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Hawkeye filed an S-1 with the SEC on Tuesday. Spoiler alert: this is ethanol=sexy. Credit Suisse, Morgan Stanley and Bank of America are underwriting the deal. Highlights from the filing (all excerpts are from the full SEC filing):

Company Description

We are the third largest ethanol producer in the United States based on production capacity. We believe that our access to low-cost corn supplies, approach to marketing our ethanol, operating scale, transportation infrastructure and operational expertise allow us to be one of the lowest-cost producers of ethanol in the United States. We own two of the largest ethanol production facilities in the United States and we are capable of producing aggregate ethanol output of approximately 205 MMGPY. Our Iowa Falls plant began operations in November 2004 and expanded to its current production capacity of 100 MMGPY in March 2006. In May 2006, our Fairbank plant began operations with 105 MMGPY of production capacity.

In addition to producing ethanol, we produce and sell distillers grains as ethanol co-products, which serve to offset a portion of our corn costs. We intend to expand our production capacity by another 200 MMGPY over the next few years, by breaking ground on our third plant in 2006 and our fourth plant in 2007, which will bring our total production capacity to over 400 MMGPY. We anticipate that the time from groundbreaking to start-up of production for each of these plants will be approximately 18 months.

Key Financial Data

  • 2005 Revenues: Broken down into Ethanol and Distillers Grains revenue. For 2005, total revenue was $89.1 million, 89% of which were ethanol revenues. At $79.4 million, 2005 ethanol revenues grew more than 10X over YOY.
  • First Quarter Revenues: Ethanol revenue grew to $24.78 million in the quarter (+56.1% over Q1 05); distillers grains revenue came in at $2.97 million (+41.6% over Q1 05). At $27.7 million, total Q1 revenues were 54.4% higher than the same period last year.
  • Margins: Cost of goods were up 8.5X over 2004, resulting in a $21.8 million gross profit. 2004 gross profit was $463k. First three months of 2006 saw cost of goods up 46% over the same period last year; Net income in the quarter was $6.77 million, a hefty 4.9X improvement over the same period last year.
  • Use of Proceeds: A proportion of the proceeds will be used to redeem the company's 8% mandatorily redeemable preferred stock; the balance is earmarked for growth and debt repayment.

    Management Background:

    Richard O. Jacobson has served as Chairman of the Board of Hawkeye Holdings, L.L.C. since its inception in 2003. He also serves as the Chairman of the Board of Jacobson Warehouse Company, Inc., a privately-held warehouse company with facilities in 53 locations in 19 states, which Mr. Jacobson founded 38 years ago. He also is Chairman of the Board of Jacobson Transportation Company, Inc., a truckload common carrier with authority to operate in the United States (48 states), Canada and Mexico. Mr. Jacobson is a member of the board of directors of Heartland Express, Inc.

    Bruce Rastetter has served as a director of Hawkeye Holdings, L.L.C. since our inception and as Chief Executive Officer since 2005. Prior to becoming Chief Executive Officer, Mr. Rastetter was the founder and chief executive officer of Heartland Pork, a million swine production company located in Alden, Iowa, ten miles west of our Iowa Falls plant site. At Heartland Pork, Mr. Rastetter managed over 500 employees. He graduated from the University of Iowa.

    Key Competitors

    1. Archer Daniels Midland (ADM)--largest ethanol producer with 25% of US production capacity
    2. VeraSun (VSE)--IPO on deck for the week of June 12
    3. Aventine
    4. Cargill
    5. Abengoa
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    Quick Comments on the Filing:

    The comparable to watch here is VeraSun Energy (VSE), slated to go public in a couple of weeks. Some quick highlights from their S1:

  • Bankers on the deal: Morgan Stanley and Lehman Brothers
  • Business: "VeraSun Energy Corporation is the second largest ethanol producer in the U.S. based on production capacity, according to the RFA. We are also the largest “pure-play” ethanol producer, focusing primarily on the production and sale of ethanol and its co-products. This focus has enabled us to significantly grow our ethanol production capacity and to work with automakers, fuel distributors, trade associations and consumers to increase the demand for ethanol."
  • Raise: 17.3 million shares at current range of $18-20, representing mid-price raise of $191 million
  • Financial Highlights:
  • $236 million revenue in 2005, up from $193.8 million in 2004. Q1 2006 revenues were $110 million, 4.4X last year's first quarter. Verasun's Q1 revenues were close to 4X Hawkeye's and gross profit 3.2X. At $2.7 million, net income was 40% of Hawkeye's for the period.

    See previous VeraSun (VSE) analysis on Seeking Alpha by Clearfish Research ("Not listed yet, but given their unspectacular operating history, when all the stars were aligned for them, we’re skeptical of how they would fare if the price of ethanol took a nose dive."), Cleantech Blog ("Given how hot the ethanol sector is right now, I’d expect this float to go out at the high end of my range, and probably trade well, but at the end of the day, it is a refiner, not a tech company.") and others.

    Source: Highlights from Hawkeye Holdings' IPO Filing