Rentech, Inc. (NYSE MKT: RTK) today announced its results for
the three and six months ended June 30, 2013. Rentech owns and
operates wood fibre processing and nitrogen fertilizer businesses.
Rentech also owns technologies designed to produce certified
synthetic fuels and renewable power when integrated with
third-party technologies.
Rentech’s financial results reflect the consolidated results of
Rentech, Inc. and its subsidiaries, including its wood fibre
processing business and Rentech Nitrogen Partners, L.P. The results
of the wood fibre processing business are reported as two operating
segments: Fulghum Fibres (wood chipping) and wood pellets. The
results of Rentech Nitrogen are reported as the nitrogen products
manufacturing subsidiary of Rentech, which includes two operating
segments: the East Dubuque Facility and the Pasadena Facility.
Results of the energy technologies business are reported in a
separate segment.
D. Hunt Ramsbottom, President and CEO of Rentech, said, “Our
financial results for the quarter demonstrate the dramatic
transformation we have undertaken at Rentech. Our new business at
the parent, which is wood fibre processing, generated positive
EBITDA, and we had no R&D expenditures this quarter. Our focus
is now on opportunities with attractive returns within the wood
fibre processing and nitrogen fertilizer segments, as we continue
our low-cost efforts to monetize our energy technologies.” Mr.
Ramsbottom continued, “Demand for nitrogen remains healthy although
results for the quarter in that business were affected by the
delayed and abbreviated spring application period and softer
nitrogen prices.”
Mr. Ramsbottom continued, “Our integration of Fulghum Fibres
into Rentech has been smooth, and we have been pleased with Fulghum
Fibres’ financial performance and growth prospects relative to our
conservative assumptions at the time of the acquisition.” Mr.
Ramsbottom added, “Conversions of the decommissioned wood fibre
mills to pellet production in Eastern Canada are progressing and
are within budget.”
Financial Highlights
The financial statements for the periods ended June 30, 2013
include results of Fulghum Fibres from the closing of the
acquisition on May 1, 2013.
Three months ended June 30,
2013
Consolidated revenues for the three months ended June 30, 2013
increased by $49.4 million to $120.2 million compared to the
prior-year period, comprised of:
- Contribution of $16.1 million from
Fulghum Fibres; and
- Increase of $33.3 million from the
nitrogen products manufacturing subsidiary, which reflects a
contribution of $42.2 million of revenues from the Pasadena
Facility, partially offset by a 13% decline in revenues from the
East Dubuque Facility.
Gross profit for the three months ended June 30, 2013 was $42.3
million, a decrease of $3.3 million compared to the prior-year
period, and which included the following:
- 15% gross margins at Fulghum Fibres;
and
- Decline in gross margin at the nitrogen
products manufacturing subsidiary to 38% from 65% in the prior-year
period, primarily due to the acquisition of the Pasadena Facility,
which realizes lower gross margins than does the East Dubuque
Facility, and the effects of allocating fixed costs to lower
volumes of delivered products.
Operating income for the three months ended June 30, 2013 was
$25.1 million, a decline of $4.4 million compared to the prior-year
period, comprised of the following:
- Contribution of $0.8 million from
Fulghum Fibres, which included $2.3 million of depreciation and
amortization expense;
- Operating loss of $0.8 million from the
wood pellets segment, which reflected selling, general and
administrative (SG&A) costs associated with developing the
business and non-capitalized costs associated with early work on
acquiring and converting the wood fibre mills at Atikokan and Wawa
for pellet production;
- Contribution of $34.0 million from the
nitrogen products manufacturing subsidiary;
- Operating loss of $2.6 million from
energy technologies, which reflects costs associated with
decommissioning the Product Demonstration Unit (PDU); taxes,
insurance, security and other administrative costs of the Company’s
energy technology facilities and sites; protecting patents; and
efforts to sell and seek partners for its energy technologies and
related assets; and
- Corporate and unallocated expenses
recorded as operating expenses of $6.4 million.
Consolidated Adjusted EBITDA for the three months ended June 30,
2013 was $31.9 million, which was flat in comparison to the
prior-year period, and which included the following:
- Contribution of $3.1 million from
Fulghum Fibres; and
- $38.4 million of Adjusted EBITDA from
the nitrogen products manufacturing subsidiary.
