Company Quick10K Filing
Quick10K
Ciner Resources
10-Q 2019-09-30 Quarter: 2019-09-30
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-11-04 Earnings, Exhibits
8-K 2019-11-04 Officers
8-K 2019-10-29 Regulation FD, Exhibits
8-K 2019-09-24 Officers, Exhibits
8-K 2019-08-22 Officers
8-K 2019-08-05 Earnings, Exhibits
8-K 2019-07-30 Regulation FD, Exhibits
8-K 2019-06-17 Officers, Regulation FD, Exhibits
8-K 2019-05-14 Earnings, Exhibits
8-K 2019-05-10 Earnings, Regulation FD, Exhibits
8-K 2019-02-14 Earnings, Exhibits
8-K 2019-01-31 Regulation FD, Exhibits
8-K 2018-12-17 Officers
8-K 2018-11-13 Other Events
8-K 2018-11-05 Earnings, Exhibits
8-K 2018-10-25 Regulation FD, Exhibits
8-K 2018-08-06 Earnings, Exhibits
8-K 2018-07-26 Regulation FD, Exhibits
8-K 2018-07-03 Enter Agreement, Exhibits
8-K 2018-06-22 Officers
8-K 2018-04-26 Regulation FD, Exhibits
8-K 2018-03-13 Officers
8-K 2018-02-15 Earnings, Exhibits
8-K 2018-02-01 Regulation FD, Exhibits
VMC Vulcan 18,469
MLM Martin Marietta Materials 15,784
SQM Chemical & Mining Co of Chile 6,288
MDU MDU Resources Group 5,311
CMP Compass Minerals 1,677
SUM Summit Materials 1,413
HL Hecla Mining 856
USLM United States Lime & Minerals 447
CVIA Covia Holdings 192
SND Smart Sand 102
CINR 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits Exhibit Index
EX-31.1 exhibit311-september302019.htm
EX-31.2 exhibit312-september302019.htm
EX-32.1 exhibit321-september302019.htm
EX-32.2 exhibit322-september302019.htm
EX-95.1 exhibit951-september302019.htm

Ciner Resources Earnings 2019-09-30

CINR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cinerresourceslp-10qxq3x20.htm 10-Q Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission file number: 001-36062
ciner-logoa18.jpg
CINER RESOURCES LP
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
Incorporation or Organization)
46-2613366
(I.R.S. Employer
Identification No.)
Five Concourse Parkway
Suite 2500
Atlanta, Georgia 30328
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (770) 375-2300
Former name, former address and former fiscal year, if changed since last report: N/A

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common units representing limited partnership interests
CINR
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ¨
Accelerated filer x 
Non-accelerated filer ¨
Smaller reporting company ¨
 
 
 
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ¨ No x
The registrant had 19,757,938 common units and 399,000 general partner units outstanding at November 1, 2019, the most recent practicable date.



CINER RESOURCES LP
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
References in this Quarterly Report on Form 10-Q (“Report”) to the “Partnership,” “CINR,” “Ciner Resources,” “we,” “our,” “us,” or like terms refer to Ciner Resources LP and its subsidiary, Ciner Wyoming LLC, which is the consolidated subsidiary of the Partnership and 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 Şirketi (“Akkan”). Akkan is directly and wholly owned by Turgay Ciner, the Chairman of the Ciner Group (“Ciner Group”), a Turkish conglomerate of companies engaged in energy and mining (including soda ash mining), media and shipping markets. All of our soda ash processed is sold to various domestic and international customers including American Natural Soda Ash Corporation (“ANSAC”), which is currently an affiliate for export sales.
We include cross references to captions elsewhere in this Report, where you can find related additional information. The following table of contents tells you where to find these captions.
 
Page Number
 
 
 
 
 
 
 

2


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CINER RESOURCES LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
As of
(In millions)
September 30,
2019
 
December 31,
2018
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
12.2

 
$
10.2

Accounts receivable—affiliates
100.2

 
70.1

Accounts receivable, net
39.6

 
36.9

Inventory
21.9

 
22.3

Other current assets
1.4

 
2.0

Total current assets
175.3

 
141.5

Property, plant and equipment, net
287.8

 
266.7

Other non-current assets
26.4

 
26.4

Total assets
$
489.5

 
$
434.6

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
17.6

 
$
17.6

Due to affiliates
4.7

 
2.6

Accrued expenses
36.5

 
44.4

Total current liabilities
58.8

 
64.6

Long-term debt
133.0

 
99.0

Other non-current liabilities
10.0

 
10.9

Total liabilities
201.8

 
174.5

Commitments and contingencies (See Note 10)

 

Equity:
 
 
 
Common unitholders - Public and Ciner Holdings (19.7 units issued and outstanding at September 30, 2019 and December 31, 2018)
166.8

 
153.8

General partner unitholders - Ciner Resource Partners LLC (0.4 units issued and outstanding at September 30, 2019 and December 31, 2018)
4.2

 
3.9

Accumulated other comprehensive loss
(4.2
)
 
(3.8
)
Partners’ capital attributable to Ciner Resources LP
166.8

 
153.9

Non-controlling interest
120.9

 
106.2

Total equity
287.7

 
260.1

Total liabilities and partners’ equity
$
489.5

 
$
434.6

See accompanying notes.

3



CINER RESOURCES LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions, except per unit data)
2019
 
2018
 
2019
 
2018
Net Sales:
 
 
 
 
 
 
 
Sales—affiliates
$
80.4

 
$
63.4

 
$
239.7

 
$
178.9

Sales—others
56.8

 
60.0

 
157.7

 
175.6

    Net sales
137.2

 
123.4

 
397.4

 
354.5

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of products sold including freight costs (excludes depreciation, depletion and amortization expense set forth separately below)
93.9

 
90.0

 
274.7

 
265.1

Depreciation, depletion and amortization expense
6.8

 
7.3

 
20.0

 
21.4

Selling, general and administrative expenses—affiliates
4.4

 
4.3

 
15.2

 
13.5

Selling, general and administrative expenses—others
0.7

 
1.8

 
4.3

 
5.4

Litigation settlement

 

 

 
(27.5
)
Total operating costs and expenses
105.8

 
103.4

 
314.2

 
277.9

Operating income
31.4

 
20.0

 
83.2

 
76.6

Other income (expenses):
 
 
 
 
 
 
 
Interest income
0.1

 
0.3

 
0.3

 
1.7

Interest expense
(1.6
)
 
(1.3
)
 
(4.6
)
 
(3.8
)
Other, net

 

 

 
(0.1
)
Total other expense, net
(1.5
)
 
(1.0
)
 
(4.3
)
 
(2.2
)
Net income
$
29.9

 
$
19.0

 
$
78.9

 
$
74.4

Net income attributable to non-controlling interest
15.1

 
10.0

 
40.5

 
38.5

Net income attributable to Ciner Resources LP
$
14.8

 
$
9.0

 
$
38.4

 
$
35.9

Other comprehensive loss:

 
 
 
 
 
 
Income/(loss) on derivative financial instruments
$
(1.1
)
 
$
1.7

 
$
(0.7
)
 
$
(1.5
)
Comprehensive income
28.8

 
20.7

 
78.2

 
72.9

Comprehensive income attributable to non-controlling interest
14.6

 
10.9

 
40.2

 
37.8

Comprehensive income attributable to Ciner Resources LP
$
14.2

 
$
9.8

 
$
38.0

 
$
35.1

 
 
 
 
 
 
 
 
Net income per limited partner unit:
 
 
 
 
 
 
 
Net income per limited partner unit (basic)
$
0.74

 
$
0.44

 
$
1.91

 
$
1.78

Net income per limited partner unit (diluted)
$
0.73

 
$
0.44

 
$
1.90

 
$
1.78

 
 
 
 
 
 
 
 
Limited partner units outstanding:
 
 
 
 
 
 
 
Weighted average limited partner units outstanding (basic)
19.7
 
19.7
 
19.7
 
19.7
Weighted average limited partner units outstanding (diluted)
19.7
 
19.7
 
19.8
 
19.7
  See accompanying notes.


4


CINER RESOURCES LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended 
 September 30,
(In millions)
2019
 
