returned back to a more normalized level.
•Net income of $15.4 million increased $10.0 million from the prior-year third
quarter; year-to-date net income of $27.8 million increased $13.6 million over
the prior year. This increase is primarily attributable to the operating income
increase resulting from overall sales and production volume recovery to
pre-COVID-19 levels with relatively consistent selling, general and
administrative expenses in the quarter ended September 30, 2021 compared to the
quarter ended September 30, 2020.
•Adjusted EBITDA of $24.1 million increased 65.1% from the prior-year third
quarter; year-to-date adjusted EBITDA of $56.1 million increased 41.0% over the
prior year. This increase is primarily attributable to the operating income
increase.
•Basic earnings per unit of $0.36 for the quarter increased 227.3% over the
prior-year third quarter of $0.11; year-to-date basic earnings per unit
of $0.63 increased 125.0% over the prior-year.
•Net cash provided by operating activities of $9.9 million decreased 53.3% over
prior-year third quarter; year-to-date net cash provided by operating activities
of $28.3 million decreased 46.0% over the prior year.
•Distributable cash flow of $8.2 million increased 115.8% compared to the
prior-year third quarter; year-to-date distributable cash flow of $15.8
million increased 38.6% over the prior year.

















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Results of Operations
A discussion and analysis of the factors contributing to our results of
operations is presented below for the periods and as of the dates indicated. The
financial statements, together with the following information, are intended to
provide investors with a reasonable basis for assessing our historical
operations, but should not serve as the only criteria for predicting our future
performance.
The following table sets forth our results of operations for the three and nine
months ended September 30, 2021 and 2020:
                                                           Three Months 

Ended September 30, Nine Months Ended September 30, (In millions, except for operating and other data section) 2021

       2020                2021                2020
Net sales:
Sales-others                                               $    135.6          $     54.0          $    384.1          $    158.6
Sales-affiliates                                                    -                44.2                   -               130.2
  Net sales                                                $    135.6      

$ 98.2 $ 384.1 $ 288.8 Operating costs and expenses: Cost of products sold

                                           104.8                78.8               310.5               233.1

Depreciation, depletion and amortization expense                  7.4                 7.8                23.8                20.8
Selling, general and administrative expenses-affiliates           5.2                 4.5                13.0                13.0
Selling, general and administrative expenses-others               1.5                 0.2                 4.9                 3.5

Total operating costs and expenses                              118.9                91.3               352.2               270.4
Operating income                                                 16.7                 6.9                31.9                18.4
Interest income                                                     -                   -                   -                 0.1
Interest expense                                                 (1.3)               (1.2)               (4.1)               (4.0)

Other, net                                                          -                (0.3)                  -                (0.3)
Total other expense, net                                         (1.3)               (1.5)               (4.1)               (4.2)

Net income                                                       15.4                 5.4                27.8                14.2
Net income attributable to noncontrolling interest                8.0                 3.1                15.1                 8.5
Net income attributable to Ciner Resources LP              $      7.4       

$ 2.3 $ 12.7 $ 5.7


Operating and Other Data:
Trona ore consumed (thousands of short tons)                     1,115.0               770.5             3,180.4             2,584.9
Ore to ash ratio(1)                                            1.55: 1.0           1.67: 1.0           1.57: 1.0           1.62: 1.0
Ore grade(2)                                                       87.3%               86.9%               86.0%               86.8%
Soda ash volume produced (thousands of short tons)              719.2               460.1             2,023.9             1,593.4
Soda ash volume sold (thousands of short tons)                  700.5               540.3             2,070.6             1,630.4

Adjusted EBITDA(3)                                         $     24.1          $     14.6          $     56.1          $     39.8




(1)Ore to ash ratio expresses the number of short tons of trona ore needed to
produce one short ton of soda ash and liquor and includes our deca rehydration
recovery process. In general, a lower ore to ash ratio results in lower costs
and improved efficiency.
(2)Ore grade is the percentage of raw trona ore that is recoverable as soda ash
free of impurities.  A higher ore grade will produce more soda ash than a lower
ore grade.
(3)For a discussion of the non-GAAP financial measure Adjusted EBITDA, please
read "Non-GAAP Financial Measures" of this Management's Discussion and Analysis.
                                       33
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Analysis of Results of Operations
The following table sets forth a summary of net sales, sales volumes and average
sales price, and the percentage change between the periods.
                                       Three Months Ended                   