For the three months ended June 30, 2013, the Company recorded a
net income tax benefit of approximately $25.1 million which is
comprised of an income tax benefit for Rentech of approximately
$25.2 million and an income tax expense for Rentech Nitrogen
Partners of approximately $0.1 million. The income tax benefit for
Rentech was due to the release of valuation allowance of $26.3
million that had been recorded against Rentech’s net operating loss
carryforwards. The release of the valuation allowance resulted from
recording of deferred tax liabilities related to the Fulghum Fibres
acquisition.
Net income for the three months ended June 30, 2013 was $32.8
million or $0.14 per basic share. Excluding loss on debt
extinguishment, the gain on fair value adjustment to earn-out
consideration and the income tax benefit, net income allocated to
common shareholders for the current period was $8.1 million or
$0.04 per basic share. A reconciliation of net income exclusive of
these items is provided below. This compares to net income of $9.5
million or $0.04 per basic share for the same period last year.
Fulghum Fibres
Fulghum Fibres generated revenues of $16.1 million from May 1,
2013 through June 30, 2013. Gross profit was $2.4 million for the
period. SG&A and interest expenses for the period were $0.9
million and $0.5 million, respectively.
Wood Pellets
The wood pellets segment incurred SG&A expenses of $0.8
million for the three months ended June 30, 2013, which included
acquisition and development costs associated with the Company’s two
previously announced pellet projects in Eastern Canada, as well as
other costs necessary to build the Company’s wood pellet
business.
Nitrogen Products Manufacturing
The nitrogen products manufacturing business generated revenues
of $104.0 million, compared to $70.6 million for the comparable
period in the prior year. Revenues increased due to the
contribution of $42.2 million from the Pasadena Facility, partially
offset by a 13% decline in revenues from the East Dubuque Facility.
Product deliveries from both facilities were negatively affected by
a wet spring season which resulted in a delayed and abbreviated
planting season and less nitrogen demand. Results of the quarter
were further affected by significant increases in exports of urea
from China that negatively impacted urea and other nitrogen prices.
Lower urea prices also prompted some late season switching from UAN
to urea due to the relative value of the two fertilizers.
During the three months ended June 30, 2013, Rentech Nitrogen
generated operating income of $34.0 million, compared to $41.6
million during the comparable period in the prior year. Operating
income in the current period was reduced by lower gross profits as
well as higher SG&A expenses and depreciation and amortization
expenses attributable to the addition of the Pasadena Facility.
Adjusted EBITDA for the three months ended June 30, 2013 was
$38.4 million, compared to $44.9 million in the corresponding
period in 2012. Adjusted EBITDA excluding Partnership level
expenses totaled $40.9 million for the current period. The East
Dubuque Facility and the Pasadena Facility contributed $38.9
million and $2.0 million in EBITDA, respectively, during the three
months ended June 30, 2013. Further explanation of Adjusted EBITDA,
a non-GAAP financial measure, has been included below in this press
release.
Gross margins for the three months ended June 30, 2013 were 38%,
compared to 65% for the same period last year, primarily due to the
addition of the Pasadena Facility, which realizes lower gross
margins than the East Dubuque Facility, and the effects of
allocating fixed costs to lower volumes of delivered products.
Gross margins at the East Dubuque Facility were 61% for the current
period, compared to 65% for the prior-year period. Gross margins at
the Pasadena Facility were 6% for the current period, which
reflected inventory write-downs and sales of products that were
produced from higher-cost raw materials purchased earlier in the
year. During the three months ended June 30, 2013, the Partnership
incurred a write-down of ammonium sulfate inventories of
approximately $1.8 million for product not shipped due to the
reduced application from the prolonged wet weather.
SG&A expenses were $4.9 million for the three months ended
June 30, 2013, compared to $3.9 million for the prior-year period.
The increase was primarily due to the addition of $1.3 million of
SG&A expenses from the Pasadena Facility, partially offset by a
28% decline in expenses at the East Dubuque Facility primarily
due to lower unused credit facility fees, legal expenses and other
professional fees.
Interest expense was $3.9 million for the three months ended
June 30, 2013, compared to $0 for the prior-year period. The
increase was attributable to debt incurred for the purchase of the
Pasadena Facility and expansion projects at the East Dubuque and
Pasadena Facilities.
