AMES, Iowa--(BUSINESS WIRE)--Renewable Energy Group, Inc. ("REG" or the "Company") (NASDAQ:REGI) today announced its financial results for the second quarter ended June 30, 2015.
Revenues for the quarter were $373.8 million. Compared to the second quarter of 2014, REG sold 24.5% more gallons of biomass-based diesel, while revenues increased by 12.3%. Adjusted EBITDA for the quarter was $3.3 million compared to $5.7 million in the prior year period, without any adjustments for the 2014 Biodiesel Mixture Excise Tax Credit (BTC). Adjusted EBITDA for the second quarter of 2014, after giving effect to the retroactive reinstatement of the BTC (as discussed below), was $24.2 million. We estimate the Adjusted EBITDA impact during the second quarter associated with the Geismar, Louisiana fire was approximately negative $7 million.
"Our second quarter results reflect improved market conditions relative to the first quarter. During the quarter, energy prices began to stabilize and we saw increased demand," said Daniel J. Oh, President and Chief Executive Officer. "The EPA's proposed volumes for biomass-based diesel through 2017 have reduced market uncertainty and are a significant improvement over the originally proposed levels. With upgrades underway at Danville and the agreement to acquire the biorefinery and terminal assets at Grays Harbor, Washington, we are further positioning ourselves to benefit from growing volumes under RFS2 and west coast low-carbon fuel markets."
Oh continued, "We have also completed much of the rebuilding and other upgrades at Geismar, and expect to resume renewable hydrocarbon diesel production in the third quarter."
Second Quarter 2015 Highlights
All figures refer to the quarter ending June 30, 2015, unless otherwise noted.
For the quarter, REG sold a total of 96.1 million gallons, an increase of 24.5% compared to the second quarter of 2014. REG produced 73.2 million gallons of biomass-based diesel during the quarter, a 30.1% increase when compared to the second quarter of 2014.
Revenues of $373.8 million increased 12.3% when compared to the second quarter of 2014. The increase is attributable to the 24.5% increase in gallons sold, which was largely offset by a reduction in average sales price. The average price per gallon of biomass-based diesel sold during the second quarter was $3.13, or 14.7% lower than in the same quarter of 2014. Prices improved and stabilized in the second quarter of 2015 compared to the prior quarter, but were still significantly lower than the prior year period.
Gross profit was $15.9 million, or 4.3% of revenues, compared to gross profit of $15.2 million, or 4.6% of revenues, for the second quarter of 2014. The increase in gross profit was due to volume, offset by compressed spreads, as energy and biomass-based diesel prices declined more rapidly than feedstock prices.
Net loss attributable to common stockholders was $0.05 per share on a fully diluted basis or $2.0 million. This compares to a net income of $0.27 per share on a fully diluted basis or $10.8 million in the second quarter of 2014.
REG repurchased 668,376 shares during the second quarter under its share repurchase program at an average price of $9.75 per share. Through June 30, 2015, the Company has spent $11.5 million of the $30 million authorized under the program, repurchasing 1,193,657 shares at an average price of $9.65 per share. Through July 31, 2015, the Company has repurchased 1,555,546 shares at an average price of $9.84 per share.
At June 30, 2015, REG had liquid assets, which includes cash, cash equivalents and marketable securities, of $101.2 million, an increase of $20.9 million from prior year end. This increase was largely the result of the net cash benefit of the retroactive reinstatement for 2014 of the biodiesel mixture excise tax credit, offset by cash spent on shares repurchased and capital expenditures.
At June 30, 2015, accounts receivable were $59.9 million, or 14 days of sales. Accounts receivable at December 31, 2014 were $294.7 million and included approximately $236 million related to the biodiesel mixture excise tax credit. Inventory was $95.2 million at June 30, 2015, or 24 days of sales, a decrease of $2.3 million from the prior year end.
Accounts payable was $62.2 million and $202.8 million at June 30, 2015 and December 31, 2014, respectively.
