Rentech, Inc. (NASDAQ: RTK) today announced financial and
operating results for the three and nine months ended September 30,
2014.
D. Hunt Ramsbottom, President and CEO of Rentech, stated,
“Third-quarter results for our nitrogen business were generally in
line with our expectations, based on seasonal demand for nitrogen
products. We expect results and cash distribution for the fourth
quarter to be significantly better than third quarter results,
corresponding with fall deliveries. In addition, the outlook for
the first half of 2015 looks encouraging for all nitrogen
products.”
Mr. Ramsbottom continued, “Our wood fibre business continues to
gain momentum. We are now in the final stages of bringing our
Canadian wood pellet plants on line, following some delays related
mostly to late shipments from vendors.
“Fulghum’s typically steady business has seen reduced profits
this year due to some events that are unusual and that we don’t
expect to recur. We expect to see improved EBITDA at Fulghum next
year as our operations return to normal following the fire this
year at our Woodland facility and the new PAC chip mill in Chile
begins operation,” Mr. Ramsbottom added.
Summary of Results
Rentech’s financial results reflect the results of Rentech, Inc.
and its subsidiaries, including its wood fibre processing business,
Rentech Nitrogen Partners, L.P. (NYSE: RNF) (Rentech Nitrogen), and
Energy Technologies as a discontinued operation. The results of the
wood fibre business are reported as three operating segments:
Fulghum Fibres (Fulghum), Wood Pellets: New England Wood Pellet
(NEWP), and Wood Pellets: Industrial, which includes Canadian
operations and wood pellet business development. Rentech owns the
general partner and approximately 60% of the limited partner
interests of Rentech Nitrogen. Rentech Nitrogen’s results include
two operating segments: the East Dubuque, Illinois facility and the
Pasadena, Texas facility.
The financial results of Fulghum and NEWP were included in
results of operations only since the dates of their acquisitions,
which were May 1, 2013 and May 1, 2014, respectively.
Three months ended September 30,
2014
Consolidated revenues for the three months ended September 30,
2014 were $125.3 million, compared to $115.7 million in the
prior-year period. These revenues were comprised of:
- $25.3 million from Fulghum, an increase
of $2.9 million from the prior-year period;
- $13.9 million from NEWP;
- $2.0 million from Wood Pellets:
Industrial; and
- $84.2 million from Rentech Nitrogen, a
decrease of $9.1 million from the prior-year period.
Gross profit was $13.0 million, compared to $21.1 million in the
prior-year period. Gross profit was comprised of:
- $3.4 million from Fulghum, a decrease
of $0.9 million from the prior-year period;
- $2.5 million from NEWP;
- $0.4 million from Wood Pellets:
Industrial; and
- $6.7 million from Rentech Nitrogen, a
decrease of $10.1 million from the prior-year period.
Consolidated Adjusted EBITDA was $5.0 million, a decrease of
$11.8 million compared to the prior-year period. Consolidated
Adjusted EBITDA included the following:
- $3.9 million from Fulghum, a decrease
of $1.3 million from the prior-year period;
- $2.7 million from NEWP;
- ($2.4) million from Wood Pellets:
Industrial; and
- $9.1 million from Rentech Nitrogen, a
decrease of $7.0 million from the prior-year period.
Further explanation of Adjusted EBITDA, a non-GAAP financial
measure, as used here and throughout this press release appears
below.
Net loss was $10.4 million, or ($0.05) per basic share, compared
to net loss of $14.6 million, or ($0.06) per basic share, for the
same period last year.
Net loss for the current period was $10.1
million, or ($0.05) per basic share, excluding loss
on debt extinguishment and the gain on fair value adjustment to
earn-out consideration. Net loss for the same period last year was
$5.3 million, or ($0.02) per basic share, excluding loss on
goodwill impairment, loss on debt extinguishment, gain on fair
value adjustment to earn-out consideration, the gain on sale of the
Natchez property and the income tax benefit.
Fulghum Fibres
Fulghum’s revenues were $25.3 million for the three months ended
September 30, 2014, compared to $22.4 million for the same period
last year. The increase was primarily due to higher South America
product sales caused by strong demand from a European customer that
increased its production capacity.
For the three months ended September 30, 2014, $15.9 million of
revenues were generated from United States operations, while $9.4
million of revenues were from South America. For the same period
last year, $15.5 million of revenues were generated from United
States operations; $6.9 million of revenues were from South
America.
During the three months ended September 30, 2014, Fulghum’s
mills in the United States processed 3.3 million green metric tons,
or GMT, of logs into wood chips and residual fuels; mills in South
America processed 0.6 million GMT of logs into wood chips and
residual fuels. One of Fulghum’s customers experienced an outage at
its production facility to which Fulghum’s mill supplies chips,
causing lower than expected processing volumes for Fulghum for the
period. During the customer’s downtime, Fulghum performed
maintenance and repairs at this mill, which increased operating
costs during the quarter.
Adjusted EBITDA for the three months ended September 30, 2014
for Fulghum was $3.9 million. This compares to Adjusted EBITDA of
$5.2 million in the corresponding period in 2013.
Net loss was $0.06 million for the three months ended September
30, 2014, compared to net income of $0.8 million for the same
period last year.
Wood Pellets: New England Wood Pellet
NEWP’s revenues were $13.9 million for the three months ended
September 30, 2014 on deliveries of 71,000 tons of wood pellets.
Sales early in the year were higher than usual due to cold weather
in the spring. Retailers’ purchases of products to be sold this
winter commenced earlier than usual this summer. Gross profit for
the three months ended September 30, 2014 was $2.5 million. Gross
profit margin was 18% for the three months ended September 30,
2014.
Adjusted EBITDA for the three months ended September 30, 2014
for NEWP was $2.7 million.
Net income was $2.0 million for the three months ended September
30, 2014.