Rentech Nitrogen realized a non-cash gain of $4.8 million for
the three months ended June 30, 2013 as a result of a decrease in
the potential earn-out consideration related to the acquisition of
Agrifos. The decrease in fair value was primarily due to lower
results and expectations in 2013 caused by a delayed and
abbreviated spring application season and higher levels of urea
exports from China suppressing prices.
Energy Technologies
The energy technologies segment includes SG&A (including
costs formerly booked as research and development (R&D)
expenses) related to the Company’s technologies that are designed
to convert carbon-bearing solids or gases into hydrocarbons and
electric power. The segment had nominal product sales during the
three months ended June 30, 2013, which generated gross margins of
45%. The segment incurred SG&A expenses of $2.7 million during
the current period, compared to $1.0 million for the prior-year
period. SG&A expenses increased primarily due to the
re-categorization of $2.0 million in costs that were previously
reported as R&D expenses, partially offset by a decrease in
project development costs of approximately $0.3 million. These
former research and development expenses include costs in support
of de-commissioning the PDU, costs associated with efforts to sell
and obtain partners for the PDU and the Company’s energy
technologies, patent protection expenses, taxes, insurance costs,
security and other administrative costs of energy technology
facilities and sites. R&D expenses for the energy technologies
segment were zero for the three months ended June 30, 2013, since
all R&D activity ceased in the first quarter of 2013. R&D
expenses for the prior-year period were $4.1 million, which were
entirely related to the Company’s alternative energy
technologies.
Six months ended June 30, 2013
Consolidated revenues for the six months ended June 30, 2013
increased by $70.5 million to $179.8 million compared to the
prior-year period, comprised of:
- Contribution of $16.1 million from
Fulghum Fibres; and
- Increase of $54.4 million from the
nitrogen products manufacturing subsidiary, which reflects
contribution of $67.3 million of revenues from the Pasadena
Facility, partially offset by a 12% decline in revenues from the
East Dubuque Facility.
Gross profit for the six months ended June 30, 2013 was $65.1
million, a decrease of $3.2 million compared to the prior-year
period and which included the following:
- 15% gross profit margins at Fulghum
Fibres; and
- Decline in gross profit margin at the
nitrogen products manufacturing subsidiary to 38% from 63% in the
prior-year period, primarily due to the acquisition of the Pasadena
Facility, which realizes lower gross margins than does the East
Dubuque Facility, and the effects of allocating fixed costs to
lower volumes of delivered products.
Operating income for the six months ended June 30, 2013 was
$27.1 million, a decline of $8.9 million compared to the prior-year
period, comprised of the following:
- Contribution of $0.8 million from
Fulghum Fibres, which included $2.3 million of depreciation and
amortization expense;
- Operating loss of $1.9 million from the
wood pellets segment, which reflected SG&A costs associated
with developing the business and non-capitalized costs associated
with early work on acquiring and converting the wood fibre mills at
Atikokan and Wawa;
- Contribution of $51.1 million from the
nitrogen products manufacturing subsidiary;
- Operating loss of $9.5 million from
energy technologies, which reflects costs associated with R&D,
decommissioning the PDU; taxes, insurance, security and other
administrative costs of the Company’s energy technology facilities
and sites; protecting patents; and efforts to sell and seek
partners for its energy technologies and related assets; and
- Corporate and unallocated expenses
recorded as operating expenses of $13.3 million.
Adjusted consolidated EBITDA for the six months ended June 30,
2013 was $37.8 million, compared to $43.0 for the prior-year
period, which included the following:
- Contribution of $3.1 million from
Fulghum Fibres; and
- $59.1 million of Adjusted EBITDA from
the nitrogen products manufacturing subsidiary.
For the six months ended June 30, 2013, the Company recorded a
net income tax benefit of approximately $25.8 million which is
comprised of an income tax benefit for Rentech of approximately
$26.0 million and an income tax expense for Rentech Nitrogen of
approximately $0.2 million. The income tax benefit for Rentech was
due to the release of valuation allowance of $26.3 million that had
been recorded against Rentech’s net operating loss carryforwards.
The release of the valuation allowance resulted from recording of
deferred tax liabilities related to the Fulghum Fibres
acquisition.
