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)

11/03/2020 | 06:03am


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;
•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 or 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;
•the impact of the ANSAC Early Exit Agreement (as defined below) 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;
•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;
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•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 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 currently sold to various domestic and international customers,
including American Natural Soda Ash Corporation ("ANSAC"), which is an affiliate
for export sales.
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

Public health epidemics, pandemics or outbreaks of contagious diseases could
adversely impact our business. In December 2019, a novel strain of coronavirus
("COVID-19") emerged in Wuhan, Hubei Province, China. While initially the
outbreak was largely concentrated in China and caused significant disruptions to
its economy, it has now spread to many other countries and infections have been
reported throughout the world, including the United States and markets to which
our products have historically been exported. On March 11, 2020, the World
Health Organization
declared COVID-19 a pandemic. Since that time, governmental
jurisdictions in the United States and globally have taken various actions to
curb the spread of COVID-19, which has resulted in disruption in the national
and global economic and financial markets.


Our Response to COVID-19




We continue to closely monitor the impact of the outbreak of COVID-19 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. We have taken strong proactive steps to keep the safety
of our team and their families as the priority. We are executing a
comprehensive plan to help prevent the spread of the virus in our work locations
and it appears to be having a positive impact. This plan includes multiple
layers of protection for our employees including but not limited to social
distancing, working from home for certain employees, splitting shifts, increased
sanitation, restricted contractor and visitor access, temperature checks on all
contractors and third-party vendors, travel restrictions, mask wearing
requirements, and daily communication with our teams. We have conducted
proactive quarantining and contact tracing from the early days of this pandemic
and require self-reporting of any illness, in addition to
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a company doctor, weekly status meetings, tracking local resources, and industry
wide efforts. We have also prepared strong contingency plans for all our
operations with specific actions based on absentee rates. While we have not
utilized any such plans to date as they have not been needed, they are
continuously refined in case needed. We anticipate a re-opening of society when
the virus plateaus and diminishes, and we have completed re-entry plans to
implement as they become appropriate. We are using data to guide our actions
rather than firm dates, and our teams are kept up to date on these plans. Our
focus prior to and during this pandemic has been the safety of our teams and
this will continue to be our priority as we scale our operations back to normal
as the data guides us to do so. 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 quarter of 2020, we started to see the impact of COVID-19 on our
operations in the form of slowing global demand and downward pricing pressure
and we began at that time to utilize the flexibility of our production assets to
adjust to the COVID-19 uncertainties and our customers' demands.
In the second quarter of 2020, the decline in demand adversely impacted our
sales and production volume, and price per ton. We experienced an approximately
33% decline in production volumes and 36% decline in sales volumes when compared
to our pre-COVID-19 production and sales levels in the quarter ended March 31,
2020
, respectively, primarily as a result of utilizing the flexibility of our
production assets to adjust to the COVID-19 uncertainties and our customers'
demands in the near- and mid-term. Our international demand was impacted the
most as different countries dealt with different levels of the outbreak and
shutdowns. In addition, our customers in the flat glass and in particular the
automotive business were significantly negatively impacted.
In the third quarter of 2020, demand showed signs of recovery domestically;
however, there was still a decline in the global market compared to the third
quarter of 2019. Our international demand continues to be impacted the most as
different countries deal with different levels of the outbreak and shutdowns,
but has shown signs of recovery during the third quarter of 2020 as compared to
the second quarter of 2020. While we have yet to recover to the pre-COVID
levels, overall sales volumes increased 26.7% and overall production volumes
increased 1.5% over second quarter 2020 results. Our production volume has
trended upward consistently with our sales volume except for an unplanned
weather related outage in September. So far, we have been able to utilize the
flexibility of our production assets to adjust to the COVID-19 uncertainties and
customers' demands, but the Partnership may experience similar declines in the
near- and mid-term as the COVID-19 pandemic continues.
At this time, we are unable to predict the ultimate impact that COVID-19 may
have on our business, future results of operations, financial position, cash
flows or ability to make distributions to unitholders. The extent to which our
operations may be impacted by the COVID-19 pandemic will depend largely on
future developments, which are highly uncertain and cannot be accurately
predicted, including new information that may emerge concerning the severity of
the outbreak and actions by local, state, federal or international government
authorities to contain the outbreak or treat its impact. Furthermore, the
impacts of a potential worsening of global economic conditions and the continued
disruptions to and volatility in the financial markets remain unknown. While we
have begun to see signs of recovery with some of our customers and industries,
primarily in the form of government re-openings and increasing orders these
recoveries are very fluid. We are actively managing the business to maintain
cash flow, and we believe we have enough liquidity to meet our anticipated
liquidity requirements. As of September 30, 2020, we 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.
For the nine months ended September 30, 2020 we have incurred $1.6 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 during the COVID-19 pandemic.

