VeraSun Energy Corporation (NYSE: VSE), a leading producer of ethanol, announced its financial results for the three months and year ended December 31, 2006.
“We are pleased to announce another strong quarter and a solid year. 2006 included significant milestones for the Company as we recorded more than $550 million of revenues in our fourth year of operations and nearly doubled our production capacity,” said Don Endres, CEO and Chairman of VeraSun.
“In the fourth quarter, we produced 59.6 million gallons of ethanol – our highest level of output to date at approximately 103 percent of nameplate capacity,” said Endres.
Net income $75.7 million, or $1.03 per diluted share, for 2006 and $21.4 million, or $0.27 per diluted share, for the fourth quarter of 2006. Cash on hand at the end of 2006 was $362.3 million, including $44.3 million of restricted cash for the construction of the Charles City, Iowa, production facility.
Fiscal Year 2006 Financial Highlights:
Revenues grew to $557.8 million for the year, an increase of $321.4 million, or 136% from 2005. This growth was the result of the sale of 98.2 million additional gallons in 2006, as well as a price improvement of $0.59 per gallon from 2005.
Net income for the year increased to $75.7 million, or 14% of revenues. Net income was $108.2 million before charges relating to the IPO. Diluted EPS was $1.03 for 2006, or $1.47 per share excluding charges relating to the IPO. EBITDA was $177.6 million, or 32 percent of 2006 revenues. EBITDA was $195.8 million excluding charges relating to the IPO.
With the $362.3 million in cash on hand at the end of 2006, the Company expects to be able to fund its announced expansion plans for ethanol production, increasing capacity to 340 million gallons per year (MMGY) by the end of the second quarter of 2007 and to 560 MMGY by the end of the first quarter of 2008.
Fourth Quarter Financial Highlights:
Revenues grew to $146.5 million for the quarter, an increase of $46.4 million or 46% from the same period in 2005. This growth was the result of the sale of 6.8 million additional gallons, as well as a price improvement of $0.47 per gallon from the same period in 2005.
Net income for the fourth quarter increased to $21.4 million, representing 15% of revenues. Diluted EPS was $0.27. EBITDA was $40.5 million, or 28 percent of revenues.
The Company’s gross margin was 28 percent in the fourth quarter of 2006, as compared to 24 percent during the same quarter of 2005.
Operational Highlights:
During 2006, the Company experienced growth in production volume primarily due to its Fort Dodge, Iowa facility being operational for the entire year. Total ethanol sales increased to 58 million gallons during the fourth quarter of 2006, a 13 percent increase in sales from the fourth quarter of 2005. From 2005 to 2006, sales of gallons of ethanol increased by 78 percent.
Construction of VeraSun’s Charles City, Iowa facility is two months ahead of schedule, and it is now expected to begin startup operations in early April 2007. The Company began construction on its facilities in Welcome, Minnesota, and Hartley, Iowa, in the fourth quarter of 2006, and expects to begin startup operations at both plants by the end of the first quarter of 2008.
As announced in November of 2006, VeraSun has developed an innovative process to extract oil from distillers grains, a co-product of the ethanol production process. This oil can be converted into biodiesel, yielding two renewable biofuels — ethanol and biodiesel — from the same amount of feedstock. The Company is considering both the construction of its own 30 MMGY biodiesel refinery and the sale of the extracted oil to other companies for conversion into biodiesel.
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