* Net income and fully diluted earnings per share for Q3'08, both of which were positively affected by significant gains on hedging activities, totaled $2.5 million and $0.06 per share, respectively * Cash provided by operations totaled $14.3 million in Q3'08, and $56.6 million for the nine months in 2008 * Record shipments of 226.6 million gallons of ethanol in Q3'08 * Corn costs for the third quarter of $5.78 per bushel remained lower than CBOT average of $5.82 per bushel * Purchase of minority interest in Nebraska Energy completed * Construction schedule for Aurora West expansion project extended
PEKIN, Ill., Oct. 30, 2008 (GLOBE NEWSWIRE) -- Aventine Renewable Energy Holdings, Inc. (NYSE:AVR), a leading producer, marketer and end-to-end provider of clean renewable energy, today released results for its third quarter and nine months ended September 30, 2008.
Ron Miller, Aventine's President and Chief Executive Officer said, "Our operations generated positive cash flow despite a difficult operating environment. In the third quarter, we generated cash from operations of $14.3 million. For the first nine months of 2008, we generated cash flow from operations totaling $56.6 million. We continue to focus on operational excellence and on our net liquidity position given the cash requirements necessary to complete our new facilities. Operationally and in the marketplace, we continue to be a leader in the ethanol sector."
Third Quarter 2008 Financial Highlights
Net income for the quarter was $2.5 million, or $0.06 per diluted share, as compared to a net loss of $1.9 million, or $0.05 per diluted share, in Q2'08. The net loss for Q2'08 included an $8.5 million loss related to auction rate securities. Excluding this loss, the Company earned $6.6 million, or $0.16 per fully diluted share in Q2'08. Gross profit in the current quarter was negatively affected by higher corn costs, higher conversion costs resulting from increased utility and maintenance costs, a lower of cost or market inventory adjustment and lower co-product returns. In Q3'08, we recorded a non-cash lower of cost or market inventory adjustment of $4.7 million due to declining ethanol and corn prices. Net income in Q3'08 was positively affected by significant gains on hedging activities, including gains on short corn positions and gains on short gasoline positions used to fix prices on gasoline-indexed ethanol contracts, and lower selling, general and administrative expenses.
Revenues in Q3'08 were flat at $599.5 million, as compared to $601.6 million in Q2'08, with higher volumes offset by lower pricing. Co-product revenue decreased to $33.7 million in Q3'08 from $37.0 million in Q2'08, an 8.9% decrease, as a result of declines in co-product pricing approximating the decline in CBOT corn prices. Total gallons of ethanol sold were 226.6 million gallons in Q3'08, versus 220.3 million gallons in Q2'08, primarily reflecting increased supply as gallons sourced from marketing alliance partners increased along with purchase/resale transactions. We also added 5.6 million gallons to inventory during the third quarter. The average gross sales price of ethanol in Q3'08 was $2.47 per gallon, down from $2.50 per gallon received in Q2'08.
Our average inventory cost of $2.08 per gallon at the end of Q3'08 (including the effect of the lower of cost or market inventory adjustment) versus $2.28 at the end of Q2'08, using our weighted-average FIFO approach to calculating inventory, reflects the decline in ethanol prices during the quarter. The economic impact of selling gallons held in inventory at the end of Q2'08 with a $2.28 per gallon value as prices decreased during Q3'08 was a negative impact to cost of goods sold of approximately $7.3 million. This impact includes the non-cash lower of cost or market inventory adjustment of $4.7 million recorded in Q3'08. Rising prices throughout the second quarter of 2008 had positively impacted cost of goods sold by approximately $13.7 million in the same manner in Q2'08.
Gallons sold in Q3'08 totaled 226.6 million gallons, as compared to 220.3 million gallons in Q2'08. In the third quarter of 2008, we produced 47.4 million gallons, purchased 130.3 million gallons from our marketing alliance partners, purchased 54.5 million gallons from unaffiliated producers and marketers and increased inventory by 5.6 million gallons. Equity production increased in Q3'08 from Q2'08 by approximately 3.9%. Equity production was 47.4 million gallons in Q3'08 versus 45.6 million gallons in Q2'08.
