Sisecam Resources LP Announces Fourth Quarter and Year Ended 2021 Financial Results

ATLANTA–(BUSINESS WIRE)–Sisecam Resources LP (NYSE: SIRE) (“we,” “us, “our,” or the “Partnership”) today reported its financial and operating results for the fourth quarter ended December 31, 2021.

Fourth Quarter and Year Ended 2021 Financial Highlights:

• Net sales of $156.0 million increased 50.9% over the prior-year fourth quarter; year-end net sales of $540.1 million increased 37.7% over the prior-year.
• Soda ash volume produced and sold increased 1.6% and 25.6%, respectively, over the prior-year fourth quarter; year-end soda ash volume produced and sold increased 19.4% and 26.6%, respectively, over the prior-year. This increase was primarily attributable to the return of sales volumes to pre-COVID-19 pandemic levels. During the fourth quarter of 2020, the Partnership experienced a slight increase in sales volumes, production and pricing after the significant decline in the first half of the year primarily due to the COVID-19 and its variants (“the COVID-19“) pandemic. Fourth quarter 2020 production included building inventory for our year end exit from ANSAC, for which related international sales were recognized in the following quarter therefore a smaller variance compared to fourth quarter 2021 production versus sales for the same periods. Since the third quarter of 2021, the sales volume level returned to normalized pre-COVID-19 levels.
• Net income of $23.6 million increased $10.9 million over the prior-year fourth quarter; year-end net income of $51.4 million increased $24.5 million over the prior-year. This increase was 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 December 31, 2021 compared to the quarter ended December 31, 2020.
• Adjusted EBITDA of $32.4 million increased 48.6% over the prior-year fourth quarter; year-end Adjusted EBITDA of $88.5 million increased 43.7% over the prior-year. This increase is primarily attributable to the operating income increase.
• Earnings per unit of $0.56 for the quarter increased 86.7% over the prior-year fourth quarter of $0.30; year- end earnings per unit of $1.19 increased 105.2% over the prior-year. Net income attributable to the Partnership for the year ended December 31, 2021 was up due to significantly lower net income due to the COVID-19 pandemic.
• Net cash provided by operating activities of $25.9 million increased 1,026.1% over the prior-year fourth quarter; year-end net cash provided by operating activities of $54.2 million decreased 0.9% over the prior-year. The increase in net cash provided by operating activities in the fourth quarter is primarily due to the significantly better net income in the current fourth quarter than the same period in 2020. The slight decrease in net cash provided by operating activities for 2021 is primarily due to higher accounts receivables offset by improved net income during the year ended at December 31, 2021 compared to the same period of 2020 as a result of more direct international customers with longer repayment terms in 2021 compared to ANSAC in 2020.
• Working capital used by operating activities increased $28.0 million from $2.4 million during the year ended December 31, 2020 to $30.4 million during the year ended December 31, 2021. The increase was primarily due to higher accounts receivable balance at December 31, 2021 as a result of higher net sales for the three months ended December 31, 2021 compared to the same period ended December 31, 2020. It is partly offset by the higher balances of accounts payable and accrued expenses as of December 31, 2021.
• Distributable cash flow of $13.2 million increased 135.7% over the prior-year fourth quarter; year-end distributable cash flow of $29.0 million increased 70.6% over the prior-year.
• The distribution coverage ratio was 0.99 and N/A for the three months ended December 31, 2021 and 2020, respectively; and 1.43 and 2.50 for the years ended December 31, 2021 and 2020, respectively.

Oğuz Erkan, CEO, commented: “I want to first commend our team for another outstanding year of safe operations. We continued to add to our exemplary safety record in 2021, collecting multiple awards that included IMA-North America’s safest large mine. Moreover, we did a tremendous job navigating COVID-19 in 2021. An unwavering commitment to COVID-19 safety protocols allowed us to avoid operational disruptions and to maintain full production rates, with 2.7 million tons produced in 2021 increasing 19% from 2020.