Nine Months Ended

                                          September 30,                       September 30,                       Percent Increase/(Decrease)
(Dollars in millions, except for
average sales price data)            2021              2020              2021              2020                QTD                         YTD

Net sales:
Domestic                          $   71.1          $   53.7          $  207.9          $  153.1              32.4%                       35.8%
International                         64.5              44.5             176.2             135.7              44.9%                       29.8%
Total net sales                   $  135.6          $   98.2          $  384.1          $  288.8              38.1%                       33.0%
Sales volumes (thousands of short
tons):
Domestic                             336.7             243.5             981.6             676.2              38.3%                       45.2%
International                        363.8             296.8           1,089.0             954.2              22.6%                       14.1%
Total soda ash volume sold           700.5             540.3           2,070.6           1,630.4              29.7%                       27.0%
Average sales price (per short
ton) (1)
Domestic                          $ 211.17          $ 220.53          $ 211.80          $ 226.41             (4.2)%                      (6.5)%
International                     $ 177.30          $ 149.93          $ 161.80          $ 142.21              18.3%                       13.8%
Average                           $ 193.58          $ 181.75          $ 185.50          $ 177.13              6.5%                        4.7%
Percent of net sales:
Domestic net sales                    52.4  %           54.7  %           54.1  %           53.0  %          (4.2)%                       2.1%
International net sales               47.6  %           45.3  %           45.9  %           47.0  %           5.1%                       (2.3)%
Total percent of net sales           100.0  %          100.0  %          100.0  %          100.0  %
Percent of sales volumes:
Domestic volume                       48.1  %           45.1  %           47.4  %           41.5  %           6.7%                        14.2%
International volume                  51.9  %           54.9  %           52.6  %           58.5  %          (5.5)%                      (10.1)%
Total percent of volume sold         100.0  %          100.0  %          100.0  %          100.0  %

(1) Average sales price per short ton is computed as net sales divided by volumes sold.



