Southwest Iowa Renewable Energy Announces Results of Third Quarter
Council Bluffs, Iowa ----- August 14, 2012---- On August 14, 2012, Southwest Iowa Renewable Energy, LLC (“SIRE”) announced its unaudited financial results for the third quarter of fiscal year 2012 (“Fiscal 2012”) which ended June 30, 2012. SIRE reported a net loss of $4,153,049, or $316.09 per unit, compared to a net loss of $1,287,162, or $97.96 per unit, for the same period during the year ended September 30, 2011 (“Fiscal 2011”). For Fiscal 2012 through June 30, 2012, SIRE reported a net income of $855,593 or $65.12 compared to a net loss of $2,357,512 or $179.43 per unit for the same period in Fiscal 2011. The cash flow provided by operations for the first three quarters of Fiscal 2012 was $12,346,881, compared to $12,427,088 for the same period in Fiscal 2011.
Adjusted EBITDA, which is defined as earnings before interest, income taxes, and depreciation and/or amortization (“EBITDA”), as adjusted for unrealized hedging losses (gains), was $787,024 for the third quarter in Fiscal 2012 and $4,577,670 for the same period in Fiscal 2011. Adjusted EBITDA for Fiscal 2012 through June 30, 2012 was $11,720,646 and $16,477,891 for the same period in Fiscal 2011. At June 30, 2012, SIRE had $8,237,313 million in cash and equivalents and $14,625,000 available under committed loan agreements (subject to satisfaction of specified lending conditions and covenants), as well as an additional $6,250,000 available under uncommitted loan agreements. For reconciliations of Adjusted EBITDA to net income attributable to SIRE, see “Adjusted EBITDA” below.
Brian Cahill, SIRE’s General Manager and CEO, stated, “Our third quarter in Fiscal 2012, reflects less than favorable margins resulting from the relative prices of our primary inputs and products during the quarter. In particular, the key factors during the quarter were increases in the price of our primary input, corn, resulting in part from the current drought conditions in the United States. Notwithstanding these margins, with our positive cash flow we have continued to make scheduled and excess cash flow payments to our banks, resulting in further principal reduction in overall debt and reduced interest costs. We have also continued to make modest capital investments that are resulting in incremental productivity improvements in our plant.”
About Southwest Iowa Renewable Energy, LLC:
SIRE is an Iowa limited liability company, located in Council Bluffs, Iowa, formed in March, 2005 to construct and operate a 110 million gallon name plate capacity ethanol plant. SIRE began producing ethanol in February, 2009 and sells its ethanol, modified wet distillers grains with solubles, corn syrup, and corn oil in the continental United States. SIRE also sells its dried distillers grains with solubles in the continental United States, Mexico and the Pacific Rim.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are made in good faith by SIRE and are identified by including terms such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “plans,” or similar language. In connection with these safe-harbor provisions, SIRE has identified in its Annual Report on Form 10-K for the fiscal year ended September 30, 2011, and in the Company's subsequent filings with the SEC, important factors that could cause actual results to differ materially from those contained in any forward-looking statement made by or on behalf of SIRE, including, without limitation, the risk and nature of SIRE’s business and the effects of general economic conditions on SIRE. SIRE may experience significant fluctuations in future operating results due to a number of economic conditions, including, but not limited to, competition in the ethanol industry, commodity market risks, financial market risks, counter-party risks, and risks associated with changes to federal policy or regulation. The cautionary statements in this press release expressly qualify all of SIRE’s forward-looking statements. The forward-looking statements contained in this press release are included in the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. SIRE further cautions that such factors are not exhaustive or exclusive. SIRE does not undertake to update any forward-looking statement which may be made from time to time by or on behalf of SIRE unless an update is required by applicable securities laws.