“In a year that began with a challenging market backdrop, we are excited to report a strong finish to 2021 and the start of a new strategic partnership. As previously announced, on December 21st our sponsor completed the sale of a controlling stake in Ciner Resources Corporation to the Sisecam Group, a Turkish manufacturing conglomerate with a long history of glass and chemical production, including 2.5 million tons of soda ash. As joint owners of Sisecam Resources LP’s (former Ciner Resources LP) general partner, Sisecam and Ciner bring together operational expertise and industry leadership to advance natural soda ash production, which is a more sustainable way of supplying the world’s growing demand for this critical resource. We are excited to be an integral part of Sisecam’s global presence and growth strategy and strengthen its operations with environmentally-friendly natural soda ash mined in Wyoming, home to the world’s largest trona deposits.

“Turning to our financial performance, the theme was steady improvement in 2021. International pricing increases were moderated during the first half of the year due to a slower pace of reopening in many Asian economies that kept inventories elevated. However, in the second half of the year, demand resurgence led to tighter supply, driving substantial improvements in international pricing levels. The impact of this upward trend was especially pronounced in our average pricing for the fourth quarter, achieving a sequential 16% increase over the third quarter of 2021 and 41% increase year-over-year. By actively managing our export sales, we were well positioned to better capitalize on tightness in Asian markets in Q4 by reallocating some volumes at higher spot prices, which bolstered margins in the quarter. Directly managing international relationships and improved visibility into supply chains and end markets contributed to last year’s success. On the domestic side, consumption levels remained strong throughout the year, and, due to longer-tenured contracts, reflected more stable pricing levels than export.

“The surge in export pricing translated into the best quarterly earnings since 2019. Record volumes of 743 thousand tons sold in Q4 2021 resulted in net sales of $156.0 million and net income of $23.6 million. Adjusted EBITDA of $32.4 million was the highest since Q3 2019 and was more than double the first quarter of 2021, again reflecting the continued improvement in soda ash markets throughout the year. Total global soda ash consumption in 2021 came in higher than 2019, demonstrating the strength of soda ash fundamentals and the resilient demand base that supports the long-term potential of our business.

“We are also excited to pass along these profits to our unitholders in the form of a $0.65 per common unit distribution, the highest quarterly distribution on record.

“We continue to reduce our leverage, which was below 1.5x at year-end, back to pre-pandemic levels as we achieve higher adjusted EBITDA and strong cash flows. We completed the refinancing of our credit facility late last year, in addition to closing a $29 million term loan secured by equipment installed for maintenance capex projects in 2021, which enabled us to end the year with high liquidity. Further, due to market tightness that persisted through the end of the fourth quarter, we are optimistic around supportive pricing levels and free cash flow in 2022; however, our Board of Directors will continue to evaluate distributable cash flow coverage and distributions on a quarter-by-quarter basis.

“Lastly, I’d like to thank our employees for their commitment to our success in 2021 as well as to the ongoing vision for our growth, as we welcome in a new era for Sisecam Resources LP as a subsidiary of Sisecam Group. The partnership of Sisecam and Ciner reinforces the position of Sisecam Resources LP as an industry leader for the long-term production of natural soda ash.”

Financial Highlights	Three Months Ended December 31,									Year Ended December 31,
(Dollars in millions, except per unit amounts)	2021			2020			% Change			2021			2020			% Change
Soda ash volume produced (millions of short tons)		0.697			0.686		1.6	%			2.721			2.279		19.4	%
Soda ash volume sold (millions of short tons)		0.743			0.592		25.6	%			2.814			2.222		26.6	%
Net sales	$	156.0		$	103.4		50.9	%		$	540.1		$	392.2		37.7	%
Net income	$	23.6		$	12.7		85.8	%		$	51.4		$	26.9		91.1	%
Net income attributable to Sisecam Resources LP	$	11.7		$	6.0		95.0	%		$	24.4		$	11.7		108.5	%
Earnings per Common Unit	$	0.56		$	0.30		86.7	%		$	1.19		$	0.58		105.2	%
Adjusted EBITDA(1)	$	32.4		$	21.8		48.6	%		$	88.5		$	61.6		43.7	%
Adjusted EBITDA attributable to Sisecam Resources LP(1)	$	16.2		$	10.6		52.8	%		$	43.9		$	30.1		45.8	%
Net cash provided by operating activities	$	25.9		$	2.3		1,026.1	%		$	54.2		$	54.7		(0.9	)%
Distributable cash flow attributable to Sisecam Resources LP(1)	$	13.2		$	5.6		135.7	%		$	29.0		$	17.0		70.6	%
Distribution coverage ratio (1)		0.99			N/A		N/A				1.43			2.50		(42.8	) %
(1) See non-GAAP reconciliations