Corn costs in the third quarter of 2008 increased to $5.78 per bushel, higher than our Q2'08 cost of $5.38 per bushel but still lower than the Q3'08 CBOT average daily closing price of $5.82 per bushel. Our corn costs do not include realized or unrealized gains or losses from corn futures contracts, as these are included in other non-operating income. At the end of Q3'08, we had fixed the pricing on approximately 39% of our corn requirements through December 2008 at a price of $5.25 per bushel through a combination of physical forward contracts, cash contracts and CBOT futures contracts.
Co-product revenue for Q3'08 was $33.7 million, versus $37.0 million for Q2'08. Co-product revenue, as a percentage of corn cost, fell to 32.3%. Lower pricing was the major cause of the decrease. In Q3'08, we sold 284.1 thousand tons of co-products, versus 272.8 thousand tons of co-products in Q2'08. Co-product tonnage increased primarily as a result of a change in product mix, with increased sales of wet distillers grain and increased CO2 sales.
Conversion costs in the quarter increased $0.04 per gallon to $0.77 per gallon, as compared to $0.73 per gallon in Q2'08. The increase in conversion costs was primarily due to increased maintenance and utility costs.
Our freight and distribution costs in Q3'08 were $0.19 per gallon versus $0.20 per gallon in Q2'08. Freight/logistics cost per gallon as discussed is calculated by taking total freight/logistics expenses incurred (including costs to ship co-products) and dividing by the total ethanol gallons sold. Although fuel surcharges are easing, freight costs continue to be negatively impacted by such surcharges, and from general freight increases associated with moving product along longer supply lines to emerging new markets in the Southeast.
Depreciation expense was $3.4 million in Q3'08 and $3.3 million in Q2'08.
Selling, general & administrative expenses were $8.8 million in Q3'08 as compared to $10.1 million in Q2'08. The lower expense in Q3'08 primarily relates to reductions in stock-based compensation expense as a result of changes in forfeiture estimates and the number of performance shares expected to vest totaling $1.2 million. In addition, legal and other outside service fees decreased by $0.6 million.
Interest income for Q3'08 totaled $0.3 million, as compared to $0.5 million in Q2'08. Interest income decreased primarily due to lower levels of available funds to invest.
Interest expense for the third quarter was $0.2 million. Interest expense includes $7.5 million in interest on $300 million aggregate principal amount of our 10% senior unsecured notes, $0.2 million of amortization of deferred financing fees, reduced by capitalized interest of $7.5 million. We made a semi-annual interest payment of $15 million on our 10% senior unsecured notes as scheduled on October 1.
Other non-operating income for the third quarter of 2008 includes $18.4 million of realized and unrealized net gains on derivative contracts, including the effect of marking to market derivative contracts, versus net losses in the second quarter of 2008 of $14.1 million. Derivative gains and losses for Q3'08 are composed of net realized gains on CBOT corn positions of $0.3 million, net realized losses on short gasoline future positions of $4.8 million, net unrealized gains on CBOT corn positions of $12.3 million and net unrealized gains on short gasoline positions of $10.6 million. All of our derivative positions require cash settlement on a daily basis. Without such cash settlement on derivative contracts, cash flows from operations would have been significantly lower. Offsetting our short gasoline positions are forward ethanol sales contracts that are indexed to gasoline. Such contracts are not marked to market. Also not marked to market are forward contracts to purchase corn that are either stand alone, or are taken against short futures positions.
Income tax expense in Q3'08 totaled $1.8 million. The effective income tax rate in Q3'08 was approximately 42% of pre-tax income. For the year, the Company does not expect to receive an income tax benefit related to the losses incurred on auction rate securities as it does not expect to have sufficient capital gains to offset the $31.6 million capital loss. As a result, the Company recorded a valuation allowance equal to the amount of the income tax benefit it recorded resulting from the loss on the auction rate securities.
Third Quarter 2008 versus Third Quarter 2007
For Q3'08, net income was $2.5 million, or $0.06 per diluted share, as compared to net income of $3.0 million, or $0.07 per diluted share, in Q3'07. Net income in the current quarter decreased primarily as a result of lower commodity spreads and higher conversion costs, offset by realized and unrealized net gains on derivative positions, lower SG&A costs and larger capitalized interest amounts. Commodity spread, defined as gross ethanol selling price per gallon less net corn cost per gallon, declined from $1.09 per gallon in Q3'07 to $0.98 per gallon in Q3'08. The average sales price per gallon of ethanol increased in Q3'08 to $2.47 per gallon from the $2.01 average received in Q3'07. However, corn costs during the third quarter of 2008 averaged $5.78 per bushel, significantly higher than our third quarter 2007 cost of $3.81 per bushel. Conversion cost in Q3'08 was $0.77 per gallon as compared to $0.63 per gallon in Q3'07.
