REG sells 25 percent more fuel in Q1 vs. same period last year

By Renewable Energy Group Inc. | May 22, 2017

Earlier this month, Renewable Energy Group Inc. reported its financial results for the first quarter of 2017 ended March 31. Revenues for the quarter were $418.9 million on 122.1 million gallons of fuel sold. Compared to the first quarter of 2016, REG sold 24.6 percent more gallons of fuel resulting in an increase in revenue of 40.6 percent. The majority of revenue growth was due to an increase in renewable hydrocarbon diesel gallons sold, a full quarter of operations at the Madison, Wisconsin, facility, and the impact of distillation upgrades completed in 2016 at the Danville, Illinois, biorefinery. Danville is now able to produce REG-9000 Distilled, a high-quality biodiesel with better cold weather performance characteristics. These factors offset the impact of the lapsed federal Biodiesel Mixture Excise Tax Credit (BTC) on Jan. 1, 2017. Net loss attributable to common stockholders was $15.9 million, compared to a net loss of $6.9 million in the first quarter of 2016. Adjusted EBITDA for the quarter was $0.6 million compared to adjusted EBITDA in the first quarter of 2016 of $2.2 million. 

“Our operating results for the first quarter of 2017 were in line with expectations given the lapsed BTC and we are well positioned should the BTC or similar incentive be reinstated as it has been in the past,” said REG President and CEO Daniel J. Oh. “We anticipate seasonally higher demand in the coming months and our biorefinery fleet is currently running at high utilization levels. On the regulatory and legislative front, we are actively engaged in supporting congressional efforts to reinstate and reform the BTC to a domestic producer incentive and the antidumping and countervailing duty petition filed with the U.S. Department of Commerce and the International Trade Commission regarding imports from Argentina and Indonesia.  We believe that the enactment of either or both of these initiatives would have positive impact on our financial results.”

First quarter 2017 highlights

All figures refer to the quarter ending March 31, 2017, unless otherwise noted. All comparisons are to the quarter ended March 31, 2016, unless otherwise noted. 

REG sold a total of 122.1 million gallons of fuel, an increase of 24.6 percent. The company produced 96.9 million gallons of biomass-based diesel during the quarter, a 12.5 percent increase. The average price per gallon of biomass-based diesel sold increased by 3.9 percent to $2.94.

Revenues were $418.9 million, an increase of 40.6 percent. This is primarily attributable to the increase in gallons sold, increase in average selling price and increased revenue from separated RIN sales, partially offset by the reduction in revenue due to the lapse of the BTC at the end of 2016.

On Jan. 1, the BTC lapsed as it has several times in the past, although when this has happened in the past the BTC has been reinstated by Congress retroactively. As a result of this history, the company and many other biomass-based diesel industry participants have adopted contractual arrangements with customers specifying the allocation and sharing of any retroactively reinstated incentive. The company estimates that if the BTC, or a similar domestic producer incentive, is retroactively reinstated for 2017 on the same terms as in 2016, REG’s net income and adjusted EBITDA for business conducted in the quarter ended March 31, 2017, will increase by approximately $40 million.

Gross profit was $17.3 million, or 4.1 percent of revenues, compared to gross profit of $17.4 million, or 5.8 percent of revenues. Gross profit as a percentage of revenue declined 1.7 percent due to a significant increase in imports, a reduction in biomass-based diesel government incentives revenue and higher costs of goods sold resulting mainly from increases in feedstock prices, which were influenced by higher palm oil prices and strong biodiesel demand.

Net loss attributable to common stockholders was $15.9 million, or $0.41 per share on a fully diluted basis. This compares to a net loss of $6.9 million, or $0.16 per share on a fully diluted basis.

At March 31, 2017, REG had cash and cash equivalents of $82.2 million, a decrease of $34 million from the prior year end.

At March 31, 2017, accounts receivable were $58.6 million, or 13 days of sales. Accounts receivable at Dec. 31, 2016, were $164.9 million. The decrease in accounts receivable for the quarter was primarily due to the collections related to the increased accounts receivable balance at Dec. 31, 2016, resulting from year-end sales to maximize the benefit of the BTC that was set to lapse on Jan. 1, coupled with the seasonally low first-quarter volume. Inventory was $169.8 million at March 31, 2017, or 38 days of sales, an increase of $24.4 million from the prior year end. Accounts payable were $70 million and $99.1 million at March 31, 2017, and Dec. 31, 2016, respectively. The decrease in accounts payable was mainly driven by the seasonality of our business and planned downtime in the first quarter.

For more information, including financial tables summarizing REG’s first-quarter results, click here

 

 
 
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