Wood Pellets: Industrial
Revenues were $2.0 million at the Atikokan Project for the three
months ended September 30, 2014, generated by delivering to OPG
9,000 metric tons of pellets sourced from a third party. Gross
profit for the three months ended September 30, 2014 was $0.4
million. Gross profit margin was 18% for the three months ended
September 30, 2014.
Adjusted EBITDA for the three months ended September 30, 2014
for Wood Pellets: Industrial was a loss of $2.4 million.
Net loss was $2.0 million for the three months ended September
30, 2014, compared to net loss of $2.1 million for the same period
last year.
Nitrogen Product Manufacturing
Revenues for the three months ended September 30, 2014 were
$84.2 million, compared to $93.3 million for the same period in the
prior year.
Gross profit for the three months ended September 30, 2014 was
$6.7 million, compared to $16.8 million for the same period last
year.
Adjusted EBITDA for the three months ended September 30, 2014
was $9.1 million. This compares to $16.1 million in the
corresponding 2013 period.
Net loss for the three months ended September 30, 2014 was $3.1
million. This compares to a net loss of $22.3 million for the same
period last year. Net loss was $2.5 million for the three months
ended September 30, 2014 excluding loss on debt extinguishment.
This compares to net income of $7.5 million excluding loss on debt
extinguishment and Pasadena goodwill impairment for the same period
last year.
East Dubuque Facility
Revenues for the three months ended September 30, 2014 were
$46.0 million, compared to $50.6 million for the same period last
year. The decrease was due to lower deliveries and sales prices of
urea ammonium nitrate solution (UAN), partially offset by higher
deliveries and sales prices for ammonia. Deliveries of UAN in 2013
occurred earlier than is typical, which pulled revenue from the
fourth quarter of 2013 into the third quarter of 2013. Production
of ammonia increased after the completion of the ammonia expansion
project in December 2013. This additional ammonia available for
sale resulted in higher ammonia deliveries during the three and
nine months ended September 30, 2014.
Average sales prices per ton for the three months ended
September 30, 2014 were 1% higher for ammonia and relatively flat
for UAN, as compared with the same period last year. These two
products comprised 80% of the East Dubuque facility’s revenues for
the three months ended September 30, 2014 and 87% for the same
period last year. The increase in ammonia sales prices was
consistent with the increase in global ammonia prices between the
two periods. The improvement in global ammonia prices during the
three months ended September 30, 2014 was caused by lower supplies
of urea from China, geopolitical events resulting in the shutdown
of significant nitrogen fertilizer plants in Libya and Ukraine, and
the reduction in natural gas supplies in other parts of the world.
UAN prices did not benefit from the improvement in the ammonia
market.
Gross profit was $15.5 million for the three months ended
September 30, 2014; this compares to $25.1 million for the same
period last year. Gross profit margin for the three months ended
September 30, 2014 was 34%, compared to 50% for the same period
last year. The decreases in gross profit and gross margin were
primarily due to lower product pricing, and increased costs of
natural gas, depreciation and electricity.
Adjusted EBITDA for the three months ended September 30, 2014
for the East Dubuque facility was $18.5 million. This compares to
Adjusted EBITDA of $25.8 million in the corresponding period in
2013.
Net income was $14.1 million for the three months ended
September 30, 2014, compared to $24.1 million for the same period
last year.
Pasadena Facility
Revenues for the three months ended September 30, 2014 were
$38.1 million, compared to $42.7 million for the same period last
year. Lower sales prices for ammonium sulfate and ammonium
thiosulfate, and lower sales volume for sulfuric acid were
partially offset by higher sales volumes for ammonium sulfate and
ammonium thiosulfate. Production of ammonium sulfate increased
after the completion of the debottlenecking project in December
2013. Demand increased due to favorable weather during the planting
season and an increase in international orders; increased
production enabled additional sales to meet that demand.
Average sales prices per ton decreased by 17% for ammonium
sulfate and increased by 10% for sulfuric acid for the three months
ended September 30, 2014, as compared with the same period last
year. These two products comprised 94% of the Pasadena facility’s
revenues for the three months ended September 30, 2014 and 98% for
the same period last year. A higher proportion of export sales,
priced lower than domestic sales, contributed to the decline in
average product price.
Gross loss was $8.8 million for the three months ended September
30, 2014, compared to a gross loss of $8.3 million for the same
period last year. Gross loss margin for the three months ended
September 30, 2014 was 23% compared to a gross loss margin of 19%
for the same period last year. The decreases in gross profit and
gross profit margin were primarily due to declines in average sales
prices for ammonium sulfate, increases in the unit prices of raw
materials, turnaround expenses and other non-recurring maintenance
expenses.
Adjusted EBITDA for the three months ended September 30, 2014
for the Pasadena facility was a loss of $7.7 million. This compares
to Adjusted EBITDA loss of $7.8 million in the corresponding period
in 2013.
Net loss was $10.2 million for the three months ended September
30, 2014, compared to $40.8 million for the same period last year.
Net loss for the three months ended September 30, 2013 includes a
loss on goodwill impairment of $30.0 million.
Net loss was $10.7 million for the three months ended September
30, 2013, excluding the Pasadena goodwill impairment.
Corporate Unallocated Expenses
Corporate unallocated expenses, which are included in selling,
general and administrative (SG&A) expenses, were $7.0 million
for the three months ended September 30, 2014, compared to
$5.7 million in the corresponding period in 2013. The increase was
primarily due to $0.5 million in software and system upgrades,
expenses for consultants who were studying Rentech’s cost
structure, and an increase in non-cash equity-based compensation of
$0.5 million.
Nine months ended September 30,
2014
Consolidated revenues were $350.0 million for the nine months
ended September 30, 2014, compared to $295.3 million in the
prior-year period. These revenues were comprised of:
- $73.7 million from Fulghum, an increase
of $35.2 million from the prior-year period;
- $19.6 million from NEWP;
- $2.7 million from Wood Pellets:
Industrial; and
- $254.1 million from Rentech Nitrogen, a
decrease of $2.7 million from the prior-year period.
