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EX-10.1 - EX-10.1 - RENTECH, INC.rtk-ex101_91.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-15795

 

RENTECH, INC.

(Exact name of registrant as specified in its charter)

 

 

Colorado

 

84-0957421

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

1000 Potomac Street NW, 5th Floor

Washington, DC 20007

(Address of principal executive offices)

(202) 791-9040

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

  (Do not check if a smaller reporting company)

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

The number of shares of the Registrant’s common stock outstanding as of July 31, 2017 was 23,211,780.

 

 

 

 

 


 

RENTECH, INC.

Form 10-Q

Table of Contents

 

 

 

2


 

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

RENTECH, INC.

Consolidated Balance Sheets

(Amounts in thousands, except per share data)

 

 

 

As of

 

 

 

June 30,

2017

 

 

December 31,

2016

 

 

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash

 

$

19,048

 

 

$

28,319

 

Accounts receivable, including unbilled revenue

 

 

6,759

 

 

 

12,490

 

Inventories

 

 

24,075

 

 

 

28,131

 

Prepaid expenses and other current assets

 

 

3,505

 

 

 

3,744

 

Other receivables

 

 

3,223

 

 

 

4,495

 

Total current assets

 

 

56,610

 

 

 

77,179

 

Property, plant and equipment, net

 

 

105,258

 

 

 

117,565

 

Construction in progress

 

 

1,597

 

 

 

905

 

Other assets

 

 

 

 

 

 

 

 

Equity investment

 

 

25,085

 

 

 

53,335

 

Goodwill

 

 

15,451

 

 

 

28,576

 

Intangible assets

 

 

26,297

 

 

 

31,227

 

Deposits and other assets

 

 

1,963

 

 

 

3,930

 

Total other assets

 

 

68,796

 

 

 

117,068

 

Total assets

 

$

232,261

 

 

$

312,717

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

11,468

 

 

$

12,389

 

Accrued payroll and benefits

 

 

3,692

 

 

 

4,529

 

Accrued liabilities

 

 

12,319

 

 

 

16,836

 

Deferred revenue

 

 

2,240

 

 

 

1,730

 

Current portion of long term debt

 

 

15,879

 

 

 

11,237

 

Accrued interest

 

 

455

 

 

 

301

 

Other

 

 

1,394

 

 

 

1,628

 

Liabilities of discontinued operations

 

 

 

 

 

150

 

Total current liabilities

 

 

47,447

 

 

 

48,800

 

Long-term liabilities

 

 

 

 

 

 

 

 

Debt

 

 

96,525

 

 

 

103,733

 

Earn-out consideration

 

 

113

 

 

 

234

 

Asset retirement obligation

 

 

252

 

 

 

245

 

Deferred income taxes

 

 

7,566

 

 

 

7,826

 

Other

 

 

1,485

 

 

 

1,761

 

Total long-term liabilities

 

 

105,941

 

 

 

113,799

 

Total liabilities

 

 

153,388

 

 

 

162,599

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Preferred stock: $10 par value; 1,000 shares authorized; 90 series A convertible preferred shares

   authorized and issued; no shares outstanding and $0 liquidation preference

 

 

 

 

 

 

Series C participating cumulative preferred stock: $10 par value; 500 shares authorized; no shares

   issued and outstanding

 

 

 

 

 

 

Common stock: $.01 par value; 45,000 shares authorized; 23,212 and 23,200 shares issued and outstanding

   at June 30, 2017 and December 31, 2016, respectively

 

 

232

 

 

 

232

 

Additional paid-in capital

 

 

534,132

 

 

 

533,575

 

Accumulated deficit

 

 

(434,031

)

 

 

(362,696

)

Accumulated other comprehensive loss

 

 

(24,007

)

 

 

(23,533

)

Total Rentech stockholders' equity

 

 

76,326

 

 

 

147,578

 

Noncontrolling interests

 

 

2,547

 

 

 

2,540

 

Total equity

 

 

78,873

 

 

 

150,118

 

Total liabilities and stockholders' equity

 

$

232,261

 

 

$

312,717

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

 

3


 

RENTECH, INC.

