Rentech, Inc. F1Q10 (Qtr End 12/31/09) Earnings Call Transcript

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 |  About: Rentech, Inc (RTK)
by: SA Transcripts

Rentech, Inc. (NASDAQ:RTK)

Q1 2010 Earnings Call

February 10, 2010 1:00 pm ET

Executives

Julie Dawoodjee – VP IR

Hunt Ramsbottom – President & CEO

Dan Cohrs – EVP & CFO

Analysts

John Bridges - JPMorgan

Brian Campbell – Simmons & Company

William Burns - Johnson Rice

Matthew Farwell - Imperial Capital

Jeremy Sussman - Brean Murray Carret

Operator

Welcome to the Rentech first quarter 2010 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Julie Dawoodjee, Vice President of Investor Relations for Rentech. Please go ahead.

Julie Dawoodjee

I would like to welcome all of you to Rentech's 2010 fiscal first quarter conference call for the period ended December 31, 2009. Before we begin our prepared remarks I would like to cover some administrative aspects of this conference call.

During this call, Hunt Ramsbottom, President and CEO of Rentech, will provide opening remarks highlighting our company’s progress during the fiscal quarter and Dan Cohrs, our Chief Financial Officer, will give a financial review of the first quarter and provide comments on Rentech’s financial position. We will then open the lines for questions and ask that you limit yourself to one question so that we may get to as many 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 terminology such as may, will, expect, believe and other comparable terms.

You are cautioned that while forward-looking statement 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 risk 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 February 10, 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.

Hunt Ramsbottom

Thank you Julie, good morning everyone and thank you for joining us today. We remain focused on commercial development activities. Over the last year we’ve added experienced licensing personnel, project developers, and related financial support staff to drive near-term development and commercial opportunities for renewable power and fuels projects worldwide.

We’re in the early development stage of several biomass to fuels, power projects, and license opportunities in countries that strongly support renewable energy and have ample supplies of biomass that conserve its feedstock.

We anticipate sharing more details as these project opportunities further develop. We’re also working with several resource holders to assess the feasibility of potential projects using their fossil or biomass feedstock with our technologies for synthetic fuels and/or power production.

Many of these potential projects are located internationally in countries who’s governments or regulatory regimes have moved quickly and provide incentives for alternative fuel and power production.

We’re also aggressively pursuing project opportunities within the United States in areas where we’ve seen support from local and state governments. These states have incentives in place that can enhance project economics, such as renewable power and fuel mandates in California.

Our Rialto project in California is expected to be the first United States commercial scale facility for the [coproduction] of renewable fuels and power. I’m pleased to say that we continue to track well against our timeline for this project.

We have submitted our Part 1 application for a DOE loan guarantee for up to 80% of total project costs. We expect to hear back from the Department of Energy within the next several weeks regarding whether we can proceed to the second stage of this process. We’ve begun working on Part 2 of the application in anticipation of Part 1 approval.

We are confident that our Rialto renewable fuels and power project is a strong candidate for the loan guarantee program as it meets the requirements that eligible projects must technologies with operating histories of at least six months and 1000 hours of operation and performance data.

These technologies must be used to produce transportation fuels that substantially reduce lifecycle greenhouse gas emissions over other transportation fuels. These projects must also create or retain US jobs. [inaudible] diesel can have a carbon footprint of near zero and our project will employ at least 70 full time positions, once operational and can be replicated.

The operating histories of our technologies strengthen our loan guarantee application as we exceed the operating requirements of the program. The Rentech SilvaGas biomass gas supply has operated for approximately 1200 hours at a DOE sponsored project at the McNeil Power Station in Burlington, Vermont and has operated for over 20,000 at [pilot scale]. Our synthetic fuels technology has operated for nearly 2500 and our product demonstration unit in Colorado, which has been online for a year and a half. Prior to that the technology operated for over 12,000 hours at our previous demo and pilot project including a DOE sponsored project in Laporte, Texas for Texaco Energy Systems.

This experience is important as it differentiates us from other alternative energy technologies which are not yet been demonstrated. The operating history of our technologies is also important because its validated the operating and design criteria for commercial deployment.

Commercial viability of our technologies is confirmed with the success of each project phase in Rialto. For example the engineering feasibility study completed by Jacobs in the project cost estimating conducted by a large associate validated that the commercial application of our technologies can generate commercial economic returns.

