Rentech, Inc. (NASDAQ: RTK) today announced financial and
operating results for the three and nine months ended September 30,
2015.
Keith Forman, President and CEO of Rentech, stated, “Financial
and operating performance improved in our nitrogen, chipping and
residential pellet businesses relative to last year. Cost
discipline and higher efficiency are contributing to a significant
turnaround at Fulghum Fibres from last year, with EBITDA for the
year expected to exceed our guidance. We also expect NEWP to exceed
our EBITDA guidance for the year, thanks to lower production costs
and higher sales prices.”
“Rentech Nitrogen had another solid quarter, with significantly
improved results compared to the third quarter of last year. Our
outlook for the year at East Dubuque has improved somewhat,
although Pasadena has weakened slightly, and we are absorbing some
transaction costs associated with the merger with CVR Partners,”
said Mr. Forman. “We continue to work towards completing the merger
with CVR Partners. We now expect to close the transaction in the
first quarter of 2016, rather than in December. The proceeds from
the merger and sale of Pasadena will be important to Rentech’s
liquidity, so we are working to arrange backup sources of
capital.”
Mr. Forman added, “We currently expect the costs to address the
conveyance issues at our plants in Ontario to be within our stated
guidance of approximately $145 million of capital costs for the
projects, and we continue to target the adjusted schedules that we
discussed last quarter. The biggest risks we see to both cost and
timing would be the discovery of any new downstream issues as we
continue ramping up the plants. We expect Atikokan’s production
this year to exceed the volume requirements of our contract with
OPG. At Wawa, we will be completing this week the installation of
the first phase of equipment to correct issues with the log infeed
system and critical conveyors. Replacements and modifications of
conveyors will continue into the first quarter of 2016.”
Summary of Results
The consolidated results of Rentech, Inc. include its
wood fibre processing business and Rentech Nitrogen’s Pasadena
facility. The wood fibre processing business consists of Fulghum
Fibres (Fulghum); New England Wood Pellet (NEWP), which includes
the Allegheny mill, and Industrial Wood Pellets, which includes our
Canadian pellet plants, business development for industrial
pellets, senior management of the fibre business and corporate
allocations. Rentech Nitrogen’s East Dubuque facility is classified
as discontinued operations due to its pending acquisition.
Rentech’s energy technologies business is also classified as
discontinued operations due to its sale in October 2014. 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.
Consolidated revenues for the third quarter of
2015 were $80.3 million, compared to $76.2
million in the prior year period. Consolidated revenues for
the nine months ended September 30, 2015 were $226.9 million,
compared to $195.2 in the prior year period.
Gross profit for the third quarter of 2015 was $6.2
million, compared to a gross loss of $(2.5) million in
the prior year period. Gross profit for the nine months ended
September 30, 2015 was $18.9 million compared to $1.5 million for
the prior year period.
Consolidated Adjusted EBITDA for the third quarter of
2015 was $18.2 million, compared to $5.0 million in
the prior year period. Consolidated Adjusted EBITDA for the nine
months ended September 30, 2015 was $76.9 million, compared to
$32.3 million in the prior year period. Further explanation of
Adjusted EBITDA, a non-GAAP financial measure, as used here and
throughout this press release, appears below.
For the Pasadena Facility, the Partnership updated its forecasts
of operating cash flows, assessed indications of interest from
potential buyers, and updated its estimates of the probabilities of
selling and operating the plant. As a result, the carrying value
was further reduced by recording an asset impairment charge of
$32.5 million for the third quarter of 2015. For the nine months
ended September 30, 2015, asset impairment charges for the Pasadena
Facility totaled $134.3 million, and impairment of goodwill totaled
$27.2 million for the nine months ended September 30, 2014. There
is significant uncertainty as to whether the Partnership will sell
the Pasadena Facility to a third party, and as to whether any sale
price would equal the carrying value of the asset, which is an
estimate.
Net loss attributable to Rentech common shareholders for the
third quarter of 2015 was $(24.3) million, or a loss
of $(1.06) per basic share, compared to a net loss
of $(11.7) million, or a loss of $(0.51) per basic share,
for the same period last year. Net income attributable to Rentech
common shareholders for the third quarter of
2015 was $8.9 million, or $0.38 per basic
share, excluding asset impairments.
Net loss attributable to Rentech common shareholders for the
nine months ended September 30, 2015 was $(82.7)
million, or a loss of $(3.60) per basic share, compared
to a net loss of $(39.3) million, or a loss of
$(1.72) per basic share, for the same period last year. Net
income attributable to Rentech common shareholders for the nine
months ended September 30, 2015 was $52.3
million, or $2.28 per basic share, excluding the asset
impairments. This compares to a net loss of $(12.1) million, or a
loss of $(0.53) per basic share, excluding the Pasadena goodwill
impairment for the prior year period.