The table below summarizes REG’s results for the second quarter of 2015.
| REG Q2 2015 and 2014 Revenues and Adjusted EBITDA Summary | ||||||||
| (dollars and gallons in thousands) | ||||||||
|
Q2 2015 |
Q2 2014 |
Y/Y |
||||||
| Gallons sold | 96,082 | 77,173 | 24.5% | |||||
| Average selling price | $ | 3.13 | $ | 3.67 | (14.7)% | |||
| Total revenues | $ | 373,762 | $ | 332,918 | 12.3% | |||
| Adjusted EBITDA prior to 2014 BTC allocation | $ | 3,259 | $ | 5,698 | (42.8)% | |||
| Adjusted EBITDA | $ | 3,259 | $ | 24,248 | (86.6)% | |||
Adjusted EBITDA Reconciliation
The
Company uses earnings before interest, taxes, depreciation and
amortization, and further adjusted for certain additional items,
identified in the table below, or Adjusted EBITDA, as a supplemental
performance measure. Adjusted EBITDA is presented in order to assist
investors in analyzing performance across reporting periods on a
consistent basis by excluding items that are not believed to be
indicative of core operating performance. Adjusted EBITDA is used by the
Company to evaluate, assess and benchmark financial performance on a
consistent and a comparable basis and as a factor in determining
incentive compensation for company executives. The following table sets
forth Adjusted EBITDA for the periods presented, as well as
reconciliation to net income:
|
Three Months |
Three Months |
Six Months
Ended |
Six Months
Ended |
|||||||||||||
| (In thousands) | ||||||||||||||||
| Net income (loss) | $ | (2,163 | ) | $ | 11,007 | $ | (40,467 | ) | $ | 8,648 | ||||||
| Adjustments: | ||||||||||||||||
| Income tax (benefit) expense | (707 | ) | (11,919 | ) | (1,604 | ) | (12,026 | ) | ||||||||
| Interest expense | 2,928 | 1,204 | 5,671 | 1,755 | ||||||||||||
| Other (income) expense, net | (1,779 | ) | (384 | ) | (2,344 | ) | (432 | ) | ||||||||
| Change in fair value of contingent liability | (2,121 | ) | (384 | ) | (1,828 | ) | (384 | ) | ||||||||
| Straight-line lease expense | (145 | ) | (150 | ) | (303 | ) | (313 | ) | ||||||||
| Depreciation | 6,134 | 3,190 | 11,747 | 6,194 | ||||||||||||
| Amortization | (206 | ) | (184 | ) | (425 | ) | (369 | ) | ||||||||
| Lease cancellation | - | 1,904 | - | 1,904 | ||||||||||||
| Other | 162 | - | 359 | - | ||||||||||||
| Non-cash stock compensation | 1,156 | 1,414 | 2,236 | 2,649 | ||||||||||||
| Adjusted EBITDA before 2014 biodiesel mixture tax credit is allocated into historical results1 | 3,259 | 5,698 | (26,958 | ) | 7,626 | |||||||||||
| Biodiesel mixture excise tax credit1 | - | 18,550 | - | 31,328 | ||||||||||||
| Adjusted EBITDA | $ | 3,259 | $ | 24,248 | $ | (26,958 | ) | $ | 38,954 | |||||||
|
(1) On December 19, 2014, the Tax Increase Prevention Act of 2014 was signed into law, which reinstated a set of tax extender items including the retroactive reinstatement of the federal biodiesel mixture excise tax credit for 2014. The retroactive credit for 2014 resulted in a net benefit to us that was recognized in the fourth quarter of 2014, however because this credit relates to the full year operating performance and results, in our calculation of EBITDA we allocated the credit based upon gallons sold among each of the quarters in 2014. |
||||||||||||||||
Adjusted EBITDA is a supplemental performance measure that is not required by, or presented in accordance with, generally accepted accounting principles, or GAAP. Adjusted EBITDA should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP, or as alternatives to cash flows from operating activities or a measure of liquidity or profitability. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for any of the results as reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect cash expenditures for capital assets or the impact of certain cash uses that we consider not to be an indication of ongoing operations;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital requirements;
- Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on indebtedness;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements;
- Stock-based compensation expense is an important element of the Company’s long term incentive compensation program, although we have excluded it as an expense when evaluating our operating performance; and
- Other companies, including other companies in the same industry, may calculate these measures differently, limiting their usefulness as a comparative measure.
