As of March 31, 2012, Rentech had consolidated cash of $247.1 million, of which $72.9 million was held at Rentech Nitrogen.
Consolidated selling, general and administrative (SG&A) expenses were $10.4 million for the three months ended March 31, 2012, compared to $7.7 million for the comparable period in the prior year. Current period SG&A expenses were comprised of $7.8 million for the alternative energy business and $2.6 million for the nitrogen fertilizer business, compared to $6.6 million and $1.1 million, respectively, for the prior-year period. The net increase in SG&A expenses for the alternative energy segment was attributable to an increase in non-cash compensation expense of $1.4 million; net cash SG&A expenses declined by $0.2 million. The $1.5 million increase in SG&A expenses for the nitrogen products manufacturing segment was due to costs associated with Rentech Nitrogen having become a publicly traded limited partnership.
Research and development (R&D) expenses incurred in the alternative energy segment during the three months ended March 31, 2012 were $5.0 million, compared to $6.4 million for the comparable period in the prior year. The decrease in R&D expenses resulted from an increase of $1.1 million in the accrual for reimbursement of expenses from the U.S. Department of Energy, which was partially offset by increased expenses related to the Integrated Bio-Refinery Project (IBR) at the Company’s demonstration facility. The reimbursement of expenses by the Department of Energy is the result of the $23 million IBR grant.
For Rentech Nitrogen, favorable weather conditions allowed farmers in its core market area of the Mid Corn Belt to apply spring ammonia earlier than is typical. This shifted meaningful volumes of ammonia deliveries into the first quarter that had been anticipated to occur in the second quarter of 2012. Robust projected corn plantings and tight inventories supported strong product pricing.In the first quarter of 2012, Rentech Nitrogen achieved average prices for ammonia and UAN that were higher by 11% and 59%, respectively, compared to the same period last year. The higher product prices were a result of strong product demand during the first quarter, coupled with the fact that the partnership had secured a robust book of forward sales for spring delivery when prices were at a peak in September and October, 2011.
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