2018
 
 
 
 
Cash flows from operating activities:
 
 
 
Net income
$
78.9

 
$
74.4

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization expense
20.2

 
21.7

Equity-based compensation expenses
0.4

 
1.5

Other non-cash items
0.3

 
0.2

Changes in operating assets and liabilities:
 
 
 
(Increase) decrease in:
 
 
 
Accounts receivable—affiliates
(30.0
)
 
34.0

Accounts receivable, net
(2.7
)
 
(4.6
)
Inventory

 
(0.9
)
Other current and non current assets
0.7

 
0.3

Increase (decrease) in:
 
 
 
Accounts payable
(1.2
)
 
2.2

Due to affiliates
2.1

 
(0.2
)
Accrued expenses and other liabilities
(0.3
)
 
2.8

Net cash provided by operating activities
68.4

 
131.4

Cash flows from investing activities:
 
 
 
Capital expenditures
(49.3
)
 
(25.3
)
Net cash used in investing activities
(49.3
)
 
(25.3
)
Cash flows from financing activities:
 
 
 
Borrowings on Ciner Wyoming credit facility
95.0

 
82.0

Repayments on Ciner Wyoming credit facility
(61.0
)
 
(120.5
)
Common units surrendered for taxes
(0.5
)
 
(0.3
)
Distributions to common unitholders
(24.6
)
 
(33.4
)
Distributions to general partner
(0.5
)
 
(0.7
)
Distributions to non-controlling interest
(25.5
)
 
(36.8
)
Net cash used in financing activities
(17.1
)
 
(109.7
)
Net increase/(decrease) in cash and cash equivalents
2.0

 
(3.6
)
Cash and cash equivalents at beginning of period
10.2

 
30.2

Cash and cash equivalents at end of period
$
12.2

 
$
26.6

 See accompanying notes.


5


CINER RESOURCES LP
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 
Common Unitholders
 
General Partner
 
Accumulated
Other
Comprehensive
Loss
 
Partners’ Capital Attributable to Ciner Resources LP Equity
 
Non-controlling
Interest
 
Total
Equity
(In millions)
Balance at December 31, 2017
$
148.3

 
$
3.8

 
$
(3.7
)
 
$
148.4

 
$
99.8

 
$
248.2

Net income
9.9

 
0.2

 

 
10.1

 
10.8

 
20.9

Other comprehensive income/(loss)

 

 
(1.1
)
 
(1.1
)
 
(1.1
)
 
(2.2
)
Equity-based compensation plan activity
(0.1
)
 

 

 
(0.1
)
 

 
(0.1
)
Distributions
(11.1
)
 
(0.2
)
 

 
(11.3
)
 
(12.3
)
 
(23.6
)
Balance at March 31, 2018
147.0

 
3.8

 
(4.8
)
 
146.0

 
97.2

 
243.2

Net income
16.5

 
0.3

 

 
16.8

 
17.7

 
34.5

Other comprehensive income/(loss)

 

 
(0.5
)
 
(0.5
)
 
(0.5
)
 
(1.0
)
Equity-based compensation plan activity
0.6

 

 

 
0.6

 

 
0.6

Distributions
(11.2
)
 
(0.3
)
 

 
(11.5
)
 
(12.2
)
 
(23.7
)
Balance at June 30, 2018
152.9

 
3.8

 
(5.3
)
 
151.4

 
102.2

 
253.6

Net income
8.7

 
0.3

 

 
9.0

 
10.0

 
19.0

Other comprehensive income/(loss)

 

 
0.8

 
0.8

 
0.9

 
1.7

Equity-based compensation plan activity
0.4

 

 

 
0.4

 

 
0.4

Distributions
(11.1
)
 
(0.2
)
 

 
(11.3
)
 
(12.3
)
 
(23.6
)
Balance at September 30, 2018
$
150.9

 
$
3.9

 
$
(4.5
)
 
$
150.3

 
$
100.8

 
$
251.1

 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
$
153.8

 
$
3.9

 
$
(3.8
)
 
$
153.9

 
$
106.2

 
$
260.1

Net income
12.1

 
0.2

 

 
12.3

 
12.9

 
25.2

Other comprehensive income/(loss)

 

 
1.0

 
1.0

 
1.0

 
2.0

Equity-based compensation plan activity
(0.3
)
 

 

 
(0.3
)
 

 
(0.3
)
Distributions
(11.1
)
 
(0.2
)
 

 
(11.3
)
 
(9.8
)
 
(21.1
)
Balance at March 31, 2019
154.5

 
3.9

 
(2.8
)
 
155.6

 
110.3

 
265.9

Net income
11.0

 
0.3

 

 
11.3

 
12.5

 
23.8

Other comprehensive income/(loss)

 

 
(0.8
)
 
(0.8
)
 
(0.8
)
 
(1.6
)
Equity-based compensation plan activity
0.7

 

 

 
0.7

 

 
0.7

Distributions
(6.8
)
 
(0.2
)
 

 
(7.0
)
 
(9.2
)
 
(16.2
)
Balance at June 30, 2019
159.4

 
4.0

 
(3.6
)
 
159.8

 
112.8

 
272.6

Net income
14.5

 
0.3

 

 
14.8

 
15.1

 
29.9

Other comprehensive income/(loss)

 

 
(0.6
)
 
(0.6
)
 
(0.5
)
 
(1.1
)
Equity-based compensation plan activity
(0.4
)
 

 

 
(0.4
)
 

 
(0.4
)
Distributions
(6.7
)
 
(0.1
)
 

 
(6.8
)
 
(6.5
)
 
(13.3
)
Balance at September 30, 2019
$
166.8

 
$
4.2

 
$
(4.2
)
 
$
166.8

 
$
120.9

 
$
287.7

 
 
 
 
 
 
 
 
 
 
 
 
 See accompanying notes.


6


CINER RESOURCES LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CORPORATE STRUCTURE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations

The unaudited condensed consolidated financial statements are composed of Ciner Resources LP (the “Partnership,” “CINR,” “Ciner Resources,” “we,” “us,” or “our”), a publicly traded Delaware limited partnership, and its consolidated subsidiary, Ciner Wyoming LLC (“Ciner Wyoming”), which is in the business of mining trona ore to produce soda ash. The Partnership’s operations consist solely of its investment in Ciner Wyoming. The Partnership was formed in April 2013 by Ciner Wyoming Holding Co. (“Ciner Holdings”), a 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 Şirketi (“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. The Partnership owns a controlling interest comprised of 51.0% membership interest in Ciner Wyoming. All of our soda ash processed is currently sold to various domestic and international customers, including ANSAC which is an affiliate for export sales. All mining and processing activities of Ciner Wyoming take place in one facility located in the Green River Basin of Wyoming.

Basis of Presentation and Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) applicable to interim period financial statements and reflect all adjustments, consisting of normal recurring accruals, which are necessary for fair presentation of the results of operations, financial position and cash flows for the periods presented. All intercompany transactions, balances, revenue and expenses have been eliminated in consolidation. The results of operations for the nine months ended September 30, 2019 and 2018 are not necessarily indicative of the operating results for the full year.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Annual Report”). As of January 1, 2019, we adopted the guidance outlined in Accounting Standards Codification (“ASC”) Standard 842, Leases (“ASC 842”). For further information on the Partnership’s adoption of this standard, refer to “Recently Issued Accounting Pronouncements” below. There have been no other material changes in the significant accounting policies followed by us during the nine months ended September 30, 2019 from those disclosed in the 2018 Annual Report.
Non-controlling interests

NRP Trona LLC, a wholly-owned subsidiary of Natural Resource Partners L.P. ("NRP"), currently owns a 49.0% membership interest in Ciner Wyoming.
        