Fulghum Fibres
Revenues were $23.4 million for third quarter of 2015, compared
to $22.1 million for the same period last year. Revenues from
operations in the United States were $15.6 million for the third
quarter of 2015, as compared to $15.8 million in the prior
year period. Revenues from operations in South America were $7.8
million for the third quarter, as compared to $6.3 million in
the prior year period. The increase in South America revenues was
primarily due to higher biomass product sales domestically and chip
sales to Asia in the third quarter of 2015 as compared to 2014.
Our mills in the United States and South America processed
3.8 and 3.7 million green metric tonnes, respectively, of logs
into wood chips and residual fuels for each of the third quarters
of 2015 and 2014.
Gross profit was $5.0 million for the third quarter of 2015
compared to $3.4 million for the prior year period. Gross profit
margin for the third quarter of 2015 was 21%, compared to gross
profit margin of 15% for the prior year period. The increases in
gross profit and gross margin were due primarily to higher product
sales volumes at our mills in South America and cost savings at our
processing mills in the United States, partially offset by higher
product costs associated with higher sales volume and higher
depreciation expense. In addition, gross profits and gross margins
were lower in the 2014 periods as a result of the fire at our Maine
mill in March of last year.
Adjusted EBITDA for the third quarter of 2015 was $5.9
million. This compares to Adjusted EBITDA of $3.9 million for
the same period in 2014.
Net income was $3.0 million for the third quarter of 2015,
compared to a net loss of $(0.1) million for the same period
last year.
New England Wood Pellet
Revenues were $17.6 million for the third quarter of 2015 on
deliveries of 88,000 tons of wood pellets. This compared to $13.9
million for the third quarter of 2014 on deliveries of 71,000 tons
of wood pellets. The increase in revenues reflects higher sales
prices and the addition of the Allegheny mill.
Gross profit for the third quarter of 2015 was $4.1 million,
compared to $2.5 million for the same period last year. Gross
profit margin was 23% for the third quarter of 2015 compared to 18%
for the prior year period. Gross margin was higher because of lower
production costs and higher sales prices. Gross profit was higher
also because of the addition of the Allegheny mill.
Adjusted EBITDA for the third quarter of 2015 was $4.4
million. This compares to Adjusted EBITDA of $2.7 million for
the same period in 2014.
Net income was $3.1 million for the third quarter of 2015,
compared to net income of $2.0 million for the same period
last year.
Wood Pellets: Industrial
Revenues for the third quarter of 2015 were $1.8 million earned
by delivering to Ontario Power Generation (OPG) 9,800 metric tonnes
of wood pellets produced at the Atikokan Facility. Revenues of $2.0
million for the prior year period reflect 9,900 metric tonnes of
wood pellets sourced from a third-party and sold to OPG.
Gross loss for the third quarter of 2015 was $(3.3) million,
compared to a gross profit of $0.4 million for prior year period.
Gross loss margin was (184%) for the third quarter of 2015,
compared to a gross profit margin of 18% for the prior year period.
The gross loss and gross loss margin for the third quarter of 2015
were due to high operating costs relative to revenues during
commissioning and ramp-up of both the Atikokan and Wawa Facilities,
including the related write down of inventory by $3.1 million for
pellets in inventory awaiting delivery to Drax.
Adjusted EBITDA loss for the third quarter of 2015
was $(7.3) million. This compares to Adjusted EBITDA loss of
$(2.4) million for the same period last year.
Net loss was $(8.4) million for the third quarter of 2015,
compared to a net loss of $(2.0) for the same period last year.
Pasadena Facility
Revenues for the third quarter of 2015 were $37.5 million,
compared to $38.1 million for the same period last year. The
decrease was due to lower sales volumes for ammonium sulfate and
ammonium thiosulfate, and lower sales prices for sulfuric acid,
partially offset by higher sales prices for ammonium sulfate and
ammonium thiosulfate, and higher sales volumes for sulfuric
acid.
Average sales prices per ton increased by 15% for ammonium
sulfate and decreased by 10% for sulfuric acid for the third
quarter of 2015 as compared with the same period last year. These
two products comprised 92% of our Pasadena Facility’s revenues for
the third quarter of 2015 and 94% for the same period in the prior
year.