SOUTHWEST IOWA RENEWABLE ENERGY, LLC
Balance Sheets
| | | | | | |
| ASSETS | June 30, 2012 | | September 30, 2011 |
| | | (Unaudited) | | | |
| Current Assets | | | | | |
| Cash and cash equivalents | $ | 8,237,313 | | $ | 11,006,590 |
| Restricted cash | | 362,382 | | | 301,361 |
| Accounts Receivable | | 325,999 | | | 224,176 |
| Accounts receivable, related party | | 10,110,432 | | | 17,642,245 |
| Due from broker | | 2,052,381 | | | 3,428,450 |
| Derivative financial instruments, related party | | 1,090,706 | | | - |
| Inventory | | 12,348,405 | | | 11,198,147 |
| Prepaid expenses and other | | 1,407,079 | | | 1,107,354 |
| Total current assets | | 35,934,697 | | | 44,908,323 |
| | | | | | |
| Property, Plant and Equipment | | | | | |
| Land | | 2,064,090 | | | 2,064,090 |
| Plant, Building and Equipment | | 204,431,928 | | | 203,749,761 |
| Office and Other Equipment | | 750,511 | | | 742,360 |
| Total Cost | | 207,246,529 | | | 206,556,211 |
| Accumulated Depreciation | | (50,852,792) | | | (42,293,441) |
| Net property and equipment | | 156,393,737 | | | 164,262,770 |
| | | | | | |
| Other Assets | | | | | |
| Financing costs, net of amortization of $2,693,184 and $2,341,400 | | 1,509,956 | | | 1,538,733 |
| Total Assets | $ | 193,838,390 | | $ | 210,709,826 |
SOUTHWEST IOWA RENEWABLE ENERGY, LLC
Balance Sheets
| | | | | | |
| LIABILITIES AND MEMBERS' EQUITY | June 30, 2012 | | September 30, 2011 |
| | | (Unaudited) | | | |
| Current Liabilities | | | | | |
| Accounts payable | $ | 1,741,970 | | $ | 2,090,561 |
| Accounts payable, related parties | | 5,495,449 | | | 5,239,128 |
| Derivative financial instruments, related party | | - | | | 2,097,075 |
| Derivative financial instruments | | 1,036,750 | | | 2,875,075 |
| Accrued expenses | | 2,376,929 | | | 2,615,092 |
| Accrued expenses, related parties | | 2,955,988 | | | 3,831,583 |
| Current maturities of notes payable | | 15,090,684 | | | 21,236,780 |
| Total current liabilities | | 28,697,770 | | | 39,985,294 |
| | | | | | |
| Long Term Liabilities | | | | | |
| Notes payable, less current maturities | | 116,036,306 | | | 121,400,805 |
| Other | | 525,013 | | | 600,010 |
| Total long term liabilities | | 116,561,319 | | | 122,000,815 |
| | | | | | |
| Commitments and Contingencies | | | | | |
| | | | | | |
| Members' Equity | | | | | |
| Members' capital, 13,139 Units issued and outstanding | | 76,474,111 | | | 76,474,111 |
| Accumulated (deficit) | | (27,894,810) | | | (27,750,394) |
| Total members' equity | | 48,579,301 | | | 48,723,717 |
| Total Liabilities and Members' Equity | $ | 193,838,390 | | $ | 210,709,826 |
Financial Results
SOUTHWEST IOWA RENEWABLE ENERGY, LLC
Statements of Operations (Unaudited)
| | | | | | | | | | | | |
| | Three Months Ended June 30, 2012 | | Three Months Ended June 30, 2011 | | Nine Months Ended June 30, 2012 | | Nine Months Ended June 30, 2011 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Revenues | $ | 79,820,338 | | $ | 94,853,474 | | $ | 264,896,990 | | $ | 236,555,894 |
| Cost of Goods Sold | | | | | | | | | | | |
| Cost of goods sold-non hedging | | 81,065,194 | | | 87,611,198 | | | 257,677,120 | | | 214,589,874 |
| Realized & unrealized hedging (gains) | | | | | | | | | | | |
| and losses | | (537,629) | | | 5,180,771 | | | (4,274,696) | | | 13,792,563 |
| | | 80,527,565 | | | 92,791,969 | | | 253,402,424 | | | 228,382,437 |
| | | | | | | | | | | | |
| Gross Margin (Loss) | | (707,227) | | | 2,061,505 | | | 11,494,566 | | | 8,173,457 |
| | | | | | | | | | | | |
| General and Administrative Expenses | | 1,048,264 | | | 933,741 | | | 3,377,965 | | | 3,293,090 |
| | | | | | | | | | | | |
| Operating Income (Loss) | | (1,755,491) | | | 1,127,764 | | | 8,116,601 | | | 4,880,367 |
| | | | | | | | | | | | |
| Other (Income) Expense | | | | | | | | | | | |
| Interest Income | | (5,346) | | | (5,853) | | | (16,893) | | | (12,862) |
| Interest Expense | | 2,408,809 | | | 2,426,329 | | | 7,341,800 | | | 7,312,267 |
| (Gain) Loss on disposal of fixed assets | | - | | | - | | | 10,503 | | | - |
| Miscellaneous income | | (5,905) | | | (5,550) | | | (74,402) | | | (61,526) |
| Total | | 2,397,558 | | | 2,414,926 | | | 7,261,008 | | | 7,237,879 |
| | | | | | | | | | | | |
| Net Income (Loss) | $ | (4,153,049) | | $ | (1,287,162) | | $ | 855,593 | | $ | (2,357,512) |
| | | | | | | | | | | | |
| Weighted Average Units Outstanding | | | | | | | | | | | |
| - Basic & Diluted | | 13,139 | | | 13,139 | | | 13,139 | | | 13,139 |
| Net income (loss) per unit | | | | | | | | | | | |
| - basic & diluted | $ | (316.09) | | $ | (97.96) | | $ | 65.12 | | $ | (179.43) |
Adjusted EBITDA
Management uses Adjusted EBITDA, a non-GAAP measure, to measure the SIRE’s financial performance and to internally manage its business. Management believes that adjusted EBITDA provides useful information to investors as a measure of comparison with peer and other companies. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with generally accepted accounting principles. Adjusted EBITDA calculations may vary from company to company. Accordingly, our computation of Adjusted EBITDA may not be comparable with a similarly-titled measure of another company.