Notice to Terminate Membership in ANSAC
As previously disclosed, the Partnership was informed on November 9, 2018 that
Ciner Corp, an affiliate of the Partnership, had 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, delivered a notice to terminate its
membership in ANSAC. Such termination was expected to be effective as of the end
of day on December 31, 2021. On July 27, 2020, ANSAC and the members thereof
entered into an agreement, effective as of July 24, 2020, that, among other
things, terminates Ciner Corp's membership in ANSAC effective as of December 31,
2020
(the "ANSAC termination date"), a year earlier than previously announced
(the "ANSAC Early Exit Agreement"). For a limited period after December 31,
2020
, 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. Between now and the ANSAC termination date, Ciner Corp
continues to have full ANSAC membership benefits and services. Potential
liabilities associated with exiting ANSAC are not expected to be material.
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Historically, by design and prior to our exit from ANSAC, ANSAC managed most of
our international sales, marketing and logistics, and as a result, was our
largest customer for the nine months ended September 30, 2020 and 2019,
accounting for 45.1% and 60.3%, respectively, of our net sales. Although ANSAC
has been our largest customer for the aforementioned periods, we anticipate that
the impact of such termination on our net sales, net income and liquidity will
be 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 better direct access and control
of our customers and logistics and the ability to leverage Ciner Group's
expertise in these areas, we believe we will be more than able to adequately
replace these net sales.


Post-ANSAC International Export Capabilities




In accordance with the ANSAC Early Exit Agreement, Ciner Corp will begin
marketing soda ash on our behalf directly into international markets and
building its international sales, marketing and supply chain infrastructure. We
will also have access to utilize the distribution network that has already been
established by the global Ciner Group. We believe that by having the option of
combining our volumes with Ciner Group's soda ash exports from Turkey, Ciner
Corp's
strategic exit from ANSAC will allow us to leverage global Ciner Group's,
the world's largest natural soda ash producer, soda ash operations which we
expect will improve our ability to optimize our market share both domestically
and internationally. Being able to work with the global Ciner Group will provide
us with the opportunity to better attract and more efficiently serve larger
global customers. In addition, the Partnership will need access to an
international logistics infrastructure that includes, among other things, a
domestic port for export capabilities. These export capabilities are currently
being developed by an affiliated company and options being evaluated range from
continued outsourcing in the near term to developing its own port capabilities
in the longer term.

Suspension of Distributions
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.

Effective November 2, 2020, the board of Ciner Wyoming unanimously approved a
continuation of the suspension of quarterly distributions to the members of
Ciner Wyoming. Effective November 2, 2020, in connection with the quarterly
distribution for the quarter ended September 30, 2020, each of the members of
the board of directors of our general partner approved a continuation of the
suspension of quarterly distributions to members and unitholders in order to
increase financial and liquidity flexibility as the COVID-19 pandemic continues.

Management and the board of directors of our general partner will continue to
evaluate, on a quarterly basis, whether it is appropriate to reinstate the
distribution to our unitholders, which will be dependent in part on our cash
reserves, liquidity, total debt levels and anticipated capital expenditures.

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 GDP. We expected 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 a material impact across a variety of our customers and
customer segments which will have a negative impact on demand for our products.
In the third quarter of 2020, demand showed signs of recovery domestically;
however, there was still a decline in the global market compared to the third
quarter of 2019. Our international demand continues to be impacted the most as
different countries deal with different levels of the outbreak and shutdowns,
but has shown signs of recovery during the third quarter of 2020 in comparison
to the second quarter 2020. While we have yet to recover to the pre-COVID
levels, overall sales volumes increased 26.7% over second quarter 2020 results.
We have been able to utilize the flexibility of our production assets to adjust
to the COVID-19 uncertainties and customers' demands, but the Partnership may
experience similar declines in the near- and mid-term as the COVID-19 pandemic
continues.