The average inventory cost of $2.08 per gallon at the end of the Q3'08 (including the effect of the lower of cost or market inventory adjustment) versus $2.28 at the end of Q2'08, using our weighted-average FIFO approach to calculating inventory, reflects declining ethanol prices during the quarter. The economic impact of selling gallons held in inventory at the end of Q2'08 with a $2.28 per gallon value as prices decreased during Q3'08 was a negative impact to cost of goods sold of approximately $7.3 million. This amount includes the $4.7 million lower of cost or market inventory adjustment. Similarly, declining prices throughout Q3'07 negatively impacted cost of goods sold by $10.6 million.
Gallons of ethanol sold in the third quarter of 2008 increased to a record 226.6 million gallons, as compared to 162.0 million gallons in the third quarter of 2007. Ethanol sales for the quarter increased primarily as a result of an increase in the number of gallons available to sell from marketing alliance partners and purchase/resale transactions. Gallons produced during the quarter increased to 47.4 million gallons from 46.8 million gallons in the third quarter of 2007.
Capital Expenditures and Liquidity
During the third quarter of 2008, we spent approximately $84.7 million, excluding capitalized interest, on capital projects. Of this amount, $3.3 million was spent on maintenance and environmental projects, while $81.4 million was spent on capacity expansion projects. The remaining amount we currently expect to spend through the second quarter of 2009 on capital expansion projects, excluding capitalized interest, is approximately $109.9 million.
As of September 30, 2008, the Company has available under its existing secured revolving credit facility approximately $132.9 million in borrowing capacity (including the $50 million we previously indicated that we do not expect to be able to access), which is net of $22.2 million in outstanding letters of credit. Nothing was drawn on this facility at the end of the third quarter of 2008. In early October 2008, we drew down $60 million on our secured revolving credit facility. We have invested these funds in cash equivalents until needed. Proforma cash on hand at September 30, 2008, including this $60 million borrowing, would have been $96.3 million.
In addition to extending the construction period and pushing out the start-up date for our ethanol facility expansion in Aurora, Nebraska as previously announced, we continue to evaluate a number of other actions designed to increase the amount of liquidity available to us, including; reducing inventory levels, seeking additional debt and equity financing, potentially delaying construction or start-up of our Mt. Vernon, Indiana expansions and other strategic initiatives. We cannot assure you that any of these initiatives will generate additional liquidity for us on acceptable terms or at all.
Purchase of Minority Interest in Nebraska Energy, LLC
In early October, the Company completed its purchase of the 21.58% of Nebraska Energy, LLC which it did not already own. The Company issued 1 million shares of its common stock to acquire the remaining interest.
Marketing Alliance and Other
Purchases from marketing alliance partners increased approximately 8% in Q3'08 compared to Q2'08. Our marketing alliance annualized volume at the end of Q3'08 totaled 639 million gallons. With our own equity production, our marketing alliance partner volumes, and purchase/resale volumes, we distributed approximately 900 million gallons of ethanol on an annualized basis in Q3'08.
The current difficult operating environment for ethanol production has led to some curtailments of production and may also force some of our marketing alliance partners to reduce or temporarily cease production. We have experienced some disruptions in contracted supply volumes in the fourth quarter.
During the third quarter of 2008, the Company did not repurchase any of its common stock under the Company's stock repurchase program approved by the Board of Directors in October 2006. The amount remaining under the authorization to repurchase stock is approximately $45.9 million.
Third Quarter Conference Call
The Company will hold a conference call at 8:00 am central time (9:00 am eastern time) on Friday, October 31, 2008 to discuss the contents of this press release. Dial in to the conference call at (888) 713-4211 (U.S.) or (617) 213-4864 (International), access code: 20420705, ten minutes prior to the scheduled start time. A link to the broadcast can be found on the Company's website at www.aventinerei.com in the Investor Relations section under the "Conference Calls" link. If you are unable to participate at this time, a replay will be available through December 1, 2008 on this website or by dialing (888) 286-8010 (U.S.) or (617) 801-6888 (International), access code: 58725384.
