D. Hunt Ramsbottom, President and CEO of Rentech, said, “We made a strong entry into the wood fibre processing business this year. Our wood chipping business, Fulghum Fibres, is generating solid revenues and EBITDA. Our two industrial wood pellet projects in Canada are on schedule, on budget and on track to provide the returns we expect, based on long-term contracts. We are also pleased that our facilities at both Fulghum Fibres and Rentech Nitrogen have exceeded our safety goals.”
Fulghum Fibres processed 3.8 million green metric tons of wood during the three months ended December 31, 2013. Fulghum Fibres’ revenues were $24.5 million for the current period, of which approximately $15.4 million and $9.1 million were generated from the U.S. and South American operations, respectively. Gross profit for the period was $5.3 million on margins of 22%. SG&A and interest expenses for three months ended December 31, 2013 were $1.6 million and $0.5 million, respectively.
Operating loss of $1.3 million from the wood pellets segment, which reflected selling, general and administrative (SG&A) costs associated with developing the business, and non-capitalized costs associated with constructing the wood pellet mills at Atikokan and Wawa.
Wood pellets segment SG&A expenses were $1.2 million for the three months ended December 31, 2013, compared to $1.1 million in the prior period. SG&A expenses include costs associated with developing the business, and non-capitalized costs associated with converting the wood pellet mills at Atikokan and Wawa.
Fulghum Fibres processed approximately 9.9 million green metric tons of wood from May 1, 2013 through December 31, 2013. The segment generated revenues of $63 million from May 1, 2013 through December 31, 2013, of which approximately $40.7 million and $22.3 million were generated from the U.S. and South American operations, respectively. Gross profit for the period was $12 million on margins of 19%. SG&A and interest expenses for the period were $3.8 million and $1.8 million, respectively.
Rentech achieved several key milestones with respect to the Company’s two industrial wood pellet projects in Eastern Canada. The majority of outside civil and concrete construction work and all remaining detailed engineering packages were completed, and nearly 80% of all required equipment and materials have been procured. The Company has also received rail cars at the Wawa facility and the first delivery of logs at the Atikokan facility.
Wood pellets segment SG&A expenses were $5.5 million for the twelve months ended December 31, 2013, compared to $1.9 million for the comparable period in the prior year. The increased SG&A was due to acquisition-related and development costs associated with the wood pellet projects as well as other costs for the development of the Company’s wood fibre processing business, and non-capitalized project costs of $0.7 million.
Rentech, Inc. owns and operates wood fibre processing and nitrogen fertilizer manufacturing businesses. The wood fibre processing business consists of the provision of wood chipping services and the manufacture and sale of wood chips, through a wholly-owned subsidiary, Fulghum Fibres, Inc., and the development of wood pellet production facilities.
