Canadian Plants Begin Producing
Pellets
Rentech, Inc. (NASDAQ:RTK) today announced financial and
operating results for the three months ended March 31, 2015.
Keith Forman, President and CEO of Rentech, stated, “Results for
the first quarter were generally in line with our expectations for
improved profits. At Rentech Nitrogen, margins improved in the
first quarter from last year, due to robust demand for ammonia and
ammonium sulfate, higher ammonium sulfate prices and lower natural
gas prices.”
“At Fulghum, our cost controls are working and EBITDA margins
have improved. We are also seeing strong demand for NEWP’s pellet
products in the U.S. Northeast,” Mr. Forman continued.
“Our two Canadian wood pellet facilities are in commissioning.
The Atikokan facility is supplying all of the required volume to
OPG from its own production, and the pellets we are producing
exceed the contract’s requirements for quality and energy content.
Commissioning of the Wawa facility is going better than forecasted.
We have completed integrated production runs, and we have run all
12 pellet mills at the plant. We loaded our first rail cars with
pellets at Wawa, and they are ready to be transported to the port,”
Mr. Forman added.
Summary of Results
The consolidated results of Rentech, Inc. include its wood fibre
processing business and Rentech Nitrogen Partners, L.P. (NYSE: RNF)
(Rentech Nitrogen). The wood fibre processing business consists of
Fulghum Fibres (Fulghum); New England Wood Pellet (NEWP), which
includes the recently purchased mill from Allegheny Pellet
Corporation (Allegheny); and Industrial Wood Pellets, which
includes our Canadian pellet plants, business development for
industrial pellets, and senior management of the fibre business and
corporate allocations. Rentech owns the general partner and
approximately 60% of the limited partner interests of Rentech
Nitrogen. Rentech Nitrogen’s operating segments are the East
Dubuque, Illinois facility and the Pasadena, Texas facility.
Rentech Nitrogen’s results for the first quarter of 2015
benefitted from improved prices for ammonium sulfate and lower
natural gas prices. Sales volumes for ammonia were significantly
higher than in the first quarter last year. At Fulghum, lower South
American product sales and reduced volumes at our U.S. and South
American chipping facilities negatively affected results in the
first quarter compared to the same quarter last year. Our two
Canadian wood pellet facilities are in commissioning. Since the
beginning of February, we have been satisfying all of our required
deliveries to Ontario Power Generation (OPG) with pellets produced
by our Atikokan facility. NEWP had a seasonally strong quarter due
to good demand for wood pellets in the U.S. Northeast. During the
first quarter, we paid $5 million in earn-out consideration to the
previous owners of NEWP based on NEWP’s 2014 performance. We
acquired the assets of Allegheny in January. In April, we borrowed
an additional $7.5 million under the Tranche B term loan from GSO
Capital to fund the Canadian operations.
NEWP’s and Allegheny’s operations are included in our operating
results from May 1, 2014 and January 23, 2015, respectively, the
closing dates of the acquisitions. Prior period revenues and cost
of sales for Fulghum’s South American operations have been revised.
Please refer to Note 2 in the Form 10-Q for the period ended
March 31, 2015 for further explanation.
Three months ended March 31,
2015
Consolidated revenues for the first quarter of 2015
were $105.6 million, compared to $82.3
million in the prior year period. These revenues were
comprised of:
- $22.7 million from Fulghum, a
decrease of $3.4 million from the prior year period;
- $12.1 million from NEWP;
- $1.7 million from Wood Pellets:
Industrial; and
- $69.2 million from Rentech
Nitrogen, an increase of $12.9 million from the prior
year period.
Gross profit for the first quarter of 2015 was $24.3
million, compared to $17.9 million in the prior year
period. Gross profit was comprised of:
- $3.7 million from Fulghum, which
was a decrease of $0.4 from the prior year period;
- $2.2 million from NEWP;
- ($0.4) million from Wood Pellets:
Industrial; and
- $18.8 million from Rentech Nitrogen, an
increase of $5.0 million from the prior year period.
Consolidated Adjusted EBITDA for the first quarter of 2015
was $17.6 million, an improvement of $11.6
million compared to the prior year period. Consolidated
Adjusted EBITDA included the following:
- $4.0 million from Fulghum, a
decrease of $0.5 million from the prior year period;
- $2.3 million from NEWP;
- ($3.9) million from Wood Pellets:
Industrial, an increase in losses of $2.2 million from the prior
year period; and
- $19.2 million from Rentech Nitrogen, an
increase of $7.7 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 attributable to Rentech common shareholders for the
first quarter of 2015 was ($4.9)
million, or ($0.02) per basic share, compared to a
net loss of ($7.0) million, or a loss of ($0.03) per
basic share, for the same period last year.
