UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-15795

RENTECH, INC.

(Exact name of registrant as specified in its charter)

Colorado	84-0957421
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1000 Potomac Street NW, 5th Floor

Washington, DC 20007

(Address of principal executive offices)

(202) 791-9040

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the Registrant’s common stock outstanding as of July 31, 2017 was 23,211,780.

RENTECH, INC.

Form 10-Q

Table of Contents

Part I — Financial Information
Item 1.	Financial Statements (unaudited):	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Statements of Stockholders’ Equity (Deficit)	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	47
Part II — Other Information
Item 1.	Legal Proceedings	48
Item 6.	Exhibits	48
Signatures		49

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RENTECH, INC.

Consolidated Balance Sheets

(Amounts in thousands, except per share data)

	As of
	June 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets
Cash	$	19,048		$	28,319
Accounts receivable, including unbilled revenue		6,759			12,490
Inventories		24,075			28,131
Prepaid expenses and other current assets		3,505			3,744
Other receivables		3,223			4,495
Total current assets		56,610			77,179
Property, plant and equipment, net		105,258			117,565
Construction in progress		1,597			905
Other assets
Equity investment		25,085			53,335
Goodwill		15,451			28,576
Intangible assets		26,297			31,227
Deposits and other assets		1,963			3,930
Total other assets		68,796			117,068
Total assets	$	232,261		$	312,717
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	11,468		$	12,389
Accrued payroll and benefits		3,692			4,529
Accrued liabilities		12,319			16,836
Deferred revenue		2,240			1,730
Current portion of long term debt		15,879			11,237
Accrued interest		455			301
Other		1,394			1,628
Liabilities of discontinued operations		—			150
Total current liabilities		47,447			48,800
Long-term liabilities
Debt		96,525			103,733
Earn-out consideration		113			234
Asset retirement obligation		252			245
Deferred income taxes		7,566			7,826
Other		1,485			1,761
Total long-term liabilities		105,941			113,799
Total liabilities		153,388			162,599
Commitments and contingencies (Note 11)
Stockholders' equity
Preferred stock: $10 par value; 1,000 shares authorized; 90 series A convertible preferred shares    authorized and issued; no shares outstanding and $0 liquidation preference		—			—
Series C participating cumulative preferred stock: $10 par value; 500 shares authorized; no shares    issued and outstanding		—			—
Common stock: $.01 par value; 45,000 shares authorized; 23,212 and 23,200 shares issued and outstanding    at June 30, 2017 and December 31, 2016, respectively		232			232
Additional paid-in capital		534,132			533,575
Accumulated deficit		(434,031	)		(362,696	)
Accumulated other comprehensive loss		(24,007	)		(23,533	)
Total Rentech stockholders' equity		76,326			147,578
Noncontrolling interests		2,547			2,540
Total equity		78,873			150,118
Total liabilities and stockholders' equity	$	232,261		$	312,717

See Accompanying Notes to Consolidated Financial Statements.

3

RENTECH, INC.

Consolidated Statements of Operations

(Amounts in thousands, except per share data)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
	(Unaudited)
Revenues
Product sales	$	11,039		$	16,336		$	27,274		$	39,652
Service revenues		13,699			15,457			29,685			32,078
Total revenues		24,738			31,793			56,959			71,730
Cost of sales
Product		12,881			20,655			32,081			47,158
Service		12,534			12,817			26,300			26,120
Total cost of sales		25,415			33,472			58,381			73,278
Gross loss		(677	)		(1,679	)		(1,422	)		(1,548	)
Operating expenses
Selling, general and administrative expense		6,146			7,742			14,830			16,856
Depreciation and amortization		453			775			1,077			1,783
Asset impairment		—			—			7,759			—
Goodwill impairment		—			—			13,125			—
Other expense, net		348			1,651			361			1,664
Total operating expenses		6,947			10,168			37,152			20,303
Operating loss		(7,624	)		(11,847	)		(38,574	)		(21,851	)
Other expense, net
Interest expense		(2,520	)		(2,511	)		(4,917	)		(6,083	)
Loss on debt repayment		—			(3,295	)		—			(3,295	)
Other income (expense)		207			367			(1,137	)		513
Total other expenses, net		(2,313	)		(5,439	)		(6,054	)		(8,865	)
Loss from continuing operations before income taxes and equity in    loss of investee		(9,937	)		(17,286	)		(44,628	)		(30,716	)
Income tax benefit		(26	)		(9,705	)		(1,250	)		(12,107	)
Loss from continuing operations before equity in loss of    investee		(9,911	)		(7,581	)		(43,378	)		(18,609	)
Equity in loss of investee		27,212			1,360			28,130			1,360
Loss from continuing operations		(37,123	)		(8,941	)		(71,508	)		(19,969	)
Income from discontinued operations, net of tax		—			305,100			96			310,674
Net income (loss)		(37,123	)		296,159			(71,412	)		290,705
Net (income) loss attributable to noncontrolling interests		66			(157	)		77			(3,563	)
Loss on redemption of preferred stock		—			(11,049	)		—			(11,049	)
Preferred stock dividends		—			—			—			(1,320	)
Net income (loss) attributable to Rentech common shareholders	$	(37,057	)	$	284,953		$	(71,335	)	$	274,773
Net income (loss) per common share allocated to Rentech common    shareholders:
Basic:
Continuing operations	$	(1.60	)	$	(0.87	)	$	(3.08	)	$	(1.41	)
Discontinued operations	$	0.00		$	12.89		$	0.00		$	12.99
Net income (loss)	$	(1.60	)	$	12.05		$	(3.07	)	$	11.61
Diluted:
Continuing operations	$	(1.60	)	$	(0.87	)	$	(3.08	)	$	(1.41	)
Discontinued operations	$	0.00		$	12.89		$	0.00		$	12.99
Net income (loss)	$	(1.60	)	$	12.05		$	(3.07	)	$	11.61
Weighted-average shares used to compute net income (loss) per common    share:
Basic		23,211			23,067			23,206			23,051
Diluted		23,211			23,067			23,206			23,051

See Accompanying Notes to Consolidated Financial Statements.