Three Months Ended September 30, 2021 compared to Three Months Ended September
30, 2020
Consolidated Results
Net sales. Net sales increased by 38.1% to $135.6 million for the three months
ended September 30, 2021 from $98.2 million for the three months ended September
30, 2020, primarily driven by an increase in soda ash volumes sold of 29.7% due
to continuing recovery of domestic and international demand from the significant
negative impact from the COVID-19 pandemic. We operated a normal production
capacity in the three months ended September 30, 2021 compared to levels that
were suppressed due to COVID-19 pandemic during the three months ended September
30, 2020. Domestic average price was lower than the prior year same period due
to customer mix, factoring in the overall volume growth as well as lower annual
market prices which were impacted by the slow economy in late 2020 affected by
the COVID-19 pandemic. International average price was higher than the prior
year same period because the prices are set on a quarterly basis with improving
supply and demand fundamentals recognized for soda ash in the global market and
particularly in Asia. Increases in net sales, average international sales prices
and cost of product sold from 2020 to 2021 are also attributable to an increase
in non-ANSAC international sales which include ocean freight in both net sales
and cost of product sold. See "How We Evaluate Our Business - Net Sales" section
for further information.
Cost of products sold. Cost of products sold, including depreciation, depletion
and amortization expense and freight costs, increased by 29.6% to $112.2 million
for the three months ended September 30, 2021 from $86.6 million for the three
months ended September 30, 2020, which were primarily due to significant
increases in overall soda ash sales volumes. The increase in cost of products
sold is also due to significant ocean freight cost primarily from a volatile
vessel market impacted by recent global supply chain constraints as well as
price increases in natural gas.
Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased 42.6% to $6.7 million for the three months
ended September 30, 2021, compared to $4.7 million for the three months ended
September 30, 2020. The increase was primarily due to more administrative work
for export business for the three months ended September 30, 2021 than for the
three months ended September 30, 2020 as we continue our transition from related
support from ANSAC.
                                       34
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Operating income. As a result of the foregoing, operating income increased by
142.0% to $16.7 million for the three months ended September 30, 2021 from $6.9
million operating loss for the three months ended September 30, 2020. The
increase was due to a continuing recovery from the COVID-19 pandemic negative
impact. In addition, a significant amount of fixed plant costs were
proportionally higher than sales and production volume which lowered margins for
the three months ended September 30, 2020.
Net income. As a result of the foregoing, net income increased by 185.2% to
$15.4 million for the three months ended September 30, 2021, from $5.4 million
for the three months ended September 30, 2020. During the three months ended
September 30, 2021, production and sales increased significantly due to a
continuing recovery from the COVID-19 pandemic. In addition, a significant
amount of fixed plant costs were proportionally higher than sales and production
volume which lowered margins for the three months ended September 30, 2020.
Nine Months Ended September 30, 2021 compared to Nine Months Ended September 30,
2020
Consolidated Results
Net sales. Net sales increased by 33.0% to $384.1 million for the nine months
ended September 30, 2021 from $288.8 million for the nine months ended September
30, 2020, primarily driven by an increase in soda ash volumes sold of 27.0% due
to the continuing recovery of domestic and international demand from the
significant negative impact from the COVID-19 pandemic. We operated close to
normal production capacity in the nine months ended September 30, 2021. Sales
prices in the nine months ended September 30, 2021 had not fully recovered to
pre-COVID-19 pandemic levels. Increase in net sales and cost of product sold
from 2020 to 2021 is also impacted by an increase in non-ANSAC international
sales which include ocean freight in both net sales and cost of product sold.
See How "We Evaluate Our Business - Net Sales" section for further information.
Cost of products sold. Cost of products sold, including depreciation, depletion
and amortization expense and freight costs, increased by 31.7% to $334.3 million
for the nine months ended September 30, 2021 from $253.9 million for the nine
months ended September 30, 2020, which was primarily due to significant
increases in overall soda ash sales volumes. The increase in cost of products
sold is also due to significant increases in ocean freight rates primarily from
a volatile vessel market impacted by recent global supply chain constraints as
well as price increases in natural gas.
Selling, general and administrative expenses.  Our selling, general and
administrative expenses increased 8.5% to $17.9 million for the nine months
ended September 30, 2021, compared to $16.5 million for the nine months ended
September 30, 2020. The increase was primarily due to more administrative work
for the export business.
Operating income. As a result of the foregoing, operating income increased by
73.4% to $31.9 million for the nine months ended September 30, 2021 from $18.4
million for the nine months ended September 30, 2020. During the nine months
ended September 30, 2021, production and sales increased significantly due to
recovery from the COVID-19 pandemic. In addition, a significant amount of fixed
plant costs were proportionally higher than sales and production volume which
lowered margins for the nine months ended September 30, 2020.
Net income. As a result of the foregoing, net income increased by 95.8% to $27.8
million for the nine months ended September 30, 2021, from $14.2 million for the
nine months ended September 30, 2020. During the nine months ended September 30,
2021, production and sales increased significantly due to recovery from the
COVID-19 pandemic. In addition, a significant amount of fixed plant costs were
proportionally higher than sales and production volume which lowered margins for
the nine months ended September 30, 2020.
Liquidity and Capital Resources
Sources of liquidity include cash generated from operations and borrowings under
credit facilities and capital calls from partners. We use cash and require
liquidity primarily to finance and maintain our operations, fund capital
expenditures for our property, plant and equipment, make cash distributions to
holders of our partnership interests, pay the expenses of our general partner
and satisfy obligations arising from our indebtedness. Our ability to meet these
liquidity requirements will depend primarily on our ability to generate cash
flow from operations.
Our sources of liquidity include:
•cash generated from our operations of which we had cash on hand of $3.0 million
at September 30, 2021; and
•approximately $120.0 million ($225.0 million, less $105.0 million outstanding),
was available for borrowing and undrawn under the Prior Ciner Wyoming Credit
Facility (as defined herein) as of September 30, 2021 (during the nine months
ended September 30, 2021, we made repayments on the Prior Ciner Wyoming Credit
Facility of $65.0 million, offset by borrowings of $67.5 million). The Prior
Ciner Wyoming Credit Facility was terminated and replaced by the Ciner Wyoming
Credit Facility on October 28, 2021, which had similar amounts drawn and
available for borrowing at closing
                                       35