Gross profit was $62.3 million, compared to $86.1 million in the
prior-year period. Gross profit was comprised of:
- $9.6 million from Fulghum, an increase
of $2.9 million from the prior-year period;
- $3.6 million from NEWP;
- $0.5 million Wood Pellets: Industrial;
and
- $48.7 million from Rentech Nitrogen, a
decrease of $30.7 million from the prior-year period.
Consolidated Adjusted EBITDA was $32.3 million, compared to
$55.8 million in the prior-year period. Consolidated Adjusted
EBITDA included the following:
- $10.5 million from Fulghum, an increase
of $2.2 million from the prior-year period;
- $3.7 million from NEWP;
- ($7.4) million Wood Pellets:
Industrial; and
- $51.3 million from Rentech Nitrogen, a
decrease of $23.8 million from the prior-year period.
Net loss for the nine months ended September 30, 2014 was $36.8
million, or $0.17 per basic share. This compares to net income of
$13.0 million, or $0.06 per basic share, for the same period last
year.
Net loss for the current period was $19.0
million, or ($0.09) per basic share, excluding loss
on goodwill impairment, loss on debt extinguishment and the loss on
fair value adjustment to earn-out consideration. This compares to
net loss of $1.6 million, or ($0.01) per basic share, for the same
period last year, excluding loss on goodwill impairment, loss on
debt extinguishment, the gain on fair value adjustment to earn-out
consideration, the gain on the sale of the Natchez property, and
the income tax benefit.
Fulghum Fibres
Fulghum’s revenues were $73.7 million for the nine months ended
September 30, 2014, compared to $38.5 million for the same period
last year. The increase was due to Rentech’s ownership of Fulghum
for the full nine months ended September 30, 2014 as compared to
five months last year. For the nine months ended September 30,
2014, operations in the United States generated $44.7 million of
revenues while South American operations generated $29.0 million of
revenues. For the same period last year, $25.3 million of revenues
were generated from operations in United States; $13.2 million of
revenues were from South America.
During the nine months ended September 30, 2014, Fulghum’s mills
in the United States processed 9.4 million GMT of logs into wood
chips and residual fuels; mills in South America processed 1.9
million GMT of logs.
The fire at the mill in Woodland, Maine, in the first quarter
has caused significant losses at the plant this year. Fulghum has
been operating with temporary chipping equipment during
reconstruction of the permanent chipping lines and building. This
has resulted in higher labor and other operating costs. Throughput
of the mill has also continued to be low during reconstruction.
Fulghum expects to be back to normal operations by the end of this
year. As part of the reconstruction of the Woodland mill, Fulghum
has added a new soft wood chipping line that will help Fulghum
increase its volumes to meet its customer's growing demand.
Several of Fulghum’s customers’ paper mills have had extended
downtime this year, which has caused Fulghum’s chipping mills to
take more downtime as well. The Fulghum team has managed to keep
overall processing volumes at expected levels in spite of the
increased downtime. Fulghum takes advantage of such outages to
perform maintenance and repairs on its chipping mills, so Fulghum’s
overall maintenance costs have been higher this year than is
typical. Fulghum also invested to enhance safety at the mills.
These investments have significantly improved Fulghum’s safety
record since Rentech acquired the business last year.
Adjusted EBITDA for the nine months ended September 30, 2014 for
Fulghum Fibres was $10.5 million. This compares to Adjusted EBITDA
of $8.3 million in the corresponding period in 2013.
Net income was $0.6 million for the nine months ended September
30, 2014, compared to $0.9 million for the same period last
year.
Wood Pellets: New England Wood Pellet
NEWP’s revenues were $19.6 million from May 1, 2014 through
September 30, 2014 on deliveries of 100,000 tons of wood pellets.
Gross profit for the nine months ended September 30, 2014 was $3.6
million. Gross profit margin was 18% for the nine months ended
September 30, 2014.
Adjusted EBITDA for the nine months ended September 30, 2014 for
NEWP was $3.7 million.
Net income was $2.8 million for the nine months ended September
30, 2014.
Wood Pellets: Industrial
Revenues were $2.7 million at the Atikokan Project for the nine
months ended September 30, 2014 generated by delivering to OPG
12,000 metric tons of wood pellets sourced from a third-party.
Gross profit for the nine months ended September 30, 2014 was $0.5
million. Gross profit margin was 18% for the nine months ended
September 30, 2014.
Adjusted EBITDA for the nine months ended September 30, 2014 for
Wood Pellets: Industrial was a loss of $7.4 million.
Net loss was $6.8 million for the nine months ended September
30, 2014.
Nitrogen Products Manufacturing
Revenues for the nine months ended September 30, 2014 were
$254.1 million, compared to $256.8 million for the same period in
the prior year.
Gross profit for the nine months ended September 30, 2014 was
$48.7 million, compared to $79.4 million for the same period last
year.
Adjusted EBITDA for the nine months ended September 30, 2014 was
$51.3 million. This compares to $75.1 million in the corresponding
2013 period.
Net loss for the nine months ended September 30, 2014 was $8.9
million. This compares to net income of $21.5 million for the same
period last year. Net income was $18.9 million for the nine months
ended September 30, 2014, excluding the Pasadena goodwill
impairment, loss on debt extinguishment, and gain on fair value
adjustment to earn-out consideration. This compares to $52.6
million for the same period last year excluding those items.
East Dubuque Facility
Revenues for the nine months ended September 30, 2014 were
$148.5 million, compared to $146.8 million for the same period last
year. The increase was due to higher natural gas sales and ammonia
sales volumes, partially offset by lower UAN sales volumes and
sales prices for ammonia and UAN. Additional ammonia available for
sale resulted in higher ammonia deliveries.
