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VeraSun Reports Record Revenues for Second Quarter 2008
VeraSun Reports Record Revenues for Second Quarter 2008
Revenues Exceed One Billion Dollars and EBITDA More than Doubles over Q2 2007
BROOKINGS, S.D., Aug. 11 2008 -- VeraSun Energy Corporation (NYSE: VSE ), one of the nation's largest ethanol producers, today announced its financial results for the three months ended June 30, 2008. The Company increased revenues by 499% over the second quarter of 2007, to $1.015 billion, and generated earnings of $.15 per diluted share. EBITDA for Q2 2008 increased to $73 million as compared to $33 million for Q2 2007.
Financial Highlights
- Total revenues increased 499% to $1.015 billion for Q2 2008 as compared to $170 million for Q2 2007
- DDGS sales increased 431% to $120 million as compared to $23 million for Q2 2007
- Net income increased to $24 million for Q2 2008, or $.15 per diluted share, as compared to $15 million for Q2 2007
- EBITDA increased to $73 million as compared to $33 million for Q2 2007
- SG&A decreased 62% to $.05 per gallon from $.13 last year
"VeraSun exceeded one billion dollars in revenues this quarter," said VeraSun CEO Donald L. Endres. "More importantly, our large scale allowed us to capture $73 million in EBITDA, more than double last year, in a challenging operating environment."
During the quarter, VeraSun completed the merger with US BioEnergy effective April 1, adding five facilities and 420 million gallons to operations. The company also completed construction at its Hankinson, North Dakota, Welcome, Minnesota and Hartley, Iowa biorefineries, with a combined capacity of 330 million gallons per year. Upon completion of two additional ethanol production facilities in Dyersville, Iowa and Janesville, Minnesota, the company expects to have a capacity of 1.64 billion gallons of ethanol through 16 production facilities by the end of 2008.
"Ethanol is playing an increasingly important and strategic role in our country's fuel supply," Endres added. "Ethanol continues to trade at a deep discount to gasoline providing a significant economic incentive for refiners and gasoline marketers to develop new markets."
Second Quarter 2008 Financial Highlights
Total revenues, which include revenues from the sale of ethanol, distillers grains, VE85®, and corn increased by $845.6 million, or 498.7%, to $1,015.2 million for the three months ended June 30, 2008, compared to $169.6 million for the three months ended June 30, 2007. The increase in total revenues was primarily the result of a 420.6% increase in ethanol volume sold and an increase in average ethanol prices of $.38 per gallon, or 17.1%, compared to 2007. For the three months ended June 30, 2008, the Company sold 329.9 million gallons of ethanol, which includes 83.4 million gallons of ethanol that were purchased from others and resold to our customers. Ethanol production increased by 175.0 million gallons, or 214.8%, to 256.5 million gallons compared with the three months ended June 30, 2007, as a result of the added capacity from Linden, Indiana facility in August 2007, the Albion, Nebraska facility in October 2007, the Bloomingburg, Ohio facility in March 2008 and the US BioEnergy acquisition on April 1, 2008.
Net sales from ethanol increased $710.4 million, or 499.4%, to $852.7 million for the three months ended June 30, 2008 compared with $142.3 million for the three months ended June 30, 2007. Of the increase, $588.2 million was driven by additional volumes of ethanol sold. The increased volume resulted from additional production at the Linden, Albion, and Bloomingburg facilities, which came on line since June 30, 2007, output from the US BioEnergy facilities acquired April 1, 2008, and ethanol that was purchased and resold to our customers. Higher ethanol prices contributed $122.2 million of the increased revenue. The average price of ethanol sold was $2.59 per gallon for the three months ended June 30, 2008, compared to $2.21 per gallon for the three months ended June 30, 2007.
Net sales from distillers grains increased $97.0 million, or 431.0%, to $119.5 million for the three months ended June 30, 2008 compared with $22.5 million for the three months ended June 30, 2007. The impact of increased volume was $56.9 million and the impact of higher prices of $48.35 per ton contributed $40.1 million of the increased revenues.