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on October 28, 2021 compared to the Prior Ciner Wyoming Credit Facility at
September 30, 2021. Please read Part I, Item 1, Financial Statements - Note 4,
"Debt," for details.
We continue to analyze all aspects of our spending in order to maintain
liquidity at levels we believe are necessary. The Prior Ciner Wyoming Credit
Facility's outstanding balance was classified as a current liability as the
facilities term was set to expire in August 2022. After replacement and
termination of the Prior Ciner Wyoming Credit Facility, and entering into the
Ciner Wyoming Credit Facility on October 28, 2021, the Partnership reclassified
the Prior Ciner Wyoming Credit Facility outstanding balance as a non-current
liability. We are closely reviewing maintenance capital expenditures at our
Wyoming facility to adequately maintain the physical assets at the Wyoming
facility. In addition, we are subject to business and operational risks that
could adversely affect our cash flow, access to borrowings under the Ciner
Wyoming Credit Facility, and ability to make monthly installment payments under
the Ciner Wyoming Equipment Financing Arrangement. Our ability to satisfy debt
service obligations, to fund planned capital expenditures, to make acquisitions
and to make distributions will depend upon our future operating performance,
which, in turn, will be affected by prevailing economic conditions, our business
and other factors, some of which are beyond our control.
We expect our ongoing working capital and capital expenditures to be funded by
cash generated from operations and borrowings under the Ciner Wyoming Credit
Facility. The amount, timing and classification of any such capital expenditures
could affect the amount of cash that is available to be distributed to our
unitholders.
In addition, we are subject to business and operational risks that could
adversely affect our cash flow and access to borrowings under the Ciner Wyoming
Credit Facility and the Ciner Wyoming Equipment Financing Arrangement.
We intend to pay a quarterly distribution to unitholders of record, to the
extent we have sufficient cash from our operations after establishment of cash
reserves, funding of any acquisitions and expansion capital expenditures, paying
debt obligations and payment of fees and expenses, including payments to our
general partner and its affiliates. See Part I, Item 2, Overview, "Recent
Developments," for more information.
Working Capital Requirements
Working capital is the amount by which current assets exceed current
liabilities. Our working capital requirements have been, and will continue to
be, primarily driven by changes in accounts receivable and accounts payable,
which generally fluctuate with changes in volumes, contract terms and market
prices of soda ash in the normal course of our business. Other factors impacting
changes in accounts receivable and accounts payable could include the timing of
collections from customers and payments to suppliers, as well as the level of
spending for maintenance and growth capital expenditures. A material adverse
change in operations or available financing under the Ciner Wyoming Credit
Facility could impact our ability to fund our requirements for liquidity and
capital resources. Historically, we have not made working capital borrowings to
finance our operations. As of September 30, 2021, we had a working capital
balance of $146.0 million as compared to a working capital balance of $109.3
million as of December 31, 2020. The primary driver for the increase in our
working capital balance was due to a higher accounts receivable balance as of
September 30, 2021 than December 31, 2020 primarily as a result of 31.1% more
sales in the three months ended September 30, 2021 compared to the three months
ended December 31, 2020.
Financial Assurance Regulatory Updates by the Wyoming Department of
Environmental Quality
We have historically been subject to a self-bond agreement (the "Self-Bond
Agreement") with the Wyoming Department of Environmental Quality ("WDEQ") under
which we committed to pay directly for reclamation costs. In May 2019, the State
of Wyoming enacted legislation that limits our and other mine operators' ability
to self-bond and required us to seek other acceptable financial instruments to
provide alternate assurances for our reclamation obligations by November 2020.
We provided such alternate assurances by timely securing a third-party surety
bond effective October 15, 2020 (the "Surety Bond") for the then-applicable full
self-bond amount $36.2 million, which was also the amount of our obligation as
of December 31, 2020. After we secured the Surety Bond, the previous Self-Bond
Agreement was terminated. As of the date of this Report, the impact on our net
income and liquidity due to securing the Surety Bond has been immaterial and we
anticipate that to continue to be the case. The amount of such assurances that
we are required to provide is subject to change upon periodic re-evaluation by
the WDEQ's Land Quality Division. As a result of the most recent such periodic
re-evaluation, the Surety Bond amount was increased to $41.8 million effective
March 1, 2021. For a discussion of risks in connection with future legislation
relating to such financial assurances that could affect our business, financial
condition and liquidity, please read Item IA, "Risk Factors-Risks Inherent in
our Business and Industry-Our inability to acquire, maintain or renew financial
assurances related to the reclamation and restoration of mining property could
have a material adverse effect on our business, financial condition and results
of operations," in our Annual Report on Form 10-K for the year ended
December 31, 2020, filed with the SEC on March 16, 2021.
                                       36
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Capital Expenditures
Our operations require investments to expand, upgrade or enhance existing
operations and to meet evolving environmental and safety regulations. We
distinguish between maintenance and expansion capital expenditures. Maintenance
capital expenditures (including expenditures for the construction or development
of new capital assets or the replacement, improvement or expansion of existing
capital assets) are made to maintain, over the long-term, our operating income
or operating capacity. Examples of maintenance capital expenditures are
expenditures to upgrade and replace mining equipment and to address equipment
integrity, safety and environmental laws and regulations. Our maintenance
capital expenditures do not include actual or estimated capital expenditures for
replacement of our trona reserves. Expansion capital expenditures are incurred
for acquisitions or capital improvements made to increase, over the long-term,
our operating income or operating capacity. Examples of expansion capital
expenditures include the acquisition and/or construction of complementary assets
to grow our business and to expand existing facilities, such as projects that
increase production from existing facilities or reduce costs, to the extent such
capital expenditures are expected to increase our long-term operating capacity
or operating income.
The table below summarizes our capital expenditures, on an accrual basis:
                                                     Three Months Ended September 30,       Nine Months Ended September 30,
(In millions)                                             2021               2020               2021               2020
Capital Expenditures:
Maintenance                                          $       4.8          $    6.5          $     20.8          $   16.7
Expansion                                                    0.1               3.1                 0.6              14.3
Total                                                $       4.9          $    9.6          $     21.4          $   31.0