To drive this project forward we’ve retained a firm to act as our owners engineer to provide full service planning, engineering and design services. We begun working with this company on optimizing the project design, in preparation for the next phase of front end engineering and design for feed.

This week our engineer issued our fee for feed contractors for the project. We intend to select the contractor and begin the feed during the first half of this calendar year. We have been participating in pre application meetings with various permitting agencies in anticipation in filing major air and water permits for the Rialto project during the first half of this calendar year.

So far we’re pleased with the state and community reception we’re receiving to this important project. For the longer-term our larger scale Natchez project we continue to work on commercial agreements on feedstock, technologies and [on take]. We’re encouraged by the recent initiatives from Washington on clear coal technologies and carbon capture synchro station which we’ve been a pioneer with CO2 off take agreement we signed with [Danbury] Resources in 2007.

We know the Natchez project offers our country one of the best solutions that can provide quantities of alternative fuels that can have an impact on domestic energy supply. For this reason we intend to continue to highlight this project with government agencies and private industry for support.

We’re currently working toward a definitive jet fuel purchase agreement for the projects entire jet fuel output of 215 million gallons per year with 13 passenger and cargo airlines that signed an MOU with us in December. Since this announcement we’ve received additional interest from international airlines for our synthetic fuel for this project and others. There is significant market demand for our fuels.

We’re on track to file our major air, water and dock permits for this project during the first half of this calendar year and our discussions with potential equity investors and feedstock suppliers continue to progress. We’ve also been negotiating arrangements with suppliers for projects key technologies.

In anticipation of these and other commercial scale projects we’ve selected our preferred [catalyst] manufacturing partner based on successful performance of their commercially produced [catalyst] during our various production runs at the PDU. We are working with the vendor to finalize the commercial [catalyst] formula and cost figures.

In addition to producing synthetic fuels for potential customers with PDU we have met all of our commercial design and operating parameters including reactor performance, catalyst activity and usage. We are confident our technology platform is unmatched. We operate the only synthetic transportation fuels plant in North America.

The value of the PDU as well as our ownership and access to key technologies from biomass gasification to finished fuels has been proven out by our progress in the Rialto project, and in the global market response we are experiencing and pursuing.

One recent example of our cutting edge technology platform is our project with ClearFuels which has been awarded a conditional $23 million grant from the Department of Energy. We expect to start receiving the funds in the next few months to facilitate the demonstration of the integration of our technologies for renewable fuels production.

We view this award as validation of the Rentech process. We are pleased that the DOE acted quickly in granting this award and are encouraged that this turnaround will be indicative of what we’ll see for the review and award process of DOE loan guarantees.

We bid on multiple domestic and international renewable power projects that could utilize our commercially demonstrated Rentech SilvaGas gas supplier. In anticipation of these projects we’re currently qualifying engineering and fabrication shops, the [inaudible] of the Rentech SilvaGas gas supplier for biomass power applications.

The priority of our Administration is placing on renewable energy can help drive these projects and also benefit our nitrogen fertilizer business, REMC. The EPA’s renewable fuel standard will increase the volume of renewable fuels such as corn ethanol, required to be blended in the transportation of fuels.

Since REMC is favorably located within the Corn Belt, it should benefit from this mandate. This mandate plus strong forecasts for corn acreage and the fact that a sizable portion of REMCs planned deliveries for the year have already been sold at fixed prices, have given us the comfort to project 2010 REMC EBITDA to be well in excess of $30 million.

We remain optimistic regarding fiscal 2010 even though we’ve experienced lower product sales in the first quarter and slower sales cycles during the weather delays. We continue to be encouraged due to the demand drivers I’ve laid out. In addition our plant has an advantage over the [golf course] pricing due its geographic location.

Dan will now provide more details on that as well as our financial performance for the period.

Dan Cohrs

Thank you Hunt, good morning everyone. The numbers are driven primarily by REMC so let’s review the basics of the fertilizer business for just a few minutes. It’s a very hard business to understand just by looking at quarterly results.

The P&L is driven by two main factors, one is the spread between product prices and the price of natural gas which is the main input to the manufacturing process. That spread determines the margins both long-term and short-term.

