Rentech, Inc. (NYSE AMEX: RTK) today announced its results for
the three months ended March 31, 2012. Rentech owns and develops
technologies that enable the production of certified synthetic
fuels, renewable power and hydrogen. The Company also owns the
general partner interest and a majority of the common units of
Rentech Nitrogen Partners, L.P. (NYSE: RNF) which operates a
nitrogen fertilizer plant in East Dubuque, IL. Rentech’s financial
results reflect the consolidated results of Rentech, Inc. and its
subsidiaries, including Rentech Nitrogen. The results of Rentech
Nitrogen are reported as the nitrogen products manufacturing
segment of Rentech.
Consolidated revenues for the three months ended March 31, 2012
were $38.6 million, as compared to $24.0 million for the comparable
period last year. Revenues were derived almost entirely from sales
of nitrogen fertilizer products through Rentech Nitrogen.
Consolidated operating income for the three months ended March
31, 2012 was $6.6 million, compared to an operating loss of $4.4
million for the comparable period last year. During the three
months ended March 31, 2012, Rentech’s nitrogen products
manufacturing segment generated operating income of $19.5 million,
compared to $9.0 million during the comparable period in the prior
year. EBITDA for Rentech’s nitrogen products manufacturing segment
was $21.9 million for the period, compared to $10.5 million in the
corresponding period in 2011. Further explanation of EBITDA, a
non-GAAP financial measure, and a reconciliation of EBITDA to
operating income for Rentech’s nitrogen products manufacturing
segment have been included below in this press release.
For the three months ended March 31, 2012, Rentech reported a
consolidated net loss of $3.3 million, or $0.01 per share. This
compares to a net loss of $7.6 million, or $0.03 per share,
reported in the comparable period in the prior year.
Commenting on results for the period, D. Hunt Ramsbottom,
President and CEO of Rentech, said, “Our nitrogen fertilizer
business had exceptionally strong first quarter results which were
driven by an early spring application window, strong product
pricing and low natural gas prices. We took advantage of this
environment and ran the plant at a 100% on-stream rate. Based on
current market conditions, we have an optimistic view of the year,
with margins holding strong.” Mr. Ramsbottom continued, “On the
alternative energy side of our business, we are enhancing our
liquidity position through cost reduction initiatives, and pursuing
investment opportunities that would generate an underlying cash
flowing business with attractive returns.”
As of March 31, 2012, Rentech had consolidated cash of $247.1
million, of which $72.9 million was held at Rentech Nitrogen.
Consolidated selling, general and administrative (SG&A)
expenses were $10.4 million for the three months ended March 31,
2012, compared to $7.7 million for the comparable period in the
prior year. Current period SG&A expenses were comprised of $7.8
million for the alternative energy business and $2.6 million for
the nitrogen fertilizer business, compared to $6.6 million and $1.1
million, respectively, for the prior-year period. The net increase
in SG&A expenses for the alternative energy segment was
attributable to an increase in non-cash compensation expense of
$1.4 million; net cash SG&A expenses declined by $0.2 million.
The $1.5 million increase in SG&A expenses for the nitrogen
products manufacturing segment was due to costs associated with
Rentech Nitrogen having become a publicly traded limited
partnership.
Research and development (R&D) expenses incurred in the
alternative energy segment during the three months ended March 31,
2012 were $5.0 million, compared to $6.4 million for the comparable
period in the prior year. The decrease in R&D expenses resulted
from an increase of $1.1 million in the accrual for reimbursement
of expenses from the U.S. Department of Energy, which was partially
offset by increased expenses related to the Integrated Bio-Refinery
Project (IBR) at the Company’s demonstration facility. The
reimbursement of expenses by the Department of Energy is the result
of the $23 million IBR grant.
For Rentech Nitrogen, favorable weather conditions allowed
farmers in its core market area of the Mid Corn Belt to apply
spring ammonia earlier than is typical. This shifted meaningful
volumes of ammonia deliveries into the first quarter that had been
anticipated to occur in the second quarter of 2012. Robust
projected corn plantings and tight inventories supported strong
product pricing.
In the first quarter of 2012, Rentech Nitrogen achieved average
prices for ammonia and UAN that were higher by 11% and 59%,
respectively, compared to the same period last year. The higher
product prices were a result of strong product demand during the
first quarter, coupled with the fact that the partnership had
secured a robust book of forward sales for spring delivery when
prices were at a peak in September and October, 2011.
Rentech Nitrogen continues to benefit from relatively low North
American natural gas prices, which, when coupled with strong
nitrogen product prices, resulted in gross profit margin of 59% for
the period, up from 43% for the comparable period in the prior
year.
During the three months ended March 31, 2012, Rentech Nitrogen
delivered 30,000 tons of ammonia, 34,000 tons of UAN, and 13,000
tons of other nitrogen products, compared to 20,000 tons of
ammonia, 30,000 tons of UAN, and 12,000 tons of other nitrogen
products during the comparable period in the prior year. Delivered
tons are rounded to the nearest thousand.
Outlook
Rentech expects cash operating and capital expenses to be
slightly higher than its previous guidance of $42-$44 million for
the twelve months ending September 30, 2012, primarily due to the
expense of minor modifications and delays to the IBR project. In
2013, Rentech expects R&D expenses to be less than $10
million.
