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Southwest Iowa Renewable Energy Announces Results of Third Quarter

August 14, 2012

COUNCIL BLUFFS, Iowa, Aug. 14, 2012 /PRNewswire/ — On August 14, 2012, Southwest Iowa Renewable Energy, LLC (“SIRE“) announced its unaudited financial results for the third quarter of fiscal year 2012 (“Fiscal 2012“) which ended June 30, 2012. SIRE reported a net loss of $4,153,049, or $316.09 per unit, compared to a net loss of $1,287,162, or $97.96 per unit, for the same period during the year ended September 30, 2011 (“Fiscal 2011“). For Fiscal 2012 through June 30, 2012, SIRE reported a net income of $855,593 or $65.12 compared to a net loss of $2,357,512 or $179.43 per unit for the same period in Fiscal 2011. The cash flow provided by operations for the first three quarters of Fiscal 2012 was $12,346,881, compared to $12,427,088 for the same period in Fiscal 2011.

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Adjusted EBITDA, which is defined as earnings before interest, income taxes, and depreciation and/or amortization (“EBITDA“), as adjusted for unrealized hedging losses (gains), was $787,024 for the third quarter in Fiscal 2012 and $4,577,670 for the same period in Fiscal 2011. Adjusted EBITDA for Fiscal 2012 through June 30, 2012 was $11,720,646 and $16,477,891 for the same period in Fiscal 2011. At June 30, 2012, SIRE had $8,237,313 million in cash and equivalents and $14,625,000 available under committed loan agreements (subject to satisfaction of specified lending conditions and covenants), as well as an additional $6,250,000 available under uncommitted loan agreements. For reconciliations of Adjusted EBITDA to net income attributable to SIRE, see “Adjusted EBITDA” below.

Brian Cahill, SIRE’s General Manager and CEO, stated, “Our third quarter in Fiscal 2012, reflects less than favorable margins resulting from the relative prices of our primary inputs and products during the quarter. In particular, the key factors during the quarter were increases in the price of our primary input, corn, resulting in part from the current drought conditions in the United States. Notwithstanding these margins, with our positive cash flow we have continued to make scheduled and excess cash flow payments to our banks, resulting in further principal reduction in overall debt and reduced interest costs. We have also continued to make modest capital investments that are resulting in incremental productivity improvements in our plant.”

About Southwest Iowa Renewable Energy, LLC:

SIRE is an Iowa limited liability company, located in Council Bluffs, Iowa, formed in March, 2005 to construct and operate a 110 million gallon name plate capacity ethanol plant. SIRE began producing ethanol in February, 2009 and sells its ethanol, modified wet distillers grains with solubles, corn syrup, and corn oil in the continental United States. SIRE also sells its dried distillers grains with solubles in the continental United States, Mexico and the Pacific Rim.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are made in good faith by SIRE and are identified by including terms such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “plans,” or similar language. In connection with these safe-harbor provisions, SIRE has identified in its Annual Report on Form 10-K for the fiscal year ended September 30, 2011, and in the Company’s subsequent filings with the SEC, important factors that could cause actual results to differ materially from those contained in any forward-looking statement made by or on behalf of SIRE, including, without limitation, the risk and nature of SIRE’s business and the effects of general economic conditions on SIRE. SIRE may experience significant fluctuations in future operating results due to a number of economic conditions, including, but not limited to, competition in the ethanol industry, commodity market risks, financial market risks, counter-party risks, and risks associated with changes to federal policy or regulation. The cautionary statements in this press release expressly qualify all of SIRE’s forward-looking statements. The forward-looking statements contained in this press release are included in the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. SIRE further cautions that such factors are not exhaustive or exclusive. SIRE does not undertake to update any forward-looking statement which may be made from time to time by or on behalf of SIRE unless an update is required by applicable securities laws.

    Summary Balance Sheets
                                               SOUTHWEST IOWA RENEWABLE ENERGY, LLC
                                                          Balance Sheets

    ASSETS                             June 30, 2012                                    September 30,
                                                                                                 2011
    ---                                                                                          ----

                                        (Unaudited)
    Current Assets
    Cash and cash equivalents                                               $8,237,313                 $11,006,590
    Restricted cash                                                            362,382                     301,361
    Accounts Receivable                                                        325,999                     224,176
    Accounts receivable, related party                                      10,110,432                  17,642,245
    Due from broker                                                          2,052,381                   3,428,450
    Derivative financial instruments,
     related party                                                           1,090,706                           -
    Inventory                                                               12,348,405                  11,198,147
    Prepaid expenses and other                                               1,407,079                   1,107,354
                                                                             ---------                   ---------
    Total current assets                                                    35,934,697                  44,908,323
                                                                            ----------                  ----------