Net income for the six months ended June 30, 2013 was $27.6
million or $0.12 per basic share. Excluding loss on debt
extinguishment, the gain on fair value adjustment to earn-out
consideration and the income tax benefit, net income allocated to
common shareholders for the current period was $2.5 million or
$0.01 per basic share. This compares to net income of $6.3 million
or $0.03 per basic share for the same period last year.
Fulghum Fibres
Fulghum Fibres generated revenues of $16.1 million from May 1,
2013 through June 30, 2013. Gross profit was $2.4 million for the
period. SG&A and interest expenses for the period were $0.9
million and $0.5 million, respectively.
Wood Pellets
The wood pellets segment incurred SG&A expenses of $1.9
million for the six months ended June 30, 2013, which included
acquisition and development costs associated with the Company’s two
previously announced pellet projects in Eastern Canada as well as
other costs necessary to build the Company’s wood fibre processing
business.
Nitrogen Products Manufacturing
The nitrogen products manufacturing business generated revenues
of $163.5 million, compared to $109.1 million for the comparable
period in the prior year. Revenues increased due to the
contribution of $67.3 million of revenues from the Pasadena
Facility, partially offset by a 12% decline in revenues from the
East Dubuque Facility. Product deliveries from both facilities were
negatively affected by a wet spring season which resulted in a
delayed and abbreviated planting season and less nitrogen demand.
Results of the quarter were further affected by significant
increases in exports of urea from China that negatively impacted
urea and other nitrogen prices. Lower urea prices also prompted
some late season switching from UAN to urea due to the relative
value of the two fertilizers.
During the six months ended June 30, 2013, Rentech Nitrogen
generated operating income of $51.1 million compared to $61.1
million during the comparable period in the prior year. Operating
income in the current period was reduced by lower gross profits as
well as higher SG&A expenses and depreciation and amortization
expenses attributable to the addition of the Pasadena Facility.
Adjusted EBITDA for the six months ended June 30, 2013 was $59.1
million, compared to $66.8 million in the corresponding period in
2012. Adjusted EBITDA excluding Partnership level expenses, totaled
$63.7 million for the current period. The East Dubuque Facility and
the Pasadena Facility contributed $58.5 million and $5.2 million in
Adjusted EBITDA, respectively, during the six months ended June 30,
2013. Further explanation of Adjusted EBITDA, a non-GAAP financial
measure, has been included below in this press release.
Gross margins for the six months ended June 30, 2013 were 38%,
compared to 63% for the same period last year, primarily due to the
addition of the Pasadena Facility, which realizes lower gross
margins than does the East Dubuque Facility, and the effects of
allocating fixed costs to lower volumes of delivered products.
Gross margins at the East Dubuque Facility were 58% for the current
period, compared to 63% for the prior-year period. Gross margins at
the Pasadena Facility were 9% for the current period, which
reflected certain inventory write-downs and sales of products that
were produced from higher-cost raw materials. During the six months
ended June 30, 2013, the Partnership incurred write-downs of sulfur
and sulfuric acid inventory of approximately $0.5 million and
ammonium sulfate inventories of approximately $1.8 million.
SG&A expenses were $9.6 million for the six months ended
June 30, 2013, compared to $6.5 million for the prior-year period.
The increase was primarily due to the addition of $2.6 million of
SG&A expenses and an increase in Partnership level expenses to
support the Pasadena Facility, partially offset by a 13% decline in
expenses at the East Dubuque Facility primarily due to lower unused
credit facility fees, legal expenses and other professional
fees.
Interest expense was $5.7 million for the six months ended June
30, 2013, compared to $0.1 million for the prior-year period. The
increase was attributable to debt incurred for the purchase of the
Pasadena Facility and expansion projects at the East Dubuque and
Pasadena Facilities.
Rentech Nitrogen realized a non-cash gain of $4.6 million for
the six months ended June 30, 2013 as a result of a decrease in the
potential earn-out consideration related to the acquisition of
Agrifos. The decrease in fair value was primarily due to lower
results and expectations in 2013 caused by a delayed and
abbreviated spring application season and higher levels of urea
exports from China suppressing prices.
