VeraSun

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The IPO of VeraSun has recently been a very hot topic. VeraSun's offering is expected to price on or about June 8th as the company expects to price its 17.25 million shares at between 18 to 20 apeice to raise about $320 million.

VeraSun's IPO presentation can be viewed here

Key facts I was able to extract from the presentation:

- VeraSun are innovators in the Ethanol industry as they built the first and second 100 million gallon ethanol production plants

- Two plants are in operation today, by the end of 2008 they expect to have an ethanol capacity of about half a billion gallons. Three more plants are to be built.
Plants
Aurora
Fort Dodge
Charles City
Northwestern Iowa
Welcome Minnesota
Condition
In Operation
In Operation
Under Construction
Under Construction
Under Construction
Date of Operation
Dec 2003
Oct 2005
Jul/Aug 2007
Q1 2008
Q1 2008
Ethanol Capacity (MMGY)
120
110
110
110
110

- Verasun is the largest pure play company, this fact I found most interesting. The table below shows VeraSun vs. Aventine and Pacific Ethanol in this statistic.
VeraSun
Current Production of Ethanol/Future Production of Ethanol
230 mmgy
340 mmgy
Aventine
Current Production of Ethanol/Future Production of Ethanol
150 mmgy
207 mmgy
Pacific Ethanol
Current Production of Ethanol/Future Production of Ethanol
0 mmgy
35 mmgy

- Verasun is second behind Archer Daniels Midland in overall ethanol production

- VeraSun has three products: Unbranded Ethanol, Branded Ethanol and Distillers Grains, here is their process:
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-Financial Comparison:
(In Millions)

12 months ending Dec 2005
LTM March 2006
Q1 05
Q1 06
Total Revenues
236.4
302.2
44.9
110.7
Gross Profit
35.5
58.7
6.2
29.3
EBITDA
29.9
54.1
5.4
29.6
Net Income
0.3
1.3
1.7
2.7
Ethanol Sold
126.3
156.2
24.7
54.5

The reason that there was such a significant increase from Q1 05 to Q1 06 was the construction of the Fort Dodge plant.

-VeraSun is currently 210 million dollares in debt

-The primary IPO offering will be used to fund the two plants under construction, Northwestern and Welcome
Sources:
IPO Proceeds
209 million
Cash on Hand as of March 31, 2006
43.3 million
Cash needed from operations
45.3 million
Total Sources
297.6 million

Uses:
Northwestern Iowa Plant
140 million
Welcome, Minnesota
140 million
Fees and Expenses
17.6 million
Total Uses
297.6 million

VeraSun is allready a proven company in this industry, they have the fundamentals, the production and a bright future. June 8th will be an interesting and volatile day for investors as most companies IPO debut's are.

 

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Comments

  • 6/3/2006 2:45 PM gridflash wrote:
    One of the assets going forward on this stock, that has not been widely discussed, is the the subject of branding.

    IMO VSE's investment in the V85 brand on the pumps is going to is going to provide huge leverage when John Q Public wants to buy an ethanol stock.

    A lot of people invest in what they use.
    Reply to this
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