Average sales prices per ton for the nine months ended September
30, 2014 were 19% lower for ammonia and 5% lower for UAN, as
compared with the same period last year. These two products
comprised 80% of the East Dubuque facility’s revenues for the nine
months ended September 30, 2014 and 83% for the same period last
year. The decreases in our sales prices for ammonia and UAN were
consistent with the decline in global nitrogen fertilizer prices in
the earlier portions of the respective periods, partially offset by
increases in the three months ended in September of the respective
years. These decreases were caused by significantly higher levels
of low-priced urea in the global market, particularly from China.
Prices were also affected by additional nitrogen fertilizer
production brought on line in North America over the last 12
months.
Gross profit was $60.8 million for the nine months ended
September 30, 2014, compared to $81.4 million for the same period
last year. Gross profit margin for the nine months ended September
30, 2014 was 41%, compared to 55% for the same period last year.
The decreases in gross profit and gross margin were primarily due
to lower product pricing, and increased costs of natural gas,
depreciation and electricity.
Adjusted EBITDA for the nine months ended September 30, 2014 for
the East Dubuque facility was $68.8 million. This compares to
Adjusted EBITDA of $84.2 million in the corresponding period in
2013.
Net income was $56.9 million for the nine months ended September
30, 2014, compared to $77.4 million for the same period last
year.
Pasadena Facility
Revenues for the nine months ended September 30, 2014 were
$105.6 million, compared to $110.0 million for the same period last
year. Lower sales prices for all products were partially offset by
higher ammonium sulfate sales volumes.
Average sales prices per ton decreased by 27% for ammonium
sulfate and by 3% for sulfuric acid for the nine months ended
September 30, 2014, as compared with the same period last year.
These two products comprised 91% of the Pasadena facility’s
revenues for each of the nine months ended September 30, 2014 and
2013. A higher proportion of export sales, priced lower than
domestic sales, contributed to the decline in average product
price.
Gross loss was $12.1 million for the nine months ended September
30, 2014, compared to a gross loss of $2.0 million for the same
period last year. Gross loss margin for the nine months ended
September 30, 2014 was 12%, compared to a gross loss margin of 2%
for the same period last year.
Adjusted EBITDA for the nine months ended September 30, 2014 for
the Pasadena facility was a loss of $11.2 million. This compares to
Adjusted EBITDA loss of $2.6 million in the corresponding period in
2013.
Net loss was $44.5 million for the nine months ended September
30, 2014, compared to a net loss of $38.9 million for the same
period last year. Net loss for the nine months ended September 30,
2014 and 2013 includes a loss on goodwill impairment of $27.2
million and $30.0 million, respectively.
Net loss was $17.3 million and $8.9 million for the nine months
ended September 30, 2014 and 2013, respectively, excluding the
Pasadena goodwill impairment.
Corporate Unallocated Expenses
Corporate unallocated expenses included in SG&A were $21.5
million for the nine months ended September 30, 2014, compared
to $18.8 million in the corresponding period in 2013. The increase
was primarily due to $1.8 million in costs associated with
evaluating shareholder proposals, completing settlements with
shareholders and conducting cost studies, $1.1 million in
transaction costs related to the NEWP acquisition, $0.7 million in
non-capitalizable software upgrade costs and an increase in
non-cash equity-based compensation of $0.4 million. These increases
were partially offset by a decrease of $1.4 million in personnel
costs. Non-cash equity-based compensation expense was $4.7 million
for the nine months ended September 30, 2014 compared to $4.3
million for the same period last year.
2014 Outlook
Rentech provided the following updated guidance for 2014,
excluding Rentech Nitrogen (RNF):
Selected Proforma Income Statement
Items- Rentech, Inc. Consolidated (Excluding Rentech
Nitrogen)
Wood Pellets
Fulghum Total Wood Fibre
Energy Unalloc
RTK ex. RNF (Stated in millions)
CAN Plants Bus Dev
Industrial Fibres
NEWP1
Pro Forma
Tech2
Corp Pro Forma
Cash SG&A3,4,5
$ 6 $ 5 $ 11 $ 5 $ 2 $ 18 $ 6 $ 22 $ 46 Non-Cash Compensation
− −
− − − − − 6
6 SG&A $ 6 $ 5 $ 11 $ 5 $ 2 $ 18 $ 6 $ 28 $ 52
Operating Income (Loss)6
(5 ) (5 ) (10 ) 7 3 − 9 (28 ) (19 )
Plus: Total Depreciation and
Amortization7
− − − 9 2 11 − − 11 Plus: Equity in Loss of Investee −
− −
− − − − − −
EBITDA $ (5 ) $ (5 ) $ (10 ) $ 16 $ 5 $
11 $ 9 $ (28 ) $ (8 ) (1) Reflects post acquisition results
(8 months) only. (2) Reported as discontinued operations in 2014.
(3) Wood Pellets: Industrial SG&A includes rail car delivery
and lease costs of approximately $2 million, and assumed
plant-related start-up costs (including project costs expensed as
SG&A) of approximately $5 million. (4) Energy Tech. SG&A
includes Sunshine Kaidi sale-related transaction and closing costs
(5)
Unallocated Corp. SG&A includes $5
million of estimated transaction fees and costs related to the
acquisition of NEWP, evaluation of shareholder proposals and
settlement agreements with shareholders, and SG&A and project
cost reviews.
(6)
Energy Tech. includes projected $15
million book gain on sale of PDU equipment and intellectual
property to Sunshine Kaidi.
(7) Includes depreciation recorded in Cost of Sales and Operating
Expense.
In September, Rentech indicated that the estimated capital
expenditures for the Canadian pellet plants would be higher than
previous guidance. Since that time, the company has experienced
additional delays on deliveries of key pieces of equipment as well
as delays due to some equipment requiring modification after having
been delivered. These issues have delayed the start-up schedules
for the projects and increased the estimated costs to complete
construction.
