Southwest Iowa Renewable Energy, LLC Announces Results for Second Quarter Fiscal 2019

COUNCIL BLUFFS, Iowa, May 9, 2019 /PRNewswire/ -- Southwest Iowa Renewable Energy, LLC ("SIRE" or the "Company") announced its unaudited financial results for the three and six months ended March 31, 2019.

Results for the Second Quarter of Fiscal 2019 (Amounts in $ and 000's, except Book Value per Unit)

Mike Jerke, SIRE's President and CEO stated, "So far during Fiscal 2019, we have seen very tight margins, continuing the trends of the previous quarters.  Corn prices have increased by almost 6.5% per bushel in 2019 as compared to Fiscal 2018, and ethanol prices in the U.S. remain below last year's levels by almost 7%. The industry has continued to adjust to lower exports to China, and is  becoming more dependent on continued export demand to other parts of the world. U.S. demand could eventually improve with expansion of E15 sales per the directive of President Trump to the EPA. Our distiller grains have also seen a slight increased price and demand improvement in Fiscal 2019 as compared to Fiscal 2018."

During the second quarter of Fiscal 2019, SIRE produced 33.1 million gallons of ethanol, compared to 31.9 million gallons during the second quarter of Fiscal 2018.  For the first six months of Fiscal 2019, SIRE produced 66.3 millions gallons of ethanol, compared to 63.6 million gallons in the first six months of Fiscal 2018.  Jerke commented - "We continue to evaluate and implement new production technology to expand our income stream.  We are focused on running the plant efficiently, increasing our ethanol yield, with a balance of optimizing the yield and profit, and at the same time scrutinizing our expenses. Our new lease agreement for tank cars and hopper cars will save us over 25% in both the near and long term as compared to the prior lease agreement."

SIRE reported net loss of $(3.0) million or ($227.13) per basic unit for the six months ended March 31, 2019, compared to net income of $0.2 million or $11.93 per basic unit for the six months ended March 31, 2018. SIRE reported a net loss of $(1.8) million, or ($132.59) per basic unit for the three months ended March 31, 2019, compared to a net loss of $(0.9) million, or ($69.63) per basic unit, for the three months ended March 31, 2018.

SIRE revenue from operations was $106.6 million for the six months ended March 31, 2019, compared to $104.1  million for the six months ended March 31, 2018. SIRE revenue from operations was $53.2  million for the three months ended March 31, 2019, compared to $53.6 million for the three months ended March 31, 2018.

Modified EBITDA, which is defined as earnings before interest, income taxes, depreciation, amortization, and unrealized hedging gains and losses was $1.6 million for the six months ended March 31, 2019, compared to $6.0 million for the six months ended March 31, 2018.  Modified EBITDA was $0.8 million for the three months ended March 31, 2019, compared to $1.9  million for the three months ended March 31, 2018.

The Company's debt increased $2.1 million at March 31, 2019, compared to September 30, 2018, due to our  increased short term borrowing requirements partially offset by the paydown of term debt.

SIRE had $1.1 million in cash and cash equivalents and $17.8 million available under revolving loan agreements, for total cash and available borrowings of $18.9 million at March 31, 2019. The cash flow provided by operating activities was $(1.4) million compared to $1.5 million for the six months ended March 31, 2019 and 2018, respectively, due primarily to lower earnings.

In the current quarter, the Company applied SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Under SAB No. 108, prior-year misstatements which, if corrected in the current year would be material to the current year, must be corrected by adjusting prior year financial statements, even though such correction previously was and continues to be immaterial to the prior year financial statements. Correcting prior year financial statements for such "immaterial errors" does not require previously filed reports to be amended. Such corrections will be made the next time the Company files the prior year financial statements. The Company was leasing tank cars and hopper cars on which a provision for repairs necessary to return the cars to the lessor in "normal" status should have been accrued, but was not. Since the lease was initiated in March of 2009, and extended to March of 2019, adjustments to previous periods were required.  Although the charges in one quarter were not significant, collectively the charges to repairs and maintenance exceeded $3.7 million over the ten year lease period; therefore, the historical financial statements were revised with all appropriate entries being flowed through the financial statements.

About Southwest Iowa Renewable Energy, LLC:

SIRE is located on 275 acres in Council Bluffs, Iowa, operating a 140 million gallon per year ethanol plant. SIRE began producing ethanol in February, 2009 and sells its ethanol, distillers grains, corn syrup, and corn oil 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 (the "1995 Act").  Such statements are made in good faith by SIRE and are identified as 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 , 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. 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.

Financial Results

Modified EBITDA

Management uses Modified EBITDA, a non-GAAP measure, to measure the Company's financial performance and to internally manage its business. Management believes that Modified EBITDA provides useful information to investors as a measure of comparison with peer and other companies. Modified EBITDA should not be considered an alternative to net income or cash flow as determined in accordance with generally accepted accounting principles. Modified EBITDA calculations may vary from company to company. Accordingly, our computation of Modified EBITDA may not be comparable with a similarly-titled measure of another company.

Modified EBITDA, which is defined as earnings before interest, income taxes, depreciation, amortization, unrealized hedging gains and losses, and other significant noncash expenses was $1.6 million for the six months ended March 31, 2019, compared to $6.0 for the six months ended March 31, 2018. Modified EBITDA was $0.8 million for the three months ended March 31, 2019, compared to $1.9 million for the three months ended March 31, 2018. The following sets forth the reconciliation of net income to Modified EBITDA for the periods indicated:

Statistical Information

Summary Balance Sheets
(Dollars in thousands)

SOURCE Southwest Iowa Renewable Energy, LLC

Related Links

http://www.sireethanol.com

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