Investors Update Call October 5, 2011 A Word From Our Counsel - - PowerPoint PPT Presentation

Investors Update Call

October 5, 2011

A Word From Our Counsel Forward Looking Statements

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 Arkalon Energy, LLC, and Bonanza BioEnergy, LLC, may differ materially from those contemplated by any forward-looking 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. Arkalon and Bonanza caution you not to put undue reliance on forward-looking statements, which speak only as of October 5, 2011, the date of this presentation

Agenda

• Recap of 2011 to Date
• Financial Overview
• What’s Happening in the Market
• Tom’s Top Questions
• Q & A

What’s Been Happening This Year?

• First and foremost, our company is doing well

– On track for record earnings – We have retired more debt – We made distributions from Bonanza

• We continue to position ourselves in the market place

– Both plants sell ethanol into desirable markets – Out distiller’s programs are a strategic and financial advantage – Our milo program paid off

• Weather, the crop and government policy = challenges

– Availability of grain locally – Commodity volatility and inflation – VEETC

Crush Margin Comparison

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Quarterly Crush Margin 2010 – Q2 ‘11, Excl. Hedging

Positive EBITDA & Working Capital

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Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 EBITDA AET 8,314,265.92 4,213,168.39 8,387,651.77 8,519,060.40 6,727,720.57 9,675,131.77 EBITDA BBE 3,429,964.83 1,262,797.29 4,207,445.17 4,579,098.06 3,910,859.76 8,123,252.99 Working Capital AET 22,393,790.00 24,871,443.00 29,138,085.00 34,446,497.00 30,203,367.83 35,819,402.16 Working Capital BBE 6,884,352.00 8,022,441.00 10,088,685.00 10,648,034.00 9,214,674.98 14,003,921.00

Selected Plant Balance Sheet Data – 6/30/11

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000's $/Gal 000's $/Gal Cash 24,266.87 0.22 5,559.76 0.10 Working Capital 35,819.40 0.33 14,003.92 0.25 Sr Term Debt 82,484.17 0.75 30,076.73 0.55 Equity 80,031.11 0.73 43,194.96 0.79 AET BBE

** Note that out rate at Arkalon has dropped by 125 basis points since 3/31

Comparative Data Q2 2010 vs. 2011 - Arkalon

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Q2 2010 Q2 2011 Revenue 48,043.77 93,251.57 Gross Profit 6,484.61 12,297.05 Net Profit (1,260.53) 4,536.12 EBITDA 4,213.17 9,675.13 EBITDA - Debt Service 1,475.10 7,271.57 Senior Debt / Gallon 0.87 0.75

Comparative Data Q2 2010 vs. 2011 - Bonanza

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Q2 2010 Q2 2011 Revenue 23,925.43 47,673.24 Gross Profit 2,811.61 6,963.91 Net Profit (565.55) 3,680.37 EBITDA 1,262.80 5,426.49 EBITDA - Debt Service (656.74) 3,686.69 Senior Debt / Gallon 0.68 0.55

Our Plants Are Performing Well

• Yields are Strong

– Averaged 2.78 (AE) and 2.79 (BBE) for 2010 – Averaged 2.80 (AE) and 2.82 (BBE) for Q1 – Averaged 2.79 (AE) and 2.81 (BBE) for Q2

• Note AE’s yield with domestic spec is 2.81 for Q2
• Our Distiller’s Program is Working

– Averaged $40 per ton in 2010 – Averaged $64 per ton in Q1 – Averaged $72 per ton in Q2 – Q2 Contribution per Gallon up $.36 From 2010 Averages

Crush Margins Drive Financial Results

• Both Plants Produced Net Income

– AE $7.6M (’10) $1.3M Q1 $4.54M Q2 – BBE $6.1M (’10) $2.1M Q1 $3.68M Q2

• Both Plants Generated Positive EBITDA

– AE $29.4M (’10) $6.7 M Q1 $9.68M Q2 – BBE $13.4M (’10) $3.9 M Q1 $5.43M Q2

• Both Plants Are Cash Positive After Debt Service

– AE $18.6M (’10) $4.1 M Q1 $7.27M Q2 – BBE $5.8M (’10) $2.1 M Q1 $3.69M Q2

Weather and the Grain Supply

• Our Feedstock Costs Continued to Rise

– AE: $4.13 (’10) $6.23 (1Q) $7.13 (2Q) – BBE: $4.16 (’10) $6.52 (1Q) $7.08 (2Q) – Highs are almost 2x 2010 levels

• Ethanol Prices Increased

– AE: $1.75 (’10) $2.38 (1Q) $2.64 (2Q) – BBE: $1.74 (’10) $2.47 (1Q) $2.68 (2Q)

Operating Result– YTD‘11

• AE Energy Year to Date

– NI of $11.8M – EBITDA of $25.6M – EBITDA – Required Debt Service of $19.1M

• BBE Energy Year to Date

– NI of $11.6M – EBITDA of $16.2M – EBITDA – Required Debt Service of $11.6M

So What Does This Mean?

• We must protect our liquidity in the near term due

to

– Higher and volatile commodity prices – Grain purchasing and inventory levels – Preserve our ability to hedge properly

• We will likely see spread compression in Q4 2011

through mid Q2 2012

• We must continue to operate efficiently
• We must continue to differentiate our product and

company

Tom’s Top Questions

• What can we expect from distributions?
• When will AE make a distribution?
• Will the plants be paid off on time?
• Will there be a tax liability?
• What are our units worth?
• How is this year’s drought impacting us?

Tom’s Top Questions

• What steps are we taking to keep our plants

running efficiently?

• What do you see for the economy and the

impact on our plants?

• How are you feeling after the “tune up”?

Q & A

• Enter your questions in the chat box now and

Tom will answer them live.

• If you have questions later you can email Tom

at tom.willis@conestogaenergy.com

• This presentation will be posted online at

www.conestogaenergy.com in the member section.