In order to minimize the effects of these equipment delays,
Rentech has mobilized additional resources from its contractors to
complete the projects as close to schedule as possible. This will
result in additional costs. A portion of the increased cost is also
due to scope changes to enable the Wawa facility to use lower-cost
feedstocks.
Rentech now expects the total cost of acquisition and conversion
for the Atikokan and Wawa projects to be approximately $105
million.
Conference Call with
Management
The Company will hold a conference call today, November 6, 2014,
at 3:00 p.m. PST, during which 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 888-517-2513 or 847-619-6533 and entering the
pass code 7750504#. 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 5:30 p.m. PST on November
6 through 11:59 p.m. PST on November 16. The replay teleconference
will be available by dialing 888-843-7419 or 630-652-3042 and
entering the audience passcode 7750503#.
Rentech, Inc. Consolidated Statements of Operations
(Amounts in Thousands, Except per Share Data)
For the Three Months For the Nine
Months Ended September 30, Ended September 30,
2014 2013 2014
2013 (unaudited) (unaudited)
Revenues $ 125,304 $
115,657 $ 350,025 $ 295,282
Cost of Sales
112,335 94,513 287,722
209,146
Gross Profit 12,969 21,144 62,303
86,136
Operating Expenses Selling, general and
administrative expenses 15,550 13,413 48,764 38,819 Depreciation
and amortization 1,418 2,436 2,488 5,333 Pasadena goodwill
impairment ― 30,029 27,202 30,029 Other expense 313
24 209 35
Total
Operating Expenses 17,281 45,902
78,663 74,216
Operating
Income (Loss) (4,312 ) (24,758 ) (16,360 ) 11,920
Other Income (Expense), Net Interest expense (5,346 ) (4,757
) (16,682 ) (11,022 ) Loss on debt extinguishment (635 ) — (1,485 )
(6,001 ) Gain (loss) on fair value adjustment to earn-out
consideration 59 586 (268 ) 5,197 Other income (expense), net
311 (88 ) 355 (267 )
Total Other Expense, Net (5,611 )
(4,259 ) (18,080 ) (12,093 )
Loss from
Continuing Operations Before Income Taxes and Equity in Loss of
Investee (9,923 ) (29,017 ) (34,440 ) (173 ) Income tax
(benefit) expense 425 (1,984 ) 1,260
(26,656 )
Income (Loss) from Continuing
Operations Before Equity in Loss of Investee (10,348 ) (27,033
) (35,700 ) 26,483 Equity in Loss of Investee 97
103 334 138
Income (Loss) from Continuing Operations (10,445 ) (27,136 )
(36,034 ) 26,345 Income (loss) from discontinued operations, net of
tax (1,242 ) 3,558 (4,280 )
(4,831 )
Net Income (Loss) (11,687 ) (23,578 )
(40,314 ) 21,514 Net (income) loss attributable to noncontrolling
interests 1,311 8,985 3,505
(8,515 )
Net Income (Loss) Attributable to
Rentech Common Shareholders $ (10,376 ) $ (14,593 ) $ (36,809 )
$ 12,999
Net Income (Loss) per Common Share
Allocated to Rentech Common Shareholders: Basic:
Continuing operations $ (0.05 ) $ (0.08 ) $ (0.15 ) $ 0.08
Discontinued operations $ (0.01 ) $ 0.02 $ (0.02 ) $
(0.02 )
Net Income (Loss) $ (0.05 ) $ (0.06 ) $ (0.17
) $ 0.06
Diluted: Continuing operations $
(0.05 ) $ (0.08 ) $ (0.15 ) $ 0.07 Discontinued
operations $ (0.01 ) $ 0.02 $ (0.02 ) $ (0.02 )
Net Income (Loss) $ (0.05 ) $ (0.06 ) $ (0.17 ) $ 0.05
Weighted-Average Shares Used to Compute Net Income
(Loss) per Common Share: Basic 228,072
226,305 228,651 225,840
Diluted 228,072 226,305
228,651 232,171
Rentech, Inc. Statements of Operation by Business
Segment (Stated in Thousands)
For the
Three Months For the Nine Months Ended
September 30, Ended September 30, 2014
2013 2014 2013
(unaudited) (unaudited) Revenues East Dubuque $ 46,021 $ 50,572 $
148,455 $ 146,838 Pasadena 38,142 42,707 105,597 109,961 Fulghum
Fibres 25,273 22,378 73,660 38,483 Wood Pellets: Industrial 2,011 —
2,678 — Wood Pellets: NEWP 13,857 —
19,635 —
Total Revenues $
125,304 $ 115,657 $ 350,025 $ 295,282
Gross Profit (Loss) East Dubuque $ 15,466 $ 25,114 $ 60,816
$ 81,353 Pasadena (8,778 ) (8,294 ) (12,145 ) (1,966 ) Fulghum
Fibres 3,429 4,324 9,579 6,749 Wood Pellets: Industrial 366 — 480 —
Wood Pellets: NEWP 2,486 — 3,573
—
Total Segment Gross Profit $ 12,969
$ 21,144 $ 62,303 $ 86,136
Selling, General and Administrative Expenses East Dubuque $ 956 $
981 $ 3,177 $ 3,423 Pasadena 1,071 1,227 4,147 3,811 Fulghum Fibres
1,368 1,250 4,420 2,109 Wood Pellets: Industrial 2,776 2,350 8,184
4,233 Wood Pellets: NEWP 624 —
1,015 —
Total Segment Selling, General and
Administrative Expenses $ 6,795 $ 5,808 $ 20,943
$ 13,576 Depreciation and Amortization East
Dubuque $ 47 $ 46 $ 122 $ 152 Pasadena 337 972 970 2,722 Fulghum
Fibres 970 1,266 1,111 1,984 Wood Pellets: Industrial 43 — 97 —
Wood Pellets: NEWP (133 ) — (231 )
—
Total Segment Depreciation and Amortization
Recorded in Operating Expenses $ 1,264 $ 2,284 $
2,069 $ 4,858 Net Income (Loss) East Dubuque $
14,139 $ 24,069 $ 56,926 $ 77,383 Pasadena (10,213 ) (40,765 )
(44,545 ) (38,915 ) Fulghum Fibres (56 ) 813 609 941 Wood Pellets:
Industrial (1,997 ) (2,058 ) (6,804 ) (3,941 ) Wood Pellets: NEWP
2,014 — 2,756 —
Total Segment Net Income (Loss) $ 3,887 $
(17,941 ) $ 8,942 $ 35,468
Reconciliation
