Filing summary
Company identity: The request identifies Green Brick Partners, Inc., but the supplied filing is BioFuel Energy Corp.’s Form 10-Q. This summary covers the filing actually provided, for the quarter ended September 30, 2013.
Business context and reporting period
BioFuel Energy produced ethanol and related products at plants in Wood River, Nebraska, and Fairmont, Minnesota. Fairmont had been idled since September 2012; Wood River continued operating. The unaudited filing reports the three and nine months ended September 30, 2013, compared with the same 2012 periods. Results are subject to volatile corn, ethanol, natural gas, and distillers-grain prices.
Financial performance and position
| Metric | Q3 2013 | Q3 2012 | Nine months 2013 | Nine months 2012 |
|---|---|---|---|---|
| Net sales | $79.0 million | $116.1 million | $259.1 million | $378.4 million |
| Gross loss (margin) | $3.1 million (3.9%) | $8.0 million (6.9%) | $7.2 million (2.8%) | $22.8 million (6.0%) |
| Operating loss | $5.7 million | $10.1 million | $15.9 million | $30.1 million |
| Net loss | $5.1 million | $11.3 million | $15.2 million | $34.8 million |
| Loss per share, basic and diluted | $0.84 | $1.88 | $2.48 | $5.76 |
- Q3 ethanol sales were 25.9 million gallons versus 36.3 million; nine-month sales were 81.8 million versus 134.8 million. Lower output and sales chiefly reflected Fairmont’s continued shutdown.
- Other income rose to $2.5 million in Q3 and $6.6 million for nine months, primarily from subleasing excess ethanol tanker cars. G&A included lender-related legal and advisory costs of $0.9 million in Q3 and $3.0 million year to date.
- Operating cash flow was positive $10.1 million for nine months, compared with $2.7 million in 2012; investing cash outflow was $2.0 million and financing cash outflow $0.1 million. Cash increased $8.0 million to $17.3 million.
- At September 30, cash was $17.3 million, current assets $38.5 million, and current liabilities $183.5 million. The $170.5 million senior facility principal was classified as current; total liabilities were $193.0 million and equity $40.5 million.
- Cash included $9.3 million at the LLC and $8.0 million at operating subsidiaries, the latter subject to lender liens. The company reported limited liquidity and dependence in part on Cargill’s payment-term accommodation.
Material changes, outlook, and risks
- Sales fell 31.9% in Q3 and 31.5% for the first nine months year over year, mainly because Fairmont remained idle. Higher unit prices partly offset reduced nine-month volume.
- The operating subsidiaries had been in default on scheduled senior-debt principal and interest payments since September 2012; unpaid scheduled payments totaled $22.4 million through September 30, 2013. The $170.5 million facility was secured by the plants and associated assets and matured in September 2014.
- On November 5, 2013, after quarter-end, the company was notified that lenders had agreed to sell the ethanol plants plus working capital to Green Plains Renewable Energy. The company had not received the agreement or disclosed transaction terms, and could not determine what value, if any, shareholders might receive. Lenders also had a deed-in-lieu arrangement held in escrow. Management said the default, Fairmont shutdown, liquidity constraints, and contemplated asset transfer raised substantial doubt about the company’s ability to continue as a going concern.
- Management gave no clear earnings or operating guidance. It said it was evaluating strategic alternatives and the economics and working-capital needs of restarting Fairmont. Commodity-margin volatility, limited ability to hedge, Cargill concentration, and possible termination of Cargill’s payment accommodation were significant risks.
- No impairment was recorded at September 30 because estimated undiscounted cash flows exceeded asset carrying values; the assessment was not revised for the subsequent sale development. No income-tax benefit was recognized, with a valuation allowance against deferred tax assets.
Important facts for investors to verify
- Confirm the intended company: the supplied filing is BioFuel Energy Corp., not Green Brick Partners, Inc.
- Review the Green Plains transaction terms, asset-transfer mechanics, treatment of working capital and debt, and any proceeds or residual value available to BioFuel shareholders.
- Check the status and timing of the lender default, deed-in-lieu escrow, and any release of claims or obligations.
- Assess accessible cash and near-term operating liquidity, including lender restrictions and whether Cargill continues its payment-term accommodation.
- Monitor Wood River operations, Fairmont’s status, commodity spreads, and whether any impairment or going-concern accounting changes are reported in subsequent filings.