All Posts from March 18, 2016

AGI to acquire NuVision Industries

Equipment provider Ag Growth International Inc., Winnipeg, Manitoba, said March 13 that it has entered into a binding agreement to acquire NuVision Industries Inc., Carseland, Alba., a designer and builder of complete turnkey fertilizer-blending plants and material-handling facilities.

“The acquisition of NuVision is another step in our developing platform for fertilizer-storage and handling equipment in Western Canada and beyond,” said Tim Close, AGI president and CEO. “NuVision is a leading provider of commercial fertilizer distribution systems and allows AGI to now offer market-leading, turnkey fertilizer systems for our customers.

“Our developing fertilizer platform is unique to AGI and positions us to offer the products and services our customers are asking for in the fertilizer sector,” continued Close. “The growth of our fertilizer business continues our strategy of diversification and risk mitigation by adding complementary seasonality and demand drivers within our core markets and with our core customers.”

NuVision’s entire team is joining AGI, including Lionel Kambeitz and Joe Wollner-Kallis, who grew the company. Wollner-Kallis will continue to lead NuVision, and Kambeitz will continue as an adviser for both Wollner-Kallis and AGI in the fertilizer space.

NuVision designs, manufactures, installs, and maintains fertilizer-blending and handling facilities throughout Western Canada.

AGI has been on a buying spree, buying GJ Vis Enterprise Inc., Oak Bluff, Man., a manufacturer of material-handling equipment used in the fertilizer, feed, and grain sectors, late last year (GM Dec. 7, 2015). In early March 2016 it acquired Brazil’s Entringer SA, a manufacturer of grain bins and equipment. In May 2015, it bought Winnipeg-based grain storage provider Westeel.

NuVision sales and adjusted EBITDA, normalized primarily for related party items, over the previous four years have averaged approximately $18 million and $3.4 million, respectively. For the year ended Dec. 31, 2015, NuVision sales and normalized EBITDA were approximately $32 million and $6.6 million, respectively.

The purchase price is based on five times NuVision’s average EBITDA for the financial years 2015 – 2018, with a maximum purchase price of $26 million. The maximum purchase price represents a multiple of four times 2015 normalized EBITDA. Terms of the transaction include payment of $12 million upon closing, with additional amounts payable annually based on achieved EBITDA in 2016, 2017, and 2018. All payments under the agreement are payable 50 percent in cash and 50 percent in AGI equipment, and the cash amount payable upon closing will be financed from AGI’s cash balance.

Completion of the transaction requires regulatory approval and the approval of the shareholders of HTC Purenergy Inc., a publicly traded entity on the TSX Venture Exchange and the majority shareholder of the parent company to NuVision. The transaction is expected to close on April 1, 2016.

Rentech income weighed down by impairments; gross profits up

Rentech Nitrogen Partners LP reported fourth-quarter 2015 results March 16 that are still being weighed down by writedowns at its Pasadena facility – $26.3 million in the fourth quarter, $160.6 million for the year. As a result, a fourth-quarter loss of $18.8 million ($0.48 per diluted unit) on revenues of $77.4 million was reported, versus the year-ago net income of $7.8 million ($0.20 per unit) and $80.6 million, respectively. Absent impairments, fourth-quarter net income was $7.6 million ($0.20 per unit).

Fourth-quarter gross profits were $17.9 million, up from the year-ago $11.8 million.

Full-year net losses were $101.5 million ($2.62 per unit) on revenues of $340.7 million, compared to 2015’s loss of $1.1 million ($0.03 per unit) and $334.6 million, respectively. Absent the impairments, Rentech had net income of $59.1 million ($1.51 per unit).

Full-year gross profit was $100.8 million, up from 2014’s $60.5 million.

Rentech Nitrogen said improved revenues and gross profits for 2015 were driven by three factors – higher ammonia sales volumes at East Dubuque, lower gas prices (excluding derivatives losses or gains), which averaged $3.71/mmBtu versus $5.00/mmBtu, and improved performance at Pasadena after the 2014 restructure.

Senior Vice President of Sales and Marketing Marc Wallis told analysts March 16 that since Jan. 1 through the present the market has continued to improve. He said East Dubuque’s markets are fairly depleted of both UAN and ammonia and the stage is set for an excellent first-half of the year.

Fourth-quarter East Dubuque net income was $15.8 million on revenues of $45.7 million, up from the year-ago $12.9 million and $47.9 million, respectively. Gross profit was $17.1 million, up from $14 million.

Full-year East Dubuque net income was $90.8 million on revenues of $201.3 million, up from $69.8 million and $196.4 million, respectively. Gross profit was $96.1 million, up from $74.8 million.

While for the fourth-quarter Pasadena reported a loss of $26.7 million due to impairments on revenues of $31.6 million, gross profit was a positive $804,000. The segment had a year-ago net loss of $3.4 million on revenues of $32.6 million, with a gross loss of $2.2 million.

For the full-year, Pasadena reported a gross profit of $4.6 million on revenues of $139.4 million, compared to 2014’s gross loss of $14.3 million and $138.2 million, respectively. Due to impairments, it had a net loss of $159.3 million compared to 2014’s net loss of $47.9 million.