    Property, Plant and Equipment
    Land                                                                     2,064,090                   2,064,090
    Plant, Building and Equipment                                          204,431,928                 203,749,761
    Office and Other Equipment                                                 750,511                     742,360
                                                                               -------                     -------
    Total Cost                                                             207,246,529                 206,556,211
    Accumulated Depreciation                                               (50,852,792)                (42,293,441)
                                                                           -----------                 -----------
    Net property and equipment                                             156,393,737                 164,262,770

    Other Assets
    Financing costs, net of
     amortization of $2,693,184 and
     $2,341,400                                                              1,509,956                   1,538,733
                                                                             ---------                   ---------
    Total Assets                                                          $193,838,390                $210,709,826
                                                                          ============                ============

                                              SOUTHWEST IOWA RENEWABLE ENERGY, LLC
                                                         Balance Sheets

    LIABILITIES AND MEMBERS' EQUITY   June 30, 2012                                    September 30,
                                                                                                2011
    ---                                                                                         ----

                                       (Unaudited)
    Current Liabilities
    Accounts payable                                                       $1,741,970                  $2,090,561
    Accounts payable, related parties                                       5,495,449                   5,239,128
    Derivative financial instruments,
     related party                                                                  -                   2,097,075
    Derivative financial instruments                                        1,036,750                   2,875,075
    Accrued expenses                                                        2,376,929                   2,615,092
    Accrued expenses, related parties                                       2,955,988                   3,831,583
    Current maturities of notes
     payable                                                               15,090,684                  21,236,780
                                                                           ----------                  ----------
    Total current liabilities                                              28,697,770                  39,985,294
                                                                           ----------                  ----------

    Long Term Liabilities
    Notes payable, less current
     maturities                                                           116,036,306                 121,400,805
    Other                                                                     525,013                     600,010
                                                                              -------                     -------
    Total long term liabilities                                           116,561,319                 122,000,815
                                                                          -----------                 -----------

    Commitments and Contingencies

    Members' Equity
    Members' capital, 13,139 Units
     issued and outstanding                                                76,474,111                  76,474,111
    Accumulated (deficit)                                                 (27,894,810)                (27,750,394)
                                                                          -----------                 -----------
    Total members' equity                                                  48,579,301                  48,723,717
                                                                           ----------                  ----------
    Total Liabilities and Members'
     Equity                                                              $193,838,390                $210,709,826
                                                                         ============                ============

    Financial Results
                                                                 SOUTHWEST IOWA RENEWABLE ENERGY, LLC
                                                                 Statements of Operations (Unaudited)

                                              Three Months                Three Months                  Nine Months             Nine Months
                                            Ended  June 30,              Ended June 30,               Ended June 30,          Ended June 30,
                                                       2012                        2011                                 2012            2011
                                                       ----                        ----                                 ----            ----

    Revenues                                                $79,820,338                                          $94,853,474                 $264,896,990  $236,555,894
    Cost of Goods Sold
    Cost of goods sold-non hedging                           81,065,194                                           87,611,198                  257,677,120   214,589,874
    Realized & unrealized hedging (gains)
    and losses                                                 (537,629)                                           5,180,771                   (4,274,696)   13,792,563
                                                               --------                                            ---------                   ----------    ----------
                                                             80,527,565                                           92,791,969                  253,402,424   228,382,437
                                                             ----------                                           ----------                  -----------   -----------

    Gross Margin (Loss)                                        (707,227)                                           2,061,505                   11,494,566     8,173,457
                                                               --------                                            ---------                   ----------     ---------

    General and Administrative Expenses                       1,048,264                                              933,741                    3,377,965     3,293,090
                                                              ---------                                              -------                    ---------     ---------

    Operating Income (Loss)                                  (1,755,491)                                           1,127,764                    8,116,601     4,880,367
                                                             ----------                                            ---------                    ---------     ---------

    Other (Income) Expense
    Interest Income                                              (5,346)                                              (5,853)                     (16,893)      (12,862)
    Interest Expense                                          2,408,809                                            2,426,329                    7,341,800     7,312,267
    (Gain) Loss on disposal of fixed assets                           -                                                    -                       10,503             -
    Miscellaneous income                                         (5,905)                                              (5,550)                     (74,402)      (61,526)
                                                                 ------                                               ------                      -------       -------
    Total                                                     2,397,558                                            2,414,926                    7,261,008     7,237,879
                                                              ---------                                            ---------                    ---------     ---------

    Net Income (Loss)                                       $(4,153,049)                                         $(1,287,162)                    $855,593   $(2,357,512)
                                                            ===========                                          ===========                     ========   ===========

    Weighted Average Units Outstanding
    - Basic & Diluted                                            13,139                                               13,139                       13,139        13,139
                                                                 ======                                               ======                       ======        ======
    Net income (loss) per unit
    - basic & diluted                                          $(316.09)                                             $(97.96)                      $65.12      $(179.43)
                                                               ========                                              =======                       ======      ========

Adjusted EBITDA

Management uses Adjusted EBITDA, a non-GAAP measure, to measure the SIRE’s financial performance and to internally manage its business. Management believes that adjusted EBITDA provides useful information to investors as a measure of comparison with peer and other companies. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with generally accepted accounting principles. Adjusted EBITDA calculations may vary from company to company. Accordingly, our computation of Adjusted EBITDA may not be comparable with a similarly-titled measure of another company.