Net sales of VE85®, our branded E85 product, increased $8.2 million, or 206.5%, to $12.2 million for the three months ended June 30, 2008 compared with $4.0 million for the three months ended June 30, 2007, primarily due to an increase in the number of retail outlets selling VE85® resulting in a $6.3 million increase and the impact of higher prices contributing to an additional increase of $1.9 million.
About VeraSun Energy Corporation
VeraSun Energy Corp. (NYSE: VSE), headquartered in Brookings, S.D., is a leading producer and marketer of ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, of which two are still under construction. VeraSun Energy is scheduled to have an annual production capacity of approximately 1.64 billion gallons of ethanol and more than five million tons of distillers grains by the end of 2008.
VeraSun also markets E85, a blend of 85 percent ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85®. For more information, please visit VeraSun Energy's websites at http://www.verasun.com or http://www.VE85.com .
Forward Looking Statement
Statements included or incorporated by reference in this document are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are based upon our current beliefs and expectations, are subject to risks and uncertainties outside of our control, and actual results might differ materially from these estimates and statements. Factors that may cause actual results to differ include the volatility and uncertainty of commodity prices, results of our hedging and other risk mitigation strategies, results of our acquisitions, operational disruptions at our facilities; our ability to implement our expansion strategy; development of infrastructure related to the sale and distribution of ethanol; excess production capacity in our industry; our ability to compete effectively in our industry; changes in or elimination of governmental laws, tariffs, trade or other controls or enforcement practices; environmental, health and safety laws; our reliance on key management personnel; future technological advances; limitations and restrictions contained in the instruments and agreements governing our indebtedness; and our ability to raise additional capital and secure additional financing, as more fully described in the "Risk Factors" sections of our annual report on Form 10-K for the year ended December 31, 2007 and our quarterly report on Form 10-Q for the quarter ended June 30, 2008. We are not under any obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any forward- looking statement, whether written or oral, that may be made from time to time.
VERASUN ENERGY
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30,
2008 2007
(unaudited)
(dollars in thousands)
Total revenue $1,015,168 100.0% $169,556
100.0%
Cost of goods sold 943,214 92.9 137,071
80.8
Gross profit 71,954 7.1 32,485
19.2
Startup expenses 4,591 0.5
218 0.1
Restructuring charge 2,004 0.2
- 0.0
Selling, general and
administrative
expenses 16,317 1.6
8,179 4.9
Operating income 49,042 4.8 24,088
14.2
Other income (expense),
net (14,654) (1.4) (787)
(0.5)
Income before income
taxes and minority
interest 34,388 3.4 23,301
13.7
Income tax provision 10,504 1.0
8,165 4.8
Minority interest 6 0.0
- 0.0
Net income $23,890 2.4%
$15,136 8.9%
Per Share Data:
Income per common
share - basic $0.15
$0.20
Basic weighted average
number of common
shares 156,962,647
76,998,341
Income per common share
- diluted $0.15
$0.19
Diluted weighted average
number of common and
common equivalent
shares 159,520,353
80,918,850
Six Months Ended June 30,
2008 2007
(unaudited)
(dollars in thousands)
Total revenue $1,531,642 100.0% $314,066
100.0%
Cost of goods sold 1,424,570 93.0 272,337
86.7
Gross profit 107,072 7.0 41,729
13.3
Startup expenses 6,702 0.4
1,584 0.5
Restructuring charge 2,004 0.1
- 0.0
Selling, general and
administrative
expenses 27,682 1.9
18,347 5.9
Operating income 70,684 4.6
21,798 6.9
Other income (expense),
net (24,052) (1.6)
1,008 0.3
Income before income
taxes and minority
interest 46,632 3.0
22,806 7.2
Income tax provision 15,175 1.0
7,982 2.5
Minority interest 6 0.0
- 0.0
Net income $31,463 2.0%
$14,824 4.7%
Per Share Data:
Income per common share
- basic $0.25
$0.19
Basic weighted average
number of common share 124,836,224
76,357,188
Income per common share
- diluted $0.25
$0.18
Diluted weighted average
number of common and common
equivalent shares 127,349,906
80,697,289
The following table sets forth other key
data for the periods presented (in thousands, except per unit data):
Three
Months Ended Six Months Ended
June 30, June
30,
2008 2007 2008
2007
(unaudited)
(unaudited)
Other financial data:
Net cash flows (used in)
provided by operating
activities $(35,391) $4,357 $(38,712)
$24,122
Other non-GAAP financial
performance data:
EBITDA (1) $73,122 $33,027 $105,468
$36,817
Operating data:
Ethanol sold - produced
(gallons, in thousands) (2) 246,556 63,368 388,756
123,579
Ethanol sold -
purchase/resale (gallons,
in thousands) 83,353 -
132,807 -
Total ethanol sold (gallons,
in thousands) 329,909 63,368 521,563
123,579
Distillers grains sold
(tons, in thousands) 829.8 235.2
1,376.3 419.8
Average gross price of
ethanol sold per gallon $2.59 $2.21
$2.49 $2.15
Average corn cost per bushel 5.37 3.62
5.14 3.77
Average natural gas cost per
MMBTU 10.81 7.59
10.48 7.85
Average dry distillers
grains gross price per ton 144.07 95.72
131.01 92.79
(1) EBITDA is defined as earnings
before interest expense, income tax
expense, depreciation and amortization. Amortization of debt
issuance
costs and debt discount are included in interest expense.
(2) Excludes ethanol sold in VE85® sales.
The following table reconciles our
EBITDA to net income for the periods presented (dollars in
thousands):
Three
Months Ended Six Months Ended
June 30, June
30,
2008 2007
2008 2007
(unaudited)(unaudited)(unaudited)
(unaudited)
Net income $23,890 $15,136 $31,463
$14,824
Depreciation and amortization 23,227 3,547
32,516 6,080
Interest expense 15,501 6,179
26,314 7,931
Income tax provision 10,504 8,165
15,175 7,982
EBITDA $73,122 $33,027 $105,468
$36,817
VERASUN ENERGY
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2008
2007
(dollars in
thousands)
Cash Flows from Operating Activities
Net income $31,463
$14,824
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation 30,687
6,080
Change in derivative financial
instruments (16,996)
6,756
Accretion of contracts and long-term
debt fair valued during purchase
accounting
(6,374) -
Deferred income taxes 5,094
5,425
Stock-based compensation expense 4,451
2,679
Amortization
1,829 -
Amortization of debt issuance cost
and debt discount
1,261 730
Gain on disposal of equipment
(262) (83)
Accretion of deferred revenue
(147) (48)
Minority interest in net loss of
subsidiary
(6) -
Excess tax benefits from share-based
payment arrangements -
(6,865)
Changes in current assets and
liabilities, net of effects of
business acquisition
Trade receivables (60,406)
18,697
Inventories (32,080)
(37,920)
Prepaid expenses and other assets (32,447)
(3,235)
Accounts payable 54,210
11,059
Accrued expenses and other
liabilities (18,989)
6,023
Net cash (used in) provided by
operating activities (38,712)
24,122
Cash Flows from Investing Activities
Purchases of property and equipment (188,857)
(129,551)
US BioEnergy acquisition, net of
transaction costs
45,106 -
Proceeds from the sale of short-term
investments
43,175 -
Change in restricted cash
(14,777) -
Payments for other long-term assets
and liabilities
(2,040) (202)
Proceeds from sales of property and
equipment
1,300 6
Purchase of short-term investments -
(249,516)
Net cash used in investing
activities (116,093)
(379,263)
Cash Flows from Financing Activities
Proceeds from long-term debt 97,092
447,750
Principal payments on long-term debt
(19,696) -
Debt issuance costs paid (3,655)
(11,375)
Cost of registering equity securities
(1,063) (5)
Net effect of the exercise of stock
options (374)
8,285
Excess tax benefits from share-based
payment arrangements -
6,865
Net cash provided by financing
activities 72,304
451,520
Net (decrease) increase in cash and
cash equivalents (82,501)
96,379
Cash and Cash Equivalents
Beginning of period 110,942
318,049
End of period $28,441
$414,428
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Source: VeraSun Energy Corporation
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