Q2 2019 Highlights
- 197 million gallons sold
- 127 million gallons produced
- Revenues of $560.6 million
- Net loss from continuing operations of $57.6 million, or $1.52
per diluted share
- Adjusted EBITDA of negative $42.3 million
- Estimated net benefit of potential reinstatement of the federal
Biodiesel Mixture Excise Tax Credit (BTC) of $81.0 million for the
second quarter 2019, $136.0 million for the six months ended June
30, 2019 and $373.0 million cumulatively for 2018 and the first six
months of 2019
- Settled 2019 convertible notes on maturity in June 2019 without
refinancing
Renewable Energy Group, Inc. ("REG" or the "Company") (NASDAQ:
REGI) today announced its financial results for the second quarter
ended June 30, 2019.
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 of 2019, compared to net income from continuing operations
attributable to common stockholders of $28.3 million in the second
quarter of 2018. Adjusted 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 BTC and small
refinery exemptions," said Cynthia (CJ) Warner, President and Chief
Executive Officer. "Within this context, our underlying performance
was strong with a 15.0% increase in gallons sold and a 2.0%
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 non-operating 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."
Estimated Adjusted EBITDA if BTC is
Reinstated
Three months ended June 30,
2019
Six months ended June 30,
2019
Twelve months ended December
31, 2018
Aggregate Total
(In thousands)
Adjusted EBITDA without BTC
$
(42,337
)
$
(69,697
)
$
151,981
$
82,284
Estimated net benefit if BTC is
reinstated
81,000
136,000
237,000
373,000
Estimated Adjusted EBITDA if BTC is
reinstated
$
38,663
$
66,303
$
388,981
$
455,284
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 $81.0
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 $136.0 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 $373.0 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%.
The average selling price per gallon was $2.70, a decrease of 13.2%
resulting primarily from lower biodiesel prices, which were down
$0.55 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 $0.16 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 2.0% increase.
Revenues were $560.6 million, a decrease of 3.2%. Revenues were
significantly impacted by an 18.1% 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
$0.67 per share on a fully diluted basis in the second quarter of
2018.
At June 30, 2019, REG had cash and cash equivalents and
marketable securities of $61.6 million, a decrease of $112.9
million from December 31, 2018. 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, 2019, accounts receivable were $75.2 million, or 12
days of sales. Accounts receivable at December 31, 2018 were $74.6
million, or 12 days of sales. Inventory was $171.4 million at June
30, 2019, or 26 days of cost of sales, an increase of $2.5 million
from December 31, 2018.
The table below summarizes REG’s results for the second quarter
of 2019.
REG Q2 2019 and Q2 2018 Revenues, Net Income
(Loss) and Adjusted EBITDA Summary
(in thousands except per gallon
amounts)
Q2 2019
Q2 2018
Y/Y Change
Total gallons sold
197,377
171,943
14.8 %
ASP per gallon
$
2.70
$
3.11
(13.2)%
Total revenues
$
560,643
$
578,900
(3.2)%
Net income (loss) from continuing
operations attributable to common stockholders
$
(57,635
)
$
28,277
N/M
Adjusted EBITDA (1)(2)
$
(42,337
)
$
44,272
N/M
(1) See Reconciliation of Non-GAAP
Measures below. (2) 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 $81.0 million and $66.2 million for business
conducted in the quarters ended June 30, 2019 and June 30, 2018,
respectively.
Reconciliation of Non - GAAP
Measures
The Company uses earnings before interest, taxes, depreciation
and amortization, 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.
