VeraSun Energy Corporation Announces Fourth Quarter and Year-End 2007 Financial Results

VeraSun Energy Corporation Announces Fourth Quarter and Year-End 2007
Financial Results

Record Revenues and Solid Earnings in 2007

Financial Highlights

- Total revenues

- Revenues increased to $848.3 million for 2007

- Revenues for Q4 were $312.4 million

- Diluted earnings per share (EPS)

- Diluted EPS for 2007 were $0.31

- Diluted EPS for Q4 were $0.04

- Net income

- Net income for the year was $26.6 million

- Net income for the quarter was $4.0 million

- Cash on hand and short-term investments

- Cash on hand and short term investments of $154.1 million at
December 31, 2007

- EBITDA

- EBITDA for 2007 was $90.4 million

- EBITDA for Q4 was $31.1 million

BROOKINGS, S.D., March 11 /PRNewswire-FirstCall/ -- VeraSun Energy Corp.
(NYSE: VSE), one of the nation's largest ethanol producers, today announced
its financial results for the three months and year ended December 31, 2007.
"We are pleased to announce a solid quarter and year," said Don Endres,
VeraSun's chairman and CEO. "Fiscal year 2007 included significant milestones
for the company as we recorded more than $848 million of revenues in our fifth
year of operations. We significantly increased our production capacity while
improving operating efficiencies.
"Our operating performance and safety record have been exceptional,"
Endres added. "In the fourth quarter, we produced 142.1 million gallons and
sold 134.4 million gallons of ethanol -- our highest level of output to date
with an average production rate of over 105 percent of nameplate capacity for
the year. During 2007, we strategically positioned the company to be one of
the largest and low cost producers and we remain confident that a strong
foundation has been laid for our continued leadership in the biofuels
industry."
Fourth Quarter 2007 Financial Highlights
Total revenues, which include revenue from the sale of ethanol, distillers
grains and VE85(TM), increased by $165.9 million, or 113%, to $312.4 million
for the three months ended December 31, 2007 from $146.5 million for the three
months ended December 31, 2006. The increase in total revenues was primarily
the result of a 131% increase in ethanol volume sold, partially offset by a
decrease in average ethanol prices of $0.30 per gallon, or 14%, compared to
the three months ended December 31, 2006. Ethanol production increased by
82.5 million gallons, or 138%, as a result of the added capacity from bringing
the Charles City, Iowa, facility on-line in April, the Linden, Indiana
facility on-line in August and the Albion, Nebraska facility on-line in
October.
Net sales from ethanol increased $125.6 million, or 99%, to $251.5 million
for the three months ended December 31, 2007 from $125.9 million for the three
months ended December 31, 2006. The impact of increased volume, primarily from
the additional Charles City and Linden capacity, was $165.4 million, partially
offset by a $39.8 million reduction due to lower prices. The average price of
ethanol sold was $1.87 per gallon for the three months ended December 31, 2007
compared to $2.17 per gallon for the three months ended December 31, 2006.
Net sales from co-products increased $36.6 million, or 202%, to
$54.6 million for the three months ended December 31, 2007 from $18.1 million
for the three months ended December 31, 2006. The impact of increased volume
from the additional Charles City, Linden, and Albion capacity was
$26.4 million and the impact of higher prices was $10.2 million.
Net sales of VE85(TM), our branded E85 product, increased $3.0 million, or
166%, to $4.8 million for the three months ended December 31, 2007 from
$1.8 million for the three months ended December 31, 2006, primarily due to a
17% increase in the number of retail outlets selling our product.
Gross profit decreased $10.0 million to $30.8 million for the three months
ended December 31, 2007 from $40.8 million for the three months ended December
31, 2006. The decrease in gross profit was primarily due to higher corn costs
and lower ethanol prices, partially offset by an increase in ethanol volume
produced in the 2007 period compared to the 2006 period.
Fiscal Year 2007 Financial Highlights:
Revenues grew to $848.3 million for the year, an increase of $290.5
million, or 52% from 2006. This growth was driven by an increase in ethanol
volume sold of 128.6 million gallons.
Net income for the year was $26.6 million. Diluted EPS was $0.31 for 2007.
EBITDA was $90.4 million. In 2006, net income for the year was $75.7 million,
diluted EPS was $1.03 and EBITDA was $177.6 million.
Operational Highlights:
During 2007, the Company experienced growth in production volume primarily
due to its Charles City, Iowa facility successful start-up in April, the
start-up of its Linden, Indiana facility in August and the start-up of Albion,
Nebraska in October. Total ethanol sales increased to 134.4 million gallons
during the fourth quarter of 2007, a 131% increase in sales from the fourth
quarter of 2006.
The Company began construction on its facilities in Welcome, Minnesota,
and Hartley, Iowa and expects to begin start-up operations at both plants by
the end of the second quarter of 2008. The Company expects to start-up the
Bloomingburg, Ohio, plant by the end of the first quarter of 2008.
The Company will host a live conference call and webcast at 9:00 AM CDT /
10:00 AM EDT, Wednesday, March 12, 2008. To listen to the conference call by
phone, domestic callers may dial 888-680-0869 and enter access code 37019078.
