Bookmark and Share

Rentech (RTK) Announces Record Results for Fiscal Year 2009

LOS ANGELES–(BUSINESS WIRE)– Rentech, Inc. (NYSE AMEX: RTK) today announced results for its fiscal 2009 fourth quarter and fiscal year ended September 30, 2009. Reported results for fiscal year 2009 were reduced by accounting changes that resulted in a restatement of previously reported annual and quarterly results for fiscal year 2008 and quarterly results for fiscal year 2009, as discussed below.

2009 Financial Results

For the fourth quarter of fiscal year 2009, Rentech reported revenue of $24.7 million, compared to $74.6 million for the comparable quarter in the prior year. The decline in revenue was attributable to lower fertilizer shipments than for the same quarter in fiscal 2008, due to weaker economic conditions and lower corn prices. Rentech reported a net loss of $6.4 million, or $0.03 per share, for the quarter ended September 30, 2009. This compares to a net loss of $2.9 million, or $0.01 per share, for the comparable period in fiscal year 2008.

For the fiscal year ended September 30, 2009, Rentech reported revenue of $183.0 million compared to $211.0 million for the prior fiscal year. Sales volume decreased primarily due to reduced shipments in the first and fourth quarters of fiscal year 2009 due to unfavorable weather and weaker economic conditions. Rentech reported full year net income, for the first time in the company’s history, of $3.0 million, or $0.02 per share, for the fiscal year ended September 30, 2009, a significant improvement over the net loss of $56.9 million, or $0.34 per share, for the comparable period in fiscal year 2008. Operating income for the Company’s wholly-owned nitrogen fertilizer facility, Rentech Energy Midwest Corporation (REMC), for fiscal year 2009 was $57.0 million as compared to $52.7 million in fiscal year 2008.

Rentech generated EBITDA of $23.6 million on a consolidated basis, and $65.5 million at REMC for fiscal year 2009. EBITDA, operating income, and net income for fiscal year 2009 were each reduced by approximately $6 million due to the impact on the cost of goods sold of restatements related to the accounting treatment of forward purchases of natural gas that had no impact on cash flow, and are further described below. Further explanation of EBITDA, a non-GAAP measure, a computation of both consolidated and REMC EBITDA, and the impacts of the accounting changes are shown below in this press release

Selling, general and administrative (SG&A) expenses were $24.1 million for the fiscal year ended September 30, 2009, down from $33.4 million for the prior year. Reductions in staff, travel and information technology expenditures accounted for a majority of the decline in SG&A expenses. Research and development (R&D) expenses for the fiscal year ended September 30, 2009 were $21.4 million, significantly lower than the $64.5 million reported for fiscal year 2008. The decrease in R&D expenses was primarily due to the completion of construction of the Company’s Product Demonstration Unit (PDU), the cost of which was expensed, in the prior fiscal year. Current period R&D expenses were for operation of the PDU, and for work on catalyst and process improvements.

As of September 30, 2009, Rentech had cash and cash equivalents of $69.1 million on a consolidated basis.

Commenting on the fiscal year 2009 financial results, D. Hunt Ramsbottom, President and CEO of Rentech, stated, “Fiscal year 2009 was an exceptional year for our Company. For the first time in Rentech’s history, we generated positive net income and consolidated EBITDA.” Mr. Ramsbottom continued, “Disciplined cost management and record cash flow generation at REMC enabled us to make significant advances in our alternative fuels business in a challenging economic environment when many companies were retrenching or failing. As a result, we made considerable commercial progress such as advancing our renewable energy project in Rialto, CA and enhancing our technology portfolio with biomass gasification technologies.”

Accounting Changes; Restatement

The Company announced that it has corrected its accounting treatment of forward gas purchase contracts and inventory valuation. This correction required restatements of the annual and quarterly consolidated financial statements for fiscal year 2008, and for the first three quarters of fiscal year 2009. The restated financial statements and the impacts of the accounting correction are included in the Company’s Form 10-K for the fiscal year ended September 30, 2009, which was filed today.