Use of Estimates
The preparation of these unaudited condensed consolidated financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Subsequent Events
We have evaluated subsequent events through the filing date of this Quarterly Report on Form 10-Q.
Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) to increase the transparency and comparability about leases among entities. Additional ASUs have been issued subsequent to ASU 2016-02 to provide supplementary clarification and implementation guidance for leases related to, among other things, the application of certain practical expedients, the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2016-02 and these additional ASUs are now codified as ASC 842. Pursuant to these updates, accounting for leases by lessors remains largely unchanged from current guidance. The update requires that lessees recognize a lease liability and a right of use asset for all leases (with the exception of short-term leases) at the commencement date of the lease and disclose key information about

7


leasing arrangements. For leases less than 12 months, an entity is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The Partnership made this election upon adoption. The Partnership adopted ASC 842 effective January 1, 2019 using a modified retrospective approach under which prior comparative periods will not be adjusted, as permitted by the guidance. The Partnership has determined that the adoption of the new standard did not have a material impact on the balance sheet or statement of operations because the Partnership has no material long term leases that are subject to ASC 842. Ciner Corp was determined to be the ultimate lessee for rail car lease agreements under ASC 842, and the Partnership will continue to incur an allocation of rent expense in relation to the use of rail cars leased by Ciner Corp.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (“ASU Topic 815”) – Targeted Improvements to Accounting for Hedging Activities. ASU Topic 815 aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, ASU Topic 815 makes certain targeted improvements to simplify the application of the existing hedge accounting guidance. ASU Topic 815 is effective for us beginning in the first quarter of 2019, with early application permitted. The Partnership adopted ASU Topic 815 effective January 1, 2019 and concluded there is no material impact to the Partnership’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2018-15”), which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 amends ASC 350 and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA. The ASU does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. Entities are permitted to apply either a retrospective or prospective transition approach to adopt the guidance. ASU 2018-15 is effective for us beginning after December 15, 2019. The Partnership is in the process of evaluating the ASU but does not expect any material impact to the Partnership’s consolidated financial statements.



2. NET INCOME PER UNIT AND CASH DISTRIBUTION
Allocation of Net Income
Net income per unit applicable to limited partners is computed by dividing limited partners’ interest in net income attributable to Ciner Corp, after deducting the general partner’s interest and any incentive distributions, by the weighted average number of outstanding common units. Our net income is allocated to the general partner and limited partners in accordance with their respective partnership percentages, after giving effect to priority income allocations for incentive distributions, if any, to our general partner, pursuant to our partnership agreement. Earnings in excess of distributions are allocated to the general partner and limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.
In addition to the common units, we have also identified the general partner interest and incentive distribution rights (“IDRs”) as participating securities and use the two-class method when calculating the net income per unit applicable to limited partners, which is based on the weighted-average number of common units outstanding during the period. Potentially anti-dilutive units outstanding were immaterial for both the three and nine months ended September 30, 2019 and 2018.

8


The net income attributable to limited partner unitholders and the weighted average units for calculating basic and diluted net income per limited partner units were as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions, except per unit data)
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
Net income attributable to Ciner Resources LP
$
14.8

 
$
9.0

 
$
38.4

 
$
35.9

Less: General partner’s interest in net income
0.3

 
0.3

 
0.8

 
0.8

Total limited partners’ interest in net income
$
14.5

 
$
8.7

 
$
37.6

 
$
35.1

 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted average limited parter units outstanding:
 
 
 
 
 
 
 
Weighted average limited partner units outstanding (basic)
19.7
 
19.7
 
19.7
 
19.7
Weighted average limited partner units outstanding (diluted)
19.7
 
19.7
 
19.8
 
19.7
 
 
 
 
 
 
 
 
Net income per limited partner units:
 
 
 
 
 
 
 
Net income per limited partner unit (basic)
$
0.74

 
$
0.44

 
$
1.91

 
$
1.78

Net income per limited partner unit (diluted)
$
0.73

 
$
0.44

 
$
1.90

 
$
1.78

The calculation of limited partners’ interest in net income is as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions)
2019
 
2018
 
2019
 
2018
Net income attributable to common unitholders:
 
 
 
 
 
 
 
Distributions(1)
$
6.7

 
$
11.2

 
$
20.1

 
$
33.4

Undistributed earnings (Distributions in excess) of net income
7.8

 
(2.5
)
 
17.5

 
1.7

Common unitholders’ interest in net income
$
14.5

 
$
8.7

 
$
37.6

 
$
35.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Distributions declared per limited partner unit for the period
$
0.340

 
$
0.567

 
$
1.020

 
$
1.701

Quarterly Distribution Declared
On October 29, 2019, the Partnership declared its third quarter 2019 quarterly cash distribution of $0.340 per unit. The quarterly cash distribution is payable on November 20, 2019 to unitholders of record on November 8, 2019. While we are working on finalizing our capital plans for a new expansion project that we believe will significantly increase production levels up to approximately 3.5 million tons of soda ash per year, such plans will require capital expenditures materially higher than have been incurred by Ciner Wyoming in recent years. To maintain a disciplined financial policy and what we believe is a conservative capital structure, we intend to pay for the investment in part through cash generated by the business and in part through debt. When considering the significant investment required by this expansion and the infrastructure improvements designed to increase our overall efficiency for each of the first three quarters of 2019, we lowered our quarterly cash distributions as compared to 2018 quarterly cash distributions in order to satisfy approximately 50% of the funding for the project, which we believe will continue for the next 8-10 quarters depending upon business performance. Subject to our business performance, we intend to maintain the Partnership quarterly cash distribution of $0.340 per unit, until such targets are met, though there can be no assurance that such level will be maintained for future quarters.
Our general partner has considerable discretion in determining the amount of available cash, the amount of distributions and the decision to make any distribution. Although our partnership agreement requires that we distribute all of our available cash quarterly, there is no guarantee that we will make quarterly cash distributions to our unitholders at our current quarterly distribution level, at the minimum quarterly distribution level or at any other rate, and we have no legal obligation to do so.
General Partner Interest and Incentive Distribution Rights
Our partnership agreement provides that our general partner initially will be entitled to 2.0% of all distributions that we make prior to our liquidation. Our general partner has the right, but not the obligation, to contribute up to a proportionate amount of capital to us in order to maintain its 2.0% general partner interest if we issue additional units (other than the issuance of common units upon a reset of the IDRs). Our general partner currently has an approximate 2.0% ownership interest in the partnership. Our partnership agreement

9


does not require that our general partner fund its capital contribution with cash. It may, instead, fund its capital contribution by contributing to us common units or other property.
IDRs represent the right to receive increasing percentages (13.0%, 23.0% and 48.0%) of quarterly distributions from operating surplus after we have achieved the minimum quarterly distribution and the target distribution levels. Our general partner currently holds the IDRs, but may transfer these rights separately from its general partner interest, subject to certain restrictions in our partnership agreement.
Percentage Allocations of Distributions from Operating Surplus
The following table illustrates the percentage allocations of distributions from operating surplus between the unitholders and our general partner based on the specified target distribution levels. The amounts set forth under the column heading “Marginal Percentage Interest in Distributions” are the percentage interests of our general partner and the unitholders in any distributions from operating surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution per Unit Target Amount.” The percentage interests shown for our unitholders and our general partner for the minimum quarterly distribution also apply to quarterly distribution amounts that are less than the minimum quarterly distribution, including for the declared quarterly distributions of $0.340 per unit for the third quarter of 2019. Under the Partnership agreement, our general partner has considerable discretion to determine the amount of available cash (as defined therein) for distribution each quarter to the Partnership’s unitholders, including discretion to establish cash reserves that would limit the amount of available cash eligible for distribution to the Partnership’s unitholders for any quarter. The Partnership does not guarantee that it will pay the target amount of the minimum quarterly distribution listed below (or any distributions) on its units in any quarter. The percentage interests set forth below for our general partner (1) include its 2.0% general partner interest, (2) assume that our general partner has contributed any additional capital necessary to maintain its 2.0% general partner interest, (3) assume that our general partner has not transferred its IDRs and (4) assume there are no arrearages on common units.
 