of Segment Net Income (Loss) to Consolidated Net Income (Loss):
Segment net income (loss) $ 3,887 $ (17,941 ) $ 8,942 $ 35,468 RNF
– Partnership and unallocated expenses recorded as selling, general
and administrative expenses (1,792 ) (1,872 ) (6,277 ) (6,488 ) RNF
– Partnership and unallocated income (expense) recorded as other
income (expense) (635 ) 309 (635 ) (1,081 ) RNF – Unallocated
interest expense and loss on interest rate swaps (4,604 ) (3,996 )
(14,373 ) (9,726 ) RNF – Income tax benefit — — — 302 Corporate and
unallocated expenses recorded as selling, general and
administrative expenses (6,963 ) (5,733 ) (21,544 ) (18,755 )
Corporate and unallocated depreciation and amortization expense
(154 ) (152 ) (419 ) (475 ) Corporate and unallocated income
(expense) recorded as other income (expense) (96 ) 7 (1,279 ) (19 )
Corporate and unallocated interest expense (54 ) (47 ) (378 ) (47 )
Corporate income tax benefit (expense) (34 ) 2,289 (71 ) 27,166
Income (loss) from Discontinued Operations, net of tax
(1,242 ) 3,558 (4,280 ) (4,831 )
Consolidated Net Income (Loss) $ (11,687 ) $ (23,578 ) $
(40,314 ) $ 21,514
Rentech, Inc.
Selected Balance Sheet Data (Stated in Thousands)
As of As of
September 30, 2014 December 31, 2013 (unaudited) Cash
$ 70,060 $ 106,369 Working capital 10,322 69,822 Construction in
progress 184,391 60,136 Total assets 825,749 703,590 Total debt
447,872 421,979 Total Rentech stockholders' equity 121,607 158,073
Cash - RNF $ 44,061 $ 34,060 Cash excluding RNF
25,999 72,309
Total Cash $ 70,060 $ 106,369
Debt - RNF $ 320,000 $ 320,000 Debt excluding RNF 127,872
101,979
Total Debt $ 447,872 $ 421,979
Disclosure Regarding Non-GAAP Financial
Measures
Adjusted EBITDA for Rentech, and Adjusted EBITDA for Rentech
Nitrogen are defined as net income (loss) plus interest expense and
other financing costs, loss on debt extinguishment, income tax
expense, depreciation and amortization, Pasadena goodwill
impairment and fair value adjustment to earn-out consideration and
other adjustments. Adjusted EBITDA for Fulghum and NEWP are defined
as net income (loss) plus interest expense and other financing
costs, income tax expense, depreciation and amortization, and other
adjustments.
The non-GAAP financial measures described above are used as
supplemental financial measures by management and by external users
of our financial statements, such as investors and commercial
banks, to assess:
- the financial performance of our assets
without regard to financing methods, capital structure or
historical cost basis; and
- our operating performance and return on
invested capital compared to those of other publicly traded limited
partnerships and other public companies, without regard to
financing methods and capital structure.
These non-GAAP financial measures should not be considered an
alternative to any measure of financial performance or liquidity
presented in accordance with GAAP. These non-GAAP financial
measures may have material limitations as performance measures
because they exclude items that are necessary elements of our
businesses’ costs and operations. In addition, EBITDA and Adjusted
EBITDA presented by other companies may not be comparable to our
presentation of those measures, since each company may define these
terms differently.
Net income (loss) excluding loss on goodwill impairment, loss on
debt extinguishment and loss on fair value adjustment to earn-out
contingent consideration is included to provide management and
investors with net income results for Rentech that are more easily
compared to the prior year period.
The table below reconciles Rentech’s consolidated Adjusted
EBITDA from net loss for the three months ended September 30, 2014
and 2013.
Rentech, Inc. (Stated in Thousands)
For the Three Months For the
Three Months Ended September 30, Ended September
30, 2014 2013 (unaudited)
Net Loss $
(11,687 ) $ (23,578 ) Add: Net interest expense 5,329 4,757 Income
tax (benefit) expense 425 (1,984 ) Depreciation and amortization
10,544 7,972 Pasadena goodwill impairment ― 30,029 Loss on debt
extinguishment 635 ― Fair value adjustment to earn-out
consideration (59 ) (586 ) Other (197 ) 191
Adjusted EBITDA $ 4,990 $ 16,801
The table below reconciles Rentech’s consolidated Adjusted
EBITDA from net income (loss) for the nine months ended September
30, 2014 and 2013.
Rentech, Inc. (Stated in Thousands)
For the Nine Months For the
Nine Months Ended September 30, Ended September
30, 2014 2013 (unaudited)
Net Income
(Loss) $ (40,314 ) $ 21,514 Add: Net interest expense 16,636
11,022 Income tax (benefit) expense 1,260 (26,656 ) Depreciation
and amortization 25,693 18,669 Pasadena goodwill impairment 27,202
30,029 Loss on debt extinguishment 1,485 6,001 Fair value
adjustment to earn-out consideration 268 (5,197 ) Other 25
405
Adjusted EBITDA $ 32,255 $
55,787
The table below reconciles Rentech Nitrogen’s consolidated
Adjusted EBITDA along with the Adjusted EBITDA for each of its
facilities, a non-GAAP financial measure, to their respective net
income (loss) for the three months ended September 30, 2014.