Fulghum Fibres
Revenues were $22.7 million for the first quarter of
2015, compared to $26.0 million for the same period last
year. Revenues from operations in the U.S. were $13.6 million for
the first quarter of 2015, as compared to $14.2 million in the
prior year period. Volumes and revenues at a number of our U.S.
mills were down due to wet and protracted winter weather. Revenues
from operations in South America were $9.1 million for the first
quarter of 2015, as compared to $11.8 million in the prior
year period. The decrease in South American revenues was primarily
due to lower biomass product sales domestically and to Asia in the
first quarter of 2015 as compared to the first quarter of 2014. In
addition, revenues from our South American processing mills were
lower because of reduced volumes during the start-up of the new
chipping line at our PAC mill, fibre transportation issues from our
customer to our Valdivia mill, and discontinued services at the Los
Sauces mill.
Fulghum’s mills in the U.S. and South America
processed a total of 3.7 million green metric tons, or GMT, of logs
into wood chips and residual fuels for the first quarter of 2015,
compared to 3.8 million GMT in the first quarter last year.
Gross profit was $3.7 million for the first quarter of 2015,
compared to $4.1 million for the same period last year. Gross
profit margin for the first quarter of 2015 was 16%, which was
essentially flat compared to the prior year period. The decrease in
gross profit was primarily due to higher depreciation and
amortization and to lower volumes processed and sold during the
first quarter of 2015.
Adjusted EBITDA for the first quarter of 2015 was $4.0
million. This compares to Adjusted EBITDA of $4.5 million for
the same period in 2014.
Net loss was ($1.1) million for the first quarter of 2015,
compared to net income of $1.7 million for the same period
last year.
New England Wood Pellet
Revenues were $12.1 million, including $1.2 million from the
Allegheny mill, for the first quarter of 2015 on deliveries of
63,000 tons of wood pellets. Gross profit was $2.2 million and
gross profit margin was 18%. Adjusted EBITDA was $2.3 million, and
net income was $1.1 million.
Wood Pellets: Industrial
Revenues were $1.7 million for the Atikokan mill
in the first quarter on deliveries of 9,100 metric tons of wood
pellets to OPG. Gross loss was ($0.4) million and gross loss
margin was (24%) due to operating at partial capacity at the
Atikokan mill during commissioning.
Adjusted EBITDA loss, including operating losses at the Wawa
facility, business development for industrial wood pellets, senior
management of the fibre business and corporate allocations,
was ($3.9) million for the first quarter of 2015, compared to
an Adjusted EBITDA loss of ($1.7) million for the same period in
2014. Net loss for the first quarter of 2015 was ($4.7)
million, compared to a net loss of ($1.6) million for the same
period in 2014.
Nitrogen Product
Manufacturing
Revenues for the first quarter of 2015 were $69.2 million,
compared to $56.3 million in the first quarter of 2014.
Gross profit for the first quarter of 2015 was $18.8
million, compared to $13.8 million for the same period last
year. Adjusted EBITDA for the first quarter of
2015 was $19.2 million, compared to $11.5 million in
the corresponding 2014 period. Net income for the first quarter of
2015 was $9.0 million, compared to net income
of $3.1 million for the prior year period.
East Dubuque Facility
Revenues for the first quarter of 2015 were $36.8
million, compared to $28.5 million for the same period
last year. The increase was due to higher sales volumes for
ammonia, partially offset by lower sales prices for ammonia and
urea.
Ammonia deliveries increased due to strong demand from
agricultural and industrial customers. Volumes were low in the
first quarter of 2014 because production was interrupted by a
planned turnaround and a fire in the fourth quarter of 2013, and
production was purposely reduced in order to sell natural gas at
high prices in the first quarter of 2014.
Average sales prices per ton for the first quarter of
2015 were 4% lower for ammonia and 1% higher for UAN, as
compared with the same period last year. These two products
comprised 78% of the East Dubuque facility’s revenues for the first
quarter of 2015 and 58% for the same period last year.
