REG cites strong biodiesel margin environment in Q1 financials

By Renewable Energy Group Inc. | May 08, 2018

Renewable Energy Group Inc. announced its financial results for first quarter ended March 31.

Revenues for the quarter were $689.3 million on 135.3 million gallons of fuel sold. Revenues in the first quarter increased $270.4 million compared to the first quarter of 2017 mainly due to the recognition of the entire 2017 federal Biodiesel Mixture Excise Tax Credit (BTC) in our GAAP financial statements in the first quarter of 2018. In addition to the BTC impact, the revenue increase is also the result of a 10.8 percent increase in gallons sold. Excluding the BTC, average selling price per gallon was $3.18, an increase of 8.2 percent over the prior year period. Net income attributable to common stockholders was $209.2 million, compared to net loss of $15.9 million in the first quarter of 2017, reflecting recognition of revenues from the entire BTC for 2017 in the 2018 period and no BTC in effect in 2017. Adjusted net income was $4.7 million compared to adjusted net loss (excluding allocation of the 2017 BTC) of $13.6 million in the first quarter of 2017. First quarter 2018 adjusted EBITDA was $17.5 million, compared to adjusted EBITDA (excluding allocation of the 2017 BTC) of $0.6 million in the first quarter of 2017.  

On an adjusted basis, the most recent quarter did not benefit from the BTC, while the prior year period did. After reallocating the net benefit of the BTC to applicable periods in 2017, adjusted net income was $4.7 million for the first quarter of 2018, compared to adjusted net income of $22.7 million in the first quarter of 2017. Adjusted EBITDA for the quarter was $17.5 million, compared to Adjusted EBITDA of $37.3 million in the first quarter of 2017.

“We are very pleased with our first quarter results,” said REG president and CEO Randy Howard. “We generated $17.5 million of adjusted EBITDA in the first quarter, which traditionally is a period when we operate at closer to a break-even level without the BTC in effect. Energy prices ran up late in the quarter resulting in risk management losses that negatively impacted our adjusted EBITDA for the first quarter. However, the higher energy prices should result in better margins on those gallons once delivered in the second quarter.”

Howard continued, “The margin environment continues to look strong as a result of a combination of higher energy prices and lower feedstock prices. We believe that we are in a position to deliver solid results in the second quarter based on current market conditions.”

First quarter 2018 highlights

All figures refer to the quarter ending March 31, 2018, unless otherwise noted. All comparisons are to the quarter ended March 31, 2017, unless otherwise noted. 

REG sold a total of 135.3 million gallons of fuel, an increase of 10.8 percent primarily due to increased petroleum gallons sold offset by fewer sales of third-party biodiesel. The average selling price per gallon excluding the BTC recognition was $3.18, an increase of 8.2 percent. The company produced 106.4 million gallons of biomass-based diesel during the quarter, a 9.8 percent increase.

Revenues were $689.3 million, an increase of 64.5 percent primarily due to the recognition of the 2017 BTC and higher gallons sold.

On Jan. 1, the BTC lapsed as it has several times in the past. Each time it previously lapsed, Congress has reinstated it retroactively. As a result of this history, the company and many other industry participants have adopted contractual arrangements with customers specifying the allocation and sharing of a retroactively reinstated incentive. The company estimates that if the BTC is retroactively reinstated for 2018 on the same terms as in 2017, REG’s adjusted net income and adjusted EBITDA for business conducted in the quarter ended March 31 would each increase by approximately $42.5 million.

Gross profit was $249.6 million, or 36.2 percent of revenues, compared to gross profit of $17.3 million, or 4.1 percent of revenues. Gross profit as a percentage of revenue increased due to the recognition of the BTC in the quarter offset by the impact from risk management.

Net income attributable to common stockholders was $209.2 million, or $5.30 per share on a fully diluted basis. This compares to a net loss of $15.9 million, or $0.41 per share, on a fully diluted basis in the first quarter of 2017. Adjusted net income, excluding the BTC, attributable to common stockholders was $4.7 million, or $0.12 per share, compared to an adjusted net loss of $13.6 million, or $0.35 per share, in the first quarter of 2017. Adjusted EBITDA was $17.5 million compared to $0.6 million, excluding the BTC, in the first quarter 2017.

At March 31, REG had cash and cash equivalents of $69.3 million, a decrease of $8.3 million from Dec. 31, 2017.

At March 31, accounts receivable were $466.5 million, or 61 days of sales. Accounts receivable at Dec. 31, 2017 were $90.6 million. Inventory was $171.9 million at March 31, or 35 days of cost of sales, an increase of $36.4 million from Dec. 31, 2017. Accounts payable were $238.5 million and $84.6 million at March 31 and Dec. 31, respectively. Accounts receivable and accounts payable were higher at March 31 compared to Dec. 31 primarily due to the recognition of the 2017 federal BTC in the first quarter of 2018.  

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

 

 
 
Array ( [REDIRECT_REDIRECT_STATUS] => 200 [REDIRECT_STATUS] => 200 [HTTP_USER_AGENT] => CCBot/2.0 (https://commoncrawl.org/faq/) [HTTP_ACCEPT] => text/html,application/xhtml+xml,application/xml;q=0.9,*/*;q=0.8 [HTTP_IF_MODIFIED_SINCE] => Thu, 16 Aug 2018 08:03:39 CEST [HTTP_HOST] => biodieselmagazine.com [HTTP_CONNECTION] => Keep-Alive [HTTP_ACCEPT_ENCODING] => gzip [PATH] => /sbin:/usr/sbin:/bin:/usr/bin [SERVER_SIGNATURE] =>
Apache/2.2.15 (CentOS) Server at biodieselmagazine.com Port 80
[SERVER_SOFTWARE] => Apache/2.2.15 (CentOS) [SERVER_NAME] => biodieselmagazine.com [SERVER_ADDR] => 10.0.0.4 [SERVER_PORT] => 80 [REMOTE_ADDR] => 54.161.116.225 [DOCUMENT_ROOT] => /datadrive/websites/biodieselmagazine.com [SERVER_ADMIN] => webmaster@dummy-host.example.com [SCRIPT_FILENAME] => /datadrive/websites/biodieselmagazine.com/app/webroot/index.php [REMOTE_PORT] => 40582 [REDIRECT_QUERY_STRING] => url=articles/2516353/reg-cites-strong-biodiesel-margin-environment-in-q1-financials [REDIRECT_URL] => /app/webroot/articles/2516353/reg-cites-strong-biodiesel-margin-environment-in-q1-financials [GATEWAY_INTERFACE] => CGI/1.1 [SERVER_PROTOCOL] => HTTP/1.1 [REQUEST_METHOD] => GET [QUERY_STRING] => url=articles/2516353/reg-cites-strong-biodiesel-margin-environment-in-q1-financials [REQUEST_URI] => /articles/2516353/reg-cites-strong-biodiesel-margin-environment-in-q1-financials [SCRIPT_NAME] => /app/webroot/index.php [PHP_SELF] => /app/webroot/index.php [REQUEST_TIME_FLOAT] => 1539695650.42 [REQUEST_TIME] => 1539695650 )