The tables and information following the text of this press release provide financial data that are included in this press release and that will be discussed on the conference call. This includes a reconciliation of net income excluding losses related to auction rate securities and net income to adjusted earnings before interest, taxes, depreciation and amortization. This press release, including these financial details, is now available on the Aventine website at www.aventinerei.com in the Investor Relations section under the heading Press Releases.
About Aventine
Aventine is a leading producer, marketer and end-to-end distributor of ethanol to many leading energy companies in the United States. In addition to ethanol, Aventine also produces distillers grains, corn gluten feed, corn germ and brewers' yeast. Our internet address is www.aventinerei.com.
Forward Looking Statements
Certain information included in this press release may be deemed to be "forward looking statements" within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release, are forward looking statements. Any forward looking statements are not guarantees of Aventine's future performance and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by such forward looking statements. Aventine disclaims any duty to update any forward looking statements. Some of the factors that may cause Aventine's actual results, developments and business decisions to differ materially from those contemplated by such forward looking statements include the following:
* Changes in or elimination of laws, tariffs, trade or other controls
or enforcement practices such as:
-- National, state or local energy policy;
-- Federal ethanol and biodiesel tax incentives;
-- Regulation currently proposed and/or under consideration which
may increase the existing renewable fuel standard and other
legislation mandating the usage of ethanol or biodiesel;
-- State and federal regulation restricting or banning the use of
Methyl Tertiary Butyl Ether;
-- Environmental laws and regulations applicable to Aventine's
operations and the enforcement thereof;
* Changes in weather and general economic conditions;
* Overcapacity within the ethanol, biodiesel and petroleum refining
industries;
* Total United States consumption of gasoline;
* Availability and costs of products and raw materials, particularly
corn, coal and natural gas;
* Labor relations;
* Fluctuations in petroleum prices;
* The impact on margins from a change in the relationship between
prices received from the sale of co-products and the price paid for
corn;
* Aventine's or its employees' failure to comply with applicable laws
and regulations;
* Aventine's ability to generate free cash flow to invest in its
business and service any indebtedness;
* Limitations and restrictions contained in the instruments and
agreements governing Aventine's indebtedness;
* Aventine's ability to raise additional capital and secure
additional financing, and our ability to service such debt, if
obtained;
* Aventine's ability to retain key employees;
* Liability resulting from actual or potential future litigation;
* Competition;
* Plant shutdowns or disruptions at our plant or plants whose
products we market;
* Availability of rail cars and barges;
* Potential decreases in marketing alliance volumes resulting from
the acquisition of marketing alliance partners by our competitors,
the reduction of production capacity or abandonment of announced
projects by marketing alliance partners for economic reasons, the
creation of similar marketing alliances by our competitors and
other failures to renew marketing alliance contracts;
* Our ability to complete our ethanol plant expansion projects in a
timely manner and at the expected cost;
* Our ability to receive and/or renew permits to construct and/or
commence operations of our proposed capacity additions in a timely
manner, or at all; and
* Fluctuations in earnings resulting from increases or decreases in
the value of ethanol or biodiesel inventory
Aventine Renewable Energy Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(In
thousands
except
per Three months ended Nine months ended
share -----------------------------------------------------------
amounts) 9/30/08 6/30/08 9/30/07 9/30/08 9/30/07
---------------------------------------------------------------------
Net sales $599,520 $601,591 $360,674 $1,711,059 $1,192,250
Cost of
goods