 
 
Marginal Percentage
Interest in
Distributions
 
Total Quarterly
Distribution per Unit
Target Amount
 
Unitholders
 
General Partner
Minimum Quarterly Distribution
$0.5000
 
98.0
%
 
2.0
%
First Target Distribution
above $0.5000 up to $0.5750
 
98.0
%
 
2.0
%
Second Target Distribution
above $0.5750 up to $0.6250
 
85.0
%
 
15.0
%
Third Target Distribution
above $0.6250 up to $0.7500
 
75.0
%
 
25.0
%
Thereafter
above $0.7500
 
50.0
%
 
50.0
%
3. INVENTORY
Inventory consisted of the following:
 
As of
(In millions)
September 30,
2019
 
December 31,
2018
Raw materials
$
9.3

 
$
10.9

Finished goods
6.6

 
5.1

Stores inventory
6.0

 
6.3

Total
$
21.9

 
$
22.3

4. DEBT

Long-term debt consisted of the following:
 
As of
(In millions)
September 30,
2019
 
December 31,
2018
Ciner Wyoming Credit Facility, unsecured principal expiring on August 1, 2022, variable interest rate as a weighted average rate of 3.56% and 3.99% at September 30, 2019 and December 31, 2018, respectively
$
133.0

 
$
99.0

Total debt
133.0

 
99.0

Current portion of long-term debt

 

Total long-term debt
$
133.0

 
$
99.0


10




Aggregate maturities required on long-term debt at September 30, 2019 are due in future years as follows:
(In millions)
Amount
2020
$

2021
$

2022
133.0

2023 to 2025 and beyond

Total
$
133.0

    
5. OTHER NON-CURRENT LIABILITIES
Other non-current liabilities consisted of the following:
 
As of
(In millions)
September 30,
2019
 
December 31,
2018
Reclamation reserve
$
5.6

 
$
5.4

Derivative instruments and hedges, fair value liabilities
4.4

 
5.5

Total
$
10.0

 
$
10.9

A reconciliation of the Partnership’s reclamation reserve liability is as follows:
 
For the period ended
(In millions)
September 30,
2019
 
December 31,
2018
Beginning reclamation reserve balance
$
5.4

 
$
5.1

Accretion expense
0.2

 
0.3

Ending reclamation reserve balance
$
5.6

 
$
5.4

 

6. REVENUE

The Partnership has one reportable segment and our revenue is derived from the sale of soda ash which is our sole and primary good and service. We account for revenue in accordance with Revenue from Contracts with Customers (“ASC 606”).

Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. At contract inception, we assess the goods and services promised in contracts with customers and identify performance obligations for each promise to transfer to the customer, a good or service that is distinct. To identify the performance obligations, the Partnership considers all goods and services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. From its analysis, the Partnership determined that the sale of soda ash is currently its only performance obligation. Many of our customer volume commitments are short-term and our performance obligations for the sale of soda ash are generally limited to single purchase orders.

When performance obligations are satisfied. Substantially all of our revenue is recognized at a point-in-time when control of goods transfers to the customer.

Transfer of Goods. The Partnership uses standard shipping terms across each customer contract with very few exceptions. Shipments to customers are made with terms stated as Free on Board (“FOB”) Shipping Point. 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.

Payment Terms. Our payment terms vary by the type and location of our customers. The term between invoicing and when payment is due is not significant and consistent with typical terms in the industry.


11


Variable Consideration. We recognize revenue as the amount of consideration that we expect to receive in exchange for transferring promised goods or services to customers. We do not adjust the transaction price for the effects of a significant financing component, as the time period between control transfer of goods and services and expected payment is one year or less. At the time of sale, we estimate provisions for different forms of variable consideration (discounts, rebates, and pricing adjustments) based on historical experience, current conditions and contractual obligations, as applicable. The estimated transaction price is typically not subject to significant reversals. We adjust these estimates when the most likely amount of consideration we expect to receive changes, although these changes are typically immaterial.

Returns, Refunds and Warranties. In the normal course of business, the Partnership does not accept returns, nor does it typically provide customers with the right to a refund.

Freight. In accordance with ASC 606, the Partnership made a policy election to treat freight and related costs that occur after control of the related good transfers to the customer as fulfillment activities instead of separate performance obligations. Therefore freight is recognized at the point in which control of soda ash has transfered to the customer.

Revenue Disaggregation. In accordance with ASC 606-10-50, the Partnership disaggregates revenue from contracts with customers into geographical regions. The Partnership determined that disaggregating revenue into these categories achieved the disclosure objectives to depict how the nature, timing, amount and uncertainty of revenue and cash flows are affected by economic factors. Refer to Note 12, “Major Customers and Segment Reporting” for revenue disaggregated into geographical regions.
 
 
 
 
Contract Balances. The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities).

Contract Assets. At the point of shipping, the Partnership has an unconditional right to payment that is only dependent on the passage of time. In general, customers are billed and a receivable is recorded as goods are shipped. These billed receivables are reported as “Accounts Receivable, net” on the Condensed Consolidated Balance Sheet as of September 30, 2019. There were no contract assets as of September 30, 2019 or December 31, 2018.

Contract Liabilities. There may be situations where customers are required to prepay for freight and insurance prior to shipment. The Partnership has elected the practical expedient for its treatment of freight and therefore, such prepayments are considered a part of the single obligation to provide soda ash. In such instances, a contract liability for prepaid freight will be recorded. For the nine months ended September 30, 2019, there were no customers that required prepaid freight. There were no contract liabilities as of September 30, 2019 or December 31, 2018.
 

Practical Expedients Exceptions

Incremental costs of obtaining contracts. We generally expense costs related to sales, including sales force salaries and marketing expenses, when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.

Unsatisfied performance obligations. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

7. EMPLOYEE COMPENSATION

The Partnership participates in various benefit plans offered and administered by Ciner Corp and is allocated its portions of the annual costs related thereto. The specific plans are as follows:
Retirement Plans - Benefits provided under the pension plan for salaried employees and pension plan for hourly employees (collectively, the “Retirement Plans”) are based upon years of service and average compensation for the highest 60 consecutive months of the employee’s last 120 months of service, as defined. Each Retirement Plan covers substantially all full-time employees hired before May 1, 2001. The Retirement Plans had a net unfunded liability balance of $53.5 million and $56.9 million at September 30, 2019 and December 31, 2018, respectively. The current funding policy is to contribute an amount within the range of the minimum required and the maximum tax-deductible contribution. The Partnership’s allocated portion of the Retirement Plan’s net periodic pension costs for the three months ended September 30, 2019 and 2018 were $0.1 million and less than $0.1 million, respectively, and for the nine months ended September 30, 2019 and 2018 were $0.9 million and $0.3 million, respectively.
Savings Plan - The 401(k) retirement plan (the “401(k) Plan”) covers all eligible hourly and salaried employees. Eligibility is limited to all domestic residents and any foreign expatriates who are in the United States indefinitely. The 401(k) Plan permits employees to

