Statement from the Chief Executive Officer – Nassef Sawiris:
“I am very pleased with the strong improvement in our operational and financial performance during the first quarter, which supports our expectation that we are on track to achieve a significant step-up in free cash flow generation driven by the completion of our growth initiatives and ramp-up to run-rate production volumes across our asset base. In the first quarter, Sorfert and EBIC achieved significantly higher utilization rates than a year ago. Iowa Fertilizer Company continued its ramp-up during the quarter and achieved a more consistent utilization rate of almost 110% in March, which bodes well for the remainder of the year.
Our performance was supported by our well-diversified portfolio. Our industrial chemicals portfolio continued to perform well with further increases in selling prices for both methanol and melamine. We are also ramping up our diesel exhaust fluid operations: we have been rolling out the product in the United States where we increased capacity for the product by 250% and enhanced logistical capabilities, we executed the first shipments from Egypt in March, and we are planning for production from the Netherlands next year.
Our two remaining growth projects continue to be on track. Natgasoline reached the major milestone of mechanical completion in April. Natural gas has already been introduced and Natgasoline is expected to start commercial production within weeks. BioMCN’s second methanol line is on track to start production in Q4 2018.
As previously discussed, optimizing our capital structure through lowering our cost of debt and extending maturities has been a primary objective for OCI, and I am pleased that we have achieved these objectives following our recent refinancings. Following the exchange of IFCo’s 2019 and 2022 bonds for longer maturities and lower coupon rates, and the refinancing and upsizing of OCI Partners’ term loan in the first quarter, we repurchased our convertible bond, entered into new revolving credit and term loan facilities for a total of $1.1 billion, and successfully closed a $1.15 billion debut bond offering in April. This week we concluded a $445 million refinancing of EFC.
Our outlook remains unchanged from our March outlook. With our growth capex effectively complete and our capital structure optimization plans finalized, we believe that we are poised to achieve significant EBITDA growth and cash flow generation on the back of our reduced capital expenditures and our ramp-up to run-rate production volumes, driven by both our new capacity and our North African assets achieving high utilization rates.
Total capital expenditure for 2018 is expected to be in the range of $250 to $300 million, of which $150 to $200 million is maintenance capex and the balance is growth capex, primarily for the refurbishment of BioMCN’s second line. Given that our facilities are on average the youngest in the industry and utilize best-in-class technologies, we expect low levels of non-growth capital expenditure in the range of $150 to $200 million on a run-rate basis.