Earnings season is not traditionally kind to Rentech (RTK) investors. For years, the stock drifted lower as the company posted loss after loss.
Yesterday could not have been more different. Rentech not only posted actual earnings, but it increased guidance. It reported net income of $36.1 million, or $0.22 per share, versus a loss of $0.05 per share in the prior year quarter. Rentech now expects 2009 EBITDA to exceed $25 million. That’s up from prior estimates, but not a linear projection of current trends. Either the company expects next quarter to be more challenging, or is trying to dampen expectations.
Macroeconomic forces were a big help this quarter. One of its largest inputs, natural gas, is scraping multi-year lows. At the same time, its outputs — synthetic fuel and fertilizer — still garner fairly high prices.
Dan Cohrs, Executive Vice President and CFO, said
We are pleased to report our first profitable quarter ever. The cost reductions we implemented in addition to exceptional management of our fertilizer business have provided us with a foundation from which we can continue to execute on our alternative energy strategy. We believe Rentech is well-positioned to capture the opportunities that have resulted from the approval of our jet fuel for commercial aviation as well as from the renewable power and low carbon fuel mandates in California.
Shares popped over 100% yesterday, so some of the upside is already baked into RTK stock price. Another 50% or so wouldn’t surprise me though.
Rentech Corp. (RTK)
DISCLOSURE: No position.