The restatement corrects a prior incorrect classification of cash deposits required by forward gas purchase contracts as inventory, and reclassifies them as deposits on gas purchase contracts within current assets on the balance sheet. The Company previously recorded impairments of the inventory components represented by those deposits due to declines in the market price of the natural gas covered by the contracts and increased margin and deposit requirements, recognizing those impairments through cost of goods sold prior to delivery of products produced with the gas. As the Company discussed at the time the inventory impairments were reported, cost of goods sold in periods following the impairments benefited to the extent of the impairments, as gas costs in the subsequent periods were recognized at the lower post-impairment cost. The corrected accounting treatment instead recognizes gas costs at contracted prices. Finished goods inventory will be tested for impairment, but no impairments will be recognized for specific components of inventory (such as natural gas under contract). The restatement reverses the impairments and the subsequent benefits to cost of goods sold. These corrections change the timing, but not the total amount, of the recognition of expenses for purchases of natural gas and have no impact on cash flow.

The restatements had the effect of increasing operating earnings and EBITDA in fiscal 2008 by approximately $6 million, and caused a reduction in reported operating earnings and EBITDA in fiscal 2009 of approximately $6 million due to changes in the timing of expense recognition. The guidance that the Company had previously provided regarding expected full year fiscal 2009 results did not give effect to this accounting change or the related downward adjustment in reported fiscal 2009 results caused by the restatement.

Additional detail about the effects of the restatement adjustments are provided below in this press release.

Rentech has also changed its balance sheet treatment of product pre-sale contracts, which has no impact on the statement of operations. The Company previously recorded the entire amount of firm take-or-pay pre-sale contracts as deferred revenue, and recorded accounts receivable for the difference between the total contract amount and the cash deposits received. The new accounting treatment will record deferred revenue only to the extent of cash deposits received, and will record no accounts receivable until products have been shipped. The impact on the September 30, 2008 balance sheet was to reduce deferred revenue and accounts receivable by approximately $58 million. There was no impact on the September 30, 2009 balance sheet, as all product pre-sale contracts at that date were fully paid.

Additional Information

For additional information, see Rentech’s Form 10-K for the fiscal year ended September 30, 2009 available on the Company’s website at www.rentechinc.com.

Conference Call with Management and Availability of Investor Presentation

The Company will hold a conference call tomorrow. December 15, at 10:00 a.m. PST, during which time Rentech’s senior management will review the Company’s financial results for these periods and will 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: 800-786-6104 or 212-231-2903. An audio webcast of the call will be available at www.rentechinc.com within the News and Events portion of the site under the Presentations section. A replay will be available by audio webcast and teleconference from 1:00 p.m. PST on December 16 through 1:00 p.m. PST on December 23. The replay teleconference will be available by dialing 800-633-8284 or 402-977-9140 and the reservation number 21443843.

A presentation on the Company’s Rialto Renewable Energy Center will be available prior to the conference call at www.rentechinc.com within the Investor Relations portion of the site under the Presentations section.

RENTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Stated in thousands, except per share data)

                            For the Three Months       For the Twelve Months

                            Ended September 30,        Ended September 30,

                            2009         2008          2009         2008

Total Revenues              $ 24,717     $ 74,604      $ 183,000    $ 210,971

Cost of Sales                 17,256       53,815        122,204      154,420

Gross Profit                  7,461        20,789        60,796       56,551

Operating Expenses            10,677       18,377        46,920       107,022

Operating Income (Loss)       (3,216  )    2,412         13,876       (50,471 )

Total Other Expenses          (3,100  )    (5,335  )     (10,859 )    (6,489  )

Income (Loss) from
Continuing Operations

before Income Taxes           (6,316  )    (2,923  )     3,017        (56,960 )

Income tax expense            43           7             61           13

Income (Loss) from            (6,359  )    (2,930  )     2,956        (56,973 )
Continuing Operations

Gain on sale of               6            30            72           91
discontinued operations

Net income from               6            30            72           91
discontinued operations

Net Income (Loss)           $ (6,353  )  $ (2,900  )   $ 3,028      $ (56,882 )

Basic Income (Loss) per
Common Share

Continuing operations       $ (0.03   )  $ (0.01   )   $ 0.02       $ (0.34   )

Discontinued operations       0.00         0.00          0.00         0.00

Basic Income (Loss) per     $ (0.03   )  $ (0.01   )   $ 0.02       $ (0.34   )
Common Share