The following sets forth the reconciliation of Net Loss to Adjusted EBITDA (unaudited) for the periods indicated:
| | Three Months Ended June 30, 2012 | | Three Months Ended June 30, 2011 |
| | | | | | |
| Net loss | $ | (4,153,049) | | $ | (1,287,162) |
| Interest Expense, net | | 2,403,463 | | | 2,420,476 |
| Depreciation | | 2,859,105 | | | 2,717,789 |
| EBITDA | | 1,109,519 | | | 3,851,103 |
| Unrealized hedging (gains) losses | | (322,495) | | | 726,567 |
| Adjusted EBITDA | $ | 787,024 | | $ | 4,577,670 |
| Adjusted EBITDA per unit | $ | 59.90 | | $ | 348.40 |
| | Nine Months Ended June 30, 2012 | | Nine Months Ended June 30, 2011 |
| | | | | | |
| Net Income (Loss) | $ | 855,593 | | $ | (2,357,512) |
| Interest Expense, net | | 7,324,907 | | | 7,299,405 |
| Depreciation | | 8,566,253 | | | 10,809,431 |
| EBITDA | | 16,746,753 | | | 15,751,324 |
| Unrealized hedging (gains) losses | | (5,026,107) | | | 726,567 |
| Adjusted EBITDA | $ | 11,720,646 | | $ | 16,477,891 |
| Adjusted EBITDA per unit | $ | 892.05 | | $ | 1,254.12 |
Statistical Information
| Three Months Ended June 30, 2012 (Unaudited) | | | Three Months Ended June 30, 2011 (Unaudited) |
| | | | | | | | | | | |
| Statistical Revenue Information | Gallons / Tons Sold | % of Revenues | | Gallons / Tons Average Price | | Statistical Revenue Information | Gallons / Tons Sold | % of Revenues | | Gallons / Tons Average Price |
| Denatured Ethanol | 28,735,866 | 74% | | $ 2.07 | | Denatured Ethanol | 30,703,782 | 82% | | $ 2.53 |
| Dried Distiller's Grains | 71,827 | 19% | | $ 209.92 | | Dried Distiller's Grains | 70,926 | 15% | | $ 194.74 |
| Corn Oil | 3,580 | 3% | | $ 773.37 | | Corn Oil | 2,230 | 2% | | $ 907.64 |
| Wet Distiller's Grains | 26,870 | 3% | | $ 89.59 | | Wet Distiller's Grains | 10,988 | 1% | | $ 69.32 |
| Syrup | 5,329 | 0% | | $ 65.88 | | Syrup | 13,212 | 0% | | $ 12.44 |
| Nine Months Ended June 30, 2012 (Unaudited) | | | Nine Months Ended June 30, 2011 (Unaudited) |
| | | | | | | | | | | |
| Statistical Revenue Information | Gallons / Tons Sold | % of Revenues | | Gallons / Tons Average Price | | Statistical Revenue Information | Gallons / Tons Sold | % of Revenues | | Gallons / Tons Average Price |
| Denatured Ethanol | 92,351,685 | 77% | | $ 2.22 | | Denatured Ethanol | 85,766,206 | 81% | | $ 2.24 |
| Dried Distiller's Grains | 221,657 | 17% | | $ 200.63 | | Dried Distiller's Grains | 227,968 | 18% | | $ 166.69 |
| Corn Oil | 9,818 | 3% | | $ 758.12 | | Corn Oil | 3,958 | 1% | | $ 892.95 |
| Wet Distiller's Grains | 78,410 | 3% | | $ 86.68 | | Wet Distiller's Grains | 16,461 | 0% | | $ 68.25 |
| Syrup | 23,817 | 0% | | $ 50.21 | | Syrup | 27,400 | 0% | | $ 13.71 |
Contact:
Brett L. Frevert, CFO
Southwest Iowa Renewable Energy, LLC
712.366.0392