For the Three Months Ended September 30, 2014
(Stated in thousands, except per unit data)
East DubuqueFacility
PasadenaFacility
PartnershipLevel
Consolidated
(unaudited) Net income (loss) $ 14,139 $ (10,213 ) $ (7,031 ) $
(3,105 ) Plus: Net interest expense 20 - 4,604 4,624 Plus: Income
tax expense - 27 - 27 Plus: Loss on debt extinguishment - - 635 635
Plus: Depreciation and amortization 4,380 2,490
- 6,870 Adjusted EBITDA $ 18,539
$ (7,696 ) $ (1,792 ) $ 9,051
The table below reconciles consolidated Adjusted EBITDA along
with the Adjusted EBITDA for each of its facilities to their
respective net income (loss) for Rentech Nitrogen for the three
months ended September 30, 2013.
For the Three Months Ended September 30, 2013
(Stated in thousands)
East DubuqueFacility
PasadenaFacility
PartnershipLevel
Consolidated (unaudited) Net income (loss) $
24,069 $ (40,765 ) $ (5,559 ) $ (22,255 ) Plus: Net interest
expense - - 3,996 3,996 Plus: Pasadena goodwill impairment - 30,029
- 30,029 Plus: Income tax (benefit) expense (9 ) 242 - 233 Plus:
Depreciation and amortization 1,712 2,674 - 4,386 Less: Gain on
fair value adjustment to earn-out consideration -
- (309 ) (309 ) Adjusted EBITDA $
25,772 $ (7,820 ) $ (1,872 ) $ 16,080
The table below reconciles consolidated Adjusted EBITDA along
with the Adjusted EBITDA for each of its facilities to their
respective net income (loss) for Rentech Nitrogen for the nine
months ended September 30, 2014.
For the Nine Months Ended September 30, 2014
(Stated in thousands, except per unit data)
East DubuqueFacility
PasadenaFacility
PartnershipLevel
Consolidated (unaudited) Net income (loss) $
56,926 $ (44,545 ) $ (21,285 ) $ (8,904 ) Plus: Net interest
expense 64 - 14,373 14,437 Plus: Income tax expense 1 81 - 82 Plus:
Loss on debt extinguishment - - 635 635 Plus: Pasadena goodwill
impairment - 27,202 - 27,202 Plus: Depreciation and amortization
11,777 6,026 - 17,803
Adjusted EBITDA $ 68,768 $ (11,236 ) $ (6,277 ) $ 51,255
The table below reconciles consolidated Adjusted EBITDA along
with the Adjusted EBITDA for each of its facilities to their
respective net income (loss) for Rentech Nitrogen for the nine
months ended September 30, 2013.
For the Nine Months Ended September 30, 2013
(Stated in thousands)
East DubuqueFacility
PasadenaFacility
PartnershipLevel
Consolidated (unaudited) Net income (loss) $
77,383 $ (38,915 ) $ (16,993 ) $ 21,475 Plus: Net interest expense
- 6 9,719 9,725 Plus: Pasadena goodwill impairment - 30,029 -
30,029 Plus: Loss on debt extinguishment - - 6,001 6,001 Plus: Loss
on interest rate swaps - - 7 7 Plus: Income tax (benefit) expense
360 380 (302 ) 438 Plus: Depreciation and amortization 6,500 5,881
- 12,381 Less: Gain on fair value adjustment to earn-out
consideration - - (4,920 )
(4,920 ) Adjusted EBITDA $ 84,243 $ (2,619 ) $ (6,488 ) $ 75,136
The table below reconciles Adjusted EBITDA to net income (loss)
for Fulghum for the three months ended September 30, 2014 and
2013.
Fulghum's Adjusted EBITDA (Stated in Thousands)
For the Three Months
For the Three Months Ended September 30,
Ended September 30, 2014 2013 (unaudited)
Fulghum Net Income (Loss) $ (56 ) $ 813 Add Fulghum Items:
Net interest expense 546 692 Depreciation and amortization 2,780
3,416 Income tax expense 320 69 Other 273 238
Fulghum's Adjusted EBITDA $ 3,863 $ 5,228
The table below reconciles Adjusted EBITDA to net income for
Fulghum for the nine months ended September 30, 2014 and 2013.
Fulghum's Adjusted EBITDA (Stated in Thousands)
For the Nine Months
For the Nine Months Ended September 30,
Ended September 30, 2014 2013 (unaudited)
Fulghum Net Income $ 609 $ 941 Add Fulghum Items: Net
interest expense 1,662 1,226 Depreciation and amortization 6,497
5,691 Income tax expense 1,050 69 Other 718 421
Fulghum's Adjusted EBITDA $ 10,536 $ 8,348
The table below reconciles Adjusted EBITDA to net income for
NEWP for the three and nine months ended September 30, 2014.
NEWP's Adjusted EBITDA (Stated in Thousands)
For the Three Months
For the Nine Months Ended September 30, Ended
September 30, 2014 2014 (unaudited)
NEWP Net
Income $ 2,014 $ 2,756 Add NEWP Items: Net interest expense 111
191 Depreciation and amortization 697 877 Income tax expense 44 53
Other (174 ) (211 )
NEWP's Adjusted EBITDA $
2,692 $ 3,666
The table below reconciles Adjusted EBITDA to net income for
Wood Pellets: Industrial for the three and nine months ended
September 30, 2014.