Diluted Income (Loss) per
Common Share

Continuing operations       $ (0.03   )  $ (0.01   )   $ 0.02       $ (0.34   )

Discontinued operations       0.00         0.00          0.00         0.00

Diluted Income (Loss) per   $ (0.03   )  $ (0.01   )   $ 0.02       $ (0.34   )
Common Share

Weighted-Average Shares:

Basic                         197,022      166,216       174,445      165,480

Diluted                       201,389      166,216       175,578      165,480

Restatement Effects

The following tables (in thousands, except per share data) set forth the effects of the restatement on selected line items within Rentech’s previously reported consolidated financial statements for the full year and quarterly periods for fiscal year 2008 and for the first three quarters of fiscal year 2009. The following tables provide only a summary of the effects of the restatement, do not include all line items that have been affected by the restatement and should be read in conjunction with the restated consolidated financial statements contained in Part II, Item 8 of the Company’s Form 10-K for the period ended September 30, 2009.

Year Ended September 30, 2008

                                   As Previously   Restatement   As Restated
                                   Reported        Adjustments

Total cost of sales                $ 160,425       $ (6,005 )    $ 154,420

Gross profit                         50,546          6,005         56,551

Write down of inventory to market    8,650           (8,650 )      0

Loss from continuing operations      (62,965 )       6,005         (56,960 )
before income taxes

Net loss                             (62,887 )       6,005         (56,882 )

EPS - Basic                          (0.38   )       0.04          (0.34   )

EPS - Diluted                        (0.38   )       0.04          (0.34   )
As of September 30, 2008

                              As Previously   Restatement   As Restated
                              Reported        Adjustments

Inventories                   $ 29,491        $ (12,362 )   $ 17,129

Deposits on gas contracts       --              18,368        18,368

Accumulated deficit             (255,260 )      6,005         (249,255 )

Total stockholders' deficit     (13,089  )      6,005         (7,084   )

Deferred Revenue                120,709         (57,901 )     62,808


            Year Ended September 30, 2009

            First Quarter                        Second Quarter                         Third Quarter

            December 31, 2008                    March 31, 2009                         June 30, 2009

            As          Restatement  As          As           Restatement               As          Restatement  As
            Previously  Adjustment   Restated    Previously   Adjustment   As Restated  Previously  Adjustment   Restated
            Reported                             Reported                               Reported

Total cost  $ 40,416    $ (4,061  )  $ 36,355    $ 19,793     $ 8,131      $ 27,924     $ 38,850    $ 1,819      $ 40,669
of sales

Gross
profit        9,661       4,061        13,722      (3,004  )    (8,131 )     (11,135 )    52,567      (1,819 )     50,748
(loss)

Write down
of            10,115      (10,115 )    0           5,861        (5,861 )     0            116         (116   )     0
inventory
to market

Income
(loss)
from
continuing    (4,320 )    4,061        (259   )    (16,592 )    (8,131 )     (24,723 )    36,133      (1,819 )     34,314
operations
before
income
taxes

Net income    (4,323 )    4,061        (262   )    (16,539 )    (8,131 )     (24,670 )    36,132      (1,819 )     34,313
(loss)

EPS -         (0.03  )    0.03         0.00        (0.10   )    (0.05  )     (0.15   )    0.22        (0.01  )     0.21
Basic

EPS -         (0.03  )    0.03         0.00        (0.10   )    (0.05  )     (0.15   )    0.22        (0.02  )     0.20
Diluted



            Year Ended September 30, 2008

            First Quarter                          Second Quarter                         Third Quarter

            December 31, 2007                      March 31, 2008                         June 30, 2008

            As           Restatement               As           Restatement               As          Restatement  As
            Previously   Adjustments  As Restated  Previously   Adjustments  As Restated  Previously  Adjustments  Restated
            Reported                               Reported                               Reported

Total cost  $ 37,182     $ (82 )      $ 37,100     $ 20,616     $ 82         $ 20,698     $ 42,807    $ 0          $ 42,807
of sales

Gross         10,278       82           10,360       7,917        (82 )        7,835        17,567      0            17,567
profit