Ammonium sulfate sales prices increased due to a higher
percentage of sales in the domestic market and continued demand for
ammonium sulfate as retailers move away from ammonium nitrate. As
part of our restructuring plan, we reduced our historically
low-margin sales to Brazil. Brazil accounted for 22% of ammonium
sulfate sales during the third quarter of 2015 while 53% of
ammonium sulfate sales were to Brazil during the third quarter of
2014.
The higher sales volumes for sulfuric acid and lower sales
volumes for ammonium sulfate were the result of our restructuring
plan implemented in late 2014. In addition to reducing sales to
Brazil, the restructuring plan included reducing expected annual
production of ammonium sulfate by approximately 25%, to 500,000
tons. Sulfuric acid is a component in the production of ammonium
sulfate. With reduced production of ammonium sulfate, less sulfuric
acid is needed, which results in more sulfuric acid being available
for sale.
Gross profit was $0.5 million for the third quarter of 2015,
compared to a gross loss of $(8.8) million for the same period last
year. Gross profit margin for the third quarter 2015 was 1%,
compared to gross loss margin of (23%) for the same period last
year. During the third quarter of 2015, we wrote down ammonium
sulfate inventories by $0.5 million, compared to $1.8 million in
the third quarter of 2014. The increases in gross profit and gross
profit margins were primarily due to higher sales prices for
ammonium sulfate and ammonium thiosulfate, higher sales volumes for
sulfuric acid and a decrease in the write down of inventories.
Adjusted EBITDA for the third quarter of 2015 was $0.9
million, compared to an Adjusted EBITDA loss of $(7.7)
million in the corresponding period in 2014.
The Pasadena Facility incurred an asset impairment charge of
$32.5 million in the third quarter of 2015.
Net loss was $(33.2) million for the third quarter
2015, compared to a net loss of $(10.2) million for the
same period last year. Net loss was $(0.7) million for the
third quarter of 2015, excluding the loss due to the asset
impairment.
Corporate and Unallocated
Expenses
Corporate and unallocated expenses, which are included in
selling, general and administrative (SG&A) expenses, were $4.9
million for the third quarter of 2015, compared to $7.0 million in
the corresponding period in 2014.
The table below provides a comparison of adjusted unallocated
SG&A expenses for the third quarters of 2015 and 2014,
including certain adjustments for comparability.
For the Three Months Ended September 30,
(Stated in millions) 2015
2014
(unaudited) Corporate and Unallocated Expenses Recorded as SG&A
Expenses $ 4.9 $ 7.0 Allocation to Wood Pellets: Industrial
1.1 — Unallocated SG&A Expenses - Adjusted $ 6.0 $ 7.0
Non-Cash Compensation (0.7 ) (1.9 ) Transaction Costs & Cost
Studies (0.3 ) (1.1 ) Allocation to Wood Pellets: Industrial
(1.1 ) — Unallocated SG&A Expenses - Adjusted $ 3.9 4.0
Discontinued Operations
East Dubuque Facility
Revenues for the third quarter of 2015 were $46.8 million,
compared to $46.0 million for the same period in the prior year.
The increase was primarily due to higher sales volumes for ammonia
and UAN, partially offset by lower sales prices for almost all
products, and lower natural gas sales.
Ammonia deliveries increased due to strong demand from
agricultural and industrial customers. UAN deliveries increased
between the third quarters of each year due to lower demand in the
spring of 2015 due to a significant amount of pre-plant ammonia
applied, the availability of lower priced urea, and wet conditions
during the UAN application period, pushing UAN sales into the third
quarter.
Average sales prices per ton for the third quarter of 2015 were
7% lower for ammonia and 10% lower for UAN, as compared with the
same period last year. These two products comprised 84% of our East
Dubuque Facility’s revenues for the third quarter of 2015 and 80%
for the same period last year.
Gross profit was $20.3 million for the third quarter of 2015,
compared to $15.5 million for the same period in the prior year.
Gross profit margin was 43% for the third quarter of 2015, compared
to 34% for the same period in the prior year. The increases in
gross profit and gross margin were primarily due to higher sales
volumes for ammonia and UAN, and lower natural gas costs, partially
offset by lower sales prices for ammonia and UAN. Gross profit
margin, without natural gas derivatives, was 42% for the third
quarter of 2015, compared to 34%, without natural gas derivatives,
for the same period in the prior year.
Adjusted EBITDA for the third quarter of 2015 was $22.6
million, compared to $18.5 million in the corresponding period
in 2014.
Net income was $17.8 million for the third quarter of
2015, compared to $14.1 million for the same period last
year.
