Rentech reports first profit, upgrades FY 09 guidance to $65 M plus EBITDA

Rentech Inc., the owner of Rentech Energy Midwest Corp. (REMC), a nitrogen fertilizer company, reported net income of $36.1 million ($.22 per diluted share) on sales of $91.4 million for the third quarter ending June 30, compared to the year-ago loss of $7.8 million ($.05 per share) on sales of $60.4 million. REMC contributes practically all of Rentech’s revenues as the company readies new energy technologies for the market.

“We are pleased to report our first profitable quarter ever,” said Dan Cohrs, Rentech executive vice president and CFO. “The cost reductions we implemented in addition to exceptional management of our fertilizer business have provided us with a foundation from which we can continue to execute on our alternative energy strategy. We believe Rentech is well-positioned to capture the opportunities that have resulted from the approval of our jet fuel for commercial aviation, as well as from the renewable power and low carbon fuel mandates in California.”

Rentech is projecting EPS for the year will be positive, and it has increased consolidated EBITDA guidance for fiscal 2009 to greater than $25 million, up from previous guidance of $15 million. In addition, REMC EBITDA guidance has been boosted to over $65 million from the previous guidance of $65 million. Factors cited for increasing guidance included significant pre-sales of fertilizer products for the remainder of the year, natural gas prices that are forecasted to remain at lower than budgeted levels, and demand for nitrogen products driven by continued strong prospects for planted corn acreage.

Rentech said higher revenues were due from higher product pricing and record shipments as favorable weather conditions allowed the realization of revenue on significant volumes shipped. Shipments during the second fiscal quarter had been delayed due to bad weather.

The average sales price per ton in the third quarter increased by 58 percent for anhydrous ammonia and decreased by 1 percent for UAN. The nine-month average sales price increased by 55 percent for ammonia and 18 percent for UAN. Prices for products delivered during the periods in fiscal 2009 were largely determined by the prices in pre-sale contracts entered into during prior periods. Rentech told analysts the average delivered price for ammonia during the nine-month period was $750/st compared to the year-ago $484/st, while the UAN price was $318/st versus $269/st. Prices in the pre-sale contracts were historically high ?Çô in part because of higher production costs, and in part because of forecasts of higher-than-normal corn planting in 2009.

Nine-month net income was $15.3 million ($.09 per share) on sales of $158.3 million, versus the year-ago loss of $54 million ($.33 per share) on sales of $136.4 million.