Annual Member s Meeting

Transcription

1 Annual Member s Meeting

2 Forward Looking Statement A word from our Counsel This presentation contains forward-looking statements involving future events, future business and other conditions, future performance, and expected operations. These statements are based on management s belief and expectations and on information currently available to management. Forward-looking statements may include statements which contain words such as believe, expect, anticipate, intend, plan, estimate, predict, hope, should, could, may, future, will, potential, or the negatives of these words and all similar expressions. Forward-looking statements involve numerous assumptions, risks, and uncertainties. The actual results or actual business or other conditions experienced by Conestoga Energy Holdings, LLC, and its subsidiaries (Companies) may differ materially from those contemplated by any forwardlooking statements, and the Companies are not under any duty to update the forward-looking statements contained in this presentation. The Companies cannot and do not guarantee any future results or performance or what future business conditions will be like. Conestoga Energy Holdings cautions you not to put undue reliance on forward-looking statements, which speak only as of May 5 th 2015, the date of this presentation. 2 Conestoga Energy Holdings

3 Who are we? Conestoga Energy is a boutique supplier of renewable fuel, maintaining flexibility to stay responsive to the market. We manage and operate three ethanol production facilities located in Kansas and Texas. Combined, Conestoga Energy s plants have a production capacity of over 218 million gallons per year. Conestoga Energy can respond to market conditions with wet or dry distiller grains. We are always looking to reduce our carbon footprint through innovative technology and disciplined processes. Our flexibility positions us to leverage our core competencies allowing for strategic and/or tactical growth. 3 Conestoga Energy Holdings

4 What we do Produce and manage within the ethanol supply chain, taking advantage of synergistic opportunities throughout. Insurance Ethanol Corn Oil Distiller s Grain CO2 Logistics

5 Kansas 2 1 Texas LOCATIONS Liberal, KS (owned) Garden City, KS (owned) Levelland, TX (managed) EMPLOYEES 164 Employees 127 in Kansas 37 in Texas GALLONS SOLD 218 Million 180 Domestic 38 Global Exports By the Numbers

6 Board of Directors Nick Hatcher Chairman Larry Leis Vice Chairman Rock Ormiston Secretary Cecil O Brate Board Member Ed Condon Board Member Mark Zorensky Board Member Greg Stone Board Member Perry Bacon Board Member Gary Harshberger Board Member Andy Bulloch Board Member 6 Conestoga Energy Holdings

7 Management Team Tom Willis CEO Fred Rayner CFO Dusty Turner COO Jason Dale VP Risk Management Dean Alling Manager CIP Matt Presley Chief Technology Officer Paula Haley VP Finance & Accounting Mike Varnes VP Logistics Matt Durler VP Marketing 7 Conestoga Energy Holdings

8 STATE OF THE COMPANY

9 Strategic Approach Our goal is to maximize our unit holders investment. Cash & Risk Management Maintain a fortress balance sheet and a disciplined risk management approach to build value and protect investment. Partnerships and Opportunities Explore and execute strategic alliances and integration throughout the supply chain. New Products Continue to research and add new technologies which give us a tactical/strategic advantage. 9 Conestoga Energy Holdings

10 Year in Review Record Setting Year $86 million net income $107 million EBITDA Distributions $36.5 million $651 per unit Fortress Balance Sheet $115 million Working Capital.28 Total Debt/Equity 10 Conestoga Energy Holdings

11 2015 Challenges and Opportunities Challenges Lower oil prices $45 drop in Brent Crude $.70 drop in RBOB Supply & Demand Domestic Production outpaces Domestic demand Loss of Competitive Advantage Grain cost basis Protein vs. Energy values Sorghum exports Opportunities Innovation $1.5MM revenue from Corn Oil Q1 Opportunistic Growth Unknowns Changes to RFS s 11 Conestoga Energy Holdings

12 AUDITED FINANCIAL STATEMENTS

13 Conestoga Energy Holdings, LLC Consolidated audit was performed as of December 31, 2014; Conestoga Energy Holdings, LLC and subsidiaries include: Arkalon Ethanol, LLC, and subsidiaries Bonanza BioEnergy, LLC Conestoga Energy Partners, LLC, and subsidiaries 13

14 Conestoga Energy Holdings, LLC Condensed Balance Sheets ASSETS December 31, Current Assets $ 144,956,471 $ 94,796,878 Property, Plant and Equipment, net 151,998, ,563,077 Other Assets 4,392,350 4,402,392 Total Assets $ 301,347,545 $ 256,762,347 LIABILITIES AND MEMBERS' EQUITY Current Liabilities $ 29,846,352 $ 42,927,248 Long-Term Debt, less current maturities 55,268,281 63,617,529 Other Noncurrent Liabilities 596, ,988 Members' Equity 215,636, ,554,582 Total Liabilities and Members' Equity $ 301,347,545 $ 256,762,347 14

15 Conestoga Energy Holdings, LLC Items of Significant Change Balance Sheets 12/31/ /31/2013 Change Cash $106.7M $59.4M Increased $47.3M Accounts Receivable $11.4M $15.8M Decreased $4.4M Inventories $16.6M $12.2M Increased $4.4M Working Capital $115.1M $51.9M Increased $63.2M Overall Debt $61.8M $85.0M Decreased $23.2M 15