Energy Technologies
Income was $0.9 million for the third quarter of 2015, compared
to a loss of $(1.2) million for the same period last year. The
income was primarily due to a property tax refund of $1.1
million.
Canadian Update
The capital expenditures estimate for the Atikokan and Wawa
plants of approximately $145 million is unchanged, with
approximately $24 million remaining to be spent as of the end of
the third quarter. Rentech noted that the capital expenditures
forecast for the plants does not include contingencies for any
further problems that may be identified during the continued
ramp-up of the facilities.
Once we complete repairs and have more operating history, we
will be able to better assess our costs and our expected stabilized
EBITDA for our Canadian operations. Several factors in the market
today would reduce our stabilized EBITDA if they continued. These
factors include the fact that oil prices, which drive indexation of
prices in our Drax contract, have declined more than Canadian
diesel prices; currency exchange rates; spot pricing for pellets;
and our reduced ability to procure third-party pellets for sale
through our port facility.
Atikokan
Atikokan has produced approximately 42,000 metric tons of
pellets and delivered to OPG approximately 34,000 metric tons
through early November. The heat value of the pellets supplied to
OPG continues to be higher than the minimum requirements of the
contract. We are shipping excess volumes produced at Atikokan to
the port as we are building inventory for the first Drax shipment
scheduled for early next year.
The Atikokan plant is ramping up on schedule. We installed the
replacement transformer at the plant in August. As a result, the
facility is now able to function without load management that was
required with the smaller, temporary transformer. While the Company
has completed most of the repairs to the truck dump hopper, there
are still some additional repairs to be made related to carryover
of material that will be completed in the coming weeks. In
addition, repairs to the conveyors are underway and are currently
scheduled to be completed early next year.
Rentech continues to target reaching full capacity at Atikokan
by the end of February 2016, but the timing could shift by several
months depending on the degree of modifications needed to correct
the material handling equipment issues and any other possible
issues that may arise during the continued ramp-up.
Wawa
Wawa has produced approximately 21,000 metric tons of wood
pellets and shipped 20,000 metric tons to the port through early
November. We currently have a total of approximately 28,000 metric
tons of pellets in transit to or stored at the port.
The Wawa facility is expected to complete a four-week outage
this week while equipment was installed to correct material
handling issues. The new log infeed system is expected to become
operational this week, enabling the chippers to operate at a
greater throughput capacity. In addition, the new replacement
conveyors that were installed during the outage have shown no
issues during check out and are expected to operate with no
problems during commissioning later this week. The truck dump and
its new conveyors are expected to be commissioned later this week.
The facility is scheduled to operate intermittently over the coming
months as work to correct the conveyors continues into the first
quarter of next year. We expect to receive final pricing and
engineering for the remaining conveyors we need to replace or
modify in the coming months.
We continue to target reaching full capacity at Wawa in the
second half of 2016, but the timing could shift depending on the
degree of modifications needed to correct the material handling
equipment issues and any other possible issues that may arise
during the continued ramp-up.
Cost Savings Plan
We have begun implementing a reorganization plan to simplify and
integrate Rentech’s structure into a lower cost model. We are
targeting approximately $10 - $12 million of reductions in annual
consolidated SG&A expense1 run-rate exiting 2016 as compared to
our guidance for consolidated SG&A expenses1 for 2015 of
approximately $44 million. The key components of the reorganization
plan include:
- Reducing corporate staff by
approximately 25%, modifying compensation packages and moving
corporate headquarters from Los Angeles, California to the
Washington, D.C. area. We expect these and other actions to result
in annual corporate SG&A cost savings2 of approximately $8.5 -
$10.5 million, including $3.8 million in savings of non-cash
compensation expenses.
- Targeting approximately $1.5 million in
cash SG&A expense reductions at our business units by
simplifying the organizational structure with fewer layers,
consolidated back office functions and reduced spending.
We have already initiated these cost savings actions, and are
targeting completion by the end of the third quarter of next year.
We estimate that we will incur total non-recurring charges of
approximately $6 million over the next twelve months in connection
with the restructuring.
We continue to pursue additional cost savings through process
improvements and common platforms that are anticipated to drive
further efficiencies.