The second factor is the timing of product deliveries which is mainly driven by weather and conditions in the fields. The timing of deliveries causes a lot of quarterly fluctuations and uncertainty in short-term results. Product that doesn’t get delivered this quarter usually gets delivered in a subsequent quarter shifting revenue and profit from quarter to quarter.

The first quarter in each of the last two years saw low deliveries due to early onset of bad weather. Two and three years ago the first quarter deliveries were 171,000 and 160,000 tons. Deliveries in the two most recent first quarters have been 124,000 and 115,000 tons, down substantially. The first quarter deliveries do not indicate a trend for the year.

The first quarter of fiscal 2010 shows product price declines exceeding 50% from these historically high prices we saw a year early. Gas prices have also declined from their historical highs of $12 to $14 to prices in the range of $5 to $6 today. Product prices were depressed not only by the decline in gas prices but by the severe economic conditions over the past year.

Now we’re seeing the fundamental strength of the fertilizer market returning as we look at pricing for the spring deliveries. We’re selling ammonia now at well over $400 per ton and UAN close to $250 per ton for spring delivery. This increased pricing reflects the sound fundamentals that drive the spread between product prices and gas prices.

Nitrogen product demand is fundamentally strong despite continued weakness in the economy. Several factors explain that. Nitrogen must be applied each year in order to get good yields on corn. Corn acreage is strong and expected to continue to be strong at approximately 90 million acres. The ratio of corn stocks to demand is low and the ethanol mandates have been confirmed and drives significant demand for corn.

On the supply side, domestic production capacity has dropped significantly. When gas prices spiked several times over the last 10 years, many plants were shut down, dismantled and shipped overseas so that capacity will not be coming back into the market.

At the same time, most observers see a new era with respect to domestic gas prices which are expected to be lower and more stable going forward than they were a few years ago. The massive new discoveries of gas and the new technologies for extracting it have changed the supply demand balance for domestic gas and are expected to reduce the volatility of prices due to the shortened lead times for new drilling.

Taken together the demand for nitrogen and the new era of gas prices caused most observers to forecast widening spreads between product prices and gas prices. That is, improving margins for the nitrogen fertilizer business. This is confirmed in the short-term by the pricing we are seeing for straight deliveries. Its also confirmed by our success in closing on renewed $62.5 million term loan at REMC.

We believe these strong fundamentals are also driving the M&A activity that we’ve seen in the US fertilizer business. Those fundamentals will determine the longer-term results for REMC but quarterly product deliveries will still be determined by weather, and field conditions. Just remember that product that does not get delivered in one quarter does not disappear. It stays in inventory and will be delivered in a later quarter.

The results for the quarter are as follows, revenue was $27.1 million, down 47% from the quarter a year earlier. That’s solely due to price declines on nitrogen products. We actually saw deliveries slightly higher in this quarter but because of those price declines that we talked about from the historically high prices a year ago revenues were down almost 50%.

Gross profit was a negative $1.2 million, that was effected by $4 million of turnaround expenses. Every two years we take the plant down for major maintenance and $4 million of those expenses flowed through which does not happen every year.

The net loss for the quarter was $15.5 million, compared to a loss of $1 million the year before. There’s a $900 million increase in noncash interest expense that we’ve now recognized through the adoption of APB 14-1 which has to do with a new accounting pronouncement for convertible debt instruments. We’ve implemented that for the first time this quarter which has the effect of increasing the noncash interest expense that we recognized. That’s all explained in the 10-Q that we just filed.

The net loss per share was $0.07 versus the loss of $0.01 in the year ago quarter. That includes a $0.02 impact of those turnaround expenses that I mentioned. SG&A has consistently been showing 25% declines but its now hit bottom and has started to increase again. We had SG&A this quarter of $7.1 million, up slightly over a million from the quarter last year.

This reflects the acquisition of SilvaGas Corporation, we retained the key employees and some office expenses for the SilvaGas company as we acquired it. And we’ve also added some headcount to promote our project development activities. There was also an increase in noncash compensation expense and some legal fees due to work around the old credit agreement. Most of these are factors that we expect to continue in the future. So we do expect SG&A to keep running at roughly the current rate.

