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 September 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 October 31, 2017 was 23,214,347.

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	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	48
Item 4.	Controls and Procedures	48
Part II — Other Information
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 6.	Exhibits	50
Signatures		51

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RENTECH, INC.

Consolidated Balance Sheets

(Amounts in thousands, except per share data)

	As of
	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets
Cash	$	20,473		$	28,319
Accounts receivable, including unbilled revenue		9,892			12,490
Inventories		15,436			28,131
Prepaid expenses and other current assets		5,119			3,744
Other receivables		2,710			4,495
Total current assets		53,630			77,179
Property, plant and equipment, net		91,746			117,565
Construction in progress		799			905
Other assets
Equity investment		23,085			53,335
Goodwill		1,750			28,576
Intangible assets		16,916			31,227
Deposits and other assets		2,105			3,930
Property held for sale		1,385			—
Total other assets		45,241			117,068
Total assets	$	191,416		$	312,717
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	14,750		$	12,389
Accrued payroll and benefits		3,608			4,529
Accrued liabilities		15,552			16,836
Deferred revenue		1,360			1,730
Current portion of long term debt		17,437			11,237
Accrued interest		438			301
Other		913			1,628
Liabilities of discontinued operations		—			150
Total current liabilities		54,058			48,800
Long-term liabilities
Debt		90,724			103,733
Earn-out consideration		206			234
Asset retirement obligation		170			245
Deferred income taxes		6,533			7,826
Other		1,335			1,761
Total long-term liabilities		98,968			113,799
Total liabilities		153,026			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; 23,214 and 23,200 shares issued and outstanding at    September 30, 2017 and December 31, 2016, respectively		232			232
Additional paid-in capital		534,339			533,575
Accumulated deficit		(474,221	)		(362,696	)
Accumulated other comprehensive loss		(24,597	)		(23,533	)
Total Rentech stockholders' equity		35,753			147,578
Noncontrolling interests		2,637			2,540
Total equity		38,390			150,118
Total liabilities and stockholders' equity	$	191,416		$	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 September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
	(Unaudited)
Revenues
Product sales	$	21,893		$	22,998		$	49,167		$	62,650
Service revenues		12,967			15,600			42,652			47,678
Total revenues		34,860			38,598			91,819			110,328
Cost of sales
Product		21,415			26,645			53,496			73,803
Service		11,223			12,748			37,523			38,868
Total cost of sales		32,638			39,393			91,019			112,671
Gross profit (loss)		2,222			(795	)		800			(2,343	)
Operating expenses
Selling, general and administrative expense		6,092			9,338			20,922			26,194
Depreciation and amortization		369			732			1,446			2,515
Asset impairment		17,103			—			24,862			—
Goodwill impairment		13,701			—			26,826			—
Other expense, net		2,843			2,221			3,204			3,885
Total operating expenses		40,108			12,291			77,260			32,594
Operating loss		(37,886	)		(13,086	)		(76,460	)		(34,937	)
Other expense, net
Interest expense		(2,415	)		(2,494	)		(7,332	)		(8,577	)
Loss on debt repayment		(168	)		—			(168	)		(3,295	)
Other income (expense)		165			218			(972	)		731
Total other expenses, net		(2,418	)		(2,276	)		(8,472	)		(11,141	)
Loss from continuing operations before income taxes and equity in    loss of investee		(40,304	)		(15,362	)		(84,932	)		(46,078	)
Income tax benefit		(2,224	)		(6,123	)		(3,474	)		(18,230	)
Loss from continuing operations before equity in loss of investee		(38,080	)		(9,239	)		(81,458	)		(27,848	)
Equity in loss of investee		2,021			1,115			30,151			2,475
Loss from continuing operations		(40,101	)		(10,354	)		(111,609	)		(30,323	)
Income from discontinued operations, net of tax		—			1,666			96			312,340
Net income (loss)		(40,101	)		(8,688	)		(111,513	)		282,017
Net (income) loss attributable to noncontrolling interests		(89	)		71			(12	)		(3,492	)
Loss on redemption of preferred stock		—			—			—			(11,049	)
Preferred stock dividends		—			—			—			(1,320	)
Net income (loss) attributable to Rentech common shareholders	$	(40,190	)	$	(8,617	)	$	(111,525	)	$	266,156
Net income (loss) per common share allocated to Rentech common    shareholders:
Basic:
Continuing operations	$	(1.73	)	$	(0.45	)	$	(4.81	)	$	(1.86	)
Discontinued operations	$	0.00		$	0.08		$	0.00		$	13.05
Net income (loss)	$	(1.73	)	$	(0.37	)	$	(4.81	)	$	11.23
Diluted:
Continuing operations	$	(1.73	)	$	(0.45	)	$	(4.81	)	$	(1.86	)
Discontinued operations	$	0.00		$	0.08		$	0.00		$	13.05
Net income (loss)	$	(1.73	)	$	(0.37	)	$	(4.81	)	$	11.23
Weighted-average shares used to compute net income (loss) per common    share:
Basic		23,212			23,189			23,209			23,098
Diluted		23,212			23,189			23,209			23,098

