Rentech, Inc. (NASDAQ: RTK) today announced that it has acquired New England Wood Pellet (NEWP), the largest producer of wood pellets for the U.S. heating market. A slide presentation regarding today's announcement appears on Rentech’s website,
. The Company’s management will discuss the acquisition on its first quarter earnings conference call, which is scheduled for May 13, 2014.
NEWP, established in 1992, operates three wood pellet facilities with a combined annual production capacity of 240,000 tons. The facilities are strategically located in the U.S. Northeast, which is the largest domestic market for consumption of wood pellets for heating. NEWP generated EBITDA of approximately $7.4 million in 2013. Further explanation of EBITDA, a non-GAAP financial measure, and a reconciliation of NEWP’s EBITDA to operating income have been included below in this press release.
“NEWP is the leader in the growing U.S. market for wood pellets used in heating applications. The acquisition brings additional cash flows and profitability to our wood fibre business. In addition, NEWP’s business broadens our product offerings, customer base and geographic markets,” said D. Hunt Ramsbottom, president and chief executive officer of Rentech.
NEWP is the leader in a well-established and growing market
Known for its high quality products, NEWP commands an approximate 15% share of the market for heating pellets in the U.S. Northeast. The company is one of the largest suppliers of wood pellets to major retailers including Home Depot, Lowe’s, Tractor Supply and Wal-Mart.
Wood pellets burned in modern heating appliances are a clean and convenient source of economical heating. Prices for wood pellets are competitive with delivered retail prices for natural gas, and lower than prices for heating oil, propane, or electricity. Wood pellet prices have historically been more stable than prices of heating oil or natural gas. Low population density in NEWP’s markets makes the distribution of natural gas inefficient and expensive.