R&D this quarter was $3.8 million, which is a 30% decline from the year ago quarter. Last year’s quarter included some PDU startup costs which were somewhat unusual so we do still continue to see the declines in R&D expenses year over year, first as we complete the construction on the PDU and now as we recognize the PDU startup costs a year ago.

We ended the quarter with $47.1 million of cash. At REMC we’ve delivered or presold more than half of our expected fertilizer deliveries for the year. And as I mentioned pricing in the first quarter for delivered tons was down significantly from the historical highs of a year earlier, but they were inline with our budgeted figures.

The average delivered prices this quarter for ammonia were $323 per ton which was down from $671 per ton a year ago. For UAM the average price of delivered tons was $143 versus $336 a year ago. But the prices we’re seeing for presales for spring delivery has shown some real strength at higher levels.

Today the average price of our presold ammonia tons for spring deliveries is over $400. The average price for a UAM is approximately $200 and those prices have continued to increase. Our latest sales for ammonia are in the $430 range and the latest sales for UAM are approaching $250. All of this is for spring delivered tons.

Taking all of this together we’re now projecting fiscal year 2010 EBITDA for REMC to be in excess of $30 million. We believe we are fully financed for our budgeted fiscal year 2010 activities. Budgeted activities for the fiscal year include the current phase of development which is pre front end engineering and design work such as permitting for both the Rialto and Natchez projects, operation of the PDU, continued research and development on the Rentech technologies and funding of general working capital needs.

We’ve taken some steps to enhance our capital structure, the old term loan at REMC matured in May of this year and we had the option of paying a fee to extend it but instead we secured a $62.5 million term loan to repay REMC’s old term loan which was approximately $37 million. The facility was arranged by Credit Suisse and the primary lenders are [Highbridge] Capital which is a unit of JPMorgan, and Goldman Sachs.

We also recently announced an aftermarket equity offering facility for up to $50 million worth of shares that can be sold at market price and at a commission of 1.5%. This can be a very efficient way for us to raise capital and gives us lots of flexibility. Its initially a six month program. We’re not obligated to issue any shares under this facility but we’d maybe like to use the program to fund additional project development activities if we feel that market prices are attractive.

In anticipation of our future capital raising for project development we filed a mixed security shelf registration statement of $42 million, that would bring our total shelf capacity back up to $100 million when combined with our remaining unused shelf capacity of $52 million. That’s assuming that of course if the SEC declares our new filings effective.

As we enter into the next phase of front end engineering and design for any of our projects, which is not yet in the approved budget, we will need to raise additional capital which can come from various combinations of project debt and equity, corporate equity, equity from strategic partners and suppliers and various forms of government support including grants and loan guarantees.

As Hunt mentioned we have filed our application with the DOE for a loan guarantee for the Rialto project as a leading edge bio refinery. And with that I’d like to turn the call back to Hunt.

Hunt Ramsbottom

Thanks Dan and I’d now like to turn the call back over for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of John Bridges - JPMorgan

John Bridges - JPMorgan

Just wanted, I was thinking that the margins at [Remech] were pretty secure over the longer-term, and we’ve had this pull back this quarter to what extent can you hedge the cost of production over and above the gas once you know what your sales price are or will be.

Dan Cohrs

Our practice is to lock in gas prices as we pre sell the tons so we are, as we do the presale contracts, we are essentially 100% hedged, plus or minus just a little bit occasionally. The other costs of production are pretty steady. Its people, some material, and the fixed costs of amortizing depreciation through the cost of goods sold.

Remember there’s a significant amount of depreciation that goes through our cost of goods sold so that’s a fixed cost. But the variable input natural gas which we can hedge we do in synchronization with our presales.

John Bridges - JPMorgan

Can you remind us what percentage of your costs, operating costs the gas represents.

Dan Cohrs

It tends to be about 80% of the costs is represented by gas and 80% of the operating cost is gas prices typically.

John Bridges - JPMorgan

And we’re hearing a lot of things about a lot of topics coming out of Washington, what are you seeing with respect to renewable energy and your interest in getting credit protection.

Hunt Ramsbottom

I think as I said we’re encouraged, we were encouraged even prior to the state of the union a few weeks ago. I think what we see at the Department of Energy a focus, we like the focus on commercialization, i.e. having a certain amount of operating experience and you’ve got to have the criteria that I mentioned in my script here.

