Rentech, Inc. (NYSE AMEX: RTK) today announced substantially
improved results for the second quarter of fiscal year 2011 over
the second quarter of fiscal year 2010 and reiterated guidance for
the 2011 fiscal year.
For the second quarter of fiscal year 2011, Rentech reported
revenue of $23.6 million, up from $19.2 million for the comparable
quarter in the prior year. The improvement was primarily due to an
increase in sale prices for nitrogen fertilizer products and higher
sales volume of urea ammonium nitrate (UAN) produced by the
Company’s wholly-owned subsidiary, Rentech Energy Midwest
Corporation (REMC). Increased nitrogen demand resulting from
expanded corn acres has contributed to improved market trends for
the fertilizer segment over last year. Rentech reported a net loss
of $7.6 million, or $0.03 per share, for the quarter ended March
31, 2011, an improvement over the net loss attributable to the
Company of $16.0 million, or $0.07 per share, for the comparable
period in fiscal 2010.
Rentech reported revenue of $65.6 million for the six months
ended March 31, 2011, compared to $46.3 million for the comparable
period in the prior year. The improvement was largely due to an
increase in sales price for nitrogen fertilizer products and higher
sales volume of UAN. Rentech reported a net loss attributable to
the Company of $13.1 million, or $0.06 a share for the six months
ended March 31, 2011, an improvement over the net loss during the
comparable period last fiscal year of $31.5 million or $0.15 a
share.
Commenting on the results, D. Hunt Ramsbottom, President and CEO
of Rentech, stated, "REMC’s results reflect strong demand and
pricing for fertilizer products, along with relatively low and
stable natural gas prices. These trends are expected to continue,
contributing to a bullish outlook for REMC.” Mr. Ramsbottom added,
“REMC is a valuable asset to us, with cash flow as well as an
experienced syngas operating team.”
Rentech continues to project that REMC’s operating income for
fiscal year 2011 will be approximately $65 million and REMC’s
EBITDA for the fiscal year will be approximately $75 million. REMC
has signed contracts with fixed prices for the sale of
approximately 80% of REMC's forecasted deliveries for the fiscal
year, and has already purchased or contracted at fixed prices for
the natural gas required to produce that product. Further
explanation of EBITDA, a non-GAAP financial measure, and a
reconciliation of REMC’s projected EBITDA to operating income for
fiscal year 2011 have been included below in this press
release.
Rentech continues to project that its budgeted activities for
the fiscal year ending September 30, 2011, including development
expenses for the Port St. Joe Project, are fully financed. Budgeted
activities for the fiscal year include continued project
development activities; operation of the Product Demonstration Unit
(PDU); continued research and development of the Rentech
technologies; and funding of general working capital needs. The
Company would require additional capital to close on financing for
the Port St. Joe Project. Rentech expects to obtain the funds
through various sources of potential financing including new
financings at REMC and government support, but there is no
assurance that these sources of capital will be available to the
Company.
Mr. Ramsbottom continued, "We have significant commercial
activities underway in our alternative energy segment. We continue
to work with the U.S. Department of Energy for potential loan
guarantees and we are finalizing commercial contracts related to
our Port St. Joe renewable power project. Our recently announced
Olympiad Project has several key development elements underway,
such as a long term source of biomass feedstock and a path to
significant financial support. Additionally, the integration of the
ClearFuels biomass gasifier at our PDU is on schedule, with
production of renewable synthetic jet and diesel fuels at the
facility targeted for the end of this calendar year."
Operating income for REMC was $9.4 million for the second
quarter of fiscal year 2011, compared to operating income of $2.4
million last year. The improvement in operating income was due to
higher gross margin resulting from greater sales prices and sales
volume, coupled with lower natural gas prices. Prior year’s
operating loss reflected an expense of $4.0 million for the
bi-annual plant turnaround.
Rentech’s selling, general and administrative (SG&A)
expenses were $7.4 million for the second quarter of fiscal year
2011, up from $6.8 million in the prior year. The increase in
SG&A expenses was primarily due to an increase in salaries as a
result of additional headcount and higher computer service and
support and professional services. These expenses were partially
offset by a decrease in stock-based compensation and legal
expense.
Research and development (R&D) expenses for the second
quarter of fiscal year 2011 were $6.7 million, up from $4.5 million
reported in the prior period. The increase was primarily due to
more operating days at the PDU; repairs and modifications at the
plant; and an increase of $444,000 of expense due to the
consolidation of ClearFuels, Inc.
Other expenses were $3.7 million for the second quarter of
fiscal year 2011, down from $7.1 million in the prior year. Other
expenses for the prior year included loss on debt extinguishment
and investments totaling $3.7 million.
For the first six months of fiscal year 2011, SG&A expenses
were $14.8 million, up from $13.8 million for the comparable period
in the prior year. SG&A increased primarily due to an increase
in salaries as a result of additional headcount and higher computer
service and support and professional services. These expenses were
partially offset by a decrease in stock-based compensation and
legal expense. R&D expenses for the current period were $12.5
million, up from $8.3 million for the comparable six month period
in the prior year. Current year R&D expenses reflect increased
costs at the PDU for plant modifications and repairs; expenses to
support a significantly higher number of plant operating days; and
$899,000 of expenses due to the consolidation of ClearFuels.
As of March 31, 2011, Rentech had cash and cash equivalents of
$77.3 million on a consolidated basis.
