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Phosphate Holdings reports another poor quarter

MADISON — Phosphate Holdings Inc. reported a second quarter 2011 loss of $1.8 million, or $0.21 per diluted share of common stock, compared to a loss of $4.9 million, or $0.58 per diluted share of common stock, for the same period in 2010.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2011 were $2.0 million, compared to negative EBITDA of $4.6 million for the second quarter of 2010.

Total net sales for the second quarter of 2011 were $80.5 million, a 30 percent increase from total net sales of $62.1 million for the second quarter of 2010.

Robert E. Jones, Phosphate Holdings’ CEO, said, “Operating issues were the dominant theme of our second quarter of 2011. We simply failed to achieve the production levels of sulfuric acid and DAP necessary for a positive quarter. For the quarter, DAP and sulfuric acid production was 134,445 and 146,043, respectively. We relied heavily on purchased sulfuric acid to supplement DAP production. However, the cost of DAP produced with purchased sulfuric acid is substantially higher than the cost of DAP manufactured using produced acid.

“The primary factors negatively impacting our production included phosphate rock shortages due to logistical issues in Morocco, which idled our phosphoric acid and DAP plants for nine days; damaged heat exchangers, which limited instantaneous rates to approximately 1,000 to 1,200 tons per day in both sulfuric acid plants; and, a scheduled maintenance turnaround of one of our sulfuric acid plants, which required 19 days.

“During the May turnaround, we replaced the impaired heat exchanger and re-established instantaneous rates in excess of the affected plants’ design capacity of 1,500 tons per day. The damaged heat exchanger in our other sulfuric acid plant will be replaced in a scheduled October 2011 turnaround.

At the end of 2010, the company’s board of directors appointed a special committee of independent directors to initiate a comprehensive review of strategic options. While this review is ongoing, Phosphate Holdings will not hold an earnings call to discuss its second quarter 2011 financial results and said it would not otherwise discuss this strategic process. When the strategic process is completed, the company said it intends to resume regular quarterly earnings calls.

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