In the fourth quarter of 2018, the operations of REG Life
Sciences were classified as discontinued operations. The Company
has excluded the results from these discontinued operations from
the calculation of Adjusted EBITDA. The corresponding prior period
amounts have been reclassified to conform with the current period
presentation. The following table sets forth Adjusted EBITDA for
the periods presented, as well as a reconciliation to net income
(loss) from continuing operations determined in accordance with
GAAP:
Three Months Ended June 30,
2019
Three Months Ended June 30,
2018
Six Months Ended June 30,
2019
Six Months Ended June 30,
2018
(In thousands)
Net income (loss) from continuing
operations
$
(57,635
)
$
29,042
$
(99,022
)
$
246,886
Adjustments:
Income tax (benefit) expense
(90
)
3,835
(520
)
2,632
Interest expense
3,737
4,925
7,956
9,576
Depreciation
9,142
9,004
18,241
17,743
Amortization of intangible assets
510
44
844
86
EBITDA
(44,336
)
46,850
(72,501
)
276,923
Gain on involuntary conversion
—
(454
)
—
(4,454
)
Gain on sale of assets
—
—
—
(990
)
Change in fair value of contingent
consideration
398
30
702
488
Loss (gain) on debt extinguishment
—
(2,337
)
2
(2,105
)
Other income, net
(691
)
(2,067
)
(1,545
)
(2,292
)
Impairment of assets
468
—
468
—
Straight-line lease expense
—
(3
)
—
(36
)
Executive severance
—
50
—
215
Non-cash stock compensation
1,824
2,203
3,177
3,997
Adjusted EBITDA excluding 2017 BTC
allocation
$
(42,337
)
$
44,272
$
(69,697
)
$
271,746
Biodiesel tax credit (1)
—
—
—
(206,521
)
Adjusted EBITDA (2)
$
(42,337
)
$
44,272
$
(69,697
)
$
65,225
(1) On February 9, 2018, the BTC was
retroactively reinstated for the 2017 calendar year. The
retroactive credit for 2017 resulted in a net benefit to us that
was recognized in the first quarter of 2018 for GAAP purposes.
Because this credit relates to the 2017 full year operating
performance and results, the net benefit of the 2017 BTC has been
removed from our 2018 Adjusted EBITDA in the table above. (2) The
Company estimates that if the BTC is retroactively reinstated on
the same terms as in 2017, Adjusted EBITDA for business conducted
in the second quarter of 2019 and 2018 would increase by
approximately $81.0 million and $66.2 million, respectively, and
would increase by approximately $136.0 million and $109.2 million
for business conducted in the six months ended June 30, 2019 and
June 30, 2018, respectively.
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 an
alternative 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 or the
impact of certain cash charges that the Company considers 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 the
Company has excluded it as an expense when evaluating our operating
performance;
- Adjusted EBITDA does not include loss from discontinued
operations. Loss from discontinued operations mainly relates to the
research and development activities of REG Life Sciences prior to
its sale in the second quarter of 2019; 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., (Nasdaq: REGI) is leading the
energy industry transition to sustainability by transforming
renewable resources into high-quality, cleaner fuels. REG is an
international producer of cleaner fuels and North America’s largest
producer of biodiesel. REG solutions are alternatives for petroleum
diesel and produce significantly lower carbon emissions. REG
utilizes an integrated procurement, distribution and logistics
network to operate 13 biorefineries in the U.S. and Europe. In
2018, REG produced 502 million gallons of cleaner fuel delivering
over four million metric tons of carbon reduction. REG is meeting
the growing global demand for lower-carbon fuels and leading the
way to a more sustainable future.
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 the possible
retroactive reinstatement of the BTC for 2018 and 2019 and the
estimated benefits to Adjusted EBITDA if the BTC is retroactively
reinstated for 2018 and 2019. 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 on the federal level, programs such as California's Low Carbon
Fuel Standard; availability of federal and state governmental tax
incentives and incentives for biomass-based diesel production,
including that the BTC may not be retroactively reinstated for 2018
or 2019 or that it may be reinstated on less favorable terms;
changes in the spread between biomass-based diesel prices and
feedstock costs; that any disruption of operations at our Geismar
renewable diesel refinery have a disproportionately adverse effect
on our profitability; the future price and volatility of
feedstocks; the future price and volatility of petroleum and
products derived from petroleum; risks associated with fire,
explosions, leaks and other natural disasters at our facilities;
the effect of excess capacity in the biomass-based diesel industry
