REG triples adjusted EBITDA first half of year compared to 2017

By Renewable Energy Group Inc. | August 06, 2018

Renewable Energy Group Inc. announced its financial results Aug. 6 for the second quarter ended June 30.

“We produced outstanding results in the first half of the year, demonstrating our ability to execute across all aspects of our business,” said Randy Howard, president and CEO. “We tripled our adjusted EBITDA for the first six months compared to last year, excluding allocation of the 2017 BTC, which is an accomplishment made even more impressive because our Geismar renewable diesel refinery was offline for three weeks due to planned maintenance. With Geismar back online and once again producing above nameplate capacity, combined with a solid margin environment, we look forward to a strong second half of the year.”

Net income attributable to common stockholders was $33 million in the second quarter of 2018, compared to net loss of $34.8 million in the second quarter of 2017. The improvement in net income reflects better margins in 2018 as well as more gallons sold. Adjusted net income was $23.5 million compared to adjusted net income of $4.5 million in the second quarter of 2017, excluding allocation of the 2017 BTC. Second quarter 2018 adjusted EBITDA was $42.3 million, compared to adjusted EBITDA of $19.7 million in the second quarter of 2017, excluding allocation of the 2017 BTC. After reallocating the net benefit of the BTC to applicable periods in 2017, adjusted net income was $62.5 million and adjusted EBITDA was $79.1 million in the second quarter of 2017.

Revenues for the quarter were $580.2 million on 171.9 million gallons of fuel sold. Revenues in the second quarter increased $45 million compared to the second quarter of 2017 mainly due to more gallons sold and a higher average selling price in the second quarter of 2018, partially offset by lower revenue from sales of separated RINs.

The company estimates that if the currently lapsed BTC is retroactively reinstated for 2018 on the same terms as in 2017, REG’s net income, adjusted net income and adjusted EBITDA would each increase by approximately $66.2 million for business conducted in the quarter ended June 30 and would each increase by approximately $108.7 million for business conducted in the first six months of 2018.

Second quarter 2018 highlights

All figures refer to the quarter ending June 30, 2018, unless otherwise noted. All comparisons are to the quarter ended June 30, 2017, unless otherwise noted.

REG sold a total of 171.9 million gallons of fuel, an increase of 7.3 percent primarily due to increased biodiesel and petroleum gallons sold, partially offset by fewer sales of biomass-based diesel gallons produced by third parties. The average selling price per gallon was $3.11, an increase of 8.7 percent excluding allocation of the 2017 BTC. The company produced 124.4 million gallons of biomass-based diesel during the quarter, a 5.9 percent increase.

Revenues were $580.2 million, an increase of 8.4 percent that was primarily due to the increase in gallons sold and higher average selling price per gallon partially offset by lower revenue from sales of separated RINs.

Gross profit was $57.6 million, or 9.9 percent of revenues, compared to gross profit of $31.5 million, or 5.9 percent of revenues. Gross profit as a percentage of revenue increased due to lower feedstock costs and operational improvements, partially offset by declining RIN prices.

Net income attributable to common stockholders was $33 million, or $0.78 per share on a fully diluted basis. This compares to a net loss of $34.8 million, or $0.90 per share on a fully diluted basis in the second quarter of 2017. Adjusted net income attributable to common stockholders was $23.5 million, or $0.56 per share, compared to an adjusted net income excluding allocation of the 2017 BTC of $4.5 million, or $0.12 per share, on a fully diluted basis in the second quarter of 2017. Adjusted EBITDA was $42.3 million compared to $19.7 million, excluding allocation of the 2017 BTC, in the second quarter 2017.

At June 30, 2018, REG had cash and cash equivalents of $221.8 million, an increase of $144.1 million from Dec. 31. This increase is mainly due to receipt of the 2017 BTC refunds in 2018.

At June 30, accounts receivable were $91.2 million, or 14 days of sales. Accounts receivable at Dec. 31 were $90.6 million. Inventory was $141.7 million at June 30, or 24 days of cost of sales, an increase of $6.2 million from Dec. 31. Accounts payable were $120.7 million and $84.6 million at June 30 and Dec. 31, respectively. The increase in accounts payable is due to amounts due to customers resulting from the retroactive BTC reinstatement.

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

 

 
 
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