So the renewed focus on I’ll call it lack of power point projects and projects that are ready to commercialize, I think the conversations that we have had probably most recently a couple of months ago was very encouraging for Rentech to get their application in because they are looking for projects of next generation fuels.

They’ve got plenty of solar and wind activity but technologies like ours that are proven in next generation fuels, they are lacking. So we’re encouraged by the attitude that we’re seeing in Washington for what we do.

Operator

Your next question comes from the line of Brian Campbell – Simmons & Company

Brian Campbell – Simmons & Company

Just a couple of quick ones, just to follow on to John’s question, when you get to the plus 30 in EBITDA from REMC are you assuming the gas curve forward and then the margins that come from that when you layer in current pricing for the two products or is there varying assumptions on both the product and on gas looking forward to get to that $30 million number.

Dan Cohrs

That’s a combination of the locked in gas prices that we have. As we’ve gone through the presale season, we’ve locked in gas prices and then of course we have a forecast of gas prices. So it’s a combination of those two factors that leads us to that forecast.

Brian Campbell – Simmons & Company

So what forecast are you using for the unsold portion of the product for gas going forward for the year.

Dan Cohrs

We don’t typically give out our specific forecasting assumptions, but we are giving guidance of $30 million plus.

Brian Campbell – Simmons & Company

And then my next question, I had another one on the Natchez facility, have you had any I guess developments there when you’ve been out pitching the idea to people who might be wiling to throw some money at that project. I know you’ve had some great success with the off take agreements, but as far as the actual financing of it, has there been anything new or is it kind of steady as she goes in looking for someone to support that project.

Hunt Ramsbottom

Announcing the airline agreement that started the conversations with potential partners again, that’s what folks were looking for was commercial activity on the back end and demand drivers for the fuel so that we knew it would increase the activity and it has. So we have now started conversations again with those folks based on that and continued with the feedstock arrangements also.

So we knew that was going to be a big driver and it has been.

Operator

Your next question comes from the line of f William Burns - Johnson Rice

William Burns - Johnson Rice

You have been back in the capital markets with [inaudible] plan I was hoping maybe if you could just give a big macro picture of your thoughts on the capital markets appetite for your project such as the biomass type projects.

Dan Cohrs

I think we’re going to get a good reception. The truth is that we are just now at the point where we’re really ready to go talk seriously about project financing for projects like Rialto and Natchez. But if you look at the biomass plan there’s a lot of value there in producing low carbon fuels. We actually talked about this on our last conference call when we talked about the Rialto project.

And we gave some public guidance on the Rialto economics. The fuel and the power that will be produced by the Rialto project are essentially zero carbon. Its very close to zero carbon and especially in California where we have the low carbon fuel standards, there’s quite a bit of upside value there. There’s also value because we produce renewable power and we can get renewable power rates.

So we think that this is a good commercial financeable project. We are of course applying first to the government for financing and hoping that we can get that financing in place but we also think its going to be a very attractive project for investors who believe in the carbon story.

Hunt Ramsbottom

I’ll add to that a little bit, not only the projects domestically but some of the activity that we’re seeing internationally for power and fuels projects, there’s a lot of funds internationally again that have governments that are put in place already our carbon regimes and incentives in place for these projects to move forward so we see a lot of activity in terms of investment dollars outside the US.

William Burns - Johnson Rice

And if I could ask a quick bookkeeping question, the $4 million for the turnaround expense on the P&L that shows up in product sales, cost of product sales.

Dan Cohrs

Yes, that’s right.

Operator

Your next question comes from the line of Matthew Farwell - Imperial Capital

Matthew Farwell - Imperial Capital

Could you discuss your financing options once the loan guarantee is won, also curious are you applying for the full 80% loan guarantee and do you have commitments for the unguaranteed portion from a sponsor bank. This is really in line with the capital market discussion around product financing as well.

Dan Cohrs

We’re applying under a program that does not require us to get a commercial lender if we get the guarantee. So the project is eligible for up to an 80% of the project cost guarantee. If we get the guarantee under this program we go directly to the federal financing bank for the funds. So there’s actually no role for a commercial lender if we get that guarantee under the program that we’re applying for. It’s the program for advanced bio refineries and leading edge technologies and so in that program you essentially borrow directly from the government and there is no fee for the loan guarantee other than the application fee.