Sales Mix
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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
See the heading titled "Post-ANSAC International Export Capabilities" above for
more information regarding details and developments related to the Partnership's
international exporting capabilities.
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, particularly natural gas, has been relatively low in recent years,
and, despite the historic volatility of natural gas prices, we believe that we
will continue to benefit from relatively low prices in the near future. However,
we expect to continue to hedge a portion of our forecasted natural gas purchases
to mitigate volatility. During 2019 and the first quarter of 2020, we continued
construction on a new natural gas-fired turbine co-generation facility that is
expected to provide roughly one-third of our electricity and steam demands at
our mine in the Green River Basin. The new co-generation facility began
operating in March 2020 and in a normal production environment is expected to
provide us with an improvement of up to approximately $3 million annually in
energy costs and up to approximately $4 million annually once the Green River
Expansion Project
is online.

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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 1.67: 1.0 and 1.62: 1.0
for the three and nine months ended September 30, 2020, respectively, and 1.53:
1.0 and 1.51: 1.0 for the three and nine months ended September 30, 2019,
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. Delivered costs to most domestic customers
and ANSAC primarily relates 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.
All of our soda ash is shipped by rail or truck from our Green River Basin
operations. Union Pacific Railroad Corporation ("Union Pacific") is our largest
provider of domestic rail freight services. Our plant receives rail service
exclusively from Union Pacific and shipments by rail accounted for 82.7% and
86.5% of our total freight costs during the three months ended September 30,
2020
and 2019, respectively and 84.5% and 84.9% of our total freight costs
during the nine months ended September 30, 2020 and 2019, respectively.

Our agreement with Union Pacific expires on December 31, 2021. If we do not ship
at least a significant portion of our soda ash production on the Union Pacific
rail line during a twelve-month period, we must pay Union Pacific a shortfall
payment under the terms of our transportation agreement. For each of the nine
months ended September 30, 2020 and 2019, we did not make any shortfall payments
and do not expect to make any such payments in the future.
Net Sales
Net sales include the amounts we earn on sales of soda ash. We recognize revenue
from our sales when control of goods transfers to the customer. Control
typically transfers 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 facility, thereby rendering
our performance obligation fulfilled. 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.
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.

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 $1.06 and
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$4.22 per MMBtu. The average monthly Northwest Pipeline Rocky Mountain Index
natural gas settlement prices for the three and nine months ended September 30,
2020
and 2019 were $1.74 and $1.77, and $1.54 and $1.98 per MMBtu, respectively.
However, we expect to continue to hedge a portion of our forecasted natural gas
purchases to mitigate volatility. During 2019 and the first quarter of 2020, we
continued construction on a new natural gas-fired turbine co-generation facility
that is expected to provide roughly one-third of our electricity and steam
demands at our mine in the Green River Basin. The new co-generation facility
began operating in March 2020 and in a normal production environment is expected
to provide us with an improvement of up to approximately $3 million annually in
energy costs, and up to approximately $4 million annually once the Green River
Expansion Project
is online.
Royalties. During the three and nine months ended September 30, 2020, we paid
royalties to the State of Wyoming, the U.S. Bureau of Land Management and Rock
Springs Royalty Company LLC
, an affiliate of Occidental Petroleum Corporation
(formerly an affiliate of Anadarko Petroleum Corporation), which were 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. The royalty rates we pay to our lessors and licensor may change
upon our renewal or renegotiation of such leases and license. Any increase in
the royalty rates we are required to pay to our lessors and licensor through
renewal or renegotiation of leases or license, 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.
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.
Selling, general and administrative expenses incurred by ANSAC on our behalf are
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. Pursuant to the
ANSAC Early Exit Agreement, we will incur a fixed rate per ton of selling,
general, and administrative expense for each ton we sell to ANSAC. On October
23, 2015
, the Partnership entered into a Services Agreement (the "Services
Agreement"), with our general partner and Ciner Corp. Pursuant to the Services
Agreement, Ciner Corp has agreed to provide the Partnership with certain
corporate, selling, marketing, and general and administrative services, in
return for which the Partnership has agreed to pay Ciner Corp an annual
management fee, subject to quarterly adjustments, and reimburse 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 2020 Financial Highlights:

•Net sales of $98.2 million decreased 28.4% from the prior-year third quarter;
year-to-date of $288.8 million decreased 27.3% over the prior year. During the
second and third quarters of 2020, the Partnership experienced a significant
decline in sales volumes, production and pricing in response to COVID-19.
•Soda ash volume produced decreased 35.3% from the prior-year third quarter, and
soda ash volume sold decreased 23.8% from the prior-year third quarter;
year-to-date soda ash volume produced decreased 22.8% from the prior-year, and
soda ash volume sold decreased 21.0% from the prior-year. During the second and
third quarters of 2020, the Partnership experienced a significant decline in
production volumes and demand in response to COVID-19.
•Net income of $5.4 million decreased $24.5 million from the prior-year third
quarter; year-to-date of $14.2 million decreased $64.7 million over the prior
year. Net income declined more than sales volumes, production, and pricing
because a significant amount of our plant costs are not as efficient with these
low productions levels and are not proportionally impacted by lower sales and
production volume.
•Adjusted EBITDA of $14.6 million decreased 61.2% from the prior-year third
quarter; year-to-date of $39.8 million decreased 61.6% over the prior year.
During the second and third quarters of 2020, sales and production volumes
decreased significantly as a result of COVID-19. Adjusted EBITDA declined more
than sales and production because a significant amount of our plant costs are
not as efficient with these low productions levels and are not proportionally
impacted by lower sales and production volume.
•Basic earnings per unit of $0.11 for the quarter decreased 85.1% over the
prior-year third quarter of $0.74; year-to-date basic earnings per unit
of $0.28 decreased 85.3% over the prior-year.
•Net cash provided by operating activities of $21.2 million decreased 47.8% over
prior-year third quarter; year-to-date of $52.4 million decreased 23.4% over the
prior year.
•Distributable cash flow of $3.8 million decreased 76.5% compared to the
prior-year third quarter; year-to-date distributable cash flow of $11.4
million
decreased 75.1% over the prior year.
•The distribution coverage ratio was N/A and 2.35 for the three months ended
September 30, 2020 and 2019, respectively; and 1.68 and 2.22 for the nine months
ended September 30, 2020 and 2019, respectively. There were no distributions in
the third quarter. Distribution coverage ratio declined as a result of decreased
Adjusted EBITDA and net income during the 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, 2020 and 2019:
Nine Months Ended September
Three Months Ended September 30, 30,


(In millions, except for operating and other data section) 2020



2019 2020 2019
Net sales:
Sales-affiliates $ 44.2 $ 80.4 $ 130.2 $ 239.7
Sales-others 54.0 56.8 158.6 157.7
Net sales $ 98.2 $ 137.2 $ 288.8 $ 397.4
Operating costs and expenses:
Cost of products sold 78.8 93.9 233.1 274.7

Depreciation, depletion and amortization expense 7.8 6.8 20.8 20.0
Selling, general and administrative expenses-affiliates 4.5 4.4 13.0 15.2
Selling, general and administrative expenses-others 0.2 0.7 3.5 4.3

Total operating costs and expenses 91.3 105.8 270.4 314.2
Operating income 6.9 31.4 18.4 83.2
Interest income - 0.1 0.1 0.3
Interest expense (1.2) (1.6) (4.0) (4.6)

Other, net (0.3) - (0.3) -
Total other expense, net (1.5) (1.5) (4.2) (4.3)

Net income 5.4 29.9 14.2 78.9
Net income attributable to non-controlling interest 3.1 15.1 8.5 40.5
Net income attributable to Ciner Resources LP $ 2.3 $ 14.8 $ 5.7 $ 38.4

Operating and Other Data:
Trona ore consumed (thousands of short tons) 770.5 1,086.3 2,584.9 3,126.0
Ore to ash ratio(1) 1.67: 1.0 1.53: 1.0 1.62: 1.0 1.51: 1.0
Ore grade(2) 86.9 % 86.4 % 86.8 % 86.6 %
Soda ash volume produced (thousands of short tons) 460.1 711.0 1,593.4 2,064.3
Soda ash volume sold (thousands of short tons) 540.3 709.0 1,630.4 2,064.5

Adjusted EBITDA(3) $ 14.6 $ 37.6 $ 39.8 $ 103.6




(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.
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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 September
30, Nine Months Ended September 30, Percent


Increase/(Decrease)



(Dollars in millions, except for
average sales price data) 2020 2019 2020 2019 QTD YTD

Net sales:
Domestic $ 53.7 $ 56.8 $ 153.1 $ 157.7 (5.5)% (2.9)%
International 44.5 80.4 135.7 239.7 (44.7)% (43.4)%
Total net sales $ 98.2 $ 137.2 $ 288.8 $ 397.4 (28.4)% (27.3)%
Sales volumes (thousands of short
tons):
Domestic 243.5 237.7 676.2 660.8 2.4% 2.3%
International 296.8 471.3 954.2 1,403.7 (37.0)% (32.0)%
Total soda ash volume sold 540.3 709.0 1,630.4 2,064.5 (23.8)%



