During the three months ended September 30, 2012, Rentech Nitrogen generated operating income of $29.2 million compared to $10.4 million during the comparable period in the prior year.
For the three months ended September 30, 2012, net income was $28.8 million or $0.75 per unit. This compares to net income of $3.3 million for the comparable period last year. EBITDA for the period was $32.9 million, compared to $12.9 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.
Commenting on the results for the period, D. Hunt Ramsbottom, CEO of Rentech Nitrogen GP, LLC, stated, “Rentech Nitrogen continues to produce exceptional results, benefiting from relatively low natural gas prices and strong product deliveries and prices. These factors contributed to strong cash distributions of $0.85 per unit this quarter.” Mr. Ramsbottom continued, “We recently completed our first acquisition, which will provide incremental cash flow and growth opportunities and diversifies the products, markets, location, and raw materials of our nitrogen fertilizer operations beyond those of our existing plant in East Dubuque. Rentech Nitrogen will begin to see the accretive benefits of this new business in 2013, when it is expected to begin contributing to cash distributions.”
Mr. Ramsbottom added, “With the acquisition of the fertilizer production facility in Pasadena, TX, we believe we have positioned Rentech Nitrogen for additional growth and less exposure to weather fluctuations in corn pricing and plantings, pricing of any one particular product or raw material, and the seasonality of sales.”Rentech Nitrogen’s natural gas hedging strategy resulted in average natural gas costs of $3.14 per MMBtu for the third quarter of 2012, compared to $4.74 per MMBtu for the prior-year period. Lower natural gas costs combined with strong product prices contributed to gross margins of 58% in the current period, up significantly from 33% for the same quarter last year.