Write down
of            82           (82 )        0            0            0            0            0           0            0
inventory
to market

Loss from
continuing
operations    (23,437 )    82           (23,355 )    (22,812 )    (82 )        (22,894 )    (7,788 )    0            (7,788 )
before
income
taxes

Net loss      (23,414 )    82           (23,332 )    (22,796 )    (82 )        (22,878 )    (7,772 )    0            (7,772 )

EPS -         (0.14   )    0            (0.14   )    (0.14   )    0            (0.14   )    (0.05  )    0            (0.05  )
Basic

EPS -         (0.14   )    0            (0.14   )    (0.14   )    0            (0.14   )    (0.05  )    0            (0.05  )
Diluted

                                        Year Ended September 30, 2008

                                        Fourth Quarter

                                        September 30, 2008

                                        As Previously  Restatement  As
                                        Reported       Adjustments  Restated

Total cost of sales                     $ 59,820       $ (6,005 )   $ 53,815

Gross profit                              14,784         6,005        20,789

Write down of inventory to market         8,568          (8,568 )     0

Loss from continuing operations before    (8,928 )       6,005        (2,923 )
income taxes

Net loss                                  (8,905 )       6,005        (2,900 )

EPS - Basic                               (0.05  )       0.04         (0.01  )

EPS - Diluted                             (0.05  )       0.04         (0.01  )

Disclosure Regarding Non-GAAP Financial Measures

EBITDA is a presentation of “earnings before interest, taxes, depreciation and amortization.” Management believes that EBITDA (a non-GAAP metric) can be a useful indicator of the fundamental operating performance of the Company’s fertilizer production facility, Rentech Energy Midwest Corporation (REMC), and of the consolidated company. Management believes that EBITDA can help investors more meaningfully evaluate the company’s and REMC’s operating performances by eliminating the effect of non-cash expenses and non-operating expenses of interest, taxes and depreciation and amortization. We believe that our investors may use EBITDA as a measure of the operating performance of REMC’s and the company’s businesses. We recommend that investors carefully review the GAAP financial information (including our statement of cash flows) included as part of our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, and our earnings releases; compare GAAP financial information with the non-GAAP financial results disclosed in our quarterly earnings releases and investor calls, and read the computation below.

Fiscal Year 2009 Consolidated EBITDA ($ millions)

                                Pre-Restatement   Restatement Impact   Actual

Operating Income                $ 19.8            $ ( 6.0 )            $ 13.8

Depreciation and Amortization     9.8               -                    9.8

EBITDA                          $ 29.6            $ ( 6.0 )              23.6
Fiscal Year 2009 REMC EBITDA ($ millions)

                                Pre-Restatement   Restatement Impact   Actual

Operating Income                $ 63.0            $ ( 6.0 )            $ 57.0

Depreciation and Amortization     8.5               -                    8.5

EBITDA                          $ 71.5            $ ( 6.0 )            $ 65.5

About Rentech, Inc.

Rentech, Inc. (www.rentechinc.com), incorporated in 1981, provides clean energy solutions. The Company’s Rentech-SilvaGas biomass gasification process can convert multiple biomass feedstocks into synthesis gas (syngas) for production of renewable fuels and power. Combining the gasification process with Rentech’s unique application of proven syngas conditioning and clean-up technology and the patented Rentech Process based on Fischer-Tropsch chemistry, Rentech offers an integrated solution for production of synthetic fuels from biomass. The Rentech Process can also convert syngas from fossil resources into ultra-clean synthetic jet and diesel fuels, specialty waxes and chemicals. Final product upgrading is provided under an alliance with UOP, a Honeywell company. Rentech develops projects and licenses these technologies for application in synthetic fuels and power facilities worldwide. Rentech Energy Midwest Corporation, the Company’s wholly-owned subsidiary, manufactures and sells nitrogen fertilizer products including ammonia, urea ammonia nitrate, urea granule, and urea solution in the corn-belt region of the central 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 Company’s advancement of its renewable energy project in Rialto, CA, the enhancement of its technology portfolio and trends in expenses and cost management. 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 web site 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.

Thursday, December 17th, 2009 Uncategorized
Top Small Cap Market News