12


contribute specified percentages of their compensation, while the Partnership makes contributions based upon specified percentages of employee contributions. Participants hired on or subsequent to May 1, 2001, will receive an additional contribution from the Partnership based on a percentage of the participant’s base pay. Contributions made to the 401(k) Plan for the three months ended September 30, 2019 and 2018 were $0.6 million, respectively, and for the nine months ended September 30, 2019 and 2018 were $2.5 million and $2.4 million, respectively.
Postretirement Benefits - Most of the Partnership’s employees are eligible for postretirement benefits other than pensions if they reach retirement age while still employed.
The postretirement benefits are accounted for by Ciner Corp on an accrual basis over an employee’s period of service. The postretirement plan, excluding pensions, are not funded, and Ciner Corp has the right to modify or terminate the plan. The post-retirement plan had a net unfunded liability of $6.7 million and $9.9 million at September 30, 2019 and December 31, 2018, respectively. The decrease in the obligation as of September 30, 2019 as compared to December 31, 2018 is due to Ciner Corp amending its postretirement benefit plan during 2017 to increase eligibility requirements at which participants may begin receiving benefits, implementing a subsidy rather than a premium for the benefit plan, and eliminating plan eligibility for individuals hired after December 31, 2016. These changes have resulted in a postretirement (benefit) cost being amortized to the liability recorded at Ciner Corp.
The Partnership’s allocated portion of postretirement benefit for the three months ended September 30, 2019 and 2018 were benefits of $0.6 million and $0.8 million, respectively, and for the nine months ended September 30, 2019 and 2018 were benefits of $1.8 million and $2.2 million, respectively.
8. EQUITY - BASED COMPENSATION
We grant various types of equity-based awards to participants, including time restricted unit awards, total return restricted performance unit awards (“TR Performance Unit Awards”) and 2019 Performance Unit Awards (as defined below). The key terms of our restricted unit awards and TR Performance Unit Awards are set forth in our 2018 Annual Report. The key terms of our 2019 Performance Unit Awards are set forth below.
All employees, officers, consultants and non-employee directors of us and our parents and subsidiaries are eligible to be selected to participate in the Ciner Resource Partners LLC 2013 Long-Term Incentive Plan (as amended to date, the “Plan” or “LTIP”). As of September 30, 2019, subject to further adjustment as provided in the Plan, a total of 0.7 million common units were available for awards under the Plan. Any common units tendered by a participant in payment of the tax liability with respect to an award, including common units withheld from any such award, will not be available for future awards under the Plan. Common units awarded under the Plan may be reserved or made available from our authorized and unissued common units or from common units reacquired (through open market transactions or otherwise). Any common units issued under the Plan through the assumption or substitution of outstanding grants from an acquired company will not reduce the number of common units available for awards under the Plan. If any common units subject to an award under the Plan are forfeited, those forfeited units will again be available for awards under the Plan. The Partnership has made a policy election to recognize forfeitures as they occur in lieu of estimating future forfeiture activity under the Plan.
Non-employee Director Awards
During the nine months ended September 30, 2019, a total of 8,832 common units were granted and fully vested to non-employee directors compared to 6,807 common units that were granted during the nine months ended September 30, 2018. The grant date average fair value per unit of these awards was $25.48 and $27.55 for the nine months ended September 30, 2019 and 2018, respectively. The total fair value of these awards were approximately $0.2 million during each of the nine months ended September 30, 2019 and 2018.
Time Restricted Unit Awards
We grant restricted unit awards in the form of common units to certain employees which vest over a specified period of time, usually between one to three years, with vesting based on continued employment as of each applicable vesting date. Award recipients are entitled to distributions subject to the same restrictions as the underlying common unit. The awards are classified as equity awards, and are accounted for at fair value at grant date. The Partnership has made a policy election to recognize compensation expense attributable to restricted unit awards on a straight-line basis.


13


The following table presents a summary of activity on the Time Restricted Unit Awards:
 
Nine Months Ended 
 September 30, 2019
 
Nine Months Ended 
 September 30, 2018
(Units in whole numbers)
Number of Common Units
 
Grant-Date Average Fair Value per Unit (1)
 
Number of Common Units
 
Grant-Date Average Fair Value per Unit (1)
Unvested at the beginning of period
71,436

 
$
27.56

 
94,791

 
$
27.22

Granted
38,402

 
16.45

 
37,914

 
26.13

Vested
(32,087
)
 
27.85

 
(42,989
)
 
25.73

Forfeited
(18,871
)
 
27.10

 
(396
)
 
28.46

Unvested at the end of the period
58,880

 
$
20.24

 
89,320

 
$
27.46

 
(1) Determined by dividing the aggregate grant date fair value of awards by the number of common units.
Total Return Performance Unit Awards
Historically, we have granted TR Performance Unit Awards to certain employees. The TR Performance Unit Awards represent the right to receive a number of common units at a future date based on the achievement of market-based performance requirements in accordance with the TR Unit Performance Award agreement, and also include Distribution Equivalent Rights (“DERs”). DERs are the right to receive an amount equal to the accumulated cash distributions made during the period with respect to each common unit issued upon vesting. The TR Performance Unit Awards vest at the end of the performance period, usually between two to three years from the date of the grant. Performance is measured on the achievement of a specified level of total return, or TR, relative to the TR of a peer group comprised of other limited partnerships. The potential payout ranges from 0-200% of the grant target quantity and is adjusted based on our total return performance relative to the peer group.
We utilized a Monte Carlo simulation model to estimate the grant date fair value of TR Performance Unit Awards granted to employees, adjusted for market conditions. This type of award requires the input of highly subjective assumptions, including expected volatility and expected distribution yield. Historical and implied volatilities were used in estimating the fair value of these awards.
The following table presents a summary of activity on the TR Performance Unit Awards:
 
Nine Months Ended 
 September 30, 2019
 
Nine Months Ended 
 September 30, 2018
(Units in whole numbers)
Number of Common Units
 
Grant-Date Average Fair Value per Unit(1)
 
Number of Common Units
 
Grant-Date Average Fair Value per Unit (1)
Unvested at the beginning of period
52,974

 
$
42.22

 
26,177

 
$
42.93

Granted

 

 
33,994

 
41.52

Vested(2)
(4,766
)
 
43.93

 

 

Forfeited
(26,505
)
 
42.12

 

 

Unvested at the end of the period
21,703

 
$
41.99

 
60,171

 
$
42.14

 
(1)Determined by dividing the aggregate grant date fair value of awards by the number of common units.
(2)Total vesting of 9,003 common units net of 5,457 of common units purchased by the Partnership in satisfaction of certain employee tax withholding obligations.

2019 Performance Unit Awards
On September 23, 2019, the board of directors of our general partner approved a new form of performance unit award agreement (“2019 Performance Unit Award Agreement”) that will be used to grant performance awards based upon the achievement of certain financial, operating and safety-related performance metrics (“2019 Performance Unit Awards”) pursuant to our LTIP, and approved grants of 2019 Performance Unit Awards to certain of our executives. In addition to being subject to all the general terms and conditions of our LTIP, the vesting of the 2019 Performance Unit Awards is linked to a weighted average consisting of internal performance metrics (as each is defined in the corresponding 2019 Performance Unit Award Agreement, and collectively referred to herein as the “Performance Metrics”) during a three-year performance period (the “Measurement Period”). The vesting of the 2019 Performance Unit Awards, and number of common units of the Partnership distributable pursuant to such vesting, is dependent on our performance relative to a pre-established budget over the Measurement Period (provided that the awardee remains continuously employed with our general partner or its affiliates or satisfies other service-related criteria through the end of the Measurement Period, except in certain cases of Changes in Control (as defined in our LTIP) or the awardee’s death or disability).


14


Vested 2019 Performance Unit Awards are to be settled in our common units, with the number of such common units payable under the award for a given year in the Measurement Period to be calculated by multiplying the target number provided in the corresponding 2019 Performance Unit Award Agreement by a payout multiplier, which may range from 0%-200% in each case, as determined by aggregating the corresponding weighted average assigned to the Performance Metrics. The 2019 Performance Unit Awards also contain DERs and entitle the recipient the right to receive an amount equal to the accumulated cash distributions made during the period with respect to each common unit issued. Upon vesting of the 2019 Performance Unit Awards, the award recipient is entitled to receive a cash payment equal to the sum of the distribution equivalents accumulated with respect to vested 2019 Performance Unit Awards during the period beginning on January 1, 2019 and ending on the applicable vesting date. The 2019 Performance Unit Awards granted to these award recipients have a performance cycle beginning on January 1, 2019 and ending December 31, 2021.

The following table presents a summary of activity on the 2019 Performance Unit Awards for the period:
 
Nine Months Ended 
 September 30, 2019
 
Nine Months Ended 
 September 30, 2018
(Units in whole numbers)
Number of Common Units
 
Grant-Date Average Fair Value per Unit(1)
 
Number of Common Units
 
Grant-Date Average Fair Value per Unit (1)
Unvested at the beginning of period

 
$

 

 
$

Granted
38,402

 
16.45

 

 

Vested

 

 

 

Forfeited

 

 

 

Unvested at the end of the period
38,402

 
$
16.45

 

 
$

 
(1)Determined by dividing the weighted average price per common unit on the date of grant.