About Renewable Energy Group
Renewable
Energy Group, Inc. is a leading North American advanced biofuels
producer and developer of renewable chemicals. REG utilizes a nationwide
production, distribution and logistics system as part of an integrated
value chain model to focus on converting natural fats, oils and greases
into advanced biofuels and converting diverse feedstocks into renewable
chemicals. With 10 active biorefineries across the country, research and
development capabilities and a diverse and growing intellectual property
portfolio, REG is committed to being a long-term leader in bio-based
fuels and chemicals.
For more than a decade, REG has been a reliable supplier of advanced biofuels which meet or exceed ASTM quality specifications. REG sells REG-9000™ biomass-based diesel to distributors so consumers can have cleaner burning fuels that help diversify the energy complex and increase energy security. REG-9000™ biomass-based diesel is distributed in most states in the US. REG also markets ultra-low sulfur diesel and heating oil in the northeastern and midwestern US. For more information on REG visit our website at www.regi.com.
Note Regarding Forward-Looking Statements
This
press release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 as
amended, including statements regarding our financial results, our
expectations regarding the restarting of our Geismar facility, the
proposed RVO volumes and trends in our market. These forward-looking
statements are based on current expectations, estimates, assumptions and
projections that are subject to change, and actual results may differ
materially from the forward-looking statements. Factors that could cause
actual results to differ materially include, but are not limited to,
potential changes in governmental programs and policies requiring or
encouraging the use of biofuels, including RFS2; changes in the spread
between biomass-based diesel prices and feedstock costs; the future
price and volatility of feedstocks; the future price and volatility of
petroleum and products derived from petroleum; availability of federal
and state governmental tax credits and incentives for biomass-based
diesel production; the effect of excess capacity in the biomass-based
diesel industry; unanticipated changes in the biomass-based diesel
market from which we generate almost all of our revenues; seasonal
fluctuations in our operating results; competition in the markets in
which we operate; our dependence on sales to a single customer;
technological advances or new methods of biomass-based diesel production
or the development of energy alternatives to biomass-based diesel; our
ability to successfully implement our acquisition strategy; our ability
to use the technology acquired from LS9 to produce renewable chemicals,
fuels and other products on a commercial scale and at a competitive
cost, and customer acceptance of the products produced; our ability to
successfully integrate Syntroleum and Dynamic Fuels and their employees
into our existing business; whether REG Geismar will be able to produce
renewable hydrocarbon diesel consistently or profitably; and other risks
and uncertainties described from time to time in REG's annual report on
Form 10-K for the year ended December 31, 2014, quarterly reports on
Forms 10-Q and other periodic filings with the Securities and Exchange
Commission.
All forward-looking statements are made as of the date of this press release and REG does not undertake to update any forward-looking statements based on new developments or changes in our expectations.
| RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014 | ||||||||||||||||
| (in thousands, except share and per share amounts) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||
| REVENUES: | ||||||||||||||||
| Biomass-based diesel sales | $ | 366,455 | $ | 327,837 | $ | 587,481 | $ | 536,959 | ||||||||
| Biomass-based diesel government incentives | 7,278 | 5,022 | 17,066 | 14,912 | ||||||||||||
| 373,733 | 332,859 | 604,547 | 551,871 | |||||||||||||
| Services | 29 | 59 | 133 | 87 | ||||||||||||
| 373,762 | 332,918 | 604,680 | 551,958 | |||||||||||||
| COSTS OF GOODS SOLD: | ||||||||||||||||
| Biomass-based diesel | 357,832 | 317,745 | 604,884 | 525,196 | ||||||||||||
| Services | 23 | 22 | 84 | 47 | ||||||||||||
| 357,855 | 317,767 | 604,968 | 525,243 | |||||||||||||
| GROSS PROFIT (LOSS) | 15,907 | 15,151 | (288 | ) | 26,715 | |||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 15,359 | 12,410 | 32,034 | 24,064 | ||||||||||||
| RESEARCH AND DEVELOPMENT EXPENSE | 4,390 | 3,217 | 8,250 | 5,090 | ||||||||||||
| LOSS FROM OPERATIONS | (3,842 | ) | (476 | ) | (40,572 | ) | (2,439 | ) | ||||||||
| OTHER INCOME (EXPENSE), NET: | 972 | (436 | ) | (1,499 | ) | (939 | ) | |||||||||
| LOSS BEFORE INCOME TAXES | (2,870 | ) | (912 | ) | (42,071 | ) | (3,378 | ) | ||||||||
| INCOME TAX BENEFIT | 707 | 11,919 | 1,604 | 12,026 | ||||||||||||
| NET INCOME (LOSS) | $ | (2,163 | ) | $ | 11,007 | $ | (40,467 | ) | $ | 8,648 | ||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY’S COMMON STOCKHOLDERS | $ | (2,001 | ) | $ | 10,835 | $ | (40,108 | ) | $ | 8,858 | ||||||
| NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS: | ||||||||||||||||
| BASIC | $ | (0.05 | ) | $ | 0.27 | $ | (0.91 | ) | $ | 0.23 | ||||||
| DILUTED | $ | (0.05 | ) | $ | 0.27 | $ | (0.91 | ) | $ | 0.22 | ||||||
| WEIGHTED AVERAGE SHARES USED TO COMPUTE NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS: | ||||||||||||||||
| BASIC | 43,736,366 | 39,939,346 | 44,048,017 | 31,119,460 | ||||||||||||
| DILUTED | 43,736,366 | 39,954,587 | 44,048,017 | 39,129,136 | ||||||||||||
| RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||||||
| AS OF JUNE 30, 2015 AND DECEMBER 31, 2014 | ||||||
| (in thousands, except share and per share amounts) | ||||||
| June 30, 2015 | December 31, 2014 | |||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ | 70,978 | $ | 63,516 | ||
| Marketable securities | 30,225 | 16,770 | ||||
| Accounts receivable, net | 59,888 | 294,669 | ||||
| Inventories | 95,166 | 97,508 | ||||
| Deferred income taxes | 12 | — | ||||
| Prepaid expenses and other assets | 41,943 | 43,135 | ||||
| Restricted cash | — | 12,845 | ||||
| Total current assets | 298,212 | 528,443 | ||||
| Property, plant and equipment, net | 500,516 | 493,196 | ||||
| Goodwill | 191,444 | 188,275 | ||||
| Intangible assets, net | 28,508 | 28,837 | ||||
| Investments | 10,331 | 9,736 | ||||
| Other assets | 17,578 | 19,586 | ||||
| Restricted cash | 106,815 | 104,815 | ||||
| TOTAL ASSETS | $ | 1,153,404 | $ | 1,372,888 | ||
| LIABILITIES AND EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Revolving lines of credit | 26,340 | 16,679 | ||||
| Current maturities of long-term debt | 5,940 | 5,746 | ||||
| Accounts payable | 62,175 | 202,821 | ||||
| Accrued expenses and other liabilities | 16,002 | 28,486 | ||||
| Deferred income taxes | 11,150 | 14,899 | ||||
| Deferred revenue | — | 16,680 | ||||
| Total current liabilities | 121,607 | 285,311 | ||||
| Unfavorable lease obligation | 18,257 | 19,170 | ||||
| Deferred income taxes | 12,119 | 6,905 | ||||
| Contingent consideration for acquisitions | 29,681 | 30,091 | ||||
| Long-term debt | 247,001 | 247,183 | ||||
| Other liabilities | 4,076 | 5,566 | ||||
| Total liabilities | 432,741 | 594,226 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||
| TOTAL EQUITY | 720,663 | 778,662 | ||||
| TOTAL LIABILITIES AND EQUITY | $ | 1,153,404 | $ | 1,372,888 | ||