See Accompanying Notes to Consolidated Financial Statements.

4

RENTECH, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Amounts in thousands)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2017			2016			2017			2016
	(Unaudited)
Net income (loss)	$	(40,101	)	$	(8,688	)	$	(111,513	)	$	282,017
Other comprehensive income (loss), net of tax:
Foreign currency translation		(590	)		(1,564	)		(1,064	)		5,690
Other comprehensive income (loss)		(590	)		(1,564	)		(1,064	)		5,690
Comprehensive income (loss)		(40,691	)		(10,252	)		(112,577	)		287,707
Less: net (income) loss attributable to noncontrolling interests		(89	)		71			(12	)		(3,492	)
Less: other comprehensive income attributable to noncontrolling interests		—			—			—			—
Comprehensive income (loss) attributable to Rentech	$	(40,780	)	$	(10,181	)	$	(112,589	)	$	284,215

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		—		—		—			—			—			—			67,812			67,812
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		—		—		—			—			—			—			(3,330	)		(3,330	)
Equity-based compensation expense		—		—		1,681			—			—			1,681			—			1,681
Restricted stock units		33		—		(31	)		—			—			(31	)		—			(31	)
Net income		—		—		—			278,525			—			278,525			3,492			282,017
Other comprehensive income		—		—		—			—			5,690			5,690			—			5,690
Other		—		—		164			—			(283	)		(119	)		(2	)		(121	)
Balance, September 30, 2016		23,191	$	232	$	533,167		$	(253,446	)	$	(21,797	)	$	258,156		$	2,773		$	260,929
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		—		—		851			—			—			851			—			851
Restricted stock units		8		—		(2	)		—			—			(2	)		—			(2	)
Net income (loss)		—		—		—			(111,525	)		—			(111,525	)		12			(111,513	)
Other comprehensive loss		—		—		—			—			(1,064	)		(1,064	)		—			(1,064	)
Other		—		—		(85	)		—			—			(85	)		85			—
Balance, September 30, 2017		23,214	$	232	$	534,339		$	(474,221	)	$	(24,597	)	$	35,753		$	2,637		$	38,390

See Accompanying Notes to Consolidated Financial Statements.

6

RENTECH, INC.

Consolidated Statements of Cash Flows

(Amounts in thousands)

	For the Nine Months Ended September 30,
	2017			2016
	(Unaudited)
Cash flows from operating activities
Net income (loss)	$	(111,513	)	$	282,017
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Income from discontinued operations		(96	)		(312,340	)
Non-cash equity in loss of investee		30,106			2,429
Depreciation and amortization		9,705			16,389
Asset impairment		24,862			—
Goodwill impairment		26,826			—
Non-cash effect of tax benefit		(54	)		(58,604	)
Utilization of spare parts		518			1,669
Write-down of inventory		3,467			16,530
Loss on disposal of fixed assets		531			3,696
Loss on debt repayment		168			3,295
Change in deferred taxes		(1,292	)		30,823
Non-cash interest expense		622			468
Equity-based compensation		851			1,532
Other		(617	)		(712	)
Changes in operating assets and liabilities:
Accounts receivable		2,673			572
Other receivables		1,851			2,018
Inventories		8,973			(20,055	)
Prepaid expenses and other current assets		(889	)		(158	)
Accounts payable		1,884			(1,086	)
Deferred revenue		(375	)		149
Accrued interest		122			(32	)
Accrued liabilities, accrued payroll and other		(1,031	)		3,270
Cash used in operating activities of continuing operations		(2,708	)		(28,130	)
Cash provided by operating activities of discontinued operations		—			19,961
Net cash used in operating activities		(2,708	)		(8,169	)
Cash flows from investing activities
Capital expenditures		(6,286	)		(15,404	)
Proceeds from disposal of assets		9,194			2,490
Distributions received from equity investment