REG commits to profitability with or without BTC in Q3 financials

Renewable Energy Group Inc. announced its financial results Nov. 5 for the third quarter ended Sept. 30.

Revenues for the third quarter were $584.4 million on 187.5 million gallons of fuel sold. Net loss from continuing operations attributable to common stockholders was $13.8 million in the third quarter, inclusive of an $11.1 million impairment charge related to the New Boston plant closure. This compares to net income from continuing operations attributable to common stockholders of $24.8 million in the third quarter last year. Adjusted EBITDA in the third quarter was $10.6 million, compared to $39.4 million in the third quarter of 2018.

“Our performance was satisfactory even in the face of the uncertainty around the lapsed [biodiesel tax credit (BTC)] and excessive small refinery waivers, both of which contributed to compressed margins,” said Cynthia (CJ) Warner, president and CEO. “We generated positive adjusted EBITDA of $11 million, which does not include the potential benefit of a retroactive BTC reinstatement. Importantly, we improved our product mix by increasing renewable diesel sales and concentrating on the most profitable gallons and market placement.”

Warner continued, “We are committed to running a profitable business, with or without the BTC. Our profit improvement, growth and value creation strategies are taking root and we believe provide a foundation for success in the future."

Third quarter 2019 highlights

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

REG sold 187.5 million gallons of fuel, an increase of 4.9 percent. The company produced 137.1 million gallons of biomass-based diesel during the quarter. Production at Geismar, the company’s renewable diesel biorefinery, was up 7 percent.

Revenues were $584.4 million, a decrease of 2 percent resulting from an 8.9 percent lower average selling price for all biomass-based diesel gallons, partially offset by an increase in gallons sold. The average selling price per gallon was $2.76, down primarily as a result of lower biodiesel prices, partially offset by higher realized prices from international renewable diesel sales. The company’s average U.S. biodiesel price was down 14.4 percent from the third quarter of 2018.

Gross profit was $24.1 million compared to gross profit of $51.2 million, resulting from lower revenues and higher average feedstock prices. In the third quarter of 2019 the company recognized $3.2 million of risk management gains compared to risk management losses of $7.5 million in the third quarter of 2018.

Net loss from continuing operations attributable to common stockholders was $13.8 million, or 35 cents per share on a fully diluted basis, which includes a noncash impairment charge of $11.1 million related to the New Boston plant closure. This compares to net income of $24.8 million, or 55 cents per share on a fully diluted basis, in the third quarter of 2018.

At Sept. 30, 2019, REG had cash and cash equivalents and marketable securities of $64.1 million, a decrease of $110.4 million from Dec. 31, 2018. The decrease is mainly due to cash flows used in operations and $67.4 million of cash used for the settlement of the 2019 convertible notes in June 2019, increased by borrowings on the company’s lines of credit.

At Sept. 30, 2019, accounts receivable were $81 million, or 12 days of sales. Accounts receivable at Dec. 31, 2018 were $74.6 million, or 11 days of sales. Inventory was $163.5 million at Sept. 30, 2019, or 26 days of cost of sales, a decrease of $5.4 million from Dec. 31, 2018.

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