During the three and nine months ended September 30, 2021, capital expenditures
decreased $4.7 million and $9.6 million as compared to the three and nine months
ended September 30, 2020, respectively. The decrease was primarily driven by
decreases in expansion capital expenditures because of the completion of our new
co-generation facility, which became operational in March 2020.
Green River Expansion Project
We continue to develop plans and execute the early phases for a potential new
Green River Expansion Project that we believe will increase production levels up
to approximately 3.5 million short tons of soda ash per year or up to
approximately 135% of the last five-year average of soda ash produced per
year. We have conducted the initial basic design and are currently evaluating
and pursuing the related permits and detailed cost and market analysis pursuant
to the basic design.  This project will require capital expenditures materially
higher than have been recently incurred by Ciner Wyoming. To maintain a
disciplined financial policy and what we consider a conservative financial
structure, we intend to pay for the investment in part through cash generated by
the business and in part through debt. The timing of the new Green River
Expansion Project as well as any other expansion capital expenditures may be
impacted by the Partnership's financial results including further negative
volatility caused by the COVID-19 or subsequent variants as well as by certain
performance ratios requirements of the Ciner Obligors' Facilities Agreement. See
Part I, Item 1, Financial Statements - Note 4, "Debt," for details.

Cash Flows Discussion
The following is a summary of cash provided by or used in each of the indicated
types of activities:
                                                         Nine Months Ended September 30,
(In millions)                                               2021                    2020              Percent Increase/(Decrease)
Cash provided by (used in):
Operating activities                                $            28.3          $      52.4                                 (46.0) %
Investing activities                                $           (20.7)         $     (28.4)                                (27.1) %
Financing activities                                $            (5.1)         $     (37.2)                                 86.3  %


Operating Activities
Our operating activities during the nine months ended September 30, 2021
provided cash of $28.3 million, a decrease of 46.0% from the $52.4 million cash
provided during the nine months ended September 30, 2020, primarily as a result
of the following:
•an increase of 95.8% in net income of $27.8 million during the nine months
ended September 30, 2021, compared to $14.2 million for the prior-year period;
and
•$24.4 million of working capital used in operating activities during the nine
months ended September 30, 2021, compared to $16.2 million of working capital
provided by operating activities during the nine months ended September 30,
2020. The
                                       37
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$40.4 million decrease in working capital relating to operating activities year
over year was primarily due to a higher accounts receivable balance at
September 30, 2021 primarily due to higher net sales for the nine months ended
September 30, 2021 compared to the same period ended September 30, 2020. It is
partly offset by the higher balances of accounts payable and accrued expenses as
of September 30, 2021.
Investing Activities
We used cash flows of $20.7 million in investing activities during the nine
months ended September 30, 2021, compared to $28.4 million used during the nine
months ended September 30, 2020, for capital projects as described in "Capital
Expenditures" above.
Financing Activities
Cash used in financing activities of $5.1 million during the nine months ended
September 30, 2021 decreased by 86.3% over the prior-year cash used in financing
activities, largely due to larger distributions to noncontrolling interest
during the nine months ended September 30, 2021 compared to the nine months
ended September 30, 2020.
Borrowings under the Prior Ciner Wyoming Credit Facility were at variable
interest rates.
                                                                 As of and for the quarter ended
                                                                          September 30,
(Dollars in millions)                                                          2021
Short-term borrowings from banks:
Outstanding amount at period end                                $                      105.0
Weighted average interest rate at period end(1)                                         3.09     %
Average daily amount outstanding for the period                 $                      111.3
Weighted average daily interest rate for the period(1)                                  3.15     %

