USBE US Bioenergy Corp (MM)

US BioEnergy Corporation (NASDAQ:USBE), today announced net income of $8.3 million, or $0.12 per share for the quarter ended June 30, 2007, compared to $5.2 million or $0.08 per share for the first quarter of 2007. EBITDA was $21.8 million for the quarter ended June 30, 2007, compared to $18.3 million for the first quarter of 2007. For the six months ended June 30, 2007, the company reported net income of $13.5 million, or $0.20 per share, and EBITDA of $40.0 million. Total revenue for the second quarter of 2007 was $154.4 million, up approximately 17% compared to $132.2 million for the first quarter of 2007. For the six months ended June 30, 2007, total revenue was $286.6 million. �We are very pleased with the strong growth and profitability we achieved during the second quarter,� said Gordon Ommen, US BioEnergy�s CEO. �With our four plants currently in operation, three additional plants under construction and the pending acquisition of Millennium Ethanol, we are well positioned to achieve a production capacity of 780 million gallons per year (mgy) by the end of 2008.� Production volumes in the second quarter of 2007 were 68.2 million gallons, up approximately 16% compared to 58.7 million gallons for the first quarter of 2007. Financial and operating results for the second quarter were primarily attributable to increases in the company�s ethanol production at existing plants and new production at the Ord, Nebraska plant, offset by higher corn costs. During the second quarter of 2007, the company sold 67.1 million gallons of ethanol at an average selling price of $1.91 per gallon, compared with 59.7�million gallons of ethanol at an average selling price of $1.90 per gallon for the first quarter of 2007. The company recognizes revenue on ethanol sales net of freight and commissions of $0.18 per gallon in the second quarter. After taking hedging losses into account, the company�s corn costs averaged $3.97 per bushel, or $1.41 per gallon of ethanol sold for the second quarter of 2007, compared with $3.64�per bushel, or $1.25�per gallon of ethanol sold for the first quarter of 2007. Before taking hedging losses into account, corn costs averaged $3.79 per bushel, or $1.35 per gallon of ethanol sold, compared with $3.52�per bushel, or $1.21�per gallon of ethanol sold in the first quarter of 2007. Milestones the company achieved during the second quarter of 2007 include the following: Early start-up of the company�s Ord plant Announced the acquisition of Millennium Ethanol, LLC adding 100 mgy of production capacity in 2008 Mr. Ommen continued, �We believe the combination of our track record of strong operating performance combined with our recently announced US Bio Process Technology(TM), which is technology enhancements, engineering improvements, training programs and other process improvements will continue to position our company as a leading producer and marketer of ethanol.� The company currently owns and operates four ethanol plants, which have combined production capacity of 300 mgy and has the following plants under construction and sites under evaluation: Hankinson, North Dakota, a 100 mgy nameplate facility, which is expected to start producing ethanol in the second quarter of 2008 Dyersville, Iowa, a 100 mgy nameplate facility, which is expected to start producing ethanol in the second quarter of 2008 Janesville, Minnesota, a 100 mgy nameplate facility, which is expected to start producing ethanol in the third quarter of 2008 The company�s total construction expenditures for the second quarter of 2007 were $124.0 million, which were primarily comprised of the following: Ord $9.1 million, Hankinson $52.6 million, Dyersville $44.8 million, Janesville $9.2 million, and $0.5 million for Grinnell. The company has put on hold any further funding of Grinnell, pending resolution of lawsuits relating to zoning issues at the site. The company�s 50 million gallon ethanol plant located in Ord, Nebraska, began producing ethanol in May 2007. At June 30, 2007, total cash and cash equivalents were $136.4 million, compared with $170.1 million on December 31, 2006. Total debt as of June 30, 2007 was $261.5 million compared with $150.1 million on December 31, 2006. Equity, as a percentage of total capitalization, was approximately 66% as of June 30, 2007. Selected Results � � Three months ended Three months ended June 30, 2007 March 31, 2007 � Sales volumes (in thousands): Ethanol gallons sold 67,068 59,726 Distillers grains tons sold 302 267 � Production volumes (in thousands) Ethanol gallons produced 68,188 58,660 Distillers grains tons produced 305 260 � Average price realizations Ethanol sales price per gallon $ 1.91 $ 1.90 Distillers grain sales price per gallon $ 0.26 $ 0.26 � Average cost Corn - no hedging impact (per bushel) $ 3.79 $ 3.52 Corn - w/ hedging impact (per bushel) $ 3.97 $ 3.64 � Corn - no hedging impact (per gallon of ethanol) $ 1.35 $ 1.21 Corn - w/ hedging impact (per gallon of ethanol) $ 1.41 $ 1.25 � Natural gas - no hedging impact (per mmbtu) $ 7.31 $ 7.19 Natural gas - w/ hedging impact (per mmbtu) $ 7.36 $ 6.88 � Natural gas - no hedging impact (per gallon of ethanol) $ 0.18 $ 0.20 Natural gas - w/ hedging impact (per gallon of ethanol) $ 0.18 $ 0.19 � � COGS - no hedging impact (per gallon of ethanol) $ 1.86 $ 1.84 COGS - w/ hedging impact (per gallon of ethanol) $ 1.97 $ 1.89 Comparability of Financial Results Prior to May 1, 2006, US BioEnergy derived revenues principally from its marketing and services businesses. Since that time, the sale of ethanol and distillers grains has become the primary source of US BioEnergy's revenues. As a result, the company�s financial results for periods after April 30, 2006 are not comparable to results for prior periods. In addition, due to the steep ramping of ethanol production since April 2006, the actual production figures for 2006 are not indicative of future operating results. EBITDA This news release describes "EBITDA" in addition to earnings calculated in accordance with generally accepted accounting principles (GAAP). Management believes that EBITDA is useful in evaluating the company�s operating performance in relation to other companies in the industry because the calculation of EBITDA generally eliminates the effects of financings and income taxes, items that vary for different companies for reasons unrelated to overall operating performance. EBITDA is not a measure of financial performance under GAAP, and should not be considered an alternative to net income, or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations of EBITDA are: EBITDA does not reflect cash used for capital expenditures; Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and EBITDA does not reflect the cash requirements for replacements; EBITDA does not reflect changes in, or cash requirements for, working capital requirements; EBITDA does not reflect the cash necessary to make payments of interest or principal on indebtedness; and EBITDA includes non-recurring payments which are reflected in other income. Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to service debt or to invest in the growth of our business. Management compensates for these limitations by relying on GAAP results as well as EBITDA. Conference Call The company will host a conference call today at 10:00 a.m. Central Time. Investors interested in listening to the call can dial (888) 895-4463 and reference conference ID 12091213. This call will be webcast and can be accessed via US BioEnergy's Web site at www.usbioenergy.net (follow the instructions on the Investor Relations page). A replay of the webcast will be available through September 3, 2007. The telephone replay will be available approximately two hours after the call concludes by dialing (800) 642-1687 or (706) 645-9291 and reference conference ID 12091213. About US BioEnergy Corporation US BioEnergy Corporation is a producer and marketer of ethanol and distillers grains. The company currently owns and operates four ethanol plants and has three additional ethanol plants under construction, and intends to acquire Millennium Ethanol, LLC. Upon completion of these initiatives, the company will own and operate eight plants with combined expected nameplate ethanol production capacity of 700 million gallons per year. Safe Harbor Statement Certain matters discussed in this news release are "forward-looking statements." The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like "believe," "anticipate," "target," "expect," "pro forma," "estimate," "intend," "guidance" or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although US BioEnergy Corporation believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. Therefore, actual results could vary materially from what we expect. Please review our filings the Securities and Exchange Commission, including Annual Report on Form 10-K for the year ended December 31, 2006, for important risk factors that could cause results to differ materially from those in any such forward-looking statements. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made except as required by applicable laws or regulations. Additional Information About the Millennium Ethanol Merger and Where to Find It US BioEnergy and Millennium Ethanol, LLC have filed a definitive proxy statement/prospectus with the Securities and Exchange Commission (the �SEC�) in connection with the proposed acquisition of Millennium Ethanol by US BioEnergy. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/ PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO BECAUSE THEY CONTAIN IMPORTANT INFORMATION. The proxy statement/prospectus and other relevant materials and any other documents filed by US BioEnergy or Millennium Ethanol with the SEC may be obtained free of charge at the SEC�s website (http://www.sec.gov). In addition, investors may obtain free copies of the proxy statement/prospectus and other relevant materials and other documents filed with the SEC by US BioEnergy by directing a request to US BioEnergy Corporation, Attention: Investor Relations, at 5500 Cenex Drive, Inver Grove Heights, Minnesota 55077, (651) 554-5491. Investors may obtain free copies of the proxy statement/prospectus and other relevant materials and other documents filed with the SEC by Millennium by directing a request to Millennium Ethanol, LLC, Attention: Steve Domm, at 44608 273rd St., Marion, South Dakota 57403, (605) 648-3941. US BioEnergy Corporation Condensed Consolidated Balance Sheets (in thousands, except per share data) � June 30, December 31, 2007 2006 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 136,404 $ 170,099 Receivables 58,859 40,958 Inventories 28,070 28,420 Derivative financial instruments - 7,144 Prepaid expenses 3,069 3,572 Deferred income taxes 1,132 - � � Total current assets � 227,534 � 250,193 Other Assets Deposits 10,125 4,307 Investment in equity of unconsolidated subsidiary 2,597 1,509 Goodwill 65,823 65,489 Intangible assets 3,676 3,174 Other assets 52 304 � � � 82,273 � 74,783 Property and equipment, net 555,467 408,814 � � Total assets $ 865,274 $ 733,790 � LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Current maturities of long-term debt $ 15,501 $ 8,131 Checks written on controlled disbursement accounts - 13,270 Notes payable 500 1,815 Accounts payable 38,722 47,163 Accrued expenses 15,851 4,938 Deferred income tax liability - 2,913 Derivative financial instruments 4,206 - Other current liabilities 611 3,955 � � Total current liabilities � 75,391 � 82,185 Long-term debt 245,545 140,128 Deferred income taxes 40,071 27,099 Long-term income taxes payable 662 - Minority interest in subsidiary 3,949 - Other long-term liabilities 222 - Commitments and Contingencies Shareholders' Equity Preferred stock, $0.01 par value, authorized 75,000,000 shares, issued none - - Common stock, $0.01 par value, authorized 75,000,000 shares; 67,963,495 and 67,968,885 shares issued and outstanding as of June 30, 2007 and December 31, 2006, respectively � � 680 679 Additional paid-in capital 468,880 467,552 Retained earnings 29,874 16,147 � � 499,434 484,378 � � Total liabilities and shareholders' equity $ 865,274 $ 733,790 US BioEnergy Corporation Condensed Consolidated Statements of Operations (in thousands, except per share data) � � Three Months Ended June 30, 2007 March 31, 2007 (Unaudited) � Revenues: Product sales $ 149,133 $ 130,048 Services and commissions 2,696 2,169 Other revenues 2,575 - � � Total revenues � 154,404 � � 132,217 � � Cost of goods sold: Cost of product sales 134,241 113,149 Cost of services and commissions 952 926 � � Total cost of goods sold � 135,193 � � 114,075 � � Gross profit 19,211 18,142 � Selling, general and administrative expenses 10,198 7,568 � � Operating income � 9,013 � � 10,574 � � Other income (expense): Interest expense (2,404 ) (4,409 ) Interest income 2,093 2,293 Other income 3,992 23 Equity in net income of unconsolidated subsidiary 805 283 � � � 4,486 � � (1,810 ) � Income before income taxes and minority interest 13,499 8,764 Federal and state income tax expense (5,258 ) (3,529 ) Minority interest in net loss of subsidiary 44 7 � � Net income $ 8,285 � $ 5,242 � � Income per common share: Basic $ 0.12 $ 0.08 Diluted 0.12 0.08 Weighted average shares outstanding: Basic 67,982 67,974 Diluted 68,940 68,913 US BioEnergy Corporation Condensed Consolidated Statements of Cash Flows (Dollars in thousands) � � Three Months Ended � June 30, 2007 March 31, 2007 (Unaudited) � Cash Flows from Operating Activities Net income $ 8,285 $ 5,242 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 5,716 5,007 Amortization 177 916 Minority interest in net (loss) income of subsidiary (44 ) (7 ) Stock-based compensation expense 703 681 Deferred income taxes 4,935 3,992 Change in derivative financial instruments 5,774 5,827 Equity in net income of unconsolidated subsidiary (805 ) (283 ) Changes in working capital components, net of effects of business acquisitions: Receivables (4,642 ) (13,059 ) Inventories (267 ) 617 Prepaid expenses (727 ) 1,178 Accounts payable (2,608 ) 10,237 Accrued expenses and other liabilities 9,917 (1,464 ) � � � Net cash provided by operating activities � � 26,414 � � 18,884 � � Cash Flows from Investing Activities Purchases of property and equipment (124,010 ) (45,770 ) Acquisition of US Bio Platte Valley and US Bio Ord, net of cash received - - Proceeds received on sale of 50 percent interest in Provista - - Acquisition of US Bio Hankinson, LLC, net of cash received - - Deposits made (6,115 ) 297 Other - - � � � Net cash used in investing activities � � (130,125 ) � (45,473 ) � Cash Flows from Financing Activities Proceeds from long-term debt 25,359 125,495 Payments of long-term debt (93 ) (37,974 ) Decrease in checks written on controlled disbursement account (49 ) (13,221 ) Debt issuance costs paid 8 (1,550 ) Net change in notes payable (470 ) (845 ) Proceeds from the issuance of common stock (84 ) 29 Deferred offering costs paid - - � � � Net cash provided by financing activities � � 24,671 � � 71,934 � Net (decrease) increase in cash and cash equivalents (79,040 ) 45,345 Cash and Cash Equivalents Beginning of period � � 215,444 � � 170,099 � End of period � $ 136,404 � $ 215,444 � US BioEnergy Corporation EBITDA (a non-GAAP measure) Reconciliation of GAAP to Non-GAAP � 3 months endedJune 30, 2007 3 months endedMarch 31, 2007 � Net Income $ 8,285 $ 5,242 � Interest Expense 2,404 4,409 Income Taxes 5,258 3,529 Depreciation 5,715 5,007 Amortization � 88 � 100 � EBITDA $ 21,750 $ 18,287