Rentech, Inc. (NASDAQ: RTK) today announced financial and
operating results for the first quarter of 2016.
Keith Forman, President and CEO of Rentech, stated, “We are
pleased to have completed Rentech Nitrogen’s merger with CVR
Partners and the partial retirement and amendment of our
obligations with GSO Capital on improved terms on April 1st. The
transactions have transformed Rentech into a pure play fibre
business with a significantly improved balance sheet.”
Mr. Forman continued, “Focusing on the quarter, results for the
period were mixed. Fulghum generated improved EBITDA for the first
quarter, primarily driven by strong South American sales. We expect
to continue to see strong demand in the region and to benefit from
cost reductions implemented at Fulghum’s U.S. mills during the
course of last year. On the other hand, NEWP is feeling the effects
of the warm winter in the US Northeast, with first quarter results
significantly below historical levels. We have temporarily scaled
back production in response to current market conditions, and we
expect NEWP’s results for 2016 to be lower than last year’s record
results. In Canada, the Atikokan pellet facility is producing at
80%-90% of capacity. At Wawa, we are pushing hard to achieve
desired uptime on a sustained basis before we implement phase II of
the conveyor replacements at the plant.”
Summary of Results
The consolidated results consist of Fulghum Fibres (Fulghum),
New England Wood Pellet (NEWP), Industrial Wood Pellets, which
includes our Canadian pellet plants, and unallocated corporate
expenses. The former Rentech Nitrogen Pasadena and East Dubuque
facilities are classified as discontinued operations due to the
disposition of those businesses in March and April 2016. Rentech’s
energy technologies business is also classified as discontinued
operations due to its sale in October 2014. Allegheny’s operations
are included in our operating results from January 23, 2015, the
closing date of the acquisition.
Consolidated revenues for the first quarter of
2016 were $39.9 million, compared to $36.4
million in the prior year period. Gross profit for the first
quarter of 2016 was $0.1 million, compared to $5.5
million in the prior year period.
Consolidated Adjusted EBITDA loss, excluding discontinued
operations, for the first quarter of 2016 was $(3.9)
million, compared to a loss of $(2.2) 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.
Net loss attributable to Rentech common shareholders for the
first quarter of 2016 was $(10.2) million, or a loss
of $(0.44) per basic share, of which $0.10 per basic share was
generated by discontinued operations. This compared to a net loss
of $(4.9) million, or a loss of $(0.22) per basic share,
of which $0.10 per basic share was generated by discontinued
operations, for the same period last year. The increase in net loss
between periods is primarily attributable to higher depreciation
and interest expense and significantly lower results at NEWP.
Fulghum Fibres
Revenues were $27.4 million for first quarter of 2016, compared
to $22.7 million for the same period last year. Revenues from
operations in the United States were $13.7 million for the first
quarter of 2016, as compared to $13.6 million in the prior
year period. Revenues from operations in South America were $13.7
million for the first quarter of 2016, as compared to
$9.1 million in the prior year period. The increase in South
America revenues was primarily due to higher biomass product sales
in South America and chip sales to Asia in the first quarter of
2016 as compared to 2015.
Our mills in the United States and South America processed
3.2 and 0.9 million green metric tons, respectively, of logs
into wood chips and residual fuels for each of the first quarters
of 2016 and 2015.
Gross profit was $4.7 million for the first quarter of 2016,
compared to $3.7 million for the prior year period. Gross profit
margin for the first quarter of 2016 was 17%, compared to gross
profit margin of 16% for the prior year period. The increases in
gross profit and gross margin were primarily due to higher product
sales volumes by our South American business.
Adjusted EBITDA for the first quarter of 2016 was $5.4
million. This compares to Adjusted EBITDA of $4.0 million for
the same period in 2015.
Net income was $1.7 million for the first quarter of 2016.
This compares to a net loss of $(1.1) million for the same
period last year.
New England Wood Pellet
Revenues were $2.6 million for the first quarter of 2016 on
deliveries of approximately 13,000 short tons of wood pellets. This
compared to revenues of $12.1 million for the first quarter of 2015
on deliveries of approximately 63,000 short tons of wood
pellets.