Conference Call with Management
The Company will hold a conference call on Tuesday, May 10, 2011
at 10:00 a.m. PDT, during which time Rentech's senior management
will review the Company's financial results for this period and
provide an update on corporate developments. Callers may listen to
the live presentation, which will be followed by a question and
answer segment, by dialing 800-925-9065 or 212-231-2910. An audio
webcast of the call will be available at www.rentechinc.com within
the Investor Relations portion of the site under the Presentations
section. A replay will be available by audio webcast and
teleconference from 12:00 p.m. PDT on May 10 through 12:00 p.m. PDT
on May 17. The replay teleconference will be available by dialing
800-633-8284 or 402-977-9140 and the reservation number
21521933.
RENTECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Stated in thousands, except per share
data)
For the Three Months For the Six Months Ended
March 31, Ended March 31, 2011 2010
2011 2010 Total Revenues
$
23,575
$ 19,182 $ 65,640 $ 46,320 Cost of Sales 13,373
16,172 39,309 44,462
Gross Profit 10,202 3,010 26,331 1,858
Operating Expenses 14,634 11,734
28,373 23,110
Operating Loss
(4,432 ) (8,724 ) (2,042 ) (21,252 ) Total Other Expenses,
Net (3,655 ) (7,123 ) (11,927 ) (9,942
)
Loss from Continuing Operationsbefore
Income Taxes and Equity in Net
Loss of Investee Company
(8,087 ) (15,847 ) (13,969 ) (31,194 ) Income tax Benefit -
- 1 -
Loss from Continuing Operations before
Equity in Net Loss of Investee Company
(8,087 ) (15,847 ) (13,968 ) (31,194 ) Equity in Net Loss of
Investee Company - 149 -
277 Loss from Continuing Operations (8,087 ) (15,996
) (13,968 ) (31,471 ) Income from Discontinued Operations -
2 - 6
Net
loss (8,087 ) (15,994 ) (13,968 ) (31,465 ) Net Loss
Attributable to Non-controlling
Interests
522 - 888 -
Net Loss Attributable to Rentech $ (7,565 ) $ (15,994 ) $
(13,080 ) $ (31,465 )
Basic and Diluted Net Loss per
Common Share Continuing operations $ (0.03 ) $ (0.07 ) $ (0.06
) $ (0.15 ) Discontinued operations 0.00 0.00
0.00 0.00
Basic and Diluted
Net Loss per Common Share $ (0.03 ) $ (0.07 ) $ (0.06 ) $ (0.15
)
Basic and Diluted Weighted-Average Number of
Common Shares Outstanding 222,218 213,544
222,098 213,154
Disclosure Regarding Non-GAAP Financial Measures
EBITDA is a presentation of earnings before interest, taxes,
depreciation and amortization. Management believes that EBITDA (a
non-GAAP financial measure) can be a useful indicator of the
fundamental operating performance of REMC’s fertilizer production
facility. Management believes that EBITDA can help investors
evaluate REMC’s operating performance by eliminating the effects of
depreciation and amortization, which are non-cash expenses, and of
interest and taxes, which are not operating expenses. We believe
that our investors may use EBITDA as a measure of the operating
performance of REMC’s business. We recommend that investors
carefully review the GAAP financial information (including our
Statements of Cash Flows) included as part of our Annual Report on
Form 10-K, our Quarterly Reports on Form 10-Q, and our earnings
releases; compare GAAP financial information with the non-GAAP
financial measures disclosed in our quarterly earnings releases and
investor calls, and read the reconciliation below.
Fiscal Year 2011 REMC EBITDA Projection ($ millions)
Operating Income of approximately:
$ 65.4 Depreciation and Amortization
9.6 EBITDA of approximately: $ 75.0
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com), incorporated in 1981,
provides clean energy solutions. The Company's Rentech-SilvaGas
biomass gasification process can convert multiple biomass
feedstocks into synthesis gas (syngas) for production of renewable
fuels and power. Combining the gasification process with Rentech's
unique application of syngas conditioning and clean-up technology
and the patented Rentech Process based on Fischer-Tropsch
chemistry, Rentech offers an integrated solution for production of
synthetic fuels from biomass. The Rentech Process can also convert
syngas from fossil resources into ultra-clean synthetic jet and
diesel fuels, specialty waxes, and chemicals. Final product
upgrading and acid gas removal technologies are provided under an
alliance with UOP, a Honeywell company. Rentech develops projects
and offers licenses for these technologies for application in
synthetic fuels and power facilities worldwide. Rentech Energy
Midwest Corporation, the Company's wholly-owned subsidiary,
manufactures and sells nitrogen fertilizer products including
ammonia, urea ammonia nitrate, urea granule, and urea solution in
the corn-belt region of the central United States.
Safe Harbor Statement
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995
about matters such as the demand, pricing and outlook for REMC’s
products; projected EBITDA performance at REMC; the Company's
projected capital needs and sources; and the prospects of our
development projects. These statements are based on management’s
current expectations and actual results may differ materially as a
result of various risks and uncertainties. Other factors that could
cause actual results to differ from those reflected in the
forward-looking statements are set forth in the Company’s prior
press releases and periodic public filings with the Securities and
Exchange Commission, which are available via Rentech’s web site at
www.rentechinc.com. The
forward-looking statements in this press release are made as of the
date of this press release and Rentech does not undertake to revise
or update these forward-looking statements, except to the extent
that it is required to do so under applicable law.
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