So it’s a slightly different program than the one I think you might have in mind. Under a different program if you get a loan guarantee you still have to find a commercial lender to supply something like 20% of the guaranteed portion of the debt. But that’s not the case for us. We have support letter from Credit Suisse which gives the opinion that they believe that we can raise money for this project.

Matthew Farwell - Imperial Capital

Now the RSS came out and it looks like they’re going to force obligated parties to pay up to $1.50 per gallon in credits to meet the sale of cellulosic bio fuel requirement. I view this as quite positive for the Rialto project if indeed its fuel can meet, can fall under that guideline of cellulosic bio fuel. I guess one is will that fuel, are you confident that fuel will fall under that standard and two, do you have any interest from refiners at this point or other types of project sponsors now that this renewable fuel standard has been implemented by the EPA.

Hunt Ramsbottom

We believe this fuel does qualify. And the answer is yes, we have that interest from refiners.

Matthew Farwell - Imperial Capital

Interesting. And on the [night] trading deal could you give me more color on the protocol for when the stock will be sold and when the market will be notified that it is sold, when will these windows open up.

Dan Cohrs

You’re talking about the ATM equity program.

Matthew Farwell - Imperial Capital

Yes.

Dan Cohrs

Well normally that program will be available once we have an open window meaning we’ve now filed our quarterly results and we would typically let a few days go by and then we would have to do a careful assessment about whether there are any nonpublic information but typically after the end of each quarter then our general counsel would make a decision as to whether that window would be open or not.

Operator

Your final question comes from the line of Jeremy Sussman - Brean Murray Carret

Jeremy Sussman - Brean Murray Carret

In terms of projects outside the US that you talked about, are we talking more Rialto type projects or more Natchez or a combination, how should we look at that.

Hunt Ramsbottom

I think what you’re seeing is a combination of everything, frankly I’ve been extremely pleased with the acquisition of SilvaGas as a market entry point. Its less complicated. There’s a lot of countries globally now with [fit] programs on the power side and we view that as, we can accelerate our market entry through the gasification to power, add fuels down the road so we’ve seen as we mentioned the beach project which is fossil.

And we’ve seen, we continue to work on some CTL projects globally, the Altona project down in Australia. We continue to work on that. So we have large scale licensing opportunities for fossil but I would say generally speaking over the last six months the activity level for bio mass, power entry points into these countries has accelerated.

And with that has come opportunities that then again look at fuels as an add on opportunity.

Jeremy Sussman - Brean Murray Carret

And then just as a quick follow-up, the off take agreement that you signed at Natchez in December I believe, obviously Natchez has been a project that’s been around, has been discussed for a couple of years. So what happens to make that all come together and I guess what do you think that means as we look at Natchez going forward.

Hunt Ramsbottom

It’s a very good question and I’ve always stated that we’ve got to have the market demand for the fuels and I think that’s step in December was big moving toward definitive docs and working with our banks to make those agreements bankable is a big step which we’ve got a team internally working on that with the airlines.

And getting obviously a bankable feedstock supplier on the front end is important. Those conversations are encouraging as you well know and now we are ramping up our conversation in Washington, again we firmly believe that this is the best scaled opportunity for transportation fuels.

And we have also ramped up discussions with our commercial partners based on those commercial agreements. So we’re going to continue to press ahead and again just so everybody understands the dollars were spending on that project are minimal right now but the impact is high, off tick agreements, feedstock and permitting.

So its not a lot of dollars for the impact to our shareholders.

Operator

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Hunt Ramsbottom

What I would like for you to takeaway from today’s call is the following, REMC is performing in line with our expectations as we did not expect to repeat 2009’s record performance. We’re comfortable with REMC’s projected EBITDA and believe with that and cash on hand are sufficient to cover our budget activities for the fiscal year.

The Administration’s heightened focus on renewable and clean coal projects should bring renewed momentum for deployment in funding opportunities for our technologies. The market looked very promising for us given that we have the technologies that can take advantage of incentives and mandates in place for renewable and clean coal projects both domestically and internationally.

We look forward to speaking with you when we announce fiscal second quarter results. Thank you for your time.

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