Wood Pellets: Industrial's Adjusted EBITDA (Stated in
Thousands)
For the Three
Months For the Nine Months Ended
September 30, Ended September 30, 2014
2014 (unaudited)
Wood Pellets: Industrial Net Loss $
(1,997 ) $ (6,804 ) Add: Net interest income (11 ) (33 )
Depreciation and amortization 43 97 Income tax expense 1 5 Other
(446 ) (627 )
Wood Pellet: Industrial's Adjusted
EBITDA $ (2,410 ) $ (7,362 )
The table below reconciles net loss attributable to Rentech
excluding loss on debt extinguishment and gain on fair value
adjustment to earn-out consideration for the three months ended
September 30, 2014. The table also reconciles net loss attributable
to Rentech excluding the Pasadena goodwill impairment, gain on fair
value adjustment to earn-out consideration, gain on sale of the
Natchez property and the income tax benefit for the three months
ended September 30, 2013.
For the Three Months
For the Three Months
(Stated in thousands) Ended September 30, 2014
Ended September 30, 2013
Net income (loss) attributable to common unit holders $
(10,376 ) $
(14,593
) Pasadena goodwill impairment
—
17,957
Loss on debt extinguishment 380
—
Loss (gain) on fair value adjustment to earn-out consideration (59
)
(462
)
Gain on sale of Natchez property —
(6,255
)
Income tax benefit —
(1,984
)
Net loss attributable to common unit holders excluding Pasadena
goodwill impairment, loss on debt extinguishment and fair value
adjustment to earn-out consideration $ (10,055 ) $
(5,336
) Net income (loss) per unit attributable to common unit
holders $ (0.05 ) $
(0.06
) Per unit Pasadena goodwill impairment —
0.08
Per unit loss on debt extinguishment
—
—
Per unit loss (gain) on fair value adjustment to earn-out
consideration — — Per unit gain on sale of Natchez property —
(0.03
)
Per unit income tax benefit —
(0.01
)
Net loss per unit attributable to common unit holders excluding
Pasadena goodwill impairment, loss on debt extinguishment and fair
value adjustment to earn-out consideration $ (0.05 ) $
(0.02
) Weighted-Average Common Units Outstanding 228,072
226,305
The table below reconciles net loss attributable to Rentech
excluding the Pasadena goodwill impairment, loss on debt
extinguishment and loss on fair value adjustment to earn-out
consideration for the nine months ended September 30, 2014. The
table also reconciles net loss attributable to Rentech excluding
the Pasadena goodwill impairment, loss on debt extinguishment, gain
on fair value adjustment to earn-out consideration, gain on sale of
the Natchez property and the income tax benefit for the nine months
ended September 30, 2013.
For the Nine Months For the Nine Months
(Stated in thousands) Ended September 30, 2014
Ended September 30, 2013 Net income (loss)
attributable to common unit holders $ (36,809 ) $ 12,999
Pasadena goodwill impairment 16,267 17,957 Loss on debt
extinguishment 1,230 3,589 Loss (gain) on fair value adjustment to
earn-out consideration 268 (3,219 ) Gain on sale of Natchez
property ― (6,255 ) Income tax benefit ― (26,656 ) Net loss
attributable to common unit holders excluding Pasadena goodwill
impairment, loss on debt extinguishment and fair value adjustment
to earn-out consideration $ (19,044 ) $ (1,585 ) Net income
(loss) per unit attributable to common unit holders $ (0.17 ) $
0.06 Per unit Pasadena goodwill impairment 0.07 0.08 Per
unit loss on debt extinguishment 0.01 0.02 Per unit loss (gain) on
fair value adjustment to earn-out consideration — (0.01 ) Per unit
gain on sale of Natchez property — (0.03 ) Per unit income tax
benefit — (0.12 ) Net loss per unit
attributable to common unit holders excluding Pasadena goodwill
impairment, loss on debt extinguishment and fair value adjustment
to earn-out consideration $ (0.09 ) $ (0.01 )
Weighted-Average Common Units Outstanding 228,651 225,840
The table below reconciles net loss attributable to the Pasadena
facility excluding Pasadena goodwill impairment for the three
months ended September 30, 2013.
For the Three Months (Stated
in thousands, except per unit data) Ended September 30,
2013 Net loss for Pasadena $ (40,765 ) Pasadena goodwill
impairment 30,029 Net loss attributable to common
unit holders excluding Pasadena goodwill impairment $ (10,736 )
The table below reconciles net loss attributable to the Pasadena
facility excluding Pasadena goodwill impairment for the nine months
ended September 30, 2014 and September 30, 2013.
For the Nine Months
For the Nine Months (Stated in thousands, except
per unit data) Ended September 30, 2014 Ended
September 30, 2013 Net loss for Pasadena $ (44,545 ) $ (38,915
) Pasadena goodwill impairment 27,202
30,029 Net loss attributable to common unit holders
excluding Pasadena goodwill impairment $ (17,343 ) $ (8,886 )
About Rentech, Inc.
Rentech, Inc. (NASDAQ: RTK) owns and operates wood fibre
processing, wood pellet production and nitrogen fertilizer
manufacturing businesses. Rentech offers a full range of integrated
wood fibre services for commercial and industrial customers around
the world, including wood chipping services, operations, marketing,
trading and vessel loading, through its subsidiary, Fulghum Fibres.
The Company’s New England Wood Pellet subsidiary is a leading
producer of bagged wood pellets for the U.S. heating market.
Rentech manufactures and sells nitrogen fertilizer through its
publicly-traded subsidiary, Rentech Nitrogen Partners, L.P. (NYSE:
RNF). Please visit www.rentechinc.com and www.rentechnitrogen.com
for more information.
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 timing for bringing our Canadian wood
pellet plants on line and their estimated costs, our outlook for
2015 at Fulghum and our forecasts for 2014, including EBITDA and
selected proforma financial results. 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 website 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.
Rentech, Inc.Julie Dawoodjee Cafarella, 310-571-9800Vice
president of Investor Relations and Communicationsir@rentk.com
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