International callers may dial 617-213-4854 and enter access code 37019078. A
live webcast can be accessed on VeraSun's Web site at www.verasun.com,
on the Investor page. Participants may pre-register for the call here
Pre-registrants will be issued a pin number to use when dialing into the live
call.
A replay will be available beginning approximately one hour after
conclusion of the call and ending on March 27, 2008. To access the replay,
domestic callers may dial 888-286-8010 and enter access code 96576880.
International callers may access the replay by dialing 617-801-6888 and
entering access code 96576880. The webcast will be archived after conclusion
of the call until March 27, 2008.
About VeraSun Energy Corporation
VeraSun Energy Corporation (NYSE: VSE), headquartered in Brookings, S.D.,
is a leading producer of renewable fuel. Founded in 2001, the company has 560
million gallons per year (MMGY) of production capacity through five operating
ethanol production facilities in Aurora, S.D., Fort Dodge and Charles City,
Iowa, Linden, Ind., and Albion, Neb. Four facilities are currently either
under construction or development in Hartley, Iowa, Welcome, Minn., Reynolds,
Ind., and Bloomingburg, Ohio. Upon completion of the new facilities, VeraSun
Energy will have an annual production capacity of approximately one billion
gallons. The company also has begun construction at its Aurora facility to
extract oil from dried distillers grains, a co-product of the ethanol process,
for use in biodiesel production.
VeraSun markets E85, a blend of 85 percent ethanol and 15 percent gasoline
for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the
brand VE85(TM). VeraSun Energy now has approximately 150 VE85(TM) retail
locations under contract in more than fifteen states and Washington, D.C. For
more information, please visit VeraSun Energy's websites at
www.verasun.com or www.VE85.com.
Forward-Looking Statements:
Certain statements in this release, and other written or oral statements
made by or on behalf of us, are "forward-looking statements" within the
meaning of the federal securities laws. Statements regarding future events and
developments and our future performance, as well as management's expectations,
anticipations, beliefs, plans, targets, estimates, or projections and similar
expressions relating to the future, are forward-looking statements within the
meaning of these laws. These statements are based on assumptions and
assessments made by our management in light of their experience and their
perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. Any forward-
looking statements are not guarantees of our future performance and are
subject to risks and uncertainties that could cause actual results,
developments and business decisions to differ materially from those
contemplated by any forward-looking statements. We disclaim any duty to update
any forward-looking statements. Some of the factors that may cause actual
results, developments and business decisions to differ materially from those
contemplated by any forward-looking statements include the volatility and
uncertainty of corn, natural gas, ethanol and unleaded gasoline prices; the
completion and results of our pending merger with US BioEnergy; our ability to
develop an oil extraction business; the results of our recently acquired
facilities; the results of our hedging transactions and other risk mitigation
strategies; operational disruptions at our facilities; our ability to
implement our expansion strategy as planned or at all; our ability to locate
and integrate potential future acquisitions; development of infrastructure
related to the sale and distribution of ethanol; our limited operating
history; excess production capacity in our industry; our ability to compete
effectively in our industry; our ability to implement a marketing and sales
network for our ethanol; changes in or elimination of governmental laws,
tariffs, trade or other controls or enforcement practices; environmental,
health and safety laws, regulations and liabilities; our reliance on key
management personnel; future technological advances; limitations and
restrictions contained in the instruments and agreements governing our
indebtedness; our ability to raise additional capital and secure additional
financing; and costs of construction and equipment, as more fully described in
the "Risk Factors" section of our annual report on Form 10-K for the year
ended December 31, 2007.
Additional Information
In connection with the proposed transaction between VeraSun and US
BioEnergy, VeraSun has filed with the SEC a registration statement on Form S-4
containing a definitive joint proxy statement of VeraSun and US BioEnergy that
also constitutes a prospectus of VeraSun, which was mailed to the shareholders
of VeraSun and US BioEnergy. SHAREHOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY BECOME
AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
VERASUN, US BIOENERGY AND THE PROPOSED TRANSACTION. The joint proxy
statement/prospectus and other documents relating to the proposed transaction
(when they are available) can be obtained free of charge from the SEC's
website at www.sec.gov. These documents (when they are available) can
also be obtained free of charge from VeraSun upon written request to VeraSun
Energy Corporation, Attention: Investor Relations, 100 22nd Avenue, Brookings,
South Dakota 57006, or by calling 605-696-7236, or from US BioEnergy, upon
written request to US BioEnergy Corporation, Attention: Investor Relations,
5500 Cenex Drive, Inver Grove Heights, Minnesota 55077, or by calling
651-554-5491

