I sat down to write this letter and realized pretty quickly that it would not be a typical, year-end letter to shareholders: recapping the prior year, discussing business segments, mentioning projects, and finishing by attempting to foretell the current year's financial performance. In our most recent 10-K filing, we described our results and delineated our lines of business, so I don't think a couple of paragraphs on these topics here would impart any new knowledge to you. Instead, I would like to tell you a little about what I've learned as I approach my six-month anniversary in this job and a little about what I expect and hope the future will hold for our company.
First Impressions: A good place for me to start was to visit some of our operating facilities, our projects under construction, our asset managers and our employees to assess first-hand the ability of these
assets and people to deliver better financial results in the future. What I have seen to date has given me
confidence that the foundation of our company is sound. We have good assets, and we have good people managing and operating them. Despite the turbulent times of last year, this team performed their duties in a manner safe to themselves, our contractors, and our neighbors. My confidence in our field team and assets includes our Pasadena ammonium sulfate plant. Last year, after a prolonged period of financial and operational underperformance, we undertook an evaluation that resulted in a restructuring of the facility. This entailed, among other things, reducing the plant's production levels, upgrading components to improve product quality, and enhancing our staff to be diligent overseers of productivity improvements. I am pleased to report that the results of the restructuring are in the category of "so far, so good." We are certainly on the right track at Pasadena, as the plant has returned to profitability and improved customer satisfaction.
In summary, I have come away from my plant visits convinced that our people in the field are of very high quality, and they are up to the challenge of turning our company in the right direction. They acknowledge to a person that more improvement can be accomplished.
our East Dubuque facility, did not perform at expected levels of production or cash flow. The problems experienced by the majority of our operating units were compounded by the delays and cost overruns in Canada, as we attempted to get our industrial wood pellet segment off the ground. On most metrics of business success, we as a company were underachievers.
Lessons learned: Our learning was shaped by events - some good, some bad, and some we could do little about. To some degree, our underperformance was attributable to market factors, such as the price of our feedstock or the price received for finished product. In too many cases, however, betteroversight and process could have led to better outcomes. We are conducting a "lessons learned" exercise on our Canadian projects. What we see today is that our Atikokan facility is producing a very high quality product prized by our customer, and our Wawa facility is starting production. I believe we can produce this product in profitable quantities and our plant design is sound, as are the quality and quantity of our feedstock supply. We do know that the way we went about constructing our plants left room for improvement. We are in the process of identifying each misstep and addressing how to avoid making the same misjudgments on our future developments. To this end, we have restructured our organization to add a project management function that reports directly to me. We are in the process of structuring our processes and our organization to minimize delays and cost over-runs across the entire spectrum of our company's operations.
Anxieties: Our company was not in sound enough financial condition to take the body blow 2014 delivered to us. Our liquidity was too low and our costs were high. We are fortunate that we have as an investor GSO Capital, who provided us the capital earlier this year to finish construction of our industrial wood pellet plants. That being said, GSO should not be relied upon as the sole source of capital to fund our growth going forward. We are exploring new avenues of capital access, including project level investment, joint-venture partners and strategic alternatives around our fertilizer investment. The
Board of Rentech Nitrogen Partners (RNF) has engaged Morgan Stanley to explore strategic alternatives
on behalf of RNF's unitholders. This process could result in our company changing our ownership interest in RNF and provide us with an opportunity to reduce our leverage. It could also result in us continuing to own the interest we own today. We will be communicating to you further on this topic as the situation progresses. The outcome of these undertakings will also help us determine the size and shape of our company going forward. This will cause us to assess how we oversee our businesses and where we oversee them from, among other things. In simple terms, the situation is dynamic and we will have to be so as well.
can promise that we will work with integrity and work safely in our pursuit of improving financial results. I can promise change. I can promise that today's company will not be tomorrow's. I can promise that our vision for tomorrow is brighter than the reality of our recent past.
Sincerely,
Keith B. Forman
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