The Northeast wood pellet market experienced a significant
slowdown as abnormally warm temperatures during November and
December 2015 and February 2016 stalled consumer purchases. The
warm temperatures, along with depressed prices for competitive
heating fuels such as heating oil and propane, resulted in lower
sales volumes in 2016 as NEWP’s customers are still carrying
inventory purchased in 2015 due to slow buying by retail customers.
In response to market conditions, NEWP has temporarily scaled back
production at its facilities since February 2016.
Gross profit for the first quarter of 2016 was $0.4 million,
compared to $2.2 million for the same period last year. Gross
profit margin was 16% for the first quarter of 2016, compared to
18% for the prior year period. Gross profit and gross profit margin
were lower because of lower sales volumes during the first quarter
of 2016.
Adjusted EBITDA for the first quarter of 2016 was $0.0
million. This compares to Adjusted EBITDA of $2.3 million for
the same period in 2015.
Net loss was $(0.6) million for the first quarter of 2016,
compared to net income of $1.1 million for the same period
last year.
Wood Pellets: Industrial
Revenues for the first quarter of 2016 were $9.9 million, earned
by delivering approximately 64,000 metric tons of wood pellets
produced at the Atikokan and Wawa Facilities. Out of the
approximately 64,000 metric tons, approximately 49,000 metric tons
were shipped to Drax and approximately 15,000 metric tons were sold
to OPG. Revenues were $1.7 million for the first quarter of 2015,
earned by delivering to OPG approximately 9,100 metric tons of wood
pellets, a significant majority of which were produced at the
Atikokan Facility.
Gross loss for the first quarter of 2016 was $(5.0) million,
compared to gross loss of $(0.4) million for prior year period.
Gross loss margin was (50%) for the first quarter of 2016, compared
to gross loss margin of (24%) for the prior year period. The
increase in gross loss and gross loss margin during the first
quarter of 2016 was due to high operating costs relative to
revenues during ramp-up of the Atikokan and Wawa Facilities, a
related write down of inventory by $5.1 million, and considerably
higher depreciation expense in the first quarter of 2016 than in
the first quarter of 2015. During the first quarter of 2015, the
Atikokan Facility began commissioning and producing wood pellets.
The Wawa Facility was in the process of commissioning, but not
producing wood pellets during the first quarter of 2015.
Adjusted EBITDA loss for the first quarter of 2016
was $(3.3) million. This compares to Adjusted EBITDA loss of
$(3.9) million for the same period last year.
Net loss was $(6.7) million for the first quarter of 2016,
compared to net loss of $(4.7) million for the same period last
year.
Corporate and Unallocated
Expenses
Corporate and unallocated expenses, which include selling,
general and administrative expenses, were $6.2 million for the
first quarter of 2016, compared to $4.8 million in the
corresponding period in 2015. The increase was primarily due to
increases in severance costs of $0.6 million, transaction costs of
$0.4 million, and consulting expenses of $0.2 million, partially
offset by a decrease in non-cash equity-based compensation of $0.3
million. Non-cash equity-based compensation expense was $0.5
million for the first quarter of 2016, compared to $0.8 million for
the same period in the prior year.
Conference Call with
Management
Rentech will hold a conference call today, May 11, 2016, at 7:00
a.m. PDT, during which the company’s senior management will review
Rentech's financial results for the first quarter. 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 8321349#. 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 9:30 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
8321349#.
