Southwest Iowa Renewable Energy shows Q3 loss, improved cash flow

By Susanne Retka Schill | August 18, 2011

Southwest Iowa Renewable Energy LLC ended its third quarter of fiscal year 2011 showing a loss, but reported continued financial and production improvements. Council Bluffs, Iowa,-based SIRE ended the third quarter June 30 reporting a net loss of $1.29 million or $97.96 per unit, compared to a net loss of $2.37 million or $180.61 per unit in the same period in 2010. The cash flow from operations for the nine months ended June 30 was $12.5 million compared to $3.58 million the year before, with the overall cash flow for the nine months ending June 30 of $3.47 million as compared to a negative $3.44 million for the same period in 2010.

“I think the final quarter will finish stronger,” said Brian Cahill, general manager and CEO. "Our corn oil extraction project continues to have a positive effect on our operations and we expect the contributions from corn oil to continue to grow as we progress through the end of fiscal year 2011. Ethanol margins have contracted in the third quarter, just as they did one year ago. However, we achieved a slight improvement with a reduced loss for the quarter ended June 30, in spite of the challenging commodity price conditions and current flood conditions. The continuing improvement in the cash flow from operations allowed us to pay down approximately $9.6 million on our term debt during the nine months ended June 30."

The company is on its way to achieving its goal for the 2011 fiscal year. “We’ve increased production and made improvements on the cost side,” Cahill said. “Obviously the biggest cost is in corn prices, and we have no control there, but on controllable costs such as energy and yields, we’ve made some progress.”  Coming online in February 2009 at 110 MMgy, the plant has increased production to 115 MMgy.

The biggest challenge of the summer was to prepare for the possibility of flooding. Located within a mile of the Missouri River, the plant made contingency plans in case the record June water releases through the control structures on the Missouri up river caused levy failures. “That was a nervous few weeks,” Cahill said. “A lot of the interstate north and south of us has been closed, but we’ve been able to continue to operate with very few issues.” 

Coming online in a time of tough margins in 2009, and showing losses in 2010, and again this year, has been a challenge for SIRE. “One of the big things everybody is faced with as a startup is trying to keep a good relationship with lenders,” Cahill said. “Our biggest focus this year has been to make sure we develop solid footing financially and keep our covenants with the bank group and meet all commitments, which we have.”