Renewable Energy Group reports Q2 financial results

By Renewable Energy Group Inc. | August 07, 2019

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

Revenues for the second quarter were $560.6 million on 197.4 million gallons of fuel sold. Net loss from continuing operations attributable to common stockholders was $57.6 million in the second quarter, compared to net income from continuing operations attributable to common stockholders of $28.3 million in the second quarter of last year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter was negative $42.3 million, compared to adjusted EBITDA of $44.3 million in the second quarter of 2018.

“The challenging margin environment continued in the second quarter as a result of uncertainty around both the [biodiesel tax credit (BTC)] and small refinery exemptions,” said Cynthia (CJ) Warner, president and CEO. “Within this context, our underlying performance was strong with a 15 percent increase in gallons sold and a 2 percent increase in gallons produced. We continue to believe that the BTC will be reinstated, which will reward our strong operational performance.”

Warner continued, “On the nonoperating front, we are pleased that we finalized the sale of our Life Sciences business and paid off our 2019 convertible notes without financing, primarily from cash on hand.”

The company estimates that if the currently lapsed BTC is retroactively reinstated for 2019 and 2018 on the same terms as in 2017, REG’s adjusted EBITDA would increase by approximately $81 million and $66.2 million for business conducted in the quarters ended June 30, 2019, and June 30, 2018, respectively, and would increase by approximately $136 million and $109.2 million for business conducted in the six months ended June 30, 2019, and June 30, 2018, respectively. The aggregate estimated increase in REG’s adjusted EBITDA for 2018 and the six months ended June 30, 2019, would be $373 million.

Second quarter 2019 highlights

 All figures refer to the quarter ended June 30, 2019, unless otherwise noted. All comparisons are to the quarter ended June 30, 2018, unless otherwise noted.

REG sold 197.4 million gallons of fuel, an increase of 14.8 percent. The average selling price per gallon was $2.70, a decrease of 13.2 percent resulting primarily from lower biodiesel prices, which were down 55 cents per gallon from the second quarter of 2018. The lower biodiesel prices resulted from customers’ preference to take on smaller share of the benefit of a potential BTC reinstatement, and from lower ULSD prices. D4 RIN prices in the second quarter of 2019 were 16 cents per RIN lower on average compared to the second quarter of 2018. The company produced 126.8 million gallons of biomass-based diesel during the quarter, a 2 percent increase.

Revenues were $560.6 million, a decrease of 3.2 percent. Revenues were significantly impacted by an 18.1 percent lower average selling price for biodiesel, partially offset by an increase in gallons sold.

Gross loss was $26.8 million compared to gross profit of $57.5 million, resulting from lower average selling prices coupled with higher prices for traditionally lower-cost feedstocks in the second quarter of 2019.

Net loss from continuing operations attributable to common stockholders was $57.6 million, or $1.52 per share on a fully diluted basis. This compares to net income of $28.3 million, or 67 cents per share on a fully diluted basis in the second quarter of 2018.

At June 30, REG had cash and cash equivalents and marketable securities of $61.6 million, a decrease of $112.9 million from Dec. 31. The decrease in cash and cash equivalents and marketable securities is mainly due to significant cash flows used in operations and $67.4 million of cash used for the settlement of the 2019 convertible notes, offset by borrowings on the lines of credit.

At June 30, accounts receivable were $75.2 million, or 12 days of sales. Accounts receivable at Dec. 31 were $74.6 million, or 12 days of sales. Inventory was $171.4 million at June 30, or 26 days of cost of sales, an increase of $2.5 million from Dec. 31.

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

 

 
 
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