Unrecognized Compensation Expense
A summary of the Partnership’s unrecognized compensation expense for its unvested restricted time and all performance based units, and the weighted-average periods over which the compensation expense is expected to be recognized are as following:    
 
Nine Months Ended 
 September 30, 2019
 
Nine Months Ended 
 September 30, 2018
 
Unrecognized Compensation Expense
(In millions)
 
Weighted Average to be Recognized
(In years)
 
Unrecognized Compensation Expense
(In millions)
 
Weighted Average to be Recognized
(In years)
Time Restricted Unit Awards
$
0.9

 
1.95
 
$
1.9

 
1.88

TR Performance Unit Awards
0.3

 
1.98
 
1.7

 
2.02

2019 Performance Unit Awards
0.6

 
2.34
 

 

Total
$
1.8

 
 
 
$
3.6

 
 
9. ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated Other Comprehensive loss
Accumulated other comprehensive loss, attributable to Ciner Resources, includes unrealized gains and losses on derivative financial instruments. Amounts recorded in accumulated other comprehensive loss as of September 30, 2019 and December 31, 2018, and changes within the period, consisted of the following:
(In millions)
 
Gains and (Losses) on Cash Flow Hedges
Balance at December 31, 2018
 
$
(3.8
)
Other comprehensive income before reclassification
 
(0.8
)
Amounts reclassified from accumulated other comprehensive loss
 
0.4

Net current period other comprehensive income
 
(0.4
)
Balance at September 30, 2019
 
$
(4.2
)

15


Other Comprehensive Loss
Other comprehensive income/(loss), including the portion attributable to non-controlling interest, is derived from adjustments to reflect the unrealized gains/(loss) on derivative financial instruments. The components of other comprehensive income/(loss) consisted of the following:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions)
 
2019
 
2018
 
2019
 
2018
Unrealized loss (gain) on derivatives:
 
 
 
 
 


 
 
Mark to market adjustment on interest rate swap contracts
 
$
0.2

 
$

 
$
(0.8
)
 
$
0.1

Mark to market adjustment on natural gas forward contracts
 
(1.3
)
 
1.7

 
0.1

 
(1.6
)
(Loss) gain on derivative financial instruments
 
$
(1.1
)
 
$
1.7

 
$
(0.7
)
 
$
(1.5
)

Reclassifications for the period
The components of other comprehensive loss, attributable to Ciner Resources, that have been reclassified consisted of the following:
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
Affected Line Items on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
 
 
 
 
(In millions)
 
2019
 
2018
 
2019
 
2018
 
Details about other comprehensive loss components:
 
 
 
 
 
 
 
 
 
 
Gains and losses on cash flow hedges:
 
 
 
 
 
 
 
 
 
 
Natural gas forward contracts
 
0.4

 
0.2

 
0.4

 
0.9

 
Cost of products sold
Total reclassifications for the period
 
$
0.4

 
$
0.2

 
$
0.4

 
$
0.9

 
 
10. COMMITMENTS AND CONTINGENCIES
From time to time we are party to various claims and legal proceedings related to our business. Although the outcome of these proceedings cannot be predicted with certainty, management does not currently expect any of the legal proceedings we are involved in to have a material effect on our business, financial condition and results of operations. We cannot predict the nature of any future claims or proceedings, nor the ultimate size or outcome of existing claims and legal proceedings and whether any damages resulting from them will be covered by insurance.
Off-Balance Sheet Arrangements
We have a self-bond agreement (the “Self-Bond Agreement”) with the Wyoming Department of Environmental Quality (“WDEQ”) under which we currently commit to pay directly for reclamation costs. The amount of the bond was $35.3 million and $32.9 million as of September 30, 2019 and December 31, 2018, respectively, the former of which is the amount we would need to pay the State of Wyoming for reclamation costs if we cease mining operations currently. In May 2019, the State of Wyoming enacted legislation that limits our and other mine operators’ ability to self-bond, which will require us to seek other acceptable financial instruments to provide additional assurances for our reclamation obligations. We expect to provide such assurances by securing a third-party surety bond no later than November 2020.  While we expect to obtain such surety guarantee by that time, we cannot guarantee the availability, costs and terms of such surety bond. Yet as of the date of this Report, we anticipate that any such impact on our net income and liquidity will be limited. The amount of such surety guarantee is subject to change upon periodic re-evaluation by the WDEQ’s Land Quality Division.


11. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
Ciner Corp is the exclusive sales agent for the Partnership and through its membership in ANSAC, Ciner Corp is responsible for promoting and increasing the use and sale of soda ash and other refined or processed sodium products produced. ANSAC operates on a cooperative service-at-cost basis to its members such that typically any annual profit or loss is passed through to the members. In the event an ANSAC member exits or the ANSAC cooperative is dissolved, the exiting members are obligated for their respective portion of the residual net assets or deficit of the cooperative. On November 9, 2018, Ciner Corp delivered a notice to terminate its membership in ANSAC. The termination from ANSAC will be effective as of December 31, 2021. As of September 30, 2019, we have not recognized an asset or liability related to its exit from ANSAC as such an amount is not currently probable or estimable.

16


All actual sales and marketing costs incurred by Ciner Corp are charged directly to the Partnership. Selling, general and administrative expenses also include amounts charged to the Partnership by its affiliates principally consisting of salaries, benefits, office supplies, professional fees, travel, rent and other costs of certain assets used by the Partnership. On October 23, 2015, the Partnership is a party to 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 and reimburse Ciner Corp for certain third-party costs incurred in connection with providing such services. In addition, under the limited liability company agreement governing Ciner Wyoming, Ciner Wyoming reimburses us for employees who operate our assets and for support provided to Ciner Wyoming. These transactions do not necessarily represent arm's length transactions and may not represent all costs if Ciner Wyoming operated on a standalone basis.

The total selling, general and administrative costs charged to the Partnership by affiliates were as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions)
2019
 
2018
 
2019
 
2018
Ciner Corp
$
3.6

 
$
3.4

 
$
12.4

 
$
11.1

ANSAC (1)
0.8

 
0.9

 
2.8

 
2.4

Total selling, general and administrative expenses - affiliates
$
4.4

 
$
4.3

 
$
15.2

 
$
13.5

 
(1) ANSAC allocates its expenses to its members using a pro-rata calculation based on sales.

Net sales to affiliates were as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions)
2019
 
2018
 
2019
 
2018
ANSAC
$
80.4

 
$
63.4

 
$
239.7

 
$
178.9

Total
$
80.4

 
$
63.4

 
$
239.7

 
$
178.9


The Partnership had accounts receivable from affiliates and due to affiliates as follows:
 
As of
 
September 30,
2019
 
December 31,
2018
 
September 30,
2019
 
December 31,
2018
(In millions)
Accounts receivable from affiliates
 
Due to affiliates
ANSAC
$
60.3

 
$
48.7

 
$
0.8

 
$
0.7

CIDT (1)
5.4

 
7.1

 

 

Ciner Corp
34.5

 
14.3

 
3.9

 
1.9

Total
$
100.2

 
$
70.1

 
$
4.7

 
$
2.6

 
(1) “CIDT” refers to Ciner Ic ve Dis Ticaret Anonim Sirketi, an export affiliate of the Partnership.



17


12. MAJOR CUSTOMERS AND SEGMENT REPORTING
Our operations are similar in geography, nature of products we provide, and type of customers we serve. As the Partnership earns substantially all of its revenues through the sale of soda ash mined at a single location, we have concluded that we have one operating segment for reporting purposes.
The net sales by geographic area are as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions)
2019
 
2018
 
2019
 
2018
Domestic
$
56.8

 
$
60.0

 
$
157.7

 
$
175.6

International - ANSAC
80.4

 
63.4

 
239.7

 
178.9

Total net sales
$
137.2

 
$
123.4

 
$
397.4

 
$
354.5

13. FAIR VALUE MEASUREMENTS
The Partnership measures certain financial and non-financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs.
A three-level valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:
Ÿ
Level 1-inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.
 