(21.0)%



Average sales price (per short ton)
(1)
Domestic $ 220.53 $ 238.96 $ 226.41 $ 238.65 (7.7)% (5.1)%
International $ 149.93 $ 170.59 $ 142.21 $ 170.76 (12.1)% (16.7)%
Average $ 181.75 $ 193.51 $ 177.13 $ 192.49 (6.1)% (8.0)%
Percent of net sales:
Domestic net sales 54.7 % 41.4 % 53.0 % 39.7 % 32.1% 33.5%
International net sales 45.3 % 58.6 % 47.0 % 60.3 % (22.7)%


(22.1)%



Total percent of net sales 100.0 % 100.0 % 100.0 % 100.0 %
Percent of sales volumes:
Domestic volume 45.1 % 33.5 % 41.5 % 32.0 % 34.6% 29.7%
International volume 54.9 % 66.5 % 58.5 % 68.0 % (17.4)% (14.0)%
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.






As discussed in the "Overview" section above the impact of COVID-19 and actions
taken by the Partnership in response to it had varying effects on our results of
operations throughout the second and third quarters of 2020. The Partnership
experienced a significant decrease in sales and production volumes due to a
significant decrease in global demand and production volumes, which negatively
impacted the business.
Three Months Ended September 30, 2020 compared to Three Months Ended September
30, 2019

Consolidated Results
Net sales. Net sales decreased by 28.4% to $98.2 million for the three months
ended September 30, 2020 from $137.2 million for the three months ended
September 30, 2019, primarily driven by a decrease in soda ash volumes sold of
23.8% due to lower international demand for three months ended September 30,
2020
, as compared to the three months ended September 30, 2019. The decrease in
soda ash volumes sold was primarily attributable to the decline in global demand
as a result of the COVID-19 pandemic. Also contributing to the decrease in net
sales was a decline in international pricing, which continued the trend that
began in the fourth quarter of 2019. In addition, the Partnership increased
domestic sales opportunities to offset lower international demand.
Additionally, during the three months ended September 30, 2020 the Partnership
experienced an improvement in net sales of 28.9% to $98.2 million from $76.2
million
as compared to the second quarter of 2020. Both the three month periods
ended September 30, 2020 and June 30, 2020 were negatively impacted by COVID-19.
The primary driver was an increase in volume in both our domestic and
international sales.
Cost of products sold. Cost of products sold, including depreciation, depletion
and amortization expense and freight costs, decreased by 14.0% to $86.6 million
for the three months ended September 30, 2020 from $100.7 million for the three
months ended September 30, 2019, which were primarily due to significant
decreases in overall soda ash sales volumes and production in response to the
COVID-19 pandemic.
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Additionally, during the three months ended September 30, 2020 the Partnership
experienced an increase in cost of products sold of 16.7% to $86.6 million from
$74.2 million as compared to the second quarter of 2020. Both the three month
periods ended September 30, 2020 and June 30, 2020 were negatively impacted by
COVID-19. The primary driver was an increase in sales volume.
Selling, general and administrative expenses. Our selling, general and
administrative expenses decreased 7.8% to $4.7 million for the three months
ended September 30, 2020, compared to $5.1 million for the three months ended
September 30, 2019. The decrease was driven primarily by decreased employee
benefit expenses and travel expenses, partially offset by higher contracted
services and professional services incurred over the same period.
Additionally, during the three months ended September 30, 2020 the Partnership
experienced a decrease in selling, general and administrative expense of 21.7%
to $4.7 million from $6.0 million as compared to the second quarter of 2020.
Both the three month periods ended September 30, 2020 and June 30, 2020 were
negatively impacted by COVID-19. The decrease was primarily driven by lower
ANSAC fees, employee benefit expenses and lower professional services.
Operating income. As a result of the foregoing, operating income decreased by
78.0% to $6.9 million for the three months ended September 30, 2020 from $31.4
million
for the three months ended September 30, 2019. During the third quarter
of 2020, production and sales decreased significantly compared to the same
period in 2019. Operating results have declined by a greater percentage than
production and sales due to a significant amount of fixed plant costs that are
not proportionally impacted by lower sales and production volume. In addition,
certain costs are higher due to cost related to employee safety and retention
during the COVID-19 pandemic.
Additionally, during the three months ended September 30, 2020 operating income
increased 272.1% to $6.9 million from an operating loss of $4.0 million as
compared to the second quarter of 2020. Both the three month periods ended
September 30, 2020 and June 30, 2020 were negatively impacted by COVID-19.
Operating results have increased by a greater percentage than production and
sales due to a significant amount of fixed plant costs that are not
proportionally impacted by higher sales and production volume.
Net income. As a result of the foregoing, net income decreased by 81.9% to $5.4
million
for the three months ended September 30, 2020, from $29.9 million for
the three months ended September 30, 2019.
Nine Months Ended September 30, 2020 compared to Nine Months Ended September 30,
2019