Consolidated Statements of Operations

(Amounts in thousands, except per share data)

 

 

 

For the Three Months Ended

June 30,

 

 

For the Six Months Ended

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

11,039

 

 

$

16,336

 

 

$

27,274

 

 

$

39,652

 

Service revenues

 

 

13,699

 

 

 

15,457

 

 

 

29,685

 

 

 

32,078

 

Total revenues

 

 

24,738

 

 

 

31,793

 

 

 

56,959

 

 

 

71,730

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

12,881

 

 

 

20,655

 

 

 

32,081

 

 

 

47,158

 

Service

 

 

12,534

 

 

 

12,817

 

 

 

26,300

 

 

 

26,120

 

Total cost of sales

 

 

25,415

 

 

 

33,472

 

 

 

58,381

 

 

 

73,278

 

Gross loss

 

 

(677

)

 

 

(1,679

)

 

 

(1,422

)

 

 

(1,548

)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

6,146

 

 

 

7,742

 

 

 

14,830

 

 

 

16,856

 

Depreciation and amortization

 

 

453

 

 

 

775

 

 

 

1,077

 

 

 

1,783

 

Asset impairment

 

 

 

 

 

 

 

 

7,759

 

 

 

 

Goodwill impairment

 

 

 

 

 

 

 

 

13,125

 

 

 

 

Other expense, net

 

 

348

 

 

 

1,651

 

 

 

361

 

 

 

1,664

 

Total operating expenses

 

 

6,947

 

 

 

10,168

 

 

 

37,152

 

 

 

20,303

 

Operating loss

 

 

(7,624

)

 

 

(11,847

)

 

 

(38,574

)

 

 

(21,851

)

Other expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,520

)

 

 

(2,511

)

 

 

(4,917

)

 

 

(6,083

)

Loss on debt repayment

 

 

 

 

 

(3,295

)

 

 

 

 

 

(3,295

)

Other income (expense)

 

 

207

 

 

 

367

 

 

 

(1,137

)

 

 

513

 

Total other expenses, net

 

 

(2,313

)

 

 

(5,439

)

 

 

(6,054

)

 

 

(8,865

)

Loss from continuing operations before income taxes and equity in

   loss of investee

 

 

(9,937

)

 

 

(17,286

)

 

 

(44,628

)

 

 

(30,716

)

Income tax benefit

 

 

(26

)

 

 

(9,705

)

 

 

(1,250

)

 

 

(12,107

)

Loss from continuing operations before equity in loss of

   investee

 

 

(9,911

)

 

 

(7,581

)

 

 

(43,378

)

 

 

(18,609

)

Equity in loss of investee

 

 

27,212

 

 

 

1,360

 

 

 

28,130

 

 

 

1,360

 

Loss from continuing operations

 

 

(37,123

)

 

 

(8,941

)

 

 

(71,508

)

 

 

(19,969

)

Income from discontinued operations, net of tax

 

 

 

 

 

305,100

 

 

 

96

 

 

 

310,674

 

Net income (loss)

 

 

(37,123

)

 

 

296,159

 

 

 

(71,412

)

 

 

290,705

 

Net (income) loss attributable to noncontrolling interests

 

 

66

 

 

 

(157

)

 

 

77

 

 

 

(3,563

)

Loss on redemption of preferred stock

 

 

 

 

 

(11,049

)

 

 

 

 

 

(11,049

)

Preferred stock dividends

 

 

 

 

 

 

 

 

 

 

 

(1,320

)

Net income (loss) attributable to Rentech common shareholders

 

$

(37,057

)

 

$

284,953

 

 

$

(71,335

)

 

$

274,773

 

Net income (loss) per common share allocated to Rentech common

   shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(1.60

)

 

$

(0.87

)

 

$

(3.08

)

 

$

(1.41

)

Discontinued operations

 

$

0.00

 

 

$

12.89

 

 

$

0.00

 

 

$

12.99

 

Net income (loss)

 

$

(1.60

)

 

$

12.05

 

 

$

(3.07

)

 

$

11.61

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(1.60

)

 

$

(0.87

)

 

$

(3.08

)

 

$

(1.41

)

Discontinued operations

 

$

0.00

 

 

$

12.89

 

 

$

0.00

 

 

$

12.99

 

Net income (loss)

 

$

(1.60

)

 

$

12.05

 

 

$

(3.07

)

 

$

11.61

 

Weighted-average shares used to compute net income (loss) per common

   share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

23,211

 

 

 

23,067

 

 

 

23,206

 

 

 

23,051

 

Diluted

 

 

23,211

 

 

 

23,067

 

 

 

23,206

 

 

 

23,051

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

4


 

RENTECH, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)

 

 

 

For the Three Months Ended

June 30,

 

 

For the Six Months Ended

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

Net income (loss)

 

$

(37,123

)

 

$

296,159

 

 

$

(71,412

)

 

$

290,705

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

(407

)

 

 

(230

)

 

 

(474

)

 

 

7,254

 

Other comprehensive income (loss)

 

 

(407

)

 

 

(230

)

 

 

(474

)

 

 

7,254

 

Comprehensive income (loss)

 

 

(37,530

)

 

 

295,929

 

 

 

(71,886

)

 

 

297,959

 

Less: net (income) loss attributable to noncontrolling interests

 

 

66

 

 

 

(157

)

 

 

77

 

 

 

(3,563

)

Less: other comprehensive income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to Rentech

 

$

(37,464

)

 

$

295,772

 

 

$

(71,809

)

 

$

294,396

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

 

5


 

RENTECH, INC.