 
Ÿ
Level 2-inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
 
 
Ÿ
Level 3-inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.
Financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value because of the nature of such instruments. Our derivative financial instruments are measured at their fair value with Level 2 inputs based on quoted market values for similar but not identical financial instruments.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Derivative Financial Instruments
We have interest rate swap contracts, designated as cash flow hedges, to mitigate our exposure to possible increases in interest rates. The swap contracts consist of four individual $12.5 million swaps with an aggregate notional value of $50.0 million at September 30, 2019 and December 31, 2018. The swaps have various maturities through 2023.
We enter into natural gas forward contracts, designated as cash flow hedges, to mitigate volatility in the price of natural gas related to a portion of the natural gas we consume. These contracts generally have various maturities through 2024. These contracts had an aggregate notional value of $34.9 million and $41.2 million at September 30, 2019 and December 31, 2018, respectively.
The following table presents the fair value of derivative assets and derivative liabilities and the respective locations on our unaudited condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018:

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Assets
 
 
Liabilities
 
 
 
September 30,
2019
 
December 31,
2018
 
 
September 30,
2019
 
December 31,
2018
(In millions)
Balance Sheet Location
 
Fair Value
 
Fair Value
 
Balance Sheet Location
Fair Value
 
Fair Value
Derivatives designated as hedges:
 
 
 
 
 
 
 
 
 
 
Interest rate swap contracts - current
 
 
$

 
$

 
Accrued Expenses
$
1.1

 
$
0.3

Natural gas forward contracts - current
Other current assets
 
0.1

 

 
Accrued Expenses
2.8

 
1.6

Natural gas forward contracts - non-current
Other non-current assets
 

 

 
Other non-current liabilities
4.4

 
5.5

Total fair value of derivatives designated as hedging instruments
 
 
$
0.1

 
$

 
 
$
8.3

 
$
7.4

Financial Assets and Liabilities not Measured at Fair Value
The carrying value of our long-term debt materially reflects the fair value of our long-term debt as its key terms are similar to indebtedness with similar amounts, durations and credit risks. See Note 4 “Debt” for additional information on our debt arrangements.
14. SUBSEQUENT EVENTS
Effective as of October 29, 2019, the members of the Board of Managers of Ciner Wyoming LLC, approved a cash distribution to the members of Ciner Wyoming in the aggregate amount of $13.0 million. This distribution is payable on November 19, 2019.
On October 29, 2019, the Partnership declared a cash distribution approved by the board of directors of our general partner. The cash distribution for the third quarter of 2019 of $0.340 per unit will be paid on November 20, 2019 to unitholders of record on November 8, 2019.









 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 forward-looking statements relating to the financial condition, results of operations, plans, objectives, future performance and business of the Partnership. We have based such forward-looking statements on management’s beliefs and assumptions and on information currently available to us. 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,” “potential,” “continue,” “may,” “will,” “should” or the negative of these terms or similar expressions. In particular, forward-looking statements in this Report include statements concerning 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. 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;
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;
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
other business risks affecting our cash levels.


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These factors should not be construed as exhaustive and we urge you to carefully consider the risks described in this Report, our most recent Form 10-K, and subsequent reports filed with the United States Securities and Exchange Commission (the "SEC"). You may obtain these reports from the SEC’s website at www.sec.gov. All forward-looking statements included in this Report are expressly qualified in their entirety by these cautionary statements. Unless required by law, we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.      
References
References in this Quarterly Report on Form 10-Q (“Report”) to the “Partnership,” “CINR,” “Ciner Resources,” “we,” “our,” “us,” or like terms refer to Ciner Resources LP and its subsidiary, Ciner Wyoming LLC, which is the consolidated subsidiary of the Partnership and 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 Şirketi (“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

Quarterly Distribution
On October 29, 2019, the Partnership declared its third quarter 2019 quarterly cash distribution of $0.340 per unit. The quarterly cash distribution is payable on November 20, 2019 to unitholders of record on November 8, 2019. While we are working on finalizing our capital plans for a new expansion project that we believe will significantly increase production levels up to approximately 3.5 million tons of soda ash per year, such plans will require capital expenditures materially higher than have been incurred by Ciner Wyoming in recent years. To maintain a disciplined financial policy and what we believe is a conservative capital structure, we intend to pay for the investment in part through cash generated by the business and in part through debt. When considering the significant investment required by this expansion and the infrastructure improvements designed to increase our overall efficiency for each of the first three quarters of 2019, we lowered our quarterly cash distributions as compared to 2018 quarterly cash distributions in order to satisfy approximately 50% of the funding for the project, which we believe will continue for the next 8-10 quarters depending upon business performance. Subject to our business performance, we intend to maintain the Partnership quarterly cash distribution of $0.340 per unit, until such targets are met, though there can be no assurance that such level will be maintained for future quarters.
Notice to Terminate Membership in ANSAC
On November 9, 2018, we were informed that Ciner Corp delivered a notice to terminate its membership in ANSAC, a cooperative that serves as the primary international distribution channel for us as well as two other U.S. manufacturers of trona-based soda ash. The effective termination date is expected to be December 31, 2021 (the”ANSAC Termination Date”). ANSAC was our largest customer for the years ended December 31, 2018 and 2017 and the nine months ended September 30, 2019 and 2018, accounting for 52.0%, 44.7%, 60.3% and 50.5%, respectively, of our net sales. Although ANSAC has been our largest customer for each of the years ended December 31, 2018 and 2017 and nine months ended September 30, 2019 and 2018, 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 that has historically seen demand for soda ash exceed supply of soda ash, and therefore we anticipate being able to find export customers regardless of our membership status. Between now and the ANSAC Termination Date, Ciner Corp will continue to have full ANSAC membership benefits and services. The ANSAC membership agreement provides that in the event an ANSAC member exits or the ANSAC cooperative is dissolved, the exiting members are obligated for their respective portion of the residual net assets or deficit of the cooperative. As of September 30, 2019, we have not recognized an asset or liability related to the exit from ANSAC as such an amount is not currently probable or estimable.

21


Financial Assurance Regulatory Updates by the Wyoming Department of Environmental Quality

We have a self-bond agreement (the “Self-Bond Agreement”) with the Wyoming Department of Environmental Quality (“WDEQ”) under which we currently commit to pay directly for reclamation costs. The amount of the bond was $35.3 million and $32.9 million as of September 30, 2019 and December 31, 2018, respectively, the former of which is the amount we would need to pay the State of Wyoming for reclamation costs if we cease mining operations currently. In May 2019, the State of Wyoming enacted legislation that limits our and other mine operators’ ability to self-bond, which will require us to seek other acceptable financial instruments to provide additional assurances for our reclamation obligations. We expect to provide such assurances by securing a third-party surety bond no later than November 2020.  While we expect to obtain such surety guarantee by that time, we cannot guarantee the availability, costs and terms of such surety bond. Yet, as of the date of this Report, we anticipate that any such impact on our net income and liquidity will be limited. The amount of such surety guarantee 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, 2018, filed with the SEC on March 8, 2019.


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 we and other producers charge for our products.
Demand for soda ash in the United States is 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. Because the United States is a well-developed market, we expect that domestic demand levels will remain stable for the near future. Because future U.S. capacity growth is expected to come from the four major producers in the Green River Basin, we also expect that U.S. supply levels will remain relatively stable in the near term.
Soda ash demand in international markets has continued to grow in conjunction with GDP. We expect that 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.
Sales Mix
We will adjust our sales mix based upon what is the best margin opportunity for the business between domestic and international. Our operations have been and continue to be sensitive to fluctuations in freight and shipping costs and changes in international prices, which have historically been more volatile than domestic prices. Our gross profit will be impacted by the mix of domestic and international sales as a result of changes in logistics costs and our average selling prices.
International Commercial Restructuring and Expansion
After the ANSAC Termination Date, we expect Ciner Corp will begin marketing soda ash directly into international markets that are currently being served by ANSAC and intends to utilize the distribution network that has already been established by the global Ciner Group. We believe by combining our volumes with Ciner Group’s soda ash exports from Turkey, our withdrawal from ANSAC will allow us to leverage the larger, global Ciner Group soda ash operations, which we expect will eventually lower our cost position and improve our ability to optimize our market share both domestically and internationally.
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. In addition, we have begun installation of a new electricity/steam co-generation facility that is estimated to reduce our electricity demand by roughly one-third per year partially offset by an increase in our natural gas consumption but resulting in overall reduction in our aggregate energy costs. We expect to commence operations of the co-generation facility by the end of 2019.