and announced large plant expansions and potential co-processing of
renewable diesel by petroleum refiners; unanticipated changes in
the biomass-based diesel market from which we generate almost all
of our revenues; seasonal fluctuations in our operating results;
potential failure to comply with government regulations;
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; and other risks and
uncertainties described in REG's annual report on Form 10-K for the
year ended December 31, 2018. 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, 2019 AND 2018
(in thousands, except share
and per share amounts)
Three months ended
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
REVENUES:
Biomass-based diesel sales
$
540,019
$
551,109
$
995,225
$
825,870
Separated RIN sales
19,596
26,186
42,059
73,365
Biomass-based diesel government
incentives
530
915
998
366,200
560,145
578,210
1,038,282
1,265,435
Other revenue
498
690
570
1,467
560,643
578,900
1,038,852
1,266,902
COSTS OF GOODS SOLD:
Biomass-based diesel
580,133
510,375
1,064,546
916,184
Separated RINs
7,282
11,011
13,867
43,749
Other costs of goods sold
—
—
3
—
587,415
521,386
1,078,416
959,933
GROSS PROFIT (LOSS)
(26,772
)
57,514
(39,564
)
306,969
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
26,865
24,512
52,010
56,166
RESEARCH AND DEVELOPMENT EXPENSE
176
27
385
1,061
IMPAIRMENT OF PROPERTY, PLANT AND
EQUIPMENT
468
—
468
—
INCOME (LOSS) FROM OPERATIONS
(54,281
)
32,975
(92,427
)
249,742
OTHER INCOME (EXPENSE), NET
(3,444
)
(98
)
(7,115
)
(226
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
(57,725
)
32,877
(99,542
)
249,516
INCOME TAX BENEFIT (EXPENSE)
90
(3,835
)
520
(2,632
)
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS
(57,635
)
29,042
(99,022
)
246,884
NET INCOME (LOSS) ON DISCONTINUED
OPERATIONS
(4,462
)
4,808
(6,479
)
1,353
NET INCOME (LOSS) TO THE COMPANY
$
(62,097
)
$
33,850
$
(105,501
)
$
248,237
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS ATTRIBUTABLE TO THE COMPANY’S COMMON STOCKHOLDERS
$
(57,635
)
$
28,277
$
(99,022
)
$
240,662
NET INCOME (LOSS) FROM DISCONTINUED
OPERATIONS ATTRIBUTABLE TO THE COMPANY'S COMMON STOCKHOLDERS
$
(4,462
)
$
4,681
$
(6,479
)
$
1,319
Basic net income (loss) per share
attributable to common stockholders:
Continuing operations
$
(1.52
)
$
0.76
$
(2.63
)
$
6.31
Discontinued operations
$
(0.12
)
$
0.13
$
(0.17
)
$
0.03
Net income (loss) per share
$
(1.64
)
$
0.88
$
(2.81
)
$
6.35
Diluted net income (loss) per share
attributable to common stockholders
Continuing operations
$
(1.52
)
$
0.67
$
(2.63
)
$
5.91
Discontinued operations
$
(0.12
)
$
0.11
$
(0.17
)
$
0.03
Net income (loss) per share
$
(1.64
)
$
0.78
$
(2.81
)
$
5.94
Weighted-average shares used to compute
basic net income (loss) per share attributable to common
stockholders:
Basic
37,851,735
37,413,387
37,603,921
38,112,531
Weighted-average shares used to compute
diluted net income (loss) per share attributable to the common
stockholders:
Continuing operations
37,851,735
42,081,341
37,603,921
40,713,114
Discontinued operations
37,851,735
42,081,341
37,603,921
40,713,114
Net income (loss)
37,851,735
42,081,341
37,603,921
40,713,114
RENEWABLE ENERGY GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
AS OF JUNE 30, 2019 AND
DECEMBER 31, 2018
(in thousands, except share
and per share amounts)
June 30, 2019
December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
61,597
$
123,575
Marketable securities
—
50,932
Accounts receivable, net
75,207
74,551
Inventories
171,397
168,900
Prepaid expenses and other assets
40,654
41,169
Restricted cash
3,000
3,000
Current assets held for sale
—
3,250
Total current assets
351,855
465,377
Property, plant and equipment, net
591,710
590,723
Right of use assets
43,490
—
Goodwill
16,080
16,080
Intangible assets, net
12,802
13,646
Other assets
21,466
21,270
TOTAL ASSETS
$
1,037,403
$
1,107,096
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Lines of credit
$
70,854
$
14,250
Current maturities of long-term debt
83,324
149,006
Current maturities of operating lease
obligations
18,580
—
Accounts payable
107,246
95,866
Accrued expenses and other liabilities
24,570
35,256
Deferred revenue
4,536
300
Total current liabilities
309,110
294,678
Unfavorable lease obligation
—
2,259
Deferred income taxes
7,879
8,410
Long-term debt (net of debt issuance costs
of $3,063 and $3,390, respectively)
30,454
33,421
Long-term operating lease obligations
35,577
—
Other liabilities
1,562
3,075
Total liabilities
384,582
341,843
COMMITMENTS AND CONTINGENCIES
TOTAL EQUITY
652,821
765,253
TOTAL LIABILITIES AND EQUITY
$
1,037,403
$
1,107,096
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005836/en/
Investor Relations: Renewable Energy Group Todd Robinson
Treasurer +1 (515) 239-8048 Todd.Robinson@regi.com
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