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Rentech, Inc. (RTK)
F4Q2010 Earnings Call Transcript
December 15, 2010 1:00 pm ET
Julie Dawoodjee – VP, IR and Communications
Hunt Ramsbottom – CEO and President
Dan Cohrs – EVP and CFO
Jeremy Sussman – Brean Murray
John Bridges – JP Morgan
Pavel Molchanov – Raymond James
Matt Farwell – Imperial Capital
Jeff Nansi [ph] – Green Finance Partners [ph]
Previous Statements by RTK
» Rentech, Inc. F3Q10 (Qtr End 06/30/10) Earnings Call Transcript
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Thank you. Welcome to Rentech's 2010 fiscal fourth quarter and year-end conference call for the period ended September 30, 2010. During this call, Hunt Ramsbottom, President and CEO of Rentech, will summarize our company’s progress during the fiscal year. Dan Cohrs, our Chief Financial Officer, will give a financial review of the fiscal period 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 terminologies 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 December 15, 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. This year, we made significant progress on the Rialto project. We are preparing to conclude the development efforts on the project so that we can close on financing in 2011. We’ve achieved significant progress on other business development efforts to commercialize our technologies in various regions. We enhanced our suite of technologies, and we demonstrated that our drop in synthetic fuels performed flawlessly in real world conditions, in commercial aircraft and on-road diesel vehicles.
I’ll start first with our commercial projects. Our Rialto project is designed to deploy our Rentech-SilvaGas biomass gasification and Fischer-Tropsch technologies. The project would process green waste diverted from landfills to produce approximately 35 megawatts of renewable base-load power and 640 barrels per day of primarily renewable synthetic RenDiesel fuel. Commercial scale energy facilities, such as our Rialto Project, are complex undertakings. And I want to spend some time walking you through the various dimensions of this project.
This past year we completed the following milestones on schedule and on budget. We completed feasibility engineering. Jacobs Engineering provided design work and cost us 90% of the project’s equipment. We completed an initial detailed cost estimate. Larkspur Associates completed the project’s detailed construction estimate, building on Jacobs’ feasibility work.
All major permit applications were filed, and we are in frequent contact with the major permitting authorities, including the South Coast Air Quality Management District. The technical impact studies have been completed along with the initial study report and noticed the preparation for the California Environmental Quality Act. The air permit work and all other permitting activities are on schedule.
We signed option agreements to secure approximately 40 acres of land and easements needed to build the facility. We are negotiating additional LOIs with multiple day scholars, which would provide 100% of the facility’s feedstock requirements. We’re currently in exclusive negotiations for power purchase agreement for all of the project’s renewable power production. We are also in discussions for the sale of the remaining 80% of the project’s synthetic diesel fuel output with fleets, other diesel users, as well as refiners and fuel brokers.
An engineering report from RW Beck is the independent engineer validated the individual technologies we use in the project, the integration of all the technologies, the plant’s production capabilities, and the project’s initial capital cost estimates. Front-End Engineering and Design, or FEED, work is on schedule, nearing completion and on budget.
Fluor has completed about 80% of FEED, and all process design packages, or PDPs, are complete. The completed PDPs are being integrated into the remaining FEED work relating to the facility layout, sizing and specifications of all equipment. All drawn reviews are expected to be completed by early January with the equipment specifications and detailed cost estimates to follow.
We are in act of dialog with the Department of Energy, and we continue to be a candidate for the DOE loan guarantee program under Section 1705. We are providing updates to the DOE as progress is made on certain milestones. We are currently finalizing our EPC contract strategy to enable us to issue a notice to proceed to our selected contractor in the summer of 2011 when we anticipate construction will commence on the site.