Energy Technologies
The energy technologies segment had product sales of $0.2
million during the six months ended June 30, 2013, which generated
gross margins of 48%. The segment incurred SG&A expenses of
$3.8 million during the current period, compared to $2.5 million
for the prior-year period. SG&A expenses increased primarily
due to the re-categorization of $2.0 million in costs that were
previously reported as R&D expenses, partially offset by a
decrease in project development costs of approximately $0.8
million. These former R&D expenses included costs in support of
de-commissioning the PDU, costs associated with efforts to sell and
obtain partners for the PDU and the Company’s energy technologies,
patent protection expenses, taxes, insurance costs, security and
other administrative costs of energy technology facilities and
sites. R&D expenses for the energy technologies segment were
$5.7 million for the six months ended June 30, 2013, all of which
were incurred in the first three months of the year. R&D
expenses for the prior-year period were $9.1 million.
2013 Outlook
Rentech
For the twelve months ending December 31, 2013, Rentech
reiterated its guidance of total cash operating expenses for
Rentech, including Fulghum Fibres and excluding the nitrogen
products manufacturing business, of approximately $34 million.
Rentech Nitrogen
In its press release dated August 8, 2013, Rentech Nitrogen
updated its guidance for cash available for distribution for the
twelve months ending December 31, 2013 to a range of $2.05 to $2.20
per unit. The 2013 guidance includes the impact of two previously
announced scheduled outages at its facilities during 2013, and the
impact of lost revenue in 2013 due to the unscheduled outage at the
East Dubuque Facility in December 2012.
Based on Rentech Nitrogen’s current guidance range of $2.05 to
$2.20 per unit, and assuming Rentech’s current ownership of 23.25
million units of Rentech Nitrogen, Rentech would receive
approximately $48 to $51 million in cash distributions.
Conference Call with Management
The Company will hold a conference call today, August 8, 2013,
at 3:00 p.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 888-390-3983 or 862-255-5354. 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 7:00 p.m. PDT on August 8 through 7:00 p.m. PDT
on August 18. The replay teleconference will be available by
dialing 888-539-4649 or 908-379-8864 and the audience passcode
93572#.
Rentech, Inc. and Subsidiaries
Consolidated Statements of
Income
(Stated in Thousands, Except per Share
Data)
For the Three
Months For the Six Months Ended June 30, Ended
June 30, 2013
2012 2013
2012 (unaudited) (unaudited) (unaudited)
(unaudited)
Total Revenues $ 120,153 $ 70,707 $
179,820 $ 109,295
Cost of Sales 77,839
25,052 114,734 41,005
Gross Profit 42,314 45,655 65,086 68,290
Selling, general and administrative expense 15,516 11,361 29,168
21,774 Research and development - 4,089 5,747 9,112 Depreciation
and amortization 1,816 677 3,001 1,816 Other (92 ) 80
28 (437 )
Operating Expenses
17,240 16,207 37,944 32,265
Operating Income 25,074
29,448 27,142 36,025
Other Expense, Net Interest expense
(4,463 ) (2,147 ) (6,267 ) (4,460 ) Loss on debt extinguishment
(6,001 ) - (6,001 ) - Gain on FV adjustments to earn-out
consideration 4,823 - 4,611 - Other expense, net (248 )
(447 ) (146 ) (386 )
Total Other Expenses,
Net (5,889 ) (2,594 ) (7,803 ) (4,846 )
Income Before
Income Taxes 19,185 26,854 19,339 31,179 Income tax
(benefit) expense (25,121 ) 1,175
(25,753 ) 1,175
Net Income 44,306
25,679 45,092 30,004 Net income attributable to non-controlling
interests (11,474 ) (16,159 ) (17,500 )
(23,749 )
Net Income Attributable to Rentech
Common Shareholders
$ 32,832 $ 9,520 $ 27,592 $ 6,255
Net Income per Common Share Allocated
to Rentech Common Shareholders:
Basic $ 0.14 $ 0.04 $ 0.12 $ 0.03
Diluted $ 0.14 $ 0.04 $ 0.12 $
0.03
Weighted-Average Shares Used to Compute Net
Income per Common Share: Basic 225,981 225,119 225,604
225,492
Diluted
231,533
233,737
231,768
233,812
Rentech, Inc.