VERASUN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Years Ended December 31,
2007 2006
(dollars in thousands)
Total revenues $848,281 100.0% $557,817 100.0%
Cost of goods sold 752,382 88.7 365,139 65.5
Gross profit 95,899 11.3 192,678 34.5
Selling, general and
administrative expenses 42,480 5.0 41,060 7.4
Operating income 53,419 6.3 151,618 27.1
Other income (expense), net (16,464) (1.9) (21,541) (3.9)
Income before income taxes
and minority interest 36,955 4.4 130,077 23.2
Income tax provision 10,348 1.2 54,350 9.7
Income before minority
interest 26,607 3.2 75,727 13.5
Minority interest in net
loss (income) of subsidiary - - - -
Net income $26,607 3.2% $75,727 13.5%

Per Share data:
Income per common share
- basic $0.32 $1.09
Basic weighted average
number of common shares 82,659,352 69,328,436

Income per common share
- diluted $0.31 $1.03
Diluted weighted average
number of common and
common equivalent shares 86,236,442 73,779,278

Three Months Ended December 31,
2007 2006
(unaudited) (unaudited)
(dollars in thousands)
Total revenues $312,347 100.0% $146,498 100.0%
Cost of goods sold 281,571 90.1 105,697 72.1
Gross profit 30,776 9.9 40,801 27.9
Selling, general and
administrative expenses 11,012 3.5 7,454 5.1
Operating income 19,764 6.4 33,347 22.8
Other income (expense), net (10,983) -3.5 1,325 0.9
Income before income taxes
and minority interest 8,781 2.8 34,672 23.7
Income tax provision 4,791 1.5 13,233 9.0
Income before minority
interest 3,990 1.4 21,439 14.7
Minority interest in net
loss (income) of subsidiary - - - -
Net income 3,990 1.4% $21,439 14.7%

Per Share data:
Income per common share
- basic $0.04 $0.29
Basic weighted average
number of common shares 92,313,267 74,965,021

Income per common share
- diluted 0.04 $0.27
Diluted weighted average
number of common and
common equivalent shares 94,952,762 80,380,362

The following table sets forth other key data for the periods presented
(in thousands, except per unit data):
Year Ended December 31,
2007 2006 2005
(in thousands, except per unit data)
Other financial data:
Net cash provided by (used in)
operating activities $39,047 $97,264 $(2,515)

Other non-GAAP financial performance
data:
EBITDA (3) $90,359 $177,615 $29,880

Operating data:
Ethanol sold (gallons) 353,133 224,520 126,346
Average gross price of ethanol sold