In its press release dated May 11, 2012, Rentech Nitrogen issued
guidance for the twelve months ending December 31, 2012 and
increased its guidance for the twelve months ending September 30,
2012.
Cash Distributions from Rentech Nitrogen
Rentech Nitrogen declared its first cash distribution of $1.06
per unit, payable on May 15, 2012 to unit holders of record as of
May 8. Rentech will receive approximately $24.6 million, based on
its ownership of 23.25 million units of Rentech Nitrogen as of the
record date.
Conference Call with Management
The Company will hold a conference call on Friday, May 11, 2012
at 12:00 p.m. PDT, during which time Rentech's senior management
will review the Company's financial results for this period and
provide an update on corporate developments. Callers may listen to
the live presentation, which will be followed by a question and
answer segment, by dialing 800-734-8592 or 212-231-2903. 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 2:00 p.m. PDT on May 11 through 2:00 p.m. PDT
on May 18. The replay teleconference will be available by dialing
800-633-8284 or 402-977-9140 and the reservation number
21586856.
Rentech, Inc. and Subsidiaries Consolidated Statements of
Operations (Stated in Thousands, Except per Share Data)
For the Three Months Ended March 31,
2012 2011
(unaudited)
Total Revenues $ 38,588 $ 23,994
Cost of Sales
15,953 13,792
Gross
Profit 22,635 10,202 Selling, general and administrative
expense 10,413 7,747 Research and development 5,022 6,372
Depreciation and amortization 1,139 559 Vendor settlement
(509
)
- Other
(8
)
(44
)
Total Operating Expenses 16,057 14,634
Operating Income (Loss) 6,578
(4,432
)
Interest and dividend income 66 37 Interest expense
(2,314
)
(3,712
)
Other income (expense), net
(4
)
20
Total Other Expenses, Net
(2,252
)
(3,655
)
Net Income (Loss) from Continuing
Operations before Income Taxes
4,326
(8,087
)
Income tax expense - -
Net Income (Loss) 4,326
(8,087
)
Net (income) loss attributable to
noncontrolling interests
(7,590
)
522
Net Loss Attributable to Rentech
$
(3,264
)
$
(7,565
)
Basic and Diluted Net Loss per Common
Share
$
(0.01
)
$
(0.03
)
Basic and Diluted Weighted-Average
Common Shares Outstanding
225,865 222,218
Rentech, Inc. and Subsidiaries
Balance Sheet Data
(Stated in Thousands)
As of March 31, As of December
31, 2012 2011 Cash and Cash Equivalents $
247,137 $ 237,478
Working Capital 207,703 206,434
Construction in Progress 25,843 9,809
Total Assets
393,869 360,528
Total Long-Term Liabilities 63,485 53,475
Total Rentech Stockholders' Equity 208,285 208,848
Disclosure Regarding Non-GAAP Financial Measures
EBITDA is a presentation of earnings before interest, taxes and
depreciation and amortization. EBITDA is used as a supplemental
financial measure by management and by external users of 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 public companies,
without regard to financing methods and capital structure.
EBITDA should not be considered an alternative to net income,
operating income, net cash provided by operating activities or any
other measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA may have material limitations as a
performance measure because it excludes items that are necessary
elements of our costs and operations. In addition, EBITDA presented
by other companies may not be comparable to our presentation, since
each company may define these terms differently.
The table below reconciles EBITDA to operating income for our
nitrogen products manufacturing segment for the three month periods
ended March 31, 2012 and 2011 (stated in thousands).
For the Three Months Ended March 31, 2012
2011 Operating Income
$
19,457
$ 9,012
Depreciation and Amortization 2,465
1,474
EBITDA $ 21,922 $ 10,486
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com) owns and develops
technologies that enable the production of certified synthetic
fuels and renewable power when integrated with certain other
third-party technologies. The Company’s clean energy technology
portfolio includes the Rentech-SilvaGas biomass gasification
technology and the Rentech-ClearFuels biomass gasification
technology, both of which can produce synthesis gas from biomass
and waste materials for production of renewable power and fuels.
The Rentech-ClearFuels Gasifier can also produce renewable hydrogen
as a product. Rentech also owns the patented Rentech Process which
is based on Fischer-Tropsch chemistry. The Rentech Process can
convert syngas from the Company’s own or other gasification
technologies into complex hydrocarbons that then can be upgraded
into fuels or chemicals using refining technology that we
license.
Rentech also owns, through its wholly owned subsidiaries, the
general partner interest and approximately 61% of the common units
representing limited partner interests in Rentech Nitrogen
Partners, L.P. (www.rentechnitrogen.com), a publicly traded limited
partnership. Rentech Nitrogen Partners, L.P. manufactures and sells
nitrogen fertilizer products including ammonia, urea ammonia
nitrate, granular urea and urea liquor in the Mid Corn Belt region
of the United States.
Safe Harbor Statement
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995
about matters such as: the forecasted cash spend for the
alternative energy segment; and the outlook for both our energy and
nitrogen fertilizer businesses. 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.
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