REG Q3 numbers reflect tough energy, commodity market conditions

By Renewable Energy Group Inc. | November 03, 2015

Renewable Energy Group Inc. announced its financial results Nov. 3 for the third quarter ended Sept. 30.

Revenues for the quarter were $395 million on 120 million gallons of fuel sold. Compared to the third quarter of 2014, REG sold 35.1 percent more gallons of fuel, while revenues increased by 2.8 percent due to a 27.4 percent decrease in the average price per gallon sold. Adjusted EBITDA for the quarter was negative $10 million compared to positive $11 million in the prior year period, without any adjustments for the 2014 Biodiesel Mixture Excise Tax Credit (BTC). Adjusted EBITDA for the third quarter of 2014, after giving effect to the retroactive reinstatement of the BTC (as discussed below), was $35 million. If the BTC is retroactively reinstated for 2015, we estimate that the net benefit for third quarter of 2015 would be between $35 and $40 million.

“Our third quarter results reflect the challenging market conditions in the energy and commodity sectors,” said REG president and CEO Daniel J. Oh. “Further, RIN prices were depressed due to high industry production levels, which reflect general anticipation of the retroactive reinstatement of the BTC for 2015. We have positioned the company to benefit from the potential reinstatement of the BTC for 2015 and a possible shift to a producer’s tax credit in 2016.”

Oh continued, “We are pleased the California low carbon fuel standard has been readopted and believe we are well positioned to serve that market from our Grays Harbor, Washington, and certain Midwest plants.”

Third quarter 2015 highlights

For the quarter, REG sold a total of 120 million gallons of fuel, an increase of 35.1 percent compared to the third quarter of 2014. REG produced 84.9 million gallons of biomass-based diesel during the quarter, a 33 percent increase when compared to the third quarter of 2014.

Revenues of $394.9 million increased 2.8 percent when compared to the third quarter of 2014. The increase is attributable to the 35.1 percent increase in gallons sold offset by the lower average sales price due to both lower heating oil and RIN prices. The average price per gallon of biomass-based diesel sold during the third quarter was $2.57, or 27.4 percent lower than in the same quarter of 2014.

Gross profit was $4.4 million, or 1.1 percent of revenues, compared to gross profit of $22.7 million, or 5.9 percent of revenues, for the third quarter of 2014. The decrease in gross profit was primarily due to compressed margins, as average sale prices declined more significantly than feedstock prices. Industry volume in the third quarter was elevated as participants made production decisions that included the expectation of a retroactive BTC reinstatement for 2015.

Net loss attributable to common stockholders was $0.36 per share on a fully diluted basis, or $15.7 million. This compares to a net income of $0.11 per share on a fully diluted basis, or $4.5 million, in the third quarter of 2014.

REG repurchased 837,065 shares during the third quarter at an average price of $9.31 per share. Through Sept. 30, the company has paid $19.3 million under its $30 million authorized share repurchase program, to repurchase 2,030,722 shares at an average price of $9.51 per share. Through Oct. 31, the company has repurchased 2,479,113 shares at an average price of $9.40 per share.

At Sept. 30, REG had liquid assets, which includes cash, cash equivalents and marketable securities, of $73.8 million, a decrease of $27.4 million from the prior quarter end. This decrease was largely the result of the negative margin environment the company experienced in the third quarter of 2015, coupled with cash spent on shares repurchased and capital expenditures.

At Sept. 30, accounts receivable were $52 million, or 12 days of sales. Accounts receivable at June 30 were $59.9 million. Inventory was $78.9 million at Sept. 30, or 18 days of sales, a decrease of $16.3 million from the prior quarter end.

Accounts payable was $78.7 million and $62.2 million at Sept. 30 and June 30, respectively.

The table below summarizes REG’s results for the third quarter of 2015.

 

REG Q3 2015 and 2014 Revenues and Adjusted EBITDA Summary

(dollars and gallons in thousands)

 

 

 

 

 

 

 

 

 

 
     

 Q3 2015 

   

 Q3 2014 

   

 Y/Y
Change

Gallons sold

     

119,966

       

88,821

   

35.1

%

Average selling price

   

$

2.57

     

$

3.54

   

(27.4

)%

Total revenues

   

$

394,856

     

$

384,258

   

2.8

%

Adjusted EBITDA prior to 2014 BTC allocation

     

($10,360

)

   

$

10,893

   

N/M

 

Adjusted EBITDA

     

($10,360

)

   

$

34,780

   

N/M

 
                         

 

For more information and financial tables, click here

 

 
 
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