Gross profit was $17.4 million for the first quarter
of 2015; this compares to a gross profit of $12.4
million for the same period last year. Gross profit margin for
the first quarter of 2015 was 47%, compared to 44% for the
prior year period. Gross profit and margin benefited from higher
sales volumes for ammonia and a $2.6 million unrealized gain on
natural gas derivatives, partially offset by lower sales prices for
ammonia and urea, lower natural gas sales, and increased labor
costs and depreciation expense.
Adjusted EBITDA for the first quarter of 2015 was $19.3
million, compared to $13.5 million in the corresponding period
in 2014.
Net income was $16.0 million for the first quarter of
2015, compared to $11.2 million for the same period last
year.
Pasadena Facility
Revenues for the first quarter of 2015 were $32.4
million, compared to $27.8 million for the same period
last year. The increase was due to higher sales prices for ammonium
sulfate and sulfuric acid, and higher sales volumes for sulfuric
acid, partially offset by lower sales volumes for ammonium sulfate
and lower sales prices for ammonium thiosulfate.
Average sales prices per ton increased for ammonium sulfate by
28% and by 2% for sulfuric acid for the first quarter of 2015, as
compared with the same period last year. Factors contributing to
higher sales prices for ammonium sulfate include a larger
proportion of higher-priced domestic sales and more favorable
supply and demand conditions. Ammonium sulfate and sulfuric acid
comprised 88% of the Pasadena facility’s revenues for the
first quarter of 2015 and 83% for the same period last
year.
Gross profit was $1.3 million for the first quarter of
2015, compared to $1.4 million for the same period last year.
Gross profit margin for the first quarter of 2015 was 4%,
compared to 5% for the same period last year.
Adjusted EBITDA for the first quarter of 2015 was $2.0
million, compared to $0.3 million in the corresponding period
in 2014.
Net income was $0.2 million for the first quarter of
2015, compared to a net loss of $0.8 million for the same
period last year.
Corporate Unallocated
Expenses
Corporate unallocated expenses, recorded as selling, general and
administrative (SG&A) expenses, were $3.9 million for the first
quarter of 2015, compared to $6.8 million in the corresponding
period in 2014.
The table below provides a comparison of adjusted unallocated
SG&A expenses for the first quarters of 2015 and 2014,
including certain adjustments for comparability.
For the Three Months Ended March 31,
($ in millions) 2015 2014
Corporate and Unallocated Expenses Recorded as SG&A Expenses $
3.9 $ 6.8 Allocation to Wood Pellets: Industrial
1.2 -
Unallocated
SG&A Expenses - Adjusted $ 5.1 $
6.8 Non-Cash Compensation (0.8 ) (1.5 ) Transaction Costs
& Cost Studies (1) (0.4 ) (0.9 ) Allocation to Wood Pellets:
Industrial (1.2 ) -
Unallocated Cash SG&A Expenses- Adjusted $
2.7 $ 4.4
1Includes costs associated with evaluating and completing
acquisitions, conducting cost studies and non-capitalizable
financing costs
Conference Call with
Management
The Company will hold a conference call today, May 11, 2015, at
8:30 a.m. PDT, 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 11:00 a.m. PDT on May 11
through 11:59 a.m. PDT on May 18. The replay teleconference will be
available by dialing 888-843-7419 or 630-652-3042 and entering the
audience passcode 7750504#.
Rentech, Inc. Consolidated Statements of
Operations (Amounts in Thousands, Except per Share Data)
For the Three Months Ended
March 31, 2015 2014 (unaudited)
Revenues $ 105,610 $ 82,319
Cost of Sales
81,301 64,424
Gross
Profit 24,309 17,895
Operating Expenses Selling,
general and administrative expenses 14,504 15,572 Depreciation and
amortization 1,874 (324 ) Other income (3 ) (348 )
Total Operating Expenses 16,375
14,900
Operating Income 7,934 2,995
Other Expense, Net Interest expense (5,917 ) (5,845 ) Other
expense, net (115 ) (24 )
Total Other
Expense, Net (6,032 ) (5,869 )
Income
(Loss) from Continuing Operations Before Income Taxes and Equity in
Loss of Investee 1,902 (2,874 ) Income tax expense 1,694
1,050
Income (Loss) from Continuing
Operations Before Equity in Loss of Investee 208 (3,924 )
Equity in Loss of Investee 15 199
Income (Loss) from Continuing Operations 193 (4,123 )
Loss from discontinued operations, net of tax (147 )
(1,471 )
Net Income (Loss) 46 (5,594 ) Net income
attributable to noncontrolling interests (3,675 ) (1,394 )
Preferred Stock Dividends (1,320 ) -
Net Loss Attributable to Rentech Common Shareholders $
(4,949 ) $ (6,988 )
Net Loss per Common Share Allocated
to Rentech Common Shareholders: Basic: Continuing
operations $ (0.02 ) $ (0.02 ) Discontinued operations $ -
$ (0.01 )
Net Loss $ (0.02 ) $ (0.03 )
Diluted: Continuing operations $ (0.02 ) $ (0.02 )
Discontinued operations $ - $ (0.01 )
Net Loss
$ (0.02 ) $ (0.03 )
Weighted-Average Shares Used to
Compute Net Loss per Common Share: Basic 229,362
227,529
Diluted 229,362
227,529
Rentech, Inc.
