Biodiesel producer REG closes strongest first quarter ever

By Renewable Energy Group Inc. | May 01, 2013

Renewable Energy Group Inc. announced its financial results for the quarter ended March 31. First quarter 2013 adjusted EBITDA was $22.0 million after adjusting for the $57.4 million related to the 2012 retroactive reinstatement of the Biodiesel Mixture Excise Tax Credit, commonly referred to as the blenders tax credit (BTC). The first quarter 2012 adjusted EBITDA was $12.7 million before including the allocation of the 2012 retroactive BTC of $10.4 million. REG sold 38.9 million gallons of biodiesel in the first quarter, an increase of 14 percent compared to the same period in 2012.

“This was our strongest first quarter ever for production and gallons sold,” said Daniel J. Oh, president and CEO. “Biodiesel demand is being driven by a number of positive factors including the 2013 RVO and biodiesel’s ability to meet certain advanced biofuel targets that are not being fulfilled by imported sugar cane ethanol.”

Oh added, “Demand also benefited from the reinstated tax credit, and new counter-seasonal markets such as Northeast heating oil. We are optimistic about industry conditions for the months ahead, and are taking concrete actions to capitalize on them.”

Operating Highlights

 During the quarter, REG positioned itself to capitalize on strong demand opportunities. Biodiesel RINs can be used to fulfill the advanced biofuel and renewable fuel (corn ethanol) renewable volume obligations (RVO) in addition to biomass-based diesel volumes. In the future, strong demand is expected from petroleum refiners and importers using biodiesel to fulfill advanced biofuels targets.

As a result of ongoing yield and throughput improvement programs across the company’s manufacturing sites, REG was able to produce 39.9 million gallons of biodiesel, compared to 38.5 million gallons in the same period in 2012. The company built inventory of its higher cloud point biodiesel in anticipation of warmer weather sales during 2013.

The company added another northeast U.S. distribution point in Rochester, N.Y., to meet extended winter heating oil blending demand. The company remains on track to complete its lower cost feedstock upgrade at the Albert Lea, Minn., facility in Q2. REG’s New Boston, Texas, plant is serving as a terminal location while repair activity is underway with biodiesel production planned to begin in Q2. In addition, we have approval and are proceeding on the construction of barge load out capabilities at our Seneca, Ill., facility to expand distribution capabilities. The project is expected to be completed in the first quarter 2014.

After the close of the quarter, the company signed a contract manufacturing agreement with Iowa Renