Rentech, Inc. (RTK)
F3Q10 (Qtr End 06/30/10) Earnings Call Transcript
August 10, 2010 1:00 pm ET
Julie Dawoodjee – VP, IR
Hunt Ramsbottom – President and CEO
Dan Cohrs – EVP and CFO
Matt Farwell – Imperial Capital
Cory Garcia – Raymond James
Jeremy Sussman – Brean Murray
Robert Fauche [ph] – Stifel Nicolaus
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Welcome to the Rentech fiscal 2010 third quarter earnings call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions)
As a reminder, this conference is being recorded, Tuesday, August 10, 2010. I would now like to turn the conference over to Julie Dawoodjee, Rentech Vice President of Investor Relations. Please go ahead, ma’am.
Welcome to Rentech's 2010 fiscal third quarter conference call for the period ended June 30th, 2010. During this call Hunt Ramsbottom, President and CEO of Rentech will summarize the company's progress during the fiscal quarter. Dan Cohrs, our Chief Financial Officer will give a financial review of the third quarter and provide comments on Rentech's financial position. We will then open the lines for questions. We ask that you limit yourself to one question so that we may get to as many of your questions as possible.
Please be advised that certain information discussed on this conference call will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. They can be identified by the use of terminology such as may, will, expect, believe and other comparable terms. You are cautioned that while forward-looking statements reflect our good faith belief and best judgment based upon current information, they are not guarantees of future performance and are subject to known and unknown risks and uncertainties and risk factors detailed from time to time in the company's periodic reports and registration statements filed with the Securities and Exchange Commission. The forward-looking statements in this call are made as of August 10th, 2010 and Rentech does not undertake to revise or update these forward-looking statements except to the extent that it is required to do so under applicable law.
Now I would like to turn the call over to Hunt Ramsbottom, President and CEO of Rentech.
Thank you, Julie. Good morning, everyone and thank you for joining us today. I'll start with an update on our Rialto project. Since our last earnings call in May, we’ve filed all major permit applications and signed a contract with floor to perform front end engineering and design for the project.
We also completed some important milestones in support of our ongoing work with the Department of Energy in connection with our application for loan guarantee. The engineering work done during the feed phase establishes the facility layout, sizing, specifications of all equipment, sets critical operating parameters and determines the technology performance requirements for the optimal size of the plant.
Upon completion of the feed phase we'll have a definitive cost estimate that will serve as the basis of the construction contract. A large component of feed is the generation of the feed process design packages. The PDP is defined all major design parameters for the technology units. There are currently five PDPs underway both within Rentech and with outside licensors including UOP.
All the PDPs are progressing on schedule and within budget. The gasification and syngas conditioning PDP are nearly complete. Floor is fully engaged in the feed process. Their role as feed contractor is to integrate the technology packages and provide the design of all of the supporting facilities.
Floor's work to date has been focused on feed stock handling and processing; syngas clean up and power generation areas of the plant. We've secured options on all the land required to construct the facility and completing site surveys in preliminary geo technical work.
The preliminary layout of the facility has been completed, identifying the locations of all major process equipment, roads and buildings. Our work in the feed phase is on schedule and the cost is trending less than the guidance we gave of significant less than 20 million. We believe the Rialto project is a strong candidate for the DOE loan guarantee under section 1705, we're still in the process and we have completed all of the steps required to date.
We obtained a report from RW Beck as the independent engineer which evaluated the technology and assumptions used in the financial forecast which we submitted to the DOE. RW Beck's report validated the combination of technologies that we'll use in the project, including the Rentech SilvaGas gas fire, our Rentech process for synthetic fuels and the integration of all technologies.
RW Beck is also evaluated the production capabilities of the plant and the capital cost estimates. The report's conclusions support both the technology and the financial assumptions in the application we submitted to the Department of Energy. RW Beck's report is a critical achievement on the path to getting financing for this project and marks the first time we have received this level of validation from an independent engineer. We also have obtained preliminary credit assessment for the project from a nationally recognized rating agency to support our loan guarantee application.
Now, on to our Natchez project. We're making good progress in adding biomass feedstock. We have advanced our feedstock negotiations with a large company with access to timber harvest residuals such as tree limbs and treetops. We believe that enough of this material is available to make biomass a significant part of our feedstock for the project. We're also negotiating a long term – with a long term supplier of large volumes of petroleum coke.