Consolidated Results
Net sales. Net sales decreased by 27.3% to $288.8 million for the nine months
ended September 30, 2020 from $397.4 million for the nine months ended September
30, 2019
, primarily driven by a decrease in soda ash volumes sold of 21.0% due
to lower international demand for the nine months ended September 30, 2020, as
compared to the nine months ended September 30, 2019. The decrease in soda ash
volumes sold were primarily attributable to the decline in global demand as a
result of the COVID-19 pandemic beginning in April 2020. Also contributing to
the decrease in net sales was a decline in international pricing, which
continued the trend that began in the fourth quarter of 2019.
Cost of products sold. Cost of products sold, including depreciation, depletion
and amortization expense and freight costs, decreased by 13.8% to $253.9 million
for the nine months ended September 30, 2020 from $294.7 million for the nine
months ended September 30, 2019, which were primarily due to significant
decreases in overall soda ash sales volumes and production in response to
COVID-19, which were partially offset by the increased cost due to usage not
being effective with the decrease in production.
Selling, general and administrative expenses. Our selling, general and
administrative expenses decreased 15.4% to $16.5 million for the nine months
ended September 30, 2020, compared to $19.5 million for the nine months ended
September 30, 2019. The decrease was driven primarily by decreased affiliate
expenses and employee benefit expenses, as well as lower travel expenses
and professional fees incurred during the nine months of 2020.
Operating income. As a result of the foregoing, operating income decreased by
77.9% to $18.4 million for the nine months ended September 30, 2020 from $83.2
million
for the nine months ended September 30, 2019. During the nine months
ended September 30, 2020, production and sales decreased significantly.
Operating results have declined by a greater percentage than production and
sales due to a significant amount of fixed plant costs that are not
proportionally impacted by lower sales and production volume. In addition,
certain costs are higher due to cost related to employee safety and retention
during the COVID-19 pandemic.
Net income. As a result of the foregoing, net income decreased by 82.0% to $14.2
million
for the nine months ended September 30, 2020, from $78.9 million for the
nine months ended September 30, 2019.

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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 $1.7 million
at September 30, 2020;
•approximately $132.5 million ($225.0 million, less $92.5 million outstanding),
is available for borrowing and undrawn under the Ciner Wyoming Credit Facility
(as defined herein) as of September 30, 2020 (during the nine months ended
September 30, 2020, we made repayments on the Ciner Wyoming Credit Facility of
$196.0 million, offset by borrowings of $159.0 million); and
•$10.0 million is available for borrowing under the Ciner Resources Credit
Facility (as defined herein) as of September 30, 2020.

We continue to analyze all aspects of our spending in order to maintain
liquidity at levels we believe are necessary. In the second and third quarters
of 2020, we took steps to remove current non-essential spend, including limiting
spending on travel, third-party services and other operating expenses. We are
utilizing applicable COVID-19 related government relief programs, such as cost
reimbursement or payment deferral programs. We have reviewed and taken actions
to adjust our capital spending and in particular our expansion capital spending
until we have more clarity and visibility into the impact of the pandemic on our
long-term business. Our ability to satisfy debt service obligations, to fund
planned capital expenditures and to make acquisitions, will depend on 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.

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.

Effective November 2, 2020, the board of Ciner Wyoming unanimously approved a
continuation of the suspension of quarterly distributions to the members of
Ciner Wyoming. Effective November 2, 2020, in connection with the quarterly
distribution for the quarter ended September 30, 2020, each of the members of
the board of directors of our general partner approved a continuation of the
suspension of quarterly distributions to members and unitholders in order to
increase financial and liquidity flexibility as the COVID-19 pandemic continues.

Management and the board of directors of our general partner will continue to
evaluate, on a quarterly basis, whether it is appropriate to reinstate the
distribution to our unitholders, which will be dependent in part on our cash
reserves, liquidity, total debt levels and anticipated capital expenditures.

Although we cannot estimate the future impact of COVID-19, we believe our
existing liquidity, the steps we took in the first and second quarters of 2020
to strengthen our financial position through the amended Ciner Wyoming Credit
Facility and Ciner Resources Credit Facility, and the suspension of our
quarterly distributions for the second and third quarters of 2020, provide the
financial flexibility and sufficient liquidity to run our business effectively.