Rentech, Inc. Consolidated Statements of
Operations
(Amounts in Thousands, Except per Share
Data)
For the Three MonthsEnded March
31,
2016 2015 (Unaudited)
Revenues $ 39,937
$ 36,436
Cost of sales 39,806 30,910
Gross
profit 131 5,526
Operating expenses
Selling, general and administrative expense 9,114 10,968
Depreciation and amortization 1,008 1,445 Other expense, net
13 - Total operating expenses 10,135 12,413
Operating loss (10,004 ) (6,887 )
Other
expense, net Interest expense (3,572 ) (889 ) Other income
(expense), net 146 (113 ) Total other expenses, net
(3,426 ) (1,002 )
Loss from continuing operations before
income taxes and equity in loss of investee
(13,430 ) (7,889 ) Income tax benefit (2,402 ) (1,865
)
Loss from continuing operations before
equity in loss of investee
(11,028 ) (6,024 ) Equity in loss of investee — 15
Loss from continuing operations (11,028 ) (6,039 ) Income
from discontinued operations, net of tax 5,574 6,085
Net income (loss) (5,454 ) 46 Net income attributable to
noncontrolling interests (3,406 ) (3,675 ) Preferred stock
dividends (1,320 ) (1,320 )
Net loss attributable to Rentech common
shareholders
$ (10,180 ) $ (4,949 )
Net income (loss) per common share
allocated to Rentech common shareholders:
Basic: Continuing operations $ (0.54 ) $ (0.32 ) Discontinued
operations $ 0.10 $ 0.10 Net loss $ (0.44 ) $ (0.22 ) Diluted:
Continuing operations $ (0.54 ) $ (0.32 ) Discontinued operations $
0.10 $ 0.10 Net loss $ (0.44 ) $ (0.22 )
Weighted-average shares used to compute
net income (loss) per common share:
Basic 23,036 22,936 Diluted 23,036
22,936
Rentech, Inc. Statements of
Operation by Business Segment
(Stated in Thousands)
For the Three MonthsEnded March
31,
2016 2015 (in thousands) Revenues Fulghum
Fibres $ 27,436 $ 22,654 Wood Pellets: Industrial 9,861 1,664 Wood
Pellets: NEWP 2,640 12,118 Total revenues $ 39,937 $
36,436 Gross profit (loss) Fulghum Fibres $ 4,666 $ 3,707 Wood
Pellets: Industrial (4,969 ) (404 ) Wood Pellets: NEWP 434
2,223 Total gross profit $ 131 $ 5,526 Selling, general and
administrative expenses Fulghum Fibres $ 1,201 $ 1,682 Wood
Pellets: Industrial 1,308 3,919 Wood Pellets: NEWP 561
704 Total segment selling, general and administrative
expenses $ 3,070 $ 6,305 Depreciation and amortization Fulghum
Fibres $ 541 $ 981 Wood Pellets: Industrial 47 43 Wood Pellets:
NEWP 295 278
Total segment depreciation and
amortization recorded in operating expenses
$ 883 $ 1,302 Net income (loss) Fulghum Fibres $ 1,653 $ (1,107 )
Wood Pellets: Industrial (6,738 ) (4,664 ) Wood Pellets: NEWP
(555 ) 1,142 Total segment net income (loss) $ (5,640
) $ (4,629 )
Reconciliation of segment net income
(loss) to consolidated net loss:
Segment net income (loss) $ (5,640 ) $ (4,629 )
Corporate and unallocated expenses
recorded as selling, general and administrative expenses
(6,045 ) (4,661 )
Corporate and unallocated depreciation and
amortization expense
(125 ) (143 )
Corporate and unallocated income
(expenses) recorded as other income (expense)
4 3 Corporate and unallocated interest expense (2,423 ) (94 )
Corporate income tax benefit 3,201 3,485
Income (loss) from discontinued
operations, net of tax
5,574 6,085 Consolidated net income (loss) $ (5,454 )
$ 46
Rentech, Inc. Selected Balance Sheet
Data
(Stated in Thousands)
March 31, 2016 Pro Forma
(1) (in thousands) Cash(2) $ 17,227 $ 65,480 Accounts
receivable 13,838 13,838 Inventories 26,272 26,272 Other current
assets 10,369 10,369 Total current assets, excluding
discontinued operations $ 67,706 $ 115,959 Accounts payable $
13,249 $ 13,249 Accrued liabilities 17,496 15,996 Debt(3) 59,219
18,753 Other current liabilities 9,709 9,709 Total
current liabilities, excluding discontinued operations $ 99,673 $
57,707 (1) The pro forma information has been derived by the
application of adjustments to Rentech’s historical consolidated
financial statements to give effect to the merger of Rentech
Nitrogen Partners, L.P. with CVR Partners, LP, the pay down of the
Tranche A Loans and the repurchase and retirement of the Preferred
Stock. The pro forma information as of March 31, 2016 is presented
as if the transactions had occurred on March 31, 2016, instead of
April 1, 2016. The pro forma information is being provided for
informational purposes only and is not intended to project the
company’s financial position for any future period. (2) On April 1,
2016, in conjunction with the merger, we received cash of $59.8
million, used $10.0 million in connection with the repurchase of
the Preferred Stock and paid $1.5 million of accrued dividends on
the Preferred Stock. (3) On April 1, 2016, in conjunction with the
merger and entering into the credit agreement, we made a debt
payment of $41.7 million and wrote off $1.3 million of discount and
debt issuance costs relating to the GSO credit agreement. The GSO
credit agreement is a long-term facility. However, under accounting
guidance, the debt payment of $41.7 million is considered current
as of March 31, 2016.