Liquidity
In early 2016, Rentech expects to need either the proceeds
anticipated from the merger of Rentech Nitrogen with CVR Partners
and the sale of the Pasadena Facility, or other sources of cash to
fund its operating and investing needs. We expect to require some
new sources of cash in a smaller amount if the merger were to close
and the Pasadena Facility were spun off, rather than sold. In the
event the merger and the sale of the Pasadena Facility were to be
delayed beyond the early months of 2016, the Company would need
alternative sources of cash to fund its operations during the
months leading to the closing of the merger. The Company is in
discussions to arrange additional borrowing and/or to pledge or
sell some of the 3.1 million unpledged units of Rentech
Nitrogen which it owns, but the outcome of such discussions is not
known at this time. Such a sale of units of Rentech Nitrogen would
require approval of CVR Partners, under the terms of the voting and
support agreement. If the merger and the sale of the Pasadena
Facility fail to close at all on the expected terms, the Company
would require additional longer-term funding. If the merger
agreement were to be terminated, the Company would be free from
contractual restrictions on selling the 3.1 million unpledged
Rentech Nitrogen units that it owns. The Company may be unable to
sell Rentech Nitrogen units or obtain funding on terms it finds
acceptable if it were to need such financing. If the merger were
not to close, or if it were to be delayed beyond the early months
of 2016, and if the Company were to be unable to secure additional
sources of funds, there would be a material adverse effect on the
Company’s business, results of operations, and financial condition,
and on its ability to complete construction of the Atikokan and
Wawa facilities and fund its normal operations.
Conference Call with
Management
The Company will hold a conference call today, November 10,
2015, at 8:30 a.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 5167954#. 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.
PST on November 10 through 11:59 a.m. PDT on November 17. The
replay teleconference will be available by dialing 888-843-7419 or
630-652-3042 and entering the audience passcode 5167954#.
________________________________
1 Excludes Rentech Nitrogen2 Reflects cost savings for
unallocated SG&A expenses, SG&A expense allocations to the
wood fibre business and wood fibre business development expenses
and overhead.
Rentech, Inc. Consolidated Statements of
Operations
(Amounts in Thousands, Except per Share
Data)
For the Three Months Ended For the Nine Months
Ended September 30, September 30, 2015
2014 2015 2014 (Unaudited)
(Unaudited)
Revenues $ 80,348 $ 76,151 $ 226,924 $ 195,236
Cost of sales 74,133 78,648 207,980
193,749
Gross profit 6,215 (2,497 )
18,944 1,487
Operating expenses Selling,
general and administrative expense 14,119 14,376 42,922 44,825
Depreciation and amortization 928 1,371 4,281 2,366 Asset
impairment 33,215 — 134,987 — Pasadena goodwill impairment — — —
27,202 Other (income) expense, net 6 8 9
(317 ) Total operating expenses 48,268 15,755
182,199 74,076
Operating loss (42,053 )
(18,252 ) (163,255 ) (72,589 )
Other
expense, net Interest expense (3,725 ) (721 ) (7,238 ) (2,244 )
Loss on debt extinguishment — — — (850 ) Loss on fair value
adjustment to earn-out consideration
99
59
495
(268 ) Other income (expense), net
(974
) 308
1,984
354 Total other expenses, net (4,600 ) (354 )
(4,759 ) (3,008 )
Loss from continuing operations before
income taxes and equity in loss of investee
(46,653 ) (18,606 ) (168,014 ) (75,597 ) Income tax (benefit)
expense (2,063 ) 425 204 1,259
Loss from continuing operations before
equity in loss of investee
(44,590 ) (19,031 ) (168,218 ) (76,856 ) Equity in loss of investee
— 96 421 334
Loss from continuing
operations (44,590 ) (19,127 ) (168,639 ) (77,190 ) Income from
discontinued operations, net of tax 11,754 7,440
57,138 36,876
Net loss (32,836 ) (11,687 )
(111,501 ) (40,314 ) Net loss attributable to noncontrolling
interests 9,812 1,311 32,754 3,505 Preferred stock dividends
(1,320 ) (1,321 ) (3,960 ) (2,521 )