We are actively managing the business to maintain cash flow and we believe with
these steps we have adequate liquidity to meet our anticipated requirements
during the COVID-19 pandemic. While we have begun to see signs of recovery with
some of our customers and industries, primarily in the form of government
re-openings and increasing sales orders, in comparison to quarter ended
September 30, 2020 these recoveries are very fluid. As we cannot predict the
duration or scope of the COVID-19 pandemic and its impact on our operations, the
potential negative financial impact to our results cannot be reasonably
estimated but could be material. We will review and, when appropriate, adjust
our overall approach to capital allocation and liquidity as we know more about
the length and severity of the COVID-19 pandemic and how the post-pandemic
recovery will unfold. See Part I, Item 2, Overview, "Recent Developments", for
more information.

Capital Requirements
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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 Resources Credit
Facility and 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,
2020
, we had a working capital balance of $83.8 million as compared to a working
capital balance of $116.0 million as of December 31, 2019. The primary driver
for the decrease in our working capital balance was a decrease in cash and cash
equivalents primarily related to declines in sales as we continue to utilize the
flexibility of our production assets to adjust to the COVID-19 uncertainties and
our customer demands and repayments under the Ciner Wyoming Credit Facility and
additionally decreases in due from affiliates primarily related to a decline in
sales levels to ANSAC and timing of collections during the nine months ended
September 30, 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. The amount of the
self-bond was $36.2 million at both September 30, 2020 and December 31, 2019.
In May 2019, the State of Wyoming enacted legislation that limits our and other
mine operators' ability to self-bond and requires 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. After we secured the
Surety Bond, the 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 is 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. 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,
2019
, filed with the SEC on March 9, 2020.

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 Nine Months Ended September
September 30, 30,
(In millions) 2020 2019 2020 2019
Capital Expenditures:
Maintenance $ 6.5 $ 4.6 $ 16.7 $ 9.8
Expansion 3.1 7.1 14.3 31.3
Total $ 9.6 $ 11.7 $ 31.0 $ 41.1


During the nine months ended September 30, 2020, capital expenditures decreased
$10.1 million as compared to the nine months ended September 30, 2019. 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. The decrease was partially offset by the continued
increase of maintenance capital expenditures that began in the second half of
2019 at our Wyoming facility to both adequately maintain the facility's physical
assets and to improve its operational reliability.
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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 tons of soda ash per year. We have conducted the
initial basic design and are currently evaluating and pursuing the related
permits and detailed cost analysis pursuant to the basic design. This project
will require capital expenditures materially higher than have been recently
incurred by Ciner Wyoming. When considering the significant investment required
by this expansion and the infrastructure improvements designed to increase our
overall efficiency, combined with the COVID-19 pandemic's negative impact on our
financial results, we have re-prioritized the timing of the significant
expenditure items in order to increase financial and liquidity flexibility and
until we have more clarity and visibility into the ongoing impact of the
COVID-19 pandemic on our business.

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, Percent
(In millions) 2020 2019 Increase/(Decrease)
Cash provided by (used in):
Operating activities $ 52.4 $ 68.4 (23.4) %
Investing activities $ (28.4) $ (49.3) (42.4) %
Financing activities $ (37.2) $ (17.1) 117.5 %


Operating Activities
Our operating activities during the nine months ended September 30, 2020
provided cash of $52.4 million, a decrease of 23.4% from the $68.4 million cash
provided during the nine months ended September 30, 2019, primarily as a result
of the following:
•a decrease of 82.0% in net income of $14.2 million during the nine months ended
September 30, 2020, compared to $78.9 million for the prior-year period; and
•$16.2 million of working capital provided by operating activities during the
nine months ended September 30, 2020, compared to $31.4 million of working
capital used in operating activities during the nine months ended September 30,
2019
. The $47.6 million increase in working capital provided by operating
activities was primarily due to the $15.1 million decrease in due-from
affiliates for the nine months ended September 30, 2020 compared to a $30.0
million
increase in due from affiliates for the nine months ended September 30,
2019
primarily related to incremental sales levels to ANSAC, as well as timing
of collections and timing of our funding of pension benefit plans offered and
administered by Ciner Corp.
Investing Activities
We used cash flows of $28.4 million in investing activities during the nine
months ended September 30, 2020, compared to $49.3 million used during the nine
months ended September 30, 2019, for capital projects as described in "Capital
Expenditures" above.
Financing Activities
Cash used in financing activities of $37.2 million during the nine months ended
September 30, 2020 increased by 117.5% over the prior-year cash used in
financing activities, largely due to repayments of the credit facility during
the nine months ended September 30, 2020.
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Borrowings under the Ciner Wyoming Credit Facility were at variable interest
rates.
As of and for the
quarter ended
September 30,
(Dollars in millions) 2020
Short-term borrowings from banks:
Outstanding amount at period end $ 92.5
Weighted average interest rate at period end(1) 2.96 %
Average daily amount outstanding for the period $ 138.7
Weighted average daily interest rate for the period(1) 2.88 %
Maximum month-end amount outstanding during the period $ 145.0