4

RENTECH, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
	(Unaudited)
Net income (loss)	$	(37,123	)	$	296,159		$	(71,412	)	$	290,705
Other comprehensive income (loss), net of tax:
Foreign currency translation		(407	)		(230	)		(474	)		7,254
Other comprehensive income (loss)		(407	)		(230	)		(474	)		7,254
Comprehensive income (loss)		(37,530	)		295,929			(71,886	)		297,959
Less: net (income) loss attributable to noncontrolling interests		66			(157	)		77			(3,563	)
Less: other comprehensive income attributable to noncontrolling interests		—			—			—			—
Comprehensive income (loss) attributable to Rentech	$	(37,464	)	$	295,772		$	(71,809	)	$	294,396

See Accompanying Notes to Consolidated Financial Statements.

5

RENTECH, INC.

Consolidated Statements of Stockholders’ Equity (Deficit)

(Amounts in thousands)

											Accumulated			Total
					Additional						Other			Rentech						Total
	Common Stock				Paid-in			Accumulated			Comprehensive			Stockholders'			Noncontrolling			Stockholders'
	Shares		Amount		Capital			Deficit			Income (Loss)			Equity(Deficit)			Interests			Equity (Deficit)
	(Unaudited)
Balance, December 31, 2015		23,033	$	230	$	543,724		$	(531,971	)	$	(27,204	)	$	(15,221	)	$	(65,199	)	$	(80,420	)
Sale of investment in RNP		—		—		—			—			—			—			67,638			67,638
Common stock issued for services		125		2		(2	)		—			—			—			—			—
Loss on redemption of preferred stock		—		—		(11,049	)		—			—			(11,049	)		—			(11,049	)
Dividends - preferred stock		—		—		(1,320	)		—			—			(1,320	)		—			(1,320	)
Distributions to noncontrolling    interests		—		—		—			—			—			—			(3,345	)		(3,345	)
Equity-based compensation expense		—		—		1,303			—			—			1,303			—			1,303
Restricted stock units		31		—		(27	)		—			—			(27	)		—			(27	)
Net income		—		—		—			287,142			—			287,142			3,563			290,705
Other comprehensive income		—		—		—			—			7,254			7,254			—			7,254
Other		—		—		164			—			(283	)		(119	)		(2	)		(121	)
Balance, June 30, 2016		23,189	$	232	$	532,793		$	(244,829	)	$	(20,233	)	$	267,963		$	2,655		$	270,618
Balance, December 31, 2016		23,200	$	232	$	533,575		$	(362,696	)	$	(23,533	)	$	147,578		$	2,540		$	150,118
Common stock issued for services		6		—		—			—			—			—			—			—
Equity-based compensation expense		—		—		644			—			—			644			—			644
Restricted stock units		6		—		(2	)		—			—			(2	)		—			(2	)
Net loss		—		—		—			(71,335	)		—			(71,335	)		(77	)		(71,412	)
Other comprehensive loss		—		—		—			—			(474	)		(474	)		—			(474	)
Other		—		—		(85	)		—			—			(85	)		84			(1	)
Balance, June 30, 2017		23,212	$	232	$	534,132		$	(434,031	)	$	(24,007	)	$	76,326		$	2,547		$	78,873

See Accompanying Notes to Consolidated Financial Statements.

6

RENTECH, INC.

Consolidated Statements of Cash Flows

(Amounts in thousands)

	For the Six Months Ended June 30,
	2017			2016
	(Unaudited)
Cash flows from operating activities
Net income (loss)	$	(71,412	)	$	290,705
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Income from discontinued operations		(96	)		(310,674	)
Non-cash equity in loss of investee		28,106			1,329
Depreciation and amortization		6,996			11,296
Asset impairment		7,759			—
Goodwill impairment		13,125			—
Non-cash effect of tax benefit		(54	)		(12,107	)
Utilization of spare parts		395			963
Write-down of inventory		3,302			10,298
Loss on disposal of fixed assets		361			1,664
Loss on debt repayment		—			3,295
Change in deferred taxes		(259	)		32,021
Non-cash interest expense		410			314
Equity-based compensation		644			1,153
Other		(316	)		(381	)
Changes in operating assets and liabilities:
Accounts receivable		5,760			(5,295	)
Other receivables		1,426			682
Inventories		318			(14,639	)
Prepaid expenses and other current assets		2,220			687
Accounts payable		(1,154	)		(3,126	)
Deferred revenue		505			629
Accrued interest		148			(44	)
Accrued liabilities, accrued payroll and other		(5,002	)		3,834
Cash provided by (used in) operating activities of continuing operations		(6,818	)		12,604
Cash used in operating activities of discontinued operations		—			(23,672	)
Net cash used in operating activities		(6,818	)		(11,068	)
Cash flows from investing activities
Capital expenditures		(4,444	)		(7,716	)
Proceeds from disposal of assets		5,219			2,442
Distributions received from equity investment		—			1,941
Cash provided by (used in) investing activities of continuing operations		775