The following sets forth the reconciliation of Net Loss to Adjusted EBITDA (unaudited) for the periods indicated:

                          Three Months Ended        Three Months Ended
                          ------------------        ------------------
                             June 30, 2012             June 30, 2011
                             -------------             -------------
    Net loss                           $(4,153,049)              $(1,287,162)
    Interest Expense, net                2,403,463                 2,420,476
    Depreciation                         2,859,105                 2,717,789
                                         ---------                 ---------
    EBITDA                               1,109,519                 3,851,103
    Unrealized hedging
     (gains) losses                       (322,495)                  726,567
                                          --------                   -------
    Adjusted EBITDA                       $787,024                $4,577,670
                                          ========                ==========
    Adjusted EBITDA per
     unit                                   $59.90                   $348.40
                                            ======                   =======

                           Nine Months Ended         Nine Months Ended
                           -----------------
                             June 30, 2012             June 30, 2011
                             -------------             -------------

    Net Income (Loss)                     $855,593               $(2,357,512)
    Interest Expense, net                7,324,907                 7,299,405
    Depreciation                         8,566,253                10,809,431
                                         ---------                ----------
    EBITDA                              16,746,753                15,751,324
    Unrealized hedging
     (gains) losses                     (5,026,107)                  726,567
                                        ----------                   -------
    Adjusted EBITDA                    $11,720,646               $16,477,891
                                       ===========               ===========
    Adjusted EBITDA per
     unit                                  $892.05                 $1,254.12
                                           =======                 =========

    Statistical Information

                                                      Three Months Ended June 30, 2012 (Unaudited)                                    Three Months Ended June 30, 2011 (Unaudited)
                                                       -------------------------------------------                                    -------------------------------------------

                Statistical               Gallons / Tons                           % of              Gallons / Tons                                  Statistical                   Gallons /              % of       Gallons / Tons
                   Revenue                     Sold                              Revenues            Average Price                                     Revenue                     Tons Sold            Revenues     Average Price
                              Information                                                                                                              Information
                -----------                                                                                                                                                                                                             ---
    Denatured                                             28,735,866                             74%                  $2.07         Denatured                                                30,703,782          82%                  $2.53
    Ethanol                                                                                                                 Ethanol
    Dried Distiller's                                         71,827                             19%                $209.92         Dried Distiller's                                            70,926          15%                $194.74
    Grains                                                                                                                  Grains
    Corn Oil                                                   3,580                              3%                $773.37         Corn Oil                                                      2,230           2%                $907.64
    Wet Distiller's                                           26,870                              3%                 $89.59         Wet Distiller's                                              10,988           1%                 $69.32
    Grains                                                                                                                  Grains
    Syrup                                                      5,329                              0%                 $65.88         Syrup                                                        13,212           0%                 $12.44

                                                    Nine Months Ended June 30, 2012 (Unaudited)                                     Nine Months Ended June 30, 2011 (Unaudited)
                                                    ------------------------------------------                                       ------------------------------------------

                Statistical               Gallons / Tons                           % of              Gallons / Tons                                  Statistical                   Gallons /              % of       Gallons / Tons
                  Revenue                      Sold                              Revenues            Average Price                                     Revenue                     Tons Sold            Revenues     Average Price
                            Information                                                                                                              Information
                -----------                                                                                                                                                                                                             ---
    Denatured                                             92,351,685                             77%                  $2.22         Denatured                                                85,766,206          81%                  $2.24
    Ethanol                                                                                                                 Ethanol
    Dried Distiller's                                        221,657                             17%                $200.63         Dried Distiller's                                           227,968          18%                $166.69
    Grains                                                                                                                  Grains
    Corn Oil                                                   9,818                              3%                $758.12         Corn Oil                                                      3,958           1%                $892.95
    Wet Distiller's                                           78,410                              3%                 $86.68         Wet Distiller's                                              16,461           0%                 $68.25
    Grains                                                                                                                  Grains
    Syrup                                                     23,817                              0%                 $50.21         Syrup                                                        27,400           0%                 $13.71

SOURCE Southwest Iowa Renewable Energy, LLC


Source: PR Newswire