(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, 2020, the interest rate swap contracts had an aggregate
notional value of $37.5 million.
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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, 2020, 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, 2019, filed with the SEC on March 9,
2020
(the "2019 Annual Report") other than as described below.
•As discussed in Part I, Item 1, Financial Statements - Note 4, "Debt", on March
26, 2020
, we entered into the Ciner Wyoming Equipment Financing Arrangement that
has an initial principal of $30 million, with monthly installment payments
beginning April 2020 through March 2028. Ciner Wyoming's balance under the Ciner
Wyoming Equipment Financing Arrangement at September 30, 2020 was $28.5 million
($28.3 million net of financing costs); and


•At September 30, 2020, borrowings under the Ciner Wyoming Credit Facility
decreased by $37.0 million from December 31, 2019.




Off-Balance Sheet Arrangements
See Part I, Item 1, Financial Statements - Note 9, Commitments and Contingencies
- "Off-Balance Sheet Arrangements", for additional details.
Critical Accounting Policies
There have been no material changes in critical accounting policies followed by
us during the nine months ended September 30, 2020 from those disclosed in the
2019 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;
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•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.
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:
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Three Months Ended September Nine Months Ended September
30, 30,
(In millions, except per unit data) 2020 2019 2020 2019
Reconciliation of Adjusted EBITDA to net income:
Net income $ 5.4 $ 29.9 $ 14.2 $ 78.9
Add backs:
Depreciation, depletion and amortization expense 7.8 6.8 20.8 20.0

Interest expense, net 1.2 1.5 3.9 4.3



Equity-based compensation expense, net of forfeitures 0.2


(0.6) 0.9 0.4

Adjusted EBITDA $ 14.6


$ 37.6 $ 39.8 $ 103.6
Less: Adjusted EBITDA attributable to non-controlling
interest


7.4 19.1 20.3 52.2


Adjusted EBITDA attributable to Ciner Resources LP $ 7.2 $ 18.5 $ 19.5 $ 51.4




Reconciliation of distributable cash flow to Adjusted EBITDA attributable to Ciner Resources LP:
Adjusted EBITDA attributable to Ciner Resources LP $ 7.2 $ 18.5 $ 19.5 $ 51.4
Less: Cash interest expense, net attributable to Ciner
Resources LP 0.6 0.8 0.7 2.2


Less: Maintenance capital expenditures attributable to
Ciner Resources LP


2.8 1.5 7.4 3.5


Distributable cash flow attributable to Ciner Resources
LP


$ 3.8


$ 16.2 $ 11.4 $ 45.7




Cash distribution declared per unit $ - $ 0.340 $ 0.340 $ 1.020
Total distributions to unitholders and general partner $ - $ 6.9 $ 6.8 $ 20.6
Distribution coverage ratio N/A 2.35 1.68 2.22


Reconciliation of Adjusted EBITDA to net cash from
operating activities:
Net cash provided by operating activities


$ 21.2 $ 40.6 $ 52.4 $ 68.4
Add/(less):

Amortization of long-term loan financing (0.1) (0.1) (0.1) (0.2)

Net change in working capital (7.7) (4.3) (16.2) 31.4

Interest expense, net 1.2 1.5 3.9 4.3

Other non-cash items - (0.1) (0.2) (0.3)
Adjusted EBITDA $ 14.6



$ 37.6 $ 39.8 $ 103.6
Less: Adjusted EBITDA attributable to non-controlling
interest


7.4 19.1 20.3 52.2


Adjusted EBITDA attributable to Ciner Resources LP $ 7.2 $ 18.5 $ 19.5 $ 51.4
Less: Cash interest expense, net attributable to Ciner
Resources LP


0.6 0.8 0.7 2.2


Less: Maintenance capital expenditures attributable to
Ciner Resources LP


2.8 1.5 7.4 3.5
Distributable cash flow attributable to Ciner Resources
LP $ 3.8 $ 16.2 $ 11.4 $ 45.7


44



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