Three Months Ended December 31, 2021 compared to Three Months Ended December 31, 2020

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 December 31,								Percent Increase/(Decrease)
Net sales (Dollars in millions):		2021				2020
Domestic		$	68.9			$	55.7			23.7%
International			87.1				47.7			82.6%
Total net sales		$	156.0			$	103.4			50.9%
Sales volumes (thousands of short tons):
Domestic			319.0				264.7			20.5%
International			423.9				326.8			29.7%
Total soda ash volume sold			742.9				591.5			25.6%
Average sales price (per short ton):
Domestic		$	215.99			$	210.43			2.6%
International		$	205.47			$	145.96			40.8%
Average		$	209.99			$	174.81			20.1%
Percent of net sales:
Domestic sales			44.2	%			53.9	%		(18.0)%
International sales			55.8	%			46.1	%		21.0%
Total percent of net sales			100.0	%			100.0	%
Percent of soda ash volume sold:
Domestic volume			42.9	%			44.8	%		(4.2)%
International volume			57.1	%			55.2	%		3.4%
Total percent of soda ash volume sold			100.0	%			100.0	%

Consolidated Results

Net sales. Net sales increased by 50.9% to $156.0 million for the three months ended December 31, 2021 from $103.4 million for the three months ended December 31, 2020, primarily driven by an increase in soda ash volumes sold of 25.6% due to continuing recovery of domestic and international demand from the significant negative impact from the COVID-19 pandemic. We operated at normal pre-COVID-19 production capacity in the three months ended December 31, 2021 compared to levels that were suppressed due to COVID-19 pandemic during the three months ended December 31, 2020. International average price was record high due to the higher ocean freight cost, which is one of the major components of the sales price, as a result of higher demand in the global market.

Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense and freight costs, increased to $125.8 million for the three months ended December 31, 2021 compared to $84.2 million for the three months ended December 31, 2020, primarily due to higher sales volumes. The increase in cost of products sold is also due to supplier cost inflation as well as significant increase in ocean freight rates primarily from the very high demand in the global supply chain. The increases from 2020 to 2021 are partially attributable to an increase in non-ANSAC international sales which include ocean freight in both net sales and cost of product sold. In addition, the natural gas prices and other raw material prices were higher in the three months ended December 31, 2021 than the three months ended December 31, 2020.

Net income. As a result of the foregoing, net income increased by 85.8% to $23.6 million for the three months ended December 31, 2021, compared to $12.7 million for the three months ended December 31, 2020.

Year Ended December 31, 2021 compared to Year Ended December 31, 2020

The following table sets forth a summary of net sales, sales volumes and average sales price, and the percentage change between the periods.

		Year Ended December 31,								Percent Increase/(Decrease)
Net sales (Dollars in millions, except average sales price):		2021				2020
Domestic		$	276.8			$	208.8			32.6%
International			263.3				183.4			43.6%
Total net sales		$	540.1			$	392.2			37.7%
Sales volumes (thousands of short tons):
Domestic			1,300.6				940.9			38.2%
International			1,512.9				1,281.0			18.1%
Total soda ash volume sold			2,813.5				2,221.9			26.6%
Average sales price (per short ton):
Domestic		$	212.82			$	221.92			(4.1)%
International		$	174.04			$	143.17			21.6%
Average		$	191.97			$	176.52			8.8%
Percent of net sales:
Domestic sales			51.2	%			53.2	%		(3.8)%
International sales			48.8	%			46.8	%		4.3%
Total percent of net sales			100.0	%			100.0	%
Percent of soda ash volume sold:
Domestic volume			46.2	%			42.3	%		9.2%
International volume			53.8	%			57.7	%		(6.8)%
Total percent of soda ash volume sold			100.0	%			100.0	%