Statements of Income by Business
Segment
(Stated in Thousands, Except per Share
Data)
For the Three
Months For the Six Months Ended June 30, Ended
June 30, 2013
2012 2013
2012 (unaudited) (unaudited) (unaudited)
(unaudited) Revenues East Dubuque Facility $ 61,717 $ 70,643 $
96,266 $ 109,116 Pasadena Facility 42,239 - 67,254 - Fulghum Fibres
16,105 - 16,105 Energy Technologies 92 64
195 179
Total Revenues $
120,153 $ 70,707 $ 179,820 $ 109,295 Gross Profit East
Dubuque Facility $ 37,493 $ 45,646 $ 56,239 $ 68,218 Pasadena
Facility 2,355 - 6,328 - Fulghum Fibres 2,425 - 2,425 - Energy
Technologies 41 9 94
72
Total Gross Profit $ 42,314 $ 45,655 $
65,086 $ 68,290 Selling, General and Administrative Expenses
East Dubuque Facility $ 1,097 $ 1,530 $ 2,442 $ 2,819 Pasadena
Facility 1,342 - 2,584 - Fulghum Fibres 859 - 859 - Wood Pellets
812 235
1,883
321 Energy Technologies 2,692 1,007
3,762 2,514
Total Selling, General
and Administrative
Expenses
$ 6,802 $ 2,772 $ 11,530 $ 5,654 Research and Development
Energy Technologies $ - $ 4,089 $ 5,747 $
9,112
Total Research and Development $ - $ 4,089 $
5,747 $ 9,112 Depreciation and Amortization East Dubuque
Facility $ 33 $ 83 $ 106 $ 636 Pasadena Facility 875 - 1,750 -
Fulghum Fibres 718 - 718 - Energy Technologies 51
389 104 779
Total
Depreciation and Amortization
Recorded in Operating Expenses
$ 1,677 $ 472 $ 2,678 $ 1,415 Other Operating Expenses
(Income) East Dubuque Facility $ (7 ) $ 75 $ 8 $ 47 Pasadena
Facility - - - - Fulghum Fibres 3 - 3 - Wood Pellets - - - - Energy
Technologies (88 ) 5 17
(484 )
Total Other Operating (Income) Expenses $ (92 ) $ 80
$ 28 $ (437 )
For the Three
Months For the Six Months Ended June 30, Ended
June 30, 2013 2012
2013 2012 (unaudited)
(unaudited) (unaudited) (unaudited)
Operating Income (Loss)
East Dubuque Facility $ 36,370 $ 43,958 $ 53,683 $ 64,716 Pasadena
Facility 138 - 1,994 - Fulghum Fibres 845 - 845 - Wood Pellets (812
) (235 ) (1,883 ) (321 ) Energy Technologies (2,614 )
(5,481 )
(9,536
)
(11,849
)
Total Operating Income $ 33,927 $ 38,242 $
45,103
$
52,546
Interest Expense East Dubuque Facility $ - $ 42 $ - $ 142
Pasadena Facility 3 - 6 - Fulghum Fibres 536 - 536 - Energy
Technologies - (124 ) 1 -
Total Interest Expense $ 539 $ (82 ) $ 543 $ 142
Net Income East Dubuque Facility $ 36,044 $ 43,930 $ 53,314
$ 64,604 Pasadena Facility 34 - 1,850 - Fulghum Fibres 128 - 128 -
Wood Pellets (812 ) (235 ) (1,883 ) (321 ) Energy Technologies
(2,578 ) (5,352 ) (9,471 ) (11,844 )
Total Net Income $ 32,816 $ 38,343 $ 43,938 $ 52,439
For the Three Months For the Six Months
Ended June 30, Ended June 30, 2013
2012 2013
2012 (unaudited) (unaudited) (unaudited) (unaudited)
Reconciliation of Segment Net income to Consolidated Net
Income (in thousands) Segment Net income $ 32,816 $ 38,343 $
43,938 $ 52,439
Rentech Nitrogen - Partnership and
Unallocated Expenses Recorded as Operating Expenses
(2,462 ) (2,354 ) (4,616 ) (3,655 )
Rentech Nitrogen - Partnership and
Unallocated Income (Expenses) Recorded as Other Expenses, Net
(1,178 ) 232 (1,390 ) 232
Rentech Nitrogen - Unallocated Interest
Expense and Loss on Interest Rate Swaps
(4,019 ) (580 ) (5,730 ) (580 ) Rentech Nitrogen - Income Tax
Benefit 302 - 302 -
Corporate and Unallocated Expenses
Recorded as Selling, General and Administrative Expenses
(6,252 ) (6,236 ) (13,022 )
(12,465
)
Corporate and Unallocated Depreciation and
Amortization Expense
(139 ) (204 ) (323 ) (401 )
Corporate and Unallocated Expenses
Recorded as Other Expense, Net
(7 )
(119
)
(26 )
(73
) Corporate and Unallocated Interest Expenses - (2,228 ) - (4,318 )
Corporate Income Tax Benefit (Expense) 25,245
(1,175 ) 25,959 (1,175 )
Consolidated Net Income
$ 44,306 $ 25,679 $ 45,092 $ 30,004
Rentech, Inc. and Subsidiaries
Balance Sheet Data
(Stated in Thousands)
As ofJune 30, 2013
As ofDecember 31, 2012
(unaudited)
Cash and Cash Equivalents $ 137,846 $
141,736
Working Capital 136,325 107,059
Construction in
Progress 88,699 61,417
