Renewable Energy Group reports first-quarter financial results

By Renewable Energy Group Inc. | May 10, 2012

Renewable Energy Group Inc. announced its financial results for the first quarter ended March 31.

Revenues were $188.2 million, an increase of 80 percent compared to revenues of $104.4 million for the same period in 2011. Adjusted EBITDA was $12.7 million, an increase of 140 percent compared to $5.3 million for the same period last year. The balance sheet remained strong with cash of $75.2 million at the close of the quarter, compared to $33.6 million at Dec. 31.

“During our first quarter as a publicly traded company, Renewable Energy Group again demonstrated why we are a leader in the advanced biofuel industry,” said Daniel J. Oh, president and CEO. “We grew our biodiesel volumes and revenue substantially, raised capital with a successful IPO, and made solid progress toward upgrades and technology advancements at our biorefineries. With strong demand due to RFS2, and a fleet of biorefineries able to flexibly arbitrage lower cost feedstocks, we believe we are well-positioned to profitably grow our business in 2012 and beyond.”

REG produced 39 million gallons of biodiesel in the first quarter of 2012, compared to 20 million gallons in the same period in 2011. REG sold 34 million gallons of biodiesel in the first quarter of 2012, an increase of 69 percent compared to the same period in 2011. Five million gallons that were produced and shipped in January and February will be recognized in the second quarter of 2012 in accordance with GAAP revenue recognition rules. The year-over-year increase in gallons sold was primarily due to an increase in biodiesel demand compared to the same period in 2011 as petroleum refiners and importers sought to meet their renewable volume obligations to purchase biomass-based diesel under the renewable fuel standard (RFS2). RFS2 specifies the consumption of 1 billion gallons of biodiesel in 2012, compared to 800 million in 2011.

After receiving the proceeds of an initial public offering of common stock in January, REG purchased the previously leased facility in Seneca, Ill., and completed construction of a third production line at the facility. REG Seneca now has nameplate capacity of 60 MMgy operating online. REG also initiated the planned upgrade of its 30 MMgy biorefinery in Albert Lea, Minn. REG Albert Lea will be modified to process a wider range of lower cost feedstocks.

Revenues for the first quarter of 2012 were $188.2 million, an 80 percent increase compared to Q1 2011, due to improved per-gallon pricing and an increase in gallons sold over the previous period. Gallons sold in Q1 2012 increased 69 percent over Q1 2011 to 34.1 million gallons of biodiesel. Biodiesel pricing and demand improved compared to the same period in 2011 due to RFS2, higher prices for petroleum-based diesel and higher RIN prices over Q1 2011.

Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and further adjusted for certain items identified below under “Adjusted EBITDA Reconciliation,” grew 140 percent year-over-year to $12.7 million. The growth reflects improved margins, controlled SG&A growth and increased sales volume.

At March 31, REG had cash and cash equivalents of $75.2 million. The company borrowed $5.7 million under the $40 million revolving line of credit with Wells Fargo.

Inventories at March 31 were $77.6 million, an increase of $35.5 million from Dec. 31. The increase in inventories was largely attributable to the 5 million gallons of biodiesel production shipped under three contracts in January and February to customers who intend to sell the product in Q2. Although the biodiesel was in storage at a third-party terminal site subleased by REG customers as of March 31, the gallons cannot be recognized in revenue in accordance with GAAP revenue recognition rules until the second quarter.

In connection with the IPO in January, we converted the Series A Preferred that was on our balance sheet at $147.8 million at year end, and certain common stock warrants into 7,660,612 shares of newly issued Class A Common Stock and 2,999,493 shares of $75.0 million stated value aggregate Series B Preferred with a 4.5 percent annual dividend. This conversion resulted in a recapitalization gain of $39.1 million.

REG presents Adjusted EBITDA because the company believes it assists investors in analyzing its performance across reporting periods on a consistent basis. In addition, REG uses Adjusted EBITDA to evaluate, assess and benchmark its financial performance on a consistent and comparable basis. REG excludes noncash stock-based compensation and other noncash other income (expense) items because it does not believe that they are indicative of the company’s ongoing operating performance. REG’s measure of Adjusted EBITDA might be different than similar financial measures used by other companies. NonGAAP metrics are not determined in accordance with GAAP and are not a substitute for or superior to financial measures determined in accordance with GAAP. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Revenues.

Highlights: 

-39 million gallons produced, up 95 percent year-over-year (y/y)

-34 million gallons sold, up 69 percent y/y

-$188 million revenue, up 80 percent y/y

-$4 million operating income, up 109 percent y/y

-Adjusted EBITDA $12.7 million, up 140 percent y/y

-Albert Lea, Minn., plant upgrade initiated

-Third production line completed at the Seneca, Ill., plant

-Net income $14 million vs. $3.7 million for first quarter last year

 

 
 
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