SIRE reports ‘favorable margins’ in late 2016, early 2017

By EPM Staff | February 17, 2017

Southwest Iowa Renewable Energy LLC recently announced its unaudited financial results for the fourth quarter of 2016. SIRE reported net income of $5.6 million, or $422.60 per unit, for the three-month period ending Dec. 31, significantly higher than the same period in 2015 when it achieved a net income of of $1.1 million or $82.99 per unit. However, SIRE’s fourth-quarter 2016 revenue from operations was $52.1 million, while its fourth-quarter 2015 revenue was slightly higher at $53.2 million.

Modified EBITDA—defined as earnings before interest, income taxes, depreciation, amortization, and unrealized hedging gains and losses—was $8.2 million in the last quarter, nearly double that of the same period in the previous year. SIRE had $1.3 million in cash and cash equivalents and $36 million available under revolving loan agreements, for a total cash and available borrowings of $37.3 million. The cash flow provided by operating activities was $9.9 million compared to $6.4 million for the same period in 2015. 

Notably, the company reported that its healthy margins of late 2016 have extended into early 2017.

“This first quarter of fiscal 2017, we saw very favorable margins, continuing the trends of the previous quarter,” said SIRE President and CEO Brian Cahill. “Corn prices retreated back below $3.50—we averaged $3.36 per bushel during this first quarter of Fiscal 2017, which is a decrease over the past year's price of $3.77. However, ethanol margins in the U.S. have been very volatile towards the end of 2016. Demand for ethanol has been strong with the lower prices, both in the U.S. and abroad. The industry has continued to adjust and we expect margins to remain positive but are becoming more dependent on continued good export demand."

During the first quarter of fiscal 2017, SIRE produced 29.9 million gallons of ethanol, compared to 29.1 million gallons during the first quarter of fiscal 2016. Cahill said the company is continuing to evaluate and implement new production technology. “We will continue to focus on running the plant efficiently, with a balance of optimizing the yield and profit," he said.

SIRE is a 125-MMgy ethanol plant located on 275 acres in Council Bluffs, Iowa. The plant began producing ethanol in early 2009 and sells its ethanol, distillers grains, corn syrup and corn oil in the continental United States, Mexico and the Pacific Rim.