Total Assets 701,022 479,202
Total Long-Term Liabilities 376,616 194,130
Total Rentech
Stockholders' Equity 185,925 157,987
Disclosure Regarding Non-GAAP Financial Measures
Net income excluding loss on debt extinguishment, gain on fair
value adjustment to earn-out contingent consideration and net
income tax benefit is included to provide management and investors
with net income results for Rentech that are more easily compared
to the prior year period.
Consolidated Adjusted EBITDA for Rentech and Adjusted EBITDA for
Rentech Nitrogen are defined as net income plus, as applicable,
interest expense and other financing costs, loss on debt
extinguishment, loss on interest rate swaps, income tax expense and
depreciation and amortization, net of gain in fair value adjustment
to earn-out consideration and income tax benefit. EBITDA for
Fulghum Fibres is defined as net income plus net interest,
depreciation and amortization and other adjustments. EBITDA,
Adjusted EBITDA and cash available for distribution 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.
EBITDA and Adjusted 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 and Adjusted
EBITDA may have material limitations as performance measures
because they exclude items that are necessary elements of Rentech’s
costs and operations. In addition, EBITDA and Adjusted EBITDA
presented by other companies may not be comparable to Rentech’s
presentation, since each company may define these terms
differently.
The table below reconciles net income attributable to Rentech
excluding loss on debt extinguishment, gain on fair value
adjustment to earn-out contingent consideration and net income tax
benefit to net income attributable to Rentech for the three and six
months ended June 30, 2013 (stated in thousands, except per share
data).
For the Three
For the Six Months Ended Months Ended June
30, 2013 June 30, 2013
Net Income Attributable to Rentech Common
Shareholders
$ 32,832 $ 27,592
Less: Income Allocated to Unvested
Restricted Stock
830
742
Net Income Allocated to Rentech Common
Shareholders
$
32,002
$
26,850
Loss on Debt Extinguishment 6,001 6,001
Gain on Fair Value Adjustment to Earn-Out
Contingent Consideration
(4,823 ) (4,611 ) Income Tax Benefit (25,121 )
(25,753 )
Net Income Attributable to Loss on Debt
Extinguishment and Gain on Fair Value Adjustment to Earn-Out
Contingent Consideration
$
8,059
$
2,487
Net Income per Share Allocated to Rentech
Common Shareholders
$ 0.14 $ 0.12 Loss per Share on Debt Extinguishment 0.03 0.03
Gain per Share on Fair Value Adjustment to
Earn-out Contingent Consideration
(0.02 ) (0.02 ) Income Tax Benefit per Share (0.11 )
(0.12 )
Net Income per Share Allocated to Rentech
Common Shareholders Excluding Loss on Debt Extinguishment and Gain
on Fair Value Adjustment to Earn-out Contingent Consideration
$ 0.04 $ 0.01 Weighted-Average Shares
Outstanding 225,981 225,604
The table below reconciles Rentech’s consolidated Adjusted
EBITDA to net income for the three and six months ended June 30,
2013 (stated in thousands)
Three Months
Six Months Ended June 30, Ended June 30,
2013 2013
Net Income
$ 44,306 $ 45,092 Plus: Interest Expense 4,463 6,267 Income Tax
(Benefit) Expense (25,121 ) (25,753 ) Depreciation and Amortization
6,852 10,697 Loss on Debt Extinguishment 6,001 6,001 Gain on Fair
Value Adjustmentto Earn-out Consideration (4,823 ) (4,611 ) Other
248 146
Adjusted EBITDA
$ 31,926 $ 37,839
The table below reconciles Fulghum Fibres’ EBITDA to net income
for the three and six months ended June 30, 2013 (stated in
thousands)
Three Months EndedJune 30,
2013
Six Months EndedJune 30,
2013
Net Income
$
44,306
$
45,092
Less: Non-Fulghum Fibres Income
(44,178
)
(44, 964
)
Fulghum Fibres Net Income
128
128
Add:
Net Interest Expense
534 534 Depreciation and Amortization 2,275 2,275 Other 183
183
EBITDA $ 3,120 $ 3,120
The table below reconciles consolidated Adjusted EBITDA to net
income for Rentech Nitrogen for the three months ended June 30,
2013 (stated in thousands).
