Rentech Inc. reports that its nitrogen subsidiary, Rentech Energy Midwest Corp. (REMC), had operating income of $2.4 million for the second quarter ending March 31, 2010, compared to an operating loss of $12.4 million in the comparable period last year. The company said the increase was primarily due to a higher ammonia sales volume margin and lower natural gas prices, partially offset by lower sales prices.
“We are pleased that favorable weather conditions have contributed to a strong fiscal second quarter and a more normalized spring season as compared to the prior year,” said Hunt Ramsbottom, Rentech president and CEO. “We are confident in our projection that REMC will have a relatively strong fiscal year. We believe the plant’s trade zone and its management team’s proven ability to execute positions REMC to benefit from strong long-term market fundamentals.”
Ramsbottom told analysts that over half of REMC’s planned deliveries for the year have been sold at fixed prices.
“The second-quarter results benefited from an early ammonia season as favorable weather allowed applications that were not possible last year at this time,” said Dan Cohrs, Rentech chief financial officer and executive vice president. “Higher ammonia deliveries and relatively low natural gas prices contributed to an improved quarter over last year. UAN deliveries, which are less affected by weather, were down just slightly from last year, although they were up for the year-to-date period.” Prices for both were lower. Ammonia delivered prices were $368/st for the quarter, down from the year-ago $542/st. Delivered UAN prices were called $176/st, down from $308/st.
The company said it has been seeing stronger prices for both ammonia and UAN at $440/st and $240/st, respectively.
Rentech continues to project that REMC’s operating income for fiscal year 2010 will be well in excess of $20 million, and that REMC’s EBITDA for the fiscal year will be well in excess of $30 million. These projections are based on REMC’s planned deliveries for the year, which have already been sold at fixed prices, as well as the strengthening demand for fertilizer prices.
Company-wide, Rentech reported a net loss of $16 million ($.07 per diluted share) on sales of $19.2 million, versus the year-ago loss of $25.4 million ($.15 per diluted share) on sales of $16.8 million. Six-month losses were $31.5 million ($.15 per share) on sales of $46.3 million, versus the year-ago loss of $26.3 million ($.16 per share) on sales of $67.5 million.