Maximum month-end amount outstanding during the period $

           115.0




(1) Weighted average interest rates set forth in the table above include the
impacts of our interest rate swap contracts designated as cash flow hedges. As
of September 30, 2021, the interest rate swap contracts had an aggregate
notional value of $37.5 million.
                                       38
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Debt

See Part I, Item 1, Financial Statements - Note 4, "Debt" for more information
regarding the Partnership's debt obligations and related disclosures.
Contractual Obligations
During the nine months ended September 30, 2021, there were no material changes
with respect to the contractual obligations disclosed in our Annual Report on
Form 10-K for the year ended December 31, 2020, filed with the SEC on March 16,
2021 (the "2020 Annual Report") other than as described in the bullets
immediately below.
•As discussed in Part I, Item 1, Financial Statements - Note 4, "Debt," on March
8, 2021, we terminated the Ciner Resources Credit Facility and fully repaid the
outstanding borrowing amount.
•During the three months ended September 30, 2021, we entered into certain
logistic services commitments with various third parties that expire during 2022
and have a minimum contractual obligation for purchases by Ciner Wyoming of
approximately $19.1 million for such logistic services.
In addition, on October 28, 2021, Ciner Wyoming entered into the Ciner Wyoming
Credit Facility and terminated the Prior Ciner Wyoming Credit Facility. Please
read Part I, Item 1, Financial Statements - Note 4, "Debt."
Critical Accounting Policies
There have been no material changes in critical accounting policies followed by
us during the nine months ended September 30, 2021 from those disclosed in the
2020 Annual Report.
Recently Issued Accounting Standards
Accounting standards recently issued are discussed in Item 1. Financial
Statements - Note 1, "Corporate Structure and Summary of Significant Accounting
Policies," in the notes to unaudited condensed consolidated financial
statements.
Non-GAAP Financial Measures
We report our financial results in accordance with generally accepted accounting
principles in the United States ("GAAP"). We also present the non-GAAP financial
measures of:
•Adjusted EBITDA;
•distributable cash flow; and
•distribution coverage ratio.
We define Adjusted EBITDA as net income (loss) plus net interest expense, income
tax, depreciation, depletion and amortization, equity-based compensation expense
and certain other expenses that are non-cash charges or that we consider not to
be indicative of ongoing operations. Distributable cash flow is defined as
Adjusted EBITDA less net cash paid for interest, maintenance capital
expenditures and income taxes, each as attributable to Ciner Resources LP. The
Partnership may fund expansion-related capital expenditures with borrowings
under existing credit facilities such that expansion-related capital
expenditures will have no impact on cash on hand or the calculation of cash
available for distribution.  In certain instances, the timing of the
Partnership's borrowings and/or its cash management practices will result in a
mismatch between the period of the borrowing and the period of the capital
expenditure.  In those instances, the Partnership adjusts designated reserves
(as provided in our partnership agreement) to take account of the timing
difference. Accordingly, expansion-related capital expenditures have been
excluded from the presentation of cash available for distribution. Distributable
cash flow will not reflect changes in working capital balances. We define
distribution coverage ratio as the ratio of distributable cash flow as of the
end of the period to cash distributions payable with respect to such period.
Adjusted EBITDA, distributable cash flow and distribution coverage ratio are
non-GAAP supplemental financial measures that management and external users of
our consolidated financial statements, such as industry analysts, investors,
lenders and rating agencies, may use to assess:
•our operating performance as compared to other publicly traded partnerships in
our industry, without regard to historical cost basis or, in the case of
Adjusted EBITDA, financing methods;
•the ability of our assets to generate sufficient cash flow to make
distributions to our unitholders;
•our ability to incur and service debt and fund capital expenditures; and
•the viability of capital expenditure projects and the returns on investment of
various investment opportunities.
                                       39
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We believe that the presentation of Adjusted EBITDA, distributable cash flow and
distribution coverage ratio provide useful information to investors in assessing
our financial condition and results of operations. The GAAP measures most
directly comparable to Adjusted EBITDA and distributable cash flow are net
income and net cash provided by operating activities. Our non-GAAP financial
measures of Adjusted EBITDA, distributable cash flow and distribution coverage
ratio should not be considered as alternatives to GAAP net income, operating
income, net cash provided by operating activities, or any other measure of
financial performance or liquidity presented in accordance with GAAP. Adjusted
EBITDA and distributable cash flow have important limitations as analytical
tools because they exclude some, but not all items that affect net income and
net cash provided by operating activities. Investors should not consider
Adjusted EBITDA, distributable cash flow and distribution coverage ratio in
isolation or as a substitute for analysis of our results as reported under GAAP.
Because Adjusted EBITDA, distributable cash flow and distribution coverage ratio
may be defined differently by other companies, including those in our industry,
our definition of Adjusted EBITDA, distributable cash flow and distribution
coverage ratio may not be comparable to similarly titled measures of other
companies, thereby diminishing its utility.
The table below presents a reconciliation of the non-GAAP financial measures of
Adjusted EBITDA and distributable cash flow to the GAAP financial measures of
net income and net cash provided by operating activities:
                                                          Three Months Ended                       Nine Months Ended
                                                            September 30,                            September 30,
(In millions, except per unit data)                     2021                 2020               2021               2020
Reconciliation of Adjusted EBITDA to net income:
Net income                                       $      15.4              $    5.4          $     27.8          $   14.2
Add backs:
Depreciation, depletion and amortization expense         7.4                   7.8                23.8              20.8