For the Three Months Ended June 30,
2013
East DubuqueFacility
PasadenaFacility
PartnershipLevel
Consolidated Net Income $ 36,044 $ 34 $ (7,357 ) $
28,721 Plus: Net Interest Expense
-
3
3,923 3,926 Plus: Loss on Debt Extinguishment
-
- 6,001 6,001 Less: Gain on Fair Value Adjustment
to Earn-Out Consideration
-
-
(4,823
)
(4,823
)
Plus: Loss on Interest Rate Swaps - - 96 96 Plus: Income Tax
Expense 326 101 (302 ) 125 Plus: Depreciation and Amortization
2,483 1,905 - 4,388 Plus: Other - - -
-
Adjusted EBITDA $ 38,853 $
2,043
$
(2,462
) $ 38,434
The table below reconciles consolidated Adjusted EBITDA to net
income for Rentech Nitrogen for the six months ended June 30, 2013
(stated in thousands).
For the Six Months Ended June
30, 2013 East DubuqueFacility
PasadenaFacility
PartnershipLevel
Consolidated Net Income $ 53,314 $ 1,850 $ (11,434 )
$ 43,730 Plus: Net Interest Expense
-
6 5,723 5,729 Plus: Loss on Debt Extinguishment
-
- 6,001 6,001 Less: Gain on Fair Value Adjustment
to Earn-Out Consideration
-
-
(4,611 ) (4,611 ) Plus: Loss on Interest Rate Swaps - - 7 7 Plus:
Income Tax Expense 369 138 (302 ) 205 Plus: Depreciation and
Amortization 4,788 3,207 -
7,995
Adjusted EBITDA $ 58,471 $ 5,201 $
(4,616 ) $ 59,056
The table below reconciles consolidated EBITDA to net income for
Rentech Nitrogen for the three and six months ended June 30, 2012
(stated in thousands).
Three Months EndedJune 30,
2012
Six Months EndedJune 30,
2012
Net Income
$ 41,228 $ 60,601 Plus:
Net Interest Expense
28 112 Income Tax Expense - - Depreciation and Amortization 3,312
5,777 Loss on Interest Rate Swaps 580 580 Other (232 )
(232 )
EBITDA $ 44,916 $ 66,838
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com) owns and operates wood fibre
processing and nitrogen fertilizer manufacturing businesses. The
wood fibre processing business consists of the provision of wood
chipping services and the manufacture and sale of wood chips,
through a wholly-owned subsidiary, Fulghum Fibres, Inc., and the
development of wood pellet production facilities. Rentech’s
nitrogen fertilizer business consists of the manufacture and sale
of nitrogen fertilizer through its publicly-traded subsidiary,
Rentech Nitrogen Partners, L.P. (NYSE: RNF). Rentech also owns the
intellectual property including patents, pilot and demonstration
data, and engineering designs for a number of clean energy
technologies designed to produce certified synthetic fuels and
renewable power when integrated with third-party technologies.
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: our ability to complete the wood pellet
mills on a timely basis, or at all; the elimination of spending on
R&D activities and reduction in other expenses related to
alternative energy technologies; the forecasted cash spend for the
alternative energy segment; the outlook for our wood processing,
nitrogen fertilizer and energy businesses; and projected cash
available for distribution and growth opportunities for Rentech
Nitrogen. 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 CafarellaVice President of
Investor Relations and Communications310-571-9800ir@rentk.com
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