Consolidated Results

Net sales. Net sales increased by 37.7% to $540.1 million for the twelve months ended December 31, 2021 from $392.2 million for the year ended December 31, 2020, primarily driven by an increase in soda ash volumes sold of 26.6% and an increase in average sales price per short ton of 8.8% primarily due to continuing recovery of domestic and international demand from the significant negative impact from the COVID-19 pandemic. We operated at normal production capacity in the year ended December 31, 2021. 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 set during the slow economy in late 2020 affected by the COVID-19 pandemic. Sales prices, particularly when considering the impact of rising logistics costs, in the year ended December 31, 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.

Cost of products sold. Cost of products sold, including depreciation, depletion and amortization expense and freight costs, increased by 36.1% to $460.1 million for the year ended December 31, 2021 from $338.1 million for the year ended December 31, 2020, primarily due to significant increases in overall soda ash sales volumes. The increase in cost of products sold is also due to supplier cost inflation as well as significant increases in ocean freight rates primarily from the high demand in the global supply chain as well as price increases in natural gas. In addition, the increases 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.

Selling, general and administrative expenses. Our selling, general and administrative expenses increased 8.3% to $23.5 million for the year ended December 31, 2021, compared to $21.7 million for the year ended December 31, 2020. The increase was primarily due to developing our internal international sales, marketing, and logistics infrastructure while additionally incurring an incremental fixed rate cost per ton on sales to ANSAC in 2021.

Operating income. Operating income increased by 74.4% to $56.5 million for the year ended December 31, 2021, compared to $32.4 million for the year ended December 31, 2020. The increase is primarily due to the sales volume improvement to the pre-COVID pandemic level, the international sales price improvement to the pre-COVID pandemic level, and the domestic sales price slow recovery toward the pre-COVID pandemic level. Despite the sales recovery from the negative impact of the COVID-19 pandemic, the operating income has not yet recovered to the pre-pandemic level as supply chain costs have increased at a much faster pace than sales.

Net income. As a result of the foregoing, net income increased by 91.1% to $51.4 million for the year ended December 31, 2021, compared to $26.9 million for the year ended December 31, 2020.

CAPEX AND ORE METRICS

The following table summarizes our capital expenditures, on an accrual basis, ore grade and ore to ash ratio:

	Three Months Ended December 31,								Year Ended December 31,
(Dollars in millions)	2021				2020				2021				2020
Capital Expenditures
Maintenance	$	6.2			$	6.2			$	27.0			$	22.9
Expansion		0.2				0.2				0.8				14.5
Total	$	6.4			$	6.4			$	27.8			$	37.4
Operating and Other Data:
Ore grade(1)		86.5	%			85.7	%			86.3	%			86.6	%
Ore to ash ratio(2)	1.54: 1.0				1.56: 1.0				1.56: 1.0				1.60: 1.0

(1)		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.
(2)		Ore to ash ratio expresses the number of short tons of trona ore needed to produce one short ton of soda ash and includes our deca rehydration recovery process. In general, a lower ore to ash ratio results in lower costs and improved efficiency.

During the year ended December 31, 2021, capital expenditures decreased $9.6 million compared to the year ended December 31, 2020. The decrease was primarily due to the COVID-19 pandemic during which we tried to maintain sound financial liquidity by postponing capital expenditures for expansion. The decrease was also attributable to the completion of our new co-generation facility, which became operational in March 2020.

FINANCIAL POSITION AND LIQUIDITY

As of December 31, 2021, we had cash and cash equivalents of $2.7 million. In addition, as of December 31, 2021, we had approximately $155.0 million ($225.0 million, less $70.0 million outstanding) of remaining capacity under our Sisecam Wyoming Credit Facility. As of December 31, 2021, our leverage and interest coverage ratios, as calculated pursuant to the credit agreement for the Sisecam Wyoming Credit Facility was 1.36: 1.0 and 18.06: 1.0, respectively. As of December 31, 2021, our balance under the Sisecam Wyoming Equipment Financing Arrangement was $53.6 million.