16 Conestoga Energy Holdings, LLC Condensed Statements of Operations (Pro Forma) Change Year Ended December Increase (Decrease) Net Sales $ 501,252,856 $ 554,074,428 $ (52,821,572) Cost of Sales 392,092, ,657,055 (111,564,104) Gross Profit (Loss) on Sales 109,159,905 50,417,373 58,742,532 Operating Expenses 22,847,198 15,472,723 7,374,475 Operating Income (Loss) 86,312,707 34,944,650 51,368,057 Other Income (Expense), net (630,016) (7,768,661) 7,138,645 Net Income (Loss) $ 85,682,691 $ 27,175,989 $ 58,506,702 16

17 Conestoga Energy Holdings, LLC Summary of Statement of Cash Flows Cash Provided by Operations 98,500,000 55,600,000 Purchase of PPE 10,325,000 1,317,000 Debt Repayment 21,320,000 13,600,000 Distributions Paid in ,601,050 - Subsequent Distributions 36,446,000 * - * Subsequent distributions were distributions paid in the first quarter of 2015 for the 2014 income tax liability 17

18 Conestoga Energy Holdings, LLC Distributions for Tax Liability Total Taxable Income 91,800,412 Ordinary Income 84,123,629 IC DISC Income 7,676,783 Tax on Ordinary Income (Assuming 39.6% Rate) 33,312,957 Tax on IC DISC Income (23.8% Rate) 1,827,074 Total Tax on Earnings 35,140,031 Total Units 56,003 Total Tax per Unit 627 Total Distributions in 2015 for 2014 Tax 36,446,663 Distribution Per Unit

19 5 YEAR DEPRECIATION PROJECTION

20 Conestoga Energy Holdings, LLC 5 Year Depreciation Schedule Book Tax Difference ,017, ,391, ,625, ,971, ,978, ,993, ,947, ,633, ,314, ,931, ,369, ,562, ,901, ,216, ,685,

21 BENEFIT OF ARKALON ICD, INC

22 Conestoga Energy Holdings, LLC Arkalon ICD, Inc. (IC-DISC) Arkalon ICD, Inc. is an Interest Charge Domestic International Sales Corporation (IC-DISC). An IC-DISC allows companies to change the character of income on foreign sales from ordinary income to capital gains income. Commissions $ 7,676,783 Estimated Tax Rate % Saved 15% Tax Savings 1,151,517 22

23 2015 Year to Date Results

24 1 st Quarter Operating Results Q Q Trend Revenue 138,778,716 91,908,525 COGS 97,604,847 84,462,185 Gross Profit 41,173,869 7,446,341 Total Fixed Costs 12,451,421 12,513,845 Net Income 28,043,087 (3,665,369) EBITDA 33,046,128 1,295,864 $1.5MM timing on hedging Compressed margins in market 24 Conestoga Energy Holdings

25 1 st Quarter 2015 Balance Sheet $36MM Distributions Q Q Trend Cash 72,413,461 60,515,627 Total Current 120,127, ,782,120 Total Assets 278,255, ,847,305 Current Liabilities 39,523,279 21,188,458 LT Liabilities 60,039,357 53,780,684 Equity 178,693, ,878,163 Total Liabilities plus Equity 278,255, ,847,305 Refi & CY Debt Reduction 25 Conestoga Energy Holdings

26 Balance Sheet Metrics Our balance sheet continues to remain strong. The major changes are the result of a combination of distributions and debt reduction. CEH Cash Working Capital 150,000, ,000, ,000, ,000,000 50,000,000 50,000,000 - Q Q Q Q Q Q Q Q Q Q Cash Working Capital Debt / Gallon Q Q Q Q Q Debt / Gallon Debt / Equity Q Q Q Q Q Debt / Equity 26 Conestoga Energy Holdings

27 2014 Unit Holder Metrics YE 2013 YE 2014 Net Income per unit $490 $1,530 EBITDA per unit $931 $1,911 Term Debt per unit $1,381 $1, Conestoga Energy Holdings

28 2015 Unit Holder Metrics Q Q Net Income per unit $500 $(65) EBITDA per unit $590 $23 Term Debt per unit $1,331 $1, Conestoga Energy Holdings

29 Market Trends Brent Crude price trends mirror RBOB trends. RBOB may be recovering in time for driving season. 29 Conestoga Energy Holdings

30 Plant Crush Margins The compression of the crush margin correlates to decreased energy prices AET - Ethanol vs Grain (w/o hedging) Q1 Yields 2.86 AET Ethanol (excluding hedging) AET Grain (excluding hedging) Q1 Yields BBE - Ethanol vs Grain (w/o hedging) BBE Ethanol (excluding hedging) BBE Grain (excluding hedging) 30 Conestoga Energy Holdings

31 Questions and Answers 31 Conestoga Energy Holdings

32 Important Questions Q What will the rest of 2015 look like?? Q Will tax liabilities be higher than reported net income? Q Any new information on the RFS? Q How are the growth plans coming? Q Will there be additional distributions this year? Q Member Questions 32 Conestoga Energy Holdings

33 Growth Energy Bryce Jones joined Growth Energy in April 2010 as Director of Sales and Membership. Bryce is responsible for all membership related activities. He also assists in the management effort for the American Ethanol partnerships with NASCAR and the UFC. Jones grew up in Mitchell, South Dakota home of the World s Only Corn Palace. He attended Augustana College in Sioux Falls, SD where he played football for the Vikings and earned his degree in Business Management. Bryce and his wife Kelsi reside in Brandon, SD and have four boys. When Jones is not chasing after his boys he spends his time hunting and playing golf. Bryce Jones bjones@growthenergy.org

34 Thank You