Expansion of fiber business outlined in Rentech Q2 earnings call

By Tim Portz | August 08, 2014

While just $26.3 million of the $139.9 million in quarterly revenues reported by Rentech CEO Hunt Ramsbottom on the August 7, 2014 second quarter earnings can be attributed to the company’s fiber business, it is clear that growing that segment remains top of mind for the Rentech team. 

“Over the past year, our fiber business has grown significantly, most recently with the addition of New England Wood Pellet (NEWP). The integration of that business is going very well. I’m very happy with the team and the acquisition,” said Ramsbottom. The Fulghum Fibres business unit generated just under $20 million dollars in revenues for the quarter with NEWP contributing nearly $6 million to company ledgers. 

Ramsbottom affirmed Rentech’s interests in continuing the expansion of their fiber business and reported, “we are pursuing a number of new projects and acquisition opportunities in the pellet and chipping businesses to complement our existing assets.” Ramsbottom declined to offer any specific plants, but assured listeners “we are getting close on several fronts.

Ramsbottom pointed to global fiber market poised for significant growth as the motivation for Rentech’s increasing aggressive work in the space.  “The global fiber market we are targeting is about $15 billion in revenues annually and potentially growing to $25 billion annually by 2020.  We feel we are well positioned to capture market share and be a global leader in that business,” he said.

In addition to the NEWP acquisition, Rentech also has over 500,000 metric tons of production capacity under construction in Canada. “I’m pleased to say the pellet facilities we are building in Canada are progressing on schedule and on budget as the team continues to execute the projects simultaneously, self-managed,” Ramsbottom said. “The Atikokan facility is nearly complete and will begin start up and commissioning very soon. We expect to begin producing pellets this summer, right on schedule.”

Some of Rentech’s Canadian production will be shipped to the Drax power station in England and Rentech is investing port infrastructure to serve this important customer. “The ability to transport wood pellets once they are produced, is of course, crucial,” said Ramsbottom. “I’m pleased to report that our progress at the Port of Quebec is also on schedule. The port will be equipped to meet our first expected shipload of pellets to Drax in the fourth quarter of 2014.” The facility was built exclusively for Rentech and has been engineered to receive, store and load up to 1 million tons annually.

Ramsbottom concluded his comments about Rentech’s fiber business by offering that Rentech’s intial thrust into the U.S. domestic heating market would not end with the acquisition of NEWP. “We see the domestic heating industry poised for consolidation and we’re prepared to capitalize on these opportunities,” noted Ramsbottom