Rentech sells Natchez site, reports Q2 financial results
Rentech Inc. recently announced that its subsidiary has closed on the sale of approximately 450 acres of land near Natchez, Miss., for $9 million. The company announced its intention to sell the land on Feb. 28 as part of its plan to cease operations at its research and development production demonstration unit (PDU) in Commerce City, Colo.
While the company had successfully demonstrated its Rentech-ClearFuels and Rentech-SilvaGas biomass gasification technologies, as well as the Rentech Fischer-Tropsch process, to produce biobased jet and diesel fuels, it announced in February it would change its focus on nearer-term profitable growth opportunities. Rentech announced the acquisition of the land near Natchez in 2007, and planned to construct a biofuels production complex at the site. Due to the company’s change in focus, the land was sold.
“The sale of the Natchez site is consistent with our stated intention to dispose of our non-core alternative energy related assets,” said D. Hunt Ramsbottom, president and CEO of Rentch, in a statement. “We remain focused on the significant opportunities within our newly launched wood fibre processing business as well as growth in our nitrogen fertilizer business.”
In its second quarter financial results, released Aug. 8, Rentech elaborates on its new wood fiber processing and nitrogen fertilizer business segments. The company also specifies within the financial release that it still owns technologies to produce synthetic fuels and renewable power, when integrated with third-party technologies. The company announced the acquisition of Georgia-based Flughum Fibers Inc. and two facilities in Ontario for the conversion into pellet plants in May. At that time, Rentech also announced that take-or-pay contacts were in place with two utilities to supply a combined 445,000 metric tons of wood pellets over 10 years.
“Our financial results for the quarter demonstrate the dramatic transformation we have undertaken at Rentech,” said Ramsbottom. “Our new business at the parent, which is wood fiber 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.”
The company reported consolidated revenues of $120.2 million during the second quarter, up $49.4 from the same period of 2012. Fulghum Fibres contributed $16.1 million of that revenue. Gross profit for the quarter was $42.3 million, which included 15 percent gross margins at Fulghum Fibres. Rentech also reported an operating loss of $25.1 million for the quarter, which included an operating loss of $800,000 from its wood pellet segment, which reflected selling, general and administrative costs associated with early work on acquiring and converting the wood fiber mills to pellet production. An operating loss of $2.6 million is also attributed to energy technology, reflecting the costs to decommission the PDU and other administrative costs.