Disclosure Regarding Non-GAAP Financial
Measures
Adjusted EBITDA is defined as net income (loss) from continuing
operations 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, historical
cost basis, non-cash charges and unusual items; and
- our operating performance and return on
invested capital compared to those of 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, excluding discontinued operations, to loss from continuing
operations for the first quarters of 2016 and 2015.
For the Three MonthsEnded March
31,
2016 2015 (in thousands) Loss from continuing
operations $ (11,028 ) $ (6,039 ) Add items: Net interest expense
3,571 877 Income tax benefit (2,402 ) (1,866 ) Depreciation and
amortization 6,056 4,680 Other (145 ) 141
Consolidated Adjusted EBITDA, excluding discontinued operations $
(3,948 ) $ (2,207 )
The table below reconciles Fulghum’s Adjusted EBITDA to net
income (loss) for the first quarters of 2016 and 2015.
For the Three MonthsEnded March
31,
2016 2015 (in thousands) Fulghum net income
(loss) $ 1,653 $ (1,107 ) Add Fulghum items: Net interest expense
569 538 Income tax (benefit) expense 779 1,602 Depreciation and
amortization 2,427 3,001 Other (78 ) 10 Fulghum's
Adjusted EBITDA $ 5,350 $ 4,044
The table below reconciles NEWP’s Adjusted EBITDA to net income
(loss) for the first quarters of 2016 and 2015.
For the Three MonthsEnded March
31,
2016 2015 (in thousands) NEWP net income
(loss) $ (555 ) $ 1,142 Add NEWP items: Net interest expense 141
139 Income tax expense 20 17 Depreciation and amortization 463
1,056 Other (40 ) (57 ) NEWP's Adjusted EBITDA $ 29 $
2,297
The table below reconciles Wood Pellets: Industrial’s Adjusted
EBITDA to net loss for the first quarters of 2016 and 2015.
For the Three MonthsEnded March
31,
2016 2015 (in thousands) Wood Pellets:
Industrial net income (loss) $ (6,738 ) $ (4,664 ) Add Wood
Pellets: Industrial items: Net interest expense 438 106
Depreciation and amortization 3,041 480 Other (23 )
191 Wood Pellets: Industrial Adjusted EBITDA $ (3,282 ) $ (3,887 )
About Rentech, Inc.
Rentech, Inc. (NASDAQ: RTK) owns and operates wood fibre
processing and wood pellet production 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’s industrial wood pellet
facilities supply wood pellets used as fuel for power generation in
Canada and the United Kingdom. Please visit www.rentechinc.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: expectations for Fulghum Fibres, NEWP, our
Canadian wood pellet facilities and our liquidity outlook. 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/20160511005349/en/
Rentech, Inc.Julie Dawoodjee Cafarella, 310-571-9800Vice
president of Investor Relations and Communicationsir@rentk.com
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