Net loss attributable to Rentech common
shareholders
$ (24,344 ) $ (11,697 ) $ (82,707 ) $ (39,330 )
Net income (loss) per common share
allocated to Rentech common shareholders:
Basic: Continuing operations $ (1.38 ) $ (0.69 ) $ (5.10 ) $ (2.61
) Discontinued operations $ 0.31 $ 0.17 $ 1.43 $ 0.86 Net loss $
(1.06 ) $ (0.51 ) $ (3.60 ) $ (1.72 ) Diluted: Continuing
operations $ (1.38 ) $ (0.69 ) $ (5.10 ) $ (2.61 ) Discontinued
operations $ 0.31 $ 0.17 $ 1.43 $ 0.86 Net loss $ (1.06 ) $ (0.51 )
$ (3.60 ) $ (1.72 )
Weighted-average shares used to compute
net income (loss) per common share:
Basic 23,005 22,807 22,969 22,865
Diluted 23,005 22,807 22,969 22,865
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, 2015
2014 2015 2014 (in thousands)
Revenues Pasadena $ 37,519 $ 38,142 $ 107,734 $ 105,597 Fulghum
Fibres 23,446 22,141 71,823 67,326
Wood Pellets: Industrial
1,772 2,011 5,980 2,678 Wood Pellets: NEWP 17,611
13,857 41,387 19,635 Total revenues $ 80,348 $ 76,151
$ 226,924 $ 195,236 Gross profit (loss) Pasadena $ 464 $ (8,778 ) $
3,852 $ (12,145 ) Fulghum Fibres 4,959 3,429 12,944 9,579 Wood
Pellets: Industrial (3,265 ) 366 (6,727 ) 480 Wood Pellets: NEWP
4,057 2,486 8,875 3,573 Total gross
profit $ 6,215 $ (2,497 ) $ 18,944 $ 1,487 Selling, general and
administrative expenses Pasadena $ 1,133 $ 1,071 $ 2,773 $ 4,147
Fulghum Fibres 1,241 1,368 3,870 4,420 Wood Pellets: Industrial
4,589 2,776 15,713 8,184 Wood Pellets: NEWP 587 624
2,009 1,015 Total segment selling, general and
administrative expenses $ 7,550 $ 5,839 $ 24,365 $ 17,766
Depreciation and amortization Pasadena $ 25 $ 337 $ 744 $ 970
Fulghum Fibres 427 970 2,107 1,111 Wood Pellets: Industrial 45 43
127 97 Wood Pellets: NEWP 295 (133 ) 885
(231 ) Total segment depreciation and amortization recorded
in
operating expenses
$ 792 $ 1,217 $ 3,863 $ 1,947 Net income (loss) Pasadena $ (33,187
) $ (10,213 ) $ (132,550 ) $ (44,545 ) Fulghum Fibres 3,012 (56 )
4,977 609 Wood Pellets: Industrial (8,382 ) (1,997 ) (23,760 )
(6,804 ) Wood Pellets: NEWP 3,106 2,014 5,786
2,756 Total segment net income (loss) $ (35,451 ) $ (10,252
) $ (145,547 ) $ (47,984 )
Reconciliation of segment net income
(loss) to consolidated net loss:
Segment net income (loss) $ (35,451 ) $ (10,252 ) $ (145,547 ) $
(47,984 )
Corporate expenses allocated to RNP
recorded as selling, general and administrative expenses
(1,701 ) (1,574 ) (5,300 ) (5,515 )
Corporate expenses allocated to RNP
recorded as other expenses
(30 ) — (88 ) —
Corporate and unallocated expenses
recorded as selling, general and administrative expenses
(4,869 ) (6,963 ) (13,259 ) (21,544 )
Corporate and unallocated depreciation and
amortization expense
(136 ) (154 ) (418 ) (419 )
Corporate and unallocated income
(expenses) recorded as other income (expense)
6 (96 ) 6 (1,279 ) Corporate and unallocated interest expense
(2,419 ) (54 ) (4,007 ) (378 ) Corporate income tax expense 10 (34
) (26 ) (71 ) Income (loss) from discontinued operations, net of
tax 11,754 7,440 57,138 36,876
Consolidated net loss $ (32,836 ) $ (11,687 ) $ (111,501 ) $
(40,314 )
Rentech, Inc. Selected
Balance Sheet Data
(Stated in Thousands)
As of As of September 30, December
31, 2015 2014 (in thousands) Cash $ 52,231 $
19,666 Working capital 35,815 3,180 Construction in progress 8,713
164,413 Total assets 726,870 828,150 Debt 180,514 133,856 Total
Rentech stockholders' equity 25,665 120,733 Cash - RNF $ 38,151 $
28,028 RNF cash recorded in discontinued operations (27,319 )
(24,529 ) Cash excluding RNF 41,399 16,167 Total Cash
$ 52,231 $ 19,666 Debt - RNF $ 346,500 $ 335,000 RNF debt recorded
in discontinued operations (346,500 ) (335,000 ) Debt excluding RNF
180,514 133,856 Total Debt $ 180,514 $ 133,856
Disclosure Regarding Non-GAAP Financial
Measures
Adjusted EBITDA is defined as net income (loss) plus net
interest expense and other financing costs, income tax (benefit)
expense, depreciation and amortization and unusual items, like
impairment and debt extinguishment charges and fair value
adjustments to earn-out consideration. 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 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.