(dollars per gallon) (5) $1.99 $2.18 $1.59
Average corn cost per bushel 3.60 2.16 2.12
Average natural gas cost per MMBTU 7.16 8.39 9.12
Average dry distillers grains price
per ton 104.81 86.04 87.00

Three Months Ended December 31,
2007 2006
(unaudited)
Other financial data:
Net cash provided by (used in)
operating activities $(34,599) $(20,108)

Other non-GAAP financial performance
data:
EBITDA (3) $31,118 $40,537

Operating data:
Ethanol sold (gallons) 134,444 58,103
Average gross price of ethanol sold
(dollars per gallon) (5) $1.87 $2.17
Average corn cost per bushel 3.61 2.52
Average natural gas cost per MMBTU 7.12 8.51
Average dry distillers grains price
per ton 126.09 95.00

The following table reconciles our EBITDA to net income for the periods
presented (dollars in thousands):
Year Ended December 31,

2007 2006 2005
(in thousands)
Net income $26,607 $75,727 $253
Depreciation 20,028 9,667 5,692
Interest expense 33,376 37,871 23,353
Income tax provision 10,348 54,350 582
EBITDA $90,359 $177,615 $29,880

Three Months Ended December 31,

2007 2006
(unaudited) (unaudited)
Net income $3,990 $21,439
Depreciation 8,908 2,502
Interest expense 13,429 3,363
Income tax provision 4,791 13,233
EBITDA $31,118 $40,537

VERASUN ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

2007 2006 2005
(dollars in thousands)
Cash Flows from Operating Activities
Net income $26,607 $75,727 $253
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation 19,586 9,667 5,692
Amortization 2,427 1,141 325
Accretion of deferred revenue (95) (96) (96)
Minority interest in net loss of
subsidiary - - (61)
Debt issuance costs and debt
discount expensed on extinguishment
of debt - - 2,387
Change in fair value of convertible
put warrant - 19,670 2,809
Change in derivative financial
instruments 1,203 (3,402) 615
Deferred income taxes 26,146 16,124 410
(Gain) loss on disposal of equipment (82) 103 2,640
Stock-based compensation expense 5,733 22,452 1,142
Excess tax benefits from share-based
payment arrangements (8,480) (1,320) -
Change in other long-term
liabilities 1,395 - -
Changes in current assets and
liabilities, net of affects of
business acquisition:
(Increase) decrease in:
Receivables (19,100) (33,886) (13,915)
Inventories (65,583) (19,758) (6,843)
Prepaid expenses (28,640) 424 (3,655)
Increase (decrease) in:
Accounts payable 72,344 9,448 5,020
Accrued expenses 5,586 970 762
Net cash provided by (used in)
operating activities 39,047 97,264 (2,515)

Cash Flows from Investing Activities
Payments for investments in short-
term investments (617,471) (204,635) -
Proceeds from the sale of short-term
investments 642,196 136,735 -
Investment in restricted cash - - (125,000)
Purchases of property and equipment (437,592) (42,973) (87,095)
Payments for other long-term assets (14,961) (480) -
ASA acquisition (249,068) - -
Proceeds from sales of equipment 12 838 46
Net cash used in investing
activities (676,884) (110,515) (212,049)

Cash Flows from Financing Activities
Proceeds from long-term debt 497,480 - 208,711
Principal payments on long-term debt - - (58,890)
Net proceeds from the issuance of
shares of common stock - 233,170 90,138
Net proceeds from the issuance of
stock options and warrants 4,126 368 -
Excess tax benefits from share-based
payment arrangements 8,480 1,320 -
Debt issuance costs paid (11,456) (1,172) (5,977)
Net cash provided by financing
activities 498,630 233,686 233,982
Net increase (decrease) in cash and
cash equivalents (139,207) 220,435 19,418

Cash and Cash Equivalents
Beginning 250,149 29,714 10,296
Ending 110,942 $250,149 $29,714

SOURCE VeraSun Energy Corp.

Investors, Patty Dickerson, +1-605-696-7236, pdickerson@verasun.com, or Media,
Mike Lockrem, +1-605-696-7527, mlockrem@verasun.com, both of VeraSun Energy
Corporation