sold 605,990 568,731 362,401 1,660,586 1,138,133
---------------------------------------------------------------------
Gross
profit (6,470) 32,860 (1,727) 50,473 54,117
Gross
profit % (1.1)% 5.5% (0.5)% 2.9% 4.5%
Selling,
general
and
admini-
strative
expenses 8,763 10,139 9,384 27,771 27,761
Loss
related
to
auction
rate
secur-
ities -- 8,476 -- 31,601 --
Other
(income) (405) (1,617) (169) (2,799) (847)
---------------------------------------------------------------------
Operating
income
(loss) (14,828) 15,862 (10,942) (6,100) 27,203
Other
income
(expense):
Interest
income 254 506 3,576 2,999 9,111
Interest
expense (235) (1,125) (5,359) (3,751) (12,716)
Other
non-
operating
income
(expense) 18,367 (14,121) (953) 6,114 5,055
Minority
interest 725 314 (103) 1,230 (1,346)
---------------------------------------------------------------------
Income
(loss)
before
income
taxes 4,283 1,436 (13,781) 492 27,307
Income tax
expense
(benefit) 1,797 3,354 (16,776) 10,719 (3,235)
---------------------------------------------------------------------
Net income
(loss) $2,486 $ (1,918) $2,995 $(10,227) $30,542
---------------------------------------------------------------------
Per share
data:
Income
(loss)
per
common
share
- basic: $0.06 $(0.05) $0.07 $(0.24) $0.73
---------------------------------------------------------------------
Basic
weighted
average
number of
common
shares 41,971 41,971 41,949 41,927 41,891
---------------------------------------------------------------------
Income
(loss)
per
common
share
- diluted: $0.06 $(0.05) $0.07 $(0.24) $0.72
---------------------------------------------------------------------
Diluted
weighted
average
number of
common
and common
equivalent
shares 42,010 41,999 42,385 41,958 42,497
---------------------------------------------------------------------
Gallons by
source:
Gallons
produced 47,381 45,590 46,824 140,706 146,410
Gallons
purchased
from
alliance
partners 130,278 120,225 84,638 380,392 294,452
Gallons
purchased
from non-
affiliated
producers 54,495 49,144 28,821 142,603 72,434
Inventory
(increase)
decrease (5,584) 5,305 1,746 (5,625) 652
---------------------------------------------------------------------
Total
gallons
sold 226,570 220,264 162,029 658,076 513,948
---------------------------------------------------------------------
Net income
(loss) $2,486 $(1,918) $2,995 $(10,227) $30,542
Loss
related to
auction
rate
securities -- 8,476 -- 31,601 --
---------------------------------------------------------------------
Net income
excluding
loss
related to
auction
rate
securities $2,486 $6,558 $2,995 $21,374 $30,542
---------------------------------------------------------------------
Per share
data:
Net income
per common
share
excluding
loss
related to
auction
rate
secur-
ities-
diluted: $0.06 $0.16 $0.07 $0.51 $0.72
---------------------------------------------------------------------
Diluted
weighted
average
number of
common and
common
equivalent
shares 42,010 41,999 42,385 41,958 42,497
---------------------------------------------------------------------
Aventine Renewable Energy Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Sept 30, Sept 30,
2008 Dec 31, 2007
(In thousands) (Unaudited) 2007 (Unaudited)
--------------------------------------------------------------------
Assets
------
Cash and cash equivalents $ 36,255 $17,171 $39,424
Short-term investments -- 211,500 282,868
Accounts receivable, net 77,491 73,058 47,800
Inventory 119,644 81,488 60,787
Income taxes receivable 1,850 11,962 14,186
Other current assets 9,756 12,816 5,795
Property, plant and
equipment, net 102,821 111,867 111,602
Construction in process 444,683 226,410 144,634
Net deferred tax assets -- 1,196 2,109
Other assets 14,851 14,717 13,762
--------------------------------------------------------------------
Total assets $807,351 $762,185 $722,967
--------------------------------------------------------------------
Liabilities and
Stockholders' Equity
---------------------
Accounts payable and
other accrued expenses $139,562 $97,118 $53,930
Accrued interest 15,000 7,500 15,333
Long-term debt 300,000 300,000 300,000
Minority interest 8,601 9,832 9,840
Net deferred tax liabilities 1,048 -- --
Other long-term liabilities 3,577 3,864 3,971
--------------------------------------------------------------------
Total liabilities 467,788 418,314 383,074
Stockholders' equity 339,563 343,871 339,893
--------------------------------------------------------------------