Net income (loss) excluding loss on impairments are included to
provide management and investors with net income results for
Rentech that are more easily compared to the prior year period.
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 from net loss for the three and nine months ended September
30, 2015 and 2014.
For the Three Months For the Nine
Months Ended September 30, Ended September 30,
2015 2014 2015 2014 (in
thousands) Net loss $ (32,836 ) $ (11,687 ) $ (111,501 ) $ (40,314
) Add items: Net interest expense 9,390 5,329 23,456 16,636 Asset
impairment 33,214 — 134,986 — Pasadena goodwill impairment — — —
27,202 Loss on debt extinguishment — 635 — 1,485 (Gain) loss on
fair value adjustment to earn-out consideration
(99
)
(59 )
(495
) 268 Income tax (benefit) expense (2,063 ) 425 204 1,260
Depreciation and amortization 9,671 10,544 31,971 25,693 Other1
873
(197 )
(1,692
) 25 Consolidated Adjusted EBITDA $ 18,150 $ 4,990 $ 76,929
$ 32,255 1 Includes Fulghum’s gain of $1.6 million and a one-time
easement payment of $1.4 million received by RNF during the nine
months ended September 30, 2015.
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 third quarter of 2015.
For the Three Months Ended September 30, 2015 East
Dubuque Pasadena Partnership
Facility Facility Level Consolidated
(in thousands, except per unit data) Net income (loss) $ 17,754 $
(33,187 ) $ (10,081 ) $ (25,514 ) Add: Net interest expense 16 —
5,554 5,570 Pasadena asset impairment — 32,510 — 32,510 Income tax
benefit — (19 ) — (19 ) Depreciation and amortization 4,861 1,609 —
6,470 Other (16 ) — 30 14 Adjusted
EBITDA $ 22,615 $ 913 $ (4,497 ) $ 19,031
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 nine
months ended September 30, 2015.
For the Nine Months Ended September 30, 2015 East
Dubuque Pasadena Partnership
Facility Facility Level Consolidated
(in thousands, except per unit data) Net income (loss) $ 74,973 $
(132,550 ) $ (25,195 ) $ (82,772 ) Add: Net interest expense 52 —
16,092 16,144 Pasadena asset impairment — 134,282 — 134,282 Income
tax expense — 28 — 28 Depreciation and amortization 13,549 6,013 —
19,562 Other1 (58 ) (1,425 ) 89 (1,394
) Adjusted EBITDA $ 88,516 $ 6,348 $ (9,014 ) $ 85,850 1 Includes a
one-time easement payment of $1.4 million received by the Pasadena
Facility during the nine months ended September 30, 2015.
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 third
quarter of 2014.
For the Three Months Ended September 30, 2014 East
Dubuque Pasadena Partnership
Facility Facility Level
Consolidated (in thousands, except per unit data) Net income
(loss) $ 14,139 $ (10,213 ) $ (7,031 ) $ (3,105 ) Add: Net interest
expense 20 — 4,604 4,624 Pasadena goodwill impairment — — — -
Income tax expense — 27 — 27 Depreciation and amortization 4,380
2,490 — 6,870 Other — — 635 635
Adjusted EBITDA $ 18,539 $ (7,696 ) $ (1,792 ) $ 9,051
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 nine
months ended September 30, 2014.
For the Nine Months Ended September 30, 2014 East
Dubuque Pasadena Partnership
Facility Facility Level
Consolidated (in thousands, except per unit data) Net income
(loss) $ 56,926 $ (44,545 ) $ (21,285 ) $ (8,904 ) Add: Net
interest expense 64 — 14,373 14,437 Pasadena goodwill impairment —
27,202 — 27,202 Income tax expense 1 81 — 82 Depreciation and
amortization 11,777 6,026 — 17,803 Other — —
635 635 Adjusted EBITDA $ 68,768 $ (11,236 ) $ (6,277 ) $
51,255
The table below reconciles Fulghum’s Adjusted EBITDA to net
income (loss) for the three and nine months ended September 30,
2015 and 2014.