Consolidated Statements of Stockholders’ Equity (Deficit)

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Rentech

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

Noncontrolling

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity (Deficit)

 

 

Interests

 

 

Equity (Deficit)

 

 

 

(Unaudited)

 

Balance, December 31, 2015

 

 

23,033

 

 

$

230

 

 

$

543,724

 

 

$

(531,971

)

 

$

(27,204

)

 

$

(15,221

)

 

$

(65,199

)

 

$

(80,420

)

Sale of investment in RNP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,638

 

 

 

67,638

 

Common stock issued for services

 

 

125

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on redemption of preferred stock

 

 

 

 

 

 

 

 

(11,049

)

 

 

 

 

 

 

 

 

(11,049

)

 

 

 

 

 

(11,049

)

Dividends - preferred stock

 

 

 

 

 

 

 

 

(1,320

)

 

 

 

 

 

 

 

 

(1,320

)

 

 

 

 

 

(1,320

)

Distributions to noncontrolling

   interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,345

)

 

 

(3,345

)

Equity-based compensation expense

 

 

 

 

 

 

 

 

1,303

 

 

 

 

 

 

 

 

 

1,303

 

 

 

 

 

 

1,303

 

Restricted stock units

 

 

31

 

 

 

 

 

 

(27

)

 

 

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

Net income

 

 

 

 

 

 

 

 

 

 

 

287,142

 

 

 

 

 

 

287,142

 

 

 

3,563

 

 

 

290,705

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,254

 

 

 

7,254

 

 

 

 

 

 

7,254

 

Other

 

 

 

 

 

 

 

 

164

 

 

 

 

 

 

(283

)

 

 

(119

)

 

 

(2

)

 

 

(121

)

Balance, June 30, 2016

 

 

23,189

 

 

$

232

 

 

$

532,793

 

 

$

(244,829

)

 

$

(20,233

)

 

$

267,963

 

 

$

2,655

 

 

$

270,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2016

 

 

23,200

 

 

$

232

 

 

$

533,575

 

 

$

(362,696

)

 

$

(23,533

)

 

$

147,578

 

 

$

2,540

 

 

$

150,118

 

Common stock issued for services

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

644

 

 

 

 

 

 

 

 

 

644

 

 

 

 

 

 

644

 

Restricted stock units

 

 

6

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(71,335

)

 

 

 

 

 

(71,335

)

 

 

(77

)

 

 

(71,412

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(474

)

 

 

(474

)

 

 

 

 

 

(474

)

Other

 

 

 

 

 

 

 

 

(85

)

 

 

 

 

 

 

 

 

(85

)

 

 

84

 

 

 

(1

)

Balance, June 30, 2017

 

 

23,212

 

 

$

232

 

 

$

534,132

 

 

$

(434,031

)

 

$

(24,007

)

 

$

76,326

 

 

$

2,547

 

 

$

78,873

 

 

See Accompanying Notes to Consolidated Financial Statements.

 

 

6


 

RENTECH, INC.

Consolidated Statements of Cash Flows

(Amounts in thousands)

 

 

 

For the Six Months

Ended June 30,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(71,412

)

 

$

290,705

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Income from discontinued operations

 

 

(96

)

 

 

(310,674

)

Non-cash equity in loss of investee

 

 

28,106

 

 

 

1,329

 

Depreciation and amortization

 

 

6,996

 

 

 

11,296

 

Asset impairment

 

 

7,759

 

 

 

 

Goodwill impairment

 

 

13,125

 

 

 

 

Non-cash effect of tax benefit

 

 

(54

)

 

 

(12,107

)

Utilization of spare parts

 

 

395

 

 

 

963

 

Write-down of inventory

 

 

3,302

 

 

 

10,298

 

Loss on disposal of fixed assets

 

 

361

 

 

 

1,664

 

Loss on debt repayment

 

 

 

 

 

3,295

 

Change in deferred taxes

 

 

(259

)

 

 

32,021

 

Non-cash interest expense

 

 

410

 

 

 

314

 

Equity-based compensation

 

 

644

 

 

 

1,153

 

Other

 

 

(316

)

 

 

(381

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

5,760

 

 

 

(5,295

)

Other receivables

 

 

1,426

 

 

 

682

 

Inventories

 

 

318

 

 

 

(14,639

)

Prepaid expenses and other current assets

 

 

2,220

 

 

 

687

 

Accounts payable

 

 

(1,154

)

 

 

(3,126

)

Deferred revenue

 

 

505

 

 

 

629

 

Accrued interest

 

 

148