Rentech, Inc. (NASDAQ:RTK) Q1 Earnings Hurt By Declining North and South America Operations

Rentech, Inc. (NASDAQ:RTK)

A decrease in revenues from North and South America operations plunged Rentech, Inc. (NASDAQ:RTK) to a first-quarter net loss of $34.3 million compared to a net loss of $10.2 million last year. Consolidated revenues from continuing operations totaled $32.2 million down from $39.9 million in Q1 2016.

Declining North & South America Operations

Rentech, Inc. (NASDAQ:RTK)’s Fulghum Fibres division generated revenues of $19.9 million down from $27.4 million as of last year same quarter. The company has attributed the decrease to South America sales that came in at $7.3 million compared to $13.7 million as of last year. The decline was as also as a result of a drop in Chip sales to Asia which Rentech expects to pick up in the second half of the year.

Gross profit for the Fulghum division dropped to $2.3 million from $4.7 million as of Q1 2016 due to lower biomass product sales in South America and a decline in chip sales in South America. The unit also incurred impairment charges of $20.9 million made up of $13.1 million, goodwill impairment and $7.8 million in asset impairments. Operating loss for the quarter was $20.4 million compared to an operating income of $2.9 million.

New England Wood Pellet division registered revenues of $4.1 million on the delivery of 22,000 tons of wood pellets. Demand was, however, low compared to historical levels mostly affected by warm weather and an increase in demand for other heating fuels such as oil and propane. Net Loss for the unit totaled $0.5 million compared to a net loss of $0.6 million for the same period as of last year.

Revenue from Wood pellets: Industrial totaled $8.1 million on the delivery of 57,000 metric tons of wood pellets. The same represented a decline from revenues of $9.9 million as of Q1 2016. Gross profit was down to $3.4 million compared to $5 million for the same period last year,

Selling general and administrative in the quarter dropped to $4.2 million from $6 million as of last year same period. Rentech, Inc. (NASDAQ:RTK) has attributed the decline to cost saving efforts including a $1.0 million drop in personnel costs.

Class Action Lawsuit

Separately, Law offices of Vincent Wong has lodged a class action lawsuit against Rentech, Inc. (NASDAQ:RTK) over possible violation of fiduciary duty. The law firm alleges that the company’s management provided misleading statements or failed to disclose that they lacked sufficient funds to overcome headwinds at the Wawa facility to ensure the facility achieved 60% production capacity.

Failure to disclose led to Rentech, Inc. (NASDAQ:RTK)’s shares shedding 47% in market value after idling the facility on February 21, 2017.

Rentech stock was unchanged in Thursday’s trading session having dropped by $0.032 to close the day at $0.403 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Author: Monica Gray

Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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