For the six months ended June 30, 2012, net income was $60.6 million or $1.58 per unit. This compares to net income of $17.3 million for the comparable period last year. Included in the prior year’s net income was $9.2 million of loss on debt extinguishment. EBITDA for the period was $66.8 million, compared to $49.8 million in the corresponding period in 2011. Further explanation of EBITDA, a non-GAAP financial measure, and a reconciliation of Rentech Nitrogen's EBITDA to net income have been included below in this press release.
Gross profit margin was 63% for the six months ended June 30, 2012, up from 48% for the comparable period in the prior year.
SG&A expenses were $6.5 million for the six months ended June 30, 2012, compared to $2.6 million for the prior-year period. The increase in SG&A expenses was primarily due to costs associated with having become a publicly traded limited partnership and included an increase of $1.1 million in non-cash unit-based compensation expense.
Partnership OutlookRentech Nitrogen expects the drought to continue to have a favorable impact on nitrogen prices and demand for the remainder of 2012 and 2013. Although the drought will reduce farmers’ production, the Federal Reserve Bank of Kansas City has stated that with higher corn prices and crop insurance, farmer’s income could approach 2011 levels, which was a record year. As a result, it is anticipated that farmers will have the cash flow necessary to support nitrogen purchases in 2012 and 2013. The ongoing drought conditions have resulted in a severe drop in water levels on the Mississippi River system. This is impeding barge traffic which can affect some deliveries to the Corn Belt. Rentech Nitrogen does not rely on barges to ship its products because its customers, who are within a 200 mile radius of the facility, typically pick up Rentech Nitrogen’s products at its plant by truck.