For the Three Months For the Nine
Months Ended September 30, Ended September 30,
2015 2014 2015 2014 (in
thousands) Fulghum net income (loss) per segment disclosure $ 3,012
$ (56 ) $ 4,977 $ 609 Add Fulghum items: Net interest expense 691
546 1,808 1,662 Asset impairment 704 — 704 — Income tax (benefit)
expense (2,036 ) 320 89 1,050 Depreciation and amortization 2,605
2,780 8,434 6,497 Other1 912 273 (622 )
718 Fulghum's Adjusted EBITDA $ 5,888 $ 3,863 $ 15,390 $ 10,536 1
Includes a gain of $1.6 million. During the second quarter of 2015,
Fulghum negotiated a settlement with its insurance carriers related
to the 2014 fire at their mill in Maine, which resulted in the gain
of $1.6 million. The gain represented the excess of the settlement
amount over the net book value of the property destroyed.
The table below reconciles NEWP’s Adjusted EBITDA to net income
for the three and nine months ended September 30, 2015 and
2014.
For the Three Months For the Nine
Months Ended September 30, Ended September 30,
2015 2014 2015 2014 (in
thousands) NEWP net income $ 3,106 $ 2,014 $ 5,786 $ 2,756 Add NEWP
items: Net interest expense 142 111 430 191 Income tax expense 1 44
58 53 Depreciation and amortization 1,258 697 3,255 877 Other
(72 ) (174 ) (290 ) (211 ) NEWP's
Adjusted EBITDA $ 4,435 $ 2,692 $ 9,239 $ 3,666
The table below reconciles Wood Pellets: Industrial’s Adjusted
EBITDA to net loss for the three and nine months ended September
30, 2015 and 2014.
For the Three Months For the Nine
Months Ended September 30, Ended September 30,
2015 2014 2015 2014 (in
thousands) Wood Pellets: Industrial net loss per segment disclosure
$ (8,382 ) $ (1,997 ) $ (23,760 ) $ (6,804 ) Add Wood Pellets:
Industrial items: Net interest expense (income) 569 (11 ) 1,067 (33
) Income tax expense — 1 4 5 Depreciation and amortization 620 43
1,705 97 Other (87 ) (446 ) 122 (627 )
Wood Pellets: Industrial Adjusted EBITDA $ (7,280 ) $ (2,410 ) $
(20,862 ) $ (7,362 )
The table below reconciles net loss attributable to Rentech
excluding impairments for the third quarter in 2015.
For the Three Months Ended September 30,
(Stated in thousands) 2015 (unaudited) Net loss
attributable to common shareholders $ (24,344 ) Asset
Impairments 33,215 Net income (loss) excluding impairments $
8,871 Net loss per share attributable to common shareholders $
(1.06 ) Asset impairments 1.44 Net income per share
attributable to common shareholders excluding impairments $ 0.38
Weighted-average common shares outstanding 23,005
The table below reconciles net income (loss) attributable to
Rentech excluding impairments for the nine months ended
September 30, 2015 and 2014.
For the Nine Months Ended September 30,
(Stated in thousands) 2015 2014
(unaudited) Net loss attributable to common shareholders $
(82,707 ) $ (39,330 ) Asset impairments 134,987 — Pasadena
goodwill impairment — 27,202 Net income (loss) excluding
impairments $ 52,280 $ (12,128 ) Net loss per share attributable to
common shareholders $ (3.60 ) $ (1.72 ) Asset impairments 5.88 —
Pasadena goodwill impairment — 1.19 Net income per share
attributable to common shareholders excluding impairments $ 2.28 $
(0.53 ) Weighted-average common shares outstanding 22,969 22,865
The table below reconciles net income attributable to the
Pasadena Facility excluding impairments for the third quarter in
2015.
For the Three Months Ended September 30,
(Stated in thousands) 2015 (unaudited) Net
loss for Pasadena $ (33,187 ) Pasadena asset impairment
32,510 Net income (loss) attributable to Pasadena excluding the
Pasadena asset impairment $ (677 )
The table below reconciles net income (loss) attributable to the
Pasadena Facility excluding impairments for the nine months ended
September 30, 2015 and 2014.
For the Nine Months Ended September 30,
(Stated in thousands) 2015 2014
(unaudited) Net loss for Pasadena $ (132,550 ) $
(44,545 ) Pasadena asset impairment 134,282 — Pasadena goodwill
impairment — 27,202 Net income (loss)
attributable to Pasadena excluding the Pasadena asset and goodwill
impairments $ 1,732 $ (17,343 )
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 to full capacity and their estimated costs, Adjusted
EBITDA for Fulghum and Adjusted EBITDA for NEWP for 2015, our
liquidity outlook, and our ability to successfully implement our
reorganization plan and to achieve the cost savings we expect from
the plan on the schedule we expect. 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151109006545/en/
Rentech, Inc.Julie Dawoodjee Cafarella, 310-571-9800Vice
president of Investor Relations and Communicationsir@rentk.com
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