Statements of Operation by Business Segment (Stated in
Thousands)
For the Three
Months Ended March 31, 2015 2014
(unaudited) Revenues East Dubuque $ 36,752 $ 28,491 Pasadena 32,422
27,789 Fulghum Fibres 22,654 26,039 Wood Pellets: Industrial 1,664
— Wood Pellets: NEWP 12,118 —
Total
Revenues $ 105,610 $ 82,319 Gross Profit
(Loss) East Dubuque $ 17,441 $ 12,398 Pasadena 1,342 1,366 Fulghum
Fibres 3,707 4,131 Wood Pellets: Industrial (404 ) — Wood Pellets:
NEWP 2,223 —
Total Segment Gross
Profit $ 24,309 $ 17,895 Selling, General
and Administrative Expenses East Dubuque $ 1,346 $ 1,133 Pasadena
796 1,829 Fulghum Fibres 1,682 1,401 Wood Pellets: Industrial 3,919
2,068 Wood Pellets: NEWP 704 —
Total
Segment Selling, General and Administrative Expenses $ 8,447
$ 6,431 Depreciation and Amortization East
Dubuque $ 69 $ 37 Pasadena 360 296 Fulghum Fibres 981 (809 ) Wood
Pellets: Industrial 43 19 Wood Pellets: NEWP 278
—
Total Segment Depreciation and Amortization
Recorded in Operating Expenses $ 1,731 $ (457 )
Net Income (Loss) East Dubuque $ 16,022 $ 11,209 Pasadena 163 (786
) Fulghum Fibres (1,107 ) 1,654 Wood Pellets: Industrial (4,664 )
(1,644 ) Wood Pellets: NEWP 1,142 —
Total Segment Net Income $ 11,556 $ 10,433
Reconciliation of Segment Net Income to Consolidated Net
Income (Loss): Segment net income $ 11,556 $ 10,433 RNF –
Partnership and unallocated expenses recorded as selling, general
and administrative expenses (2,194 ) (2,316 ) RNF – Partnership and
unallocated income (expense) recorded as other income (expense) (29
) — RNF – Unallocated interest expense and loss on interest rate
swaps (5,009 ) (4,982 ) Corporate and unallocated expenses recorded
as selling, general and administrative expenses (3,863 ) (6,825 )
Corporate and unallocated depreciation and amortization expense
(143 ) (133 ) Corporate and unallocated income (expense) recorded
as other income (expense) 4 8 Corporate and unallocated interest
expense (94 ) (304 ) Corporate income tax benefit (expense) (35 )
(4 ) Income (loss) from Discontinued Operations, net of tax
(147 ) (1,471 )
Consolidated Net Income (Loss) $ 46
$ (5,594 )
Rentech, Inc. Selected Balance
Sheet Data (Stated in Thousands)
As of (Stated in Thousands)
March 31, 2015
December 31, 2014 (unaudited) Cash $ 53,747 $ 44,195 Working
capital 16,641 3,180 Construction in progress 110,540 179,423 Total
assets 860,085 828,150 Total debt 507,116 468,856 Total Rentech
stockholders' equity 107,515 120,733 Cash - RNF $ 32,406 $
28,028 Cash excluding RNF 21,341 16,167
Total
Cash $ 53,747 $ 44,195 Debt - RNF $ 339,000 $ 335,000
Debt excluding RNF 168,116 133,856
Total Debt
$ 507,116 $ 468,856
Disclosure Regarding Non-GAAP Financial
Measures
Rentech’s Adjusted EBITDA is defined as Rentech’s new income
(loss) plus interest expense, income tax expense, depreciation and
amortization. Rentech Nitrogen’s Adjusted EBITDA is defined as
Rentech Nitrogen’s net income (loss) plus interest expense and
other financing costs, income tax expense, depreciation and
amortization. Fulghum’s Adjusted EBITDA is defined as Fulghum’s net
income (loss) plus interest expense and other financing costs,
depreciation and amortization, and income tax expense. NEWP’s
Adjusted EBITDA is defined as NEWP’s net income plus interest
expense and other financing costs, depreciation and amortization,
and income tax expense. Wood Pellets: Industrial’s Adjusted EBITDA
is defined as Wood Pellets: Industrial’s net loss plus interest
expense, depreciation and amortization and income tax expense.