CASH FLOWS AND QUARTERLY CASH DISTRIBUTION

Cash Flows

Operating Activities

Cash provided by operating activities decreased to $54.2 million during the year ended December 31, 2021 compared to $54.7 million of cash provided during the year ended December 31, 2020, primarily as a result of the following:

• an increase of 91.1% of net income of $51.4 million during the year ended December 31, 2021, compared to $26.9 million during the year ended December 31, 2020, and
• an increase of $28.0 million in working capital used by operating activities from $2.4 million during the year ended December 31, 2020 to $30.4 million year ended December 31, 2021. The increase was primarily due to higher accounts receivable balance at December 31, 2021 as a result of higher net sales for the three months ended December 31, 2021 compared to the same period ended December 31, 2020. It is partly offset by the higher balances of accounts payable and accrued expenses as of December 31, 2021.

Investing Activities

We used cash flows of $24.9 million in investing activities during the year ended December 31, 2021, compared to $42.2 million used the year ended December 31, 2020, primarily related to capital projects as described in “Capital Expenditures” above.

Financing Activities

Cash used in financing activities was $27.1 million during the year ended December 31, 2021, compared to $26.9 million used for the year ended December 31, 2020. Higher repayments than borrowings on debt offset by lower distributions for the year ended December 31, 2021 compared to December 31, 2020 resulted in slightly more cash used in financing activities during the year ended December 31, 2021.

Quarterly Distribution

On January 27, 2022, the Partnership declared its fourth quarter 2021 quarterly distribution. On February 18, 2022, we paid a quarterly cash distribution of $0.650 per limited partner unit to unitholders of record on February 7, 2022. The total distribution paid was $13.4 million with $12.9 million paid to our limited partners and $0.3 million and $0.3 million paid to our general partner for its general partner interests and incentive distribution rights, respectively.

Change in Control Transaction

On December 21, 2021, Sisecam Chemicals USA Inc. (“Sisecam USA”) acquired 60% of the units in Sisecam Chemicals Resources LLC (formerly known as Ciner Resources Corporation) (“Sisecam Chemicals”) from Ciner Enterprises Inc.. Sisecam Chemicals owns 100% of the interests in Sisecam Chemicals Wyoming LLC (formerly known as Ciner Wyoming Holding Co.) (“SCW LLC”), which in turn owns approximately 74% of the common units in the Partnership and 100% of the General Partner (collectively such transactions, the “CoC Transaction”). As a result of the closing of the CoC Transaction, Sisecam USA has an indirect controlling interest in the Partnership and the general partner. As a part of the CoC Transaction, Ciner Resources LP was renamed Sisecam Resources LP and Ciner Wyoming LLC was renamed Sisecam Wyoming LLC (“Sisecam Wyoming”).

Green River Expansion Project

In connection with the CoC Transaction, management is evaluating whether and when to pursue a potential new Green River Expansion Project that, we believe, could increase production levels up to approximately 3.5 million short tons of soda ash per year or up to approximately 134% of the last five-year average of soda ash produced per year. We have conducted the initial basic design and secured certain related permits and are currently evaluating the detailed cost and market analysis pursuant to the basic design. If we proceed with this project, it will require capital expenditures materially higher than have been recently incurred by Sisecam Wyoming. The timing of the new Green River Expansion Project as well as any other expansion capital expenditures may also be impacted by the Partnership’s financial results including further negative volatility caused by the ongoing COVID-19 pandemic, including resurgences or subsequent variants of the virus.

COVID-19

COVID-19, including the Omicron variant, continues 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 restrict daily activities and for many businesses to curtail or cease normal operations. Vaccines for COVID-19 become widely available globally and individuals over five years old are eligible for the vaccine in the U.

Contacts

Investor Relations
Ahmet Tohma

Chief Financial Officer

(770) 375-2321

[email protected]

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