22


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 1.53: 1.0 and 1.51: 1.0 for the three and nine months ended September 30, 2019, respectively, and 1.53: 1.0 and 1.54: 1.0 for the three and nine months ended September 30, 2018, 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.
Union Pacific is our largest provider of domestic rail freight services and accounted for 86.5% and 76.8% of our total freight costs during the three months ended September 30, 2019 and 2018, respectively, and 84.9% and 77.9% of our total freight costs during the nine months ended September 30, 2019 and 2018, respectively. The increase in the percentage of freight that is related to Union Pacific is due primarily to our increased usage of Union Pacific to accommodate changes in sales mix between domestic and international and their respective delivery locations. Our agreement with Union Pacific expires on December 31, 2019 and is currently in active negotiations for renewal, although there can be no assurance that it will be renewed on terms favorable to us or at all. 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, 2019 and 2018, we had no shortfall payments and do not expect 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 7, “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 Henry Hub natural gas settlement prices, over the past five years, have ranged between $1.73 and $4.12 per MMBtu. The average monthly Henry Hub natural gas settlement prices for the three and nine months ended September 30, 2019 and 2018 were $2.38 and

23


$2.93, and $2.62 and $2.95 per MMBtu, respectively. In order to mitigate the risk of gas price fluctuations, we hedge a portion of our forecasted natural gas purchases by entering into physical or financial gas hedges generally ranging between 20% and 80% of our expected monthly gas requirements, on a sliding scale, for approximately the next four years.
Royalties. We pay royalties to the State of Wyoming, the U.S. Bureau of Land Management and Rock Springs Royalty Company LLC (“RSRC”), an affiliate of Occidental Petroleum, which are calculated based upon a percentage of the value of soda ash and related products sold at a certain stage in the mining process. These royalty payments may be subject to a minimum domestic production volume from our Green River Basin facility.  We are also obligated to pay annual rentals to our lessors and licensor regardless of actual sales. In addition, we pay a production tax to Sweetwater County, and trona severance tax to the State of Wyoming that is calculated based on a formula that utilizes the volume of trona ore mined and the value of the soda ash produced.

The royalty rates we pay to our lessors and licensor may change upon our renewal or renegotiation of such leases and license. On June 28, 2018, Ciner Wyoming amended its License Agreement, dated July 18, 1961 (the “License Agreement”), with RSRC to, among other things, (i) extend the term of the License Agreement to July 18, 2061 and for so long thereafter as Ciner Wyoming continuously conducts operations to mine and remove sodium minerals from the licensed premises in commercial quantities; and (ii) revise the production royalty rate for each sale of sodium mineral products produced from ore extracted from the licensed premises at the royalty rate of eight percent (8%) of the net sales of such sodium mineral products. Any increase in the royalty rates we are required to pay to our lessors and licensor 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. The Partnership has 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 one of its other North American subsidiaries entered into an agreement in 2017 to exclusively import soda ash into a port on the east coast of the U.S. Ciner Corp, which is the exclusive sales agent for the Partnership, will serve as the exclusive sales agent of that material and receive a commission on those sales. We believe by having access to that material, Ciner Corp will be able to offer its customers an improved level of service, greater certainty of supply to the Partnership’s end customers, and over time lower our overall costs to serve and which are subsequently charged to the Partnership.


24


Third Quarter 2019 Financial Highlights:

Net sales of $137.2 million increased 11.2% over the prior-year third quarter; year-to-date net sales of $397.4 million increased 12.1% over the prior-year.
Soda ash volume produced and sold increased 8.3% and 8.0% over the prior-year third quarter; year-to-date soda ash volume produced and sold increased 8.4% and 8.2% over the prior-year.
Net income of $29.9 million increased $10.9 million over the prior-year third quarter; year-to-date net income of $78.9 million increased $4.5 million over the prior-year. Net income for the year-to-date period ended September 30, 2018 includes a $27.5 million litigation settlement in the second quarter of 2018.
Adjusted EBITDA of $37.6 million increased 35.3% over the prior-year third quarter; year-to-date adjusted EBITDA of $103.6 million increased 4.1% over the prior-year. Adjusted EBITDA for the year-to-date period ended September 30, 2018 includes a $27.5 million litigation settlement in the second quarter of 2018.
Earnings per unit of $0.740 for the quarter increased 68.2% over the prior-year third quarter of $0.440; year-to-date earnings per unit of $1.910 increased 7.3% over the prior-year. Net income attributable to the Partnership for the year-to-date period ended September 30, 2018, the measure upon which earnings per unit is calculated, included a $27.5 million litigation settlement in the second quarter of 2018.
Quarterly distribution declared per unit of $0.340 decreased 40.0% compared to the prior-year third quarter and remained flat compared to the first and second quarters of 2019.
Net cash provided by operating activities of $40.6 million decreased 45.3% over prior-year third quarter; year-to-date net cash provided by operating activities of $68.4 million decreased by 47.9% over the prior-year.
Distributable cash flow of $16.2 million increased 38.5% compared to the prior-year third quarter; year-to-date distributable cash flow of $45.7 million increased 2.7% over the prior year. Distributable cash flow for the year-to-date period ended September 30, 2018 includes a $27.5 million litigation settlement in the second quarter of 2018.
The distribution coverage ratio was 2.35 and 1.03 for the three months ended September 30, 2019 and 2018, respectively; and 2.22 and 1.30 for the nine months ended September 30, 2019 and 2018, respectively.



















25






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, 2019 and 2018:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(In millions, except for operating and other data section)
2019
 
2018
 
2019
 
2018
Net sales:
 
 
 
 
 
 
 
Sales—affiliates
$
80.4

 
$
63.4

 
$
239.7

 
$
178.9

Sales—others
56.8

 
60.0

 
157.7

 
175.6

    Net sales
$
137.2

 
$
123.4

 
$
397.4

 
$
354.5

Operating costs and expenses:
 
 
 
 
 
 
 
Cost of products sold
93.9

 
90.0

 
274.7

 
265.1

Depreciation, depletion and amortization expense
6.8

 
7.3

 
20.0

 
21.4

Selling, general and administrative expenses—affiliates
4.4

 
4.3

 
15.2

 
13.5

Selling, general and administrative expenses—others
0.7

 
1.8

 
4.3

 
5.4

Litigation settlement

 

 

 
(27.5
)
Total operating costs and expenses
105.8

 
103.4

 
314.2

 
277.9

Operating income
31.4

 
20.0

 
83.2

 
76.6

Interest income
0.1

 
0.3

 
0.3

 
1.7

Interest expense
(1.6
)
 
(1.3
)
 
(4.6
)
 
(3.8
)
Other, net

 

 

 
(0.1
)
Total other expense, net
(1.5
)
 
(1.0
)
 
(4.3
)
 
(2.2
)
Net income
29.9

 
19.0

 
78.9

 
74.4

Net income attributable to non-controlling interest
15.1

 
10.0

 
40.5

 
38.5

Net income attributable to Ciner Resources LP
$
14.8

 
$
9.0

 
$
38.4

 
$
35.9

 
 
 
 
 
 
 
 
Operating and Other Data:
 
 
 
 
 
 
 
Trona ore consumed (thousands of short tons)
1,086.3

 
1,004.8

 
3,126.0

 
2,941.3

Ore to ash ratio(1)
1.53: 1.0

 
1.53: 1.0

 
1.51: 1.0

 
1.54: 1.0

Ore grade(2)
86.4
%
 
84.7
%
 
86.6
%
 
85.7
%
Soda ash volume produced (thousands of short tons)
711.0

 
656.5

 
2,064.3

 
1,904.6

Soda ash volume sold (thousands of short tons)
709.0

 
656.6

 
2,064.5

 
1,908.8

Adjusted EBITDA(3)
$
37.6

 
$
27.8

 
$
103.6

 
$
99.5

 
(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.

26


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)
 
2019
 
2018
 
2019
 
2018
 
QTD
 
YTD
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
$
56.8

 
$
60.0

 
$
157.7

 
$
175.6

 
(5.3)%
 
(10.2)%
International
 
80.4

 
63.4

 
239.7

 
178.9

 
26.8%
 
34.0%
Total net sales
 
$
137.2

 
$
123.4

 
$
397.4

 
$
354.5

 
11.2%
 
12.1%
Sales volumes (thousands of short tons):
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
237.7

 
267.9

 
660.8

 
796.8

 
(11.3)%
 
(17.1)%
International
 
471.3

 
388.7

 
1,403.7