Adjusted EBITDA is used as a supplemental financial measure by
management and by external users of our consolidated financial
statements, such as investors and commercial banks, to assess:
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.
The table below reconciles Rentech’s consolidated Adjusted
EBITDA to net income (loss) for the first quarter of 2015 and 2014.
The consolidated Adjusted EBITDA includes Adjusted EBITDA from 100%
of Rentech’s subsidiaries, most notably Rentech Nitrogen
Partners.
For the Three Months Ended March
31, (Stated in thousands)
2015
2014 (unaudited)
Net Income (Loss) $
46 $ (5,594 ) Add: Net interest expense 5,905 5,831
Income tax (benefit) expense 1,694 1,050 Depreciation and
amortization 9,823 4,441 Other 142
237
Adjusted EBITDA (1) $
17,610 $ 5,965 (1) Adjusted EBITDA includes the
impact of discontinued operations of ($147) and ($1,471) for the
three months ended March 31, 2015 and 2014, respectively.
The table below reconciles Rentech Nitrogen’s Adjusted EBITDA,
along with the Adjusted EBITDA for each of its facilities, to their
respective net income (loss) for the first quarter of 2015.
For the Three Months Ended March 31,
2015
(Stated in thousands)
East Dubuque
Facility
Pasadena
Facility
Partnership
Level
Consolidated (unaudited) Net income (loss) $ 16,022 $
163 $ (7,232 ) $ 8,953 Plus: Net interest expense 19 - 5,009 5,028
Plus: Income tax expense 15 23 - 38 Plus: Depreciation and
amortization 3,308 1,835 - 5,143 Plus: Other (26 ) -
29 3
Adjusted EBITDA
$ 19,338 $ 2,021 $ (2,194 ) $ 19,165
The table below reconciles Rentech Nitrogen’s consolidated
Adjusted EBITDA, along with the Adjusted EBITDA for each of its
facilities, to their respective net income (loss) for the first
quarter of 2014.
For the Three Months Ended March 31,
2014 (Stated in thousands)
East Dubuque
Facility
Pasadena
Facility
Partnership
Level
Consolidated (unaudited) Net income (loss) $ 11,209 $
(786 ) $ (7,298 ) $ 3,125 Plus: Net interest expense 22 - 4,982
5,004 Plus: Income tax expense 3 27 - 30 Plus: Depreciation and
amortization 2,242 1,062 -
3,304
Adjusted EBITDA $ 13,476 $ 303 $ (2,316
) $ 11,463
The table below reconciles Fulghum’s Adjusted EBITDA to net
income (loss) for the first quarter of 2015 and 2014.
For the Three Months Ended March
31, (Stated in thousands) 2015
2014 (unaudited)
Fulghum Net Income $
(1,107 ) $ 1,654 Add Fulghum Items: Net interest
expense 538 536 Depreciation and amortization 3,001 985 Income tax
expense 1,602 1,012 Other 10
336
Fulghum's Adjusted EBITDA $ 4,044 $
4,523
The table below reconciles NEWP’s Adjusted EBITDA to net income
for the first quarter of 2015.
For the Three Months
Ended March 31, (Stated in thousands)
2015 (unaudited)
NEWP Net Income $ 1,142 Add
NEWP Items: Net interest expense 139 Depreciation and amortization
1,056 Income tax expense 17 Other (57 )
NEWP's Adjusted
EBITDA $ 2,297
The table below reconciles Wood Pellets: Industrial’s Adjusted
EBITDA to net loss for the first quarter of 2015.
For the Three Months Ended March
31, (Stated in thousands) 2015
2014 (unaudited)
Wood Pellets: Industrial Net
Loss $ (4,664 ) $ (1,644 ) Add: Net interest expense 106 11
Depreciation and amortization 480 19 Income tax expense — 4 Other
191 (116 )
Wood Pellet: Industrial's
Adjusted EBITDA $ (3,887 ) $ (1,726 )
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 performance of our Canadian wood pellet
plants. 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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