Total liabilities
and stockholders' equity $807,351 $762,185 $722,967
--------------------------------------------------------------------
Aventine Renewable Energy Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended
September 30,
----------------------
(In thousands) 2008 2007
---------------------------------------------------------------------
Operating Activities
Net income (loss) $(10,227) $ 30,542
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss related to auction rate securities 31,601 --
Lower of cost or market adjustment
related to inventory 4,538 1,600
Depreciation and amortization 10,726 9,765
Deferred income taxes 2,244 (7,939)
Stock based compensation expense 4,510 5,258
Minority interest (1,230) 1,346
Other (376) 139
Net changes in operating assets
and liabilities 14,826 13,193
---------------------------------------------------------------------
Net cash provided by operating activities 56,612 53,904
Investing Activities
Additions to property, plant and equipment (221,980) (149,898)
Sales of short-term securities 179,899 --
Indemnification proceeds 3,039 --
Proceeds from the sale of fixed assets 14 --
Investment in short-term securities -- (183,943)
---------------------------------------------------------------------
Net cash provided by (used for)
investing activities (39,028) (333,841)
Financing Activities
Proceeds from the issuance of
senior unsecured notes -- 300,000
Payment of debt issuance costs -- (8,220)
Purchase of treasury stock (991)
Other 1,500 --
Proceeds from stock option exercises -- 508
Distributions to minority shareholders -- (1,727)
---------------------------------------------------------------------
Net cash provided by financing activities 1,500 289,570
Net increase in cash and cash equivalents 19,084 9,633
---------------------------------------------------------------------
Cash and cash equivalents at
beginning of period 17,171 29,791
---------------------------------------------------------------------
Cash and cash equivalents at
end of period $36,255 $39,424
---------------------------------------------------------------------
Cost of Goods Sold Breakout (Unaudited)
Three months ended Nine months ended
(In millions) 9/30/08 6/30/08 9/30/07 9/30/08 9/30/07
------------- --------------------------------------------
Gross corn costs $104.2 $92.1 $67.1 $277.1 $206.5
Conversion costs 36.7 33.1 29.4 99.5 87.4
Depreciation 3.4 3.3 3.3 10.0 9.3
Freight/distribution
costs 44.0 44.3 31.0 130.5 89.2
Inventory change
Volume (1) (13.1) 11.2 4.0 (13.3) 2.7
Price (2) 7.3 (13.7) 10.6 (10.2) 8.6
Other (3) (0.1) 0.3 (0.1) (0.1) (0.7)
--------------------------------------------
Total inventory change (5.9) (2.2) 14.5 (23.6) 10.6
--------------------------------------------
Purchased ethanol and
pass through taxes 423.6 398.1 217.1 1,167.1 735.1
--------------------------------------------
Total cost of goods sold $606.0 $568.7 $362.4 $1,660.6 $1,138.1
--------------------------------------------
(1) Volume = change in volume x current periods price
(2) Price = change in price x previous period volume
(3) Other is made up of changes in co-product inventory and
adjustment entries related to the timing of product unloading and
volume gains or losses
This press release contains, and our conference call will include, references to net income excluding losses related to auction rate securities, net income per common share excluding loss related to auction rate securities-diluted and unaudited adjusted earnings before interest, taxes depreciation and amortization (EBITDA), along with certain operational statistics, which are non-GAAP financial measures. We have adjusted EBITDA to reflect the non-cash or non-recurring nature of some charges. The following table provides a reconciliation of net income to adjusted EBITDA. Management believes adjusted EBITDA is a meaningful measure of liquidity and the Company's ability to service debt because it provides a measure of cash available for such purposes. Additionally, management provides net income excluding losses related to auction rate securities, net income per common share excluding loss related to auction rate securities-diluted and adjusted EBITDA measures so that investors will have the same financial information that management uses with the belief that it will assist investors in properly assessing the Company's performance on a year-over-year and quarter-over-quarter basis.