Interest expense, net                                    1.3                   1.2                 4.1               3.9

Equity-based compensation expense, net of
forfeitures                                                -                   0.2                 0.4               0.9

Adjusted EBITDA                                  $      24.1              $   14.6          $     56.1          $   39.8
Less: Adjusted EBITDA attributable to
noncontrolling interest                                 12.1                   7.4                28.4              20.3
Adjusted EBITDA attributable to Ciner Resources
LP                                               $      12.0              $ 

7.2 $ 27.7 $ 19.5


Reconciliation of distributable cash flow to Adjusted EBITDA attributable to Ciner Resources LP:
Adjusted EBITDA attributable to Ciner Resources
LP                                               $      12.0              $    7.2          $     27.7          $   19.5
Less: Cash interest expense, net attributable to
Ciner Resources LP                                       0.6                   0.6                 1.8               0.7
Less: Maintenance capital expenditures
attributable to Ciner Resources LP                       3.2                   2.8                10.1               7.4
Distributable cash flow attributable to Ciner
Resources LP                                     $       8.2              $ 

3.8 $ 15.8 $ 11.4


Cash distribution declared per unit              $     0.340              $      -          $    0.340          $  0.340
Total distributions to unitholders and general
partner                                          $       6.9              $      -          $      6.9          $    6.8
Distribution coverage ratio                             1.19                      N/A             2.29              1.68

Reconciliation of Adjusted EBITDA to net cash
from operating activities:
Net cash provided by operating activities        $       9.9              $   21.2          $     28.3          $   52.4
Add/(less):

Amortization of long-term loan financing                (0.1)                 (0.1)               (0.4)             (0.1)

Net change in working capital                           13.1                  (7.7)               24.4             (16.2)

Interest expense, net                                    1.3                   1.2                 4.1               3.9

Other non-cash items                                    (0.1)                    -                (0.3)             (0.2)
Adjusted EBITDA                                  $      24.1              $   14.6          $     56.1          $   39.8
Less: Adjusted EBITDA attributable to
noncontrolling interest                                 12.1                   7.4                28.4              20.3

Adjusted EBITDA attributable to Ciner Resources
LP                                               $      12.0              $    7.2          $     27.7          $   19.5
Less: Cash interest expense, net attributable to
Ciner Resources LP                                       0.6                   0.6                 1.8               0.7
Less: Maintenance capital expenditures
attributable to Ciner Resources LP                       3.2                   2.8                10.1               7.4
Distributable cash flow attributable to Ciner
Resources LP                                     $       8.2              $    3.8          $     15.8          $   11.4


                                       40

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© Edgar Online, source Glimpses

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