(In thousands) Three months ended Nine months ended
(Unaudited) 9/30/08 6/30/08 9/30/07 9/30/08 9/30/07
---------------------------------------------------------------------
Net income (loss) $2,486 $(1,918) $2,995 $(10,227) $30,542
Depreciation 3,368 3,317 3,332 10,016 9,307
Loss related to
auction rate
securities -- 8,476 -- 31,601 --
Non-cash stock-based
compensation expense 628 2,008 1,913 4,510 5,258
Minority interest (725) (314) 103 (1,230) 1,346
Interest expense 235 1,125 5,359 3,751 12,716
Interest income (254) (506) (3,576) (2,999) (9,111)
Income tax expense
(benefit) 1,797 3,354 (16,776) 10,719 (3,235)
---------------------------------------------------------------------
Adjusted earnings
before interest, taxes,
depreciation
and amortization $7,535 $15,542 $(6,650) $46,141 $46,823
---------------------------------------------------------------------
Production and Operating Statistics (Unaudited)
Three months ended Nine months ended
9/30/08 6/30/08 9/30/07 9/30/08 9/30/07
--------------------------------------
Gross ethanol revenue
per gallon sold $2.47 $2.50 $2.01 $2.40 $2.13
Less: freight/distribution
cost per gallon sold (1) $0.19 $0.20 $0.19 $0.20 $0.17
--------------------------------------
Net ethanol revenue
per gallon sold $2.28 $2.30 $1.82 $2.20 $1.96
Corn cost per bushel $5.78 $5.38 $3.81 $5.22 $3.79
Yield (gallons per bushel) (2) 2.63 2.66 2.66 2.65 2.69
Bushels consumed (in millions) 18.0 17.1 17.6 53.1 54.4
Co-product return % (3) 32.3% 40.2% 35.8% 37.5% 34.0%
Commodity spread per gallon $0.98 $1.29 $1.09 $1.17 $1.20
Less: conversion cost per
gallon produced $0.77 $0.73 $0.63 $0.71 $0.60
Less: freight/distribution
cost per gallon (1) $0.19 $0.20 $0.19 $0.20 $0.17
--------------------------------------
Commodity spread less
conversion cost and freight
(per gallon) $0.02 $0.36 $0.27 $0.26 $0.43
Inventory value per gallon $2.08 $2.28 $1.61 $2.08 $1.61
Inventory gallons
(in millions) (4) 42.8 36.5 28.6 42.0 28.6
Total co-product revenue
(in millions) $33.7 $37.0 $24.0 $104.0 $70.3
Corn costs - gross
(in millions) $104.2 $92.1 $67.1 $277.1 $206.5
Less: Co-product revenue
assigned to corn costs
(in millions) (5) $31.3 $27.6 $20.1 $83.1 $62.0
--------------------------------------
Adjusted corn cost
(in millions) $72.9 $64.5 $47.0 $194.0 $144.5
Conversion costs (in millions) $36.7 $33.1 $29.4 $99.6 $87.4
Less: co-product returns in
excess of typical dry mill
returns (in millions) (6) $2.4 $9.4 $3.9 $20.9 $8.3
--------------------------------------
Adjusted conversion costs
(in millions) $34.3 $23.7 $25.5 $78.7 $79.1
Adjusted conversion
costs per gallon $0.72 $0.52 $0.54 $0.56 $0.54
(1) Calculated by taking total freight/distribution costs incurred
and dividing by total ethanol gallons sold. Total
freight/distribution costs as shown also include cost to ship
co-products.
(2) Yield equals gallons produced divided by bushels consumed
(3) Co-product return percentage equals co-product quarterly
revenue divided by quarterly gross corn cost
(4) Inventory gallons reflect ethanol gallons on hand at period end,
and may include adjustments for volume gains or losses.
(5) Assumes 30% co-product returns as per industry expectations
for a dry mill.
(6) Reflects excess of actual co-product revenue in excess of 30%
industry expectation for a dry mill
Outstanding Hedge Positions (Unaudited)
Weighted Marked Value at
Average To September 30, 2008
Period Quantity Price ($) Market (in millions)
---------------------------------------------------------------------
Fixed Price Forward Physical Corn Contracts
-------------------------------------------
(millions of bushels)
Q4'08 9.3 5.25 no n/a
Q1'09 4.4 5.85 no n/a
Q2'09 0.3 7.57 no n/a
Q4'09 0.7 5.07 no n/a
Long CBOT Corn Futures Positions
--------------------------------
(millions of bushels)
Q4'08 0.1 4.97 yes $0
Short CBOT Corn Futures Positions
---------------------------------
(millions of bushels)
Q4'08 1.9 6.23 yes $2.5
Q1'09 3.3 5.68 yes $2.1
Q2'09 0.3 7.99 yes $0.7
Q4'09 0.4 4.69 yes $(0.3)
Short Gasoline Futures Positions
--------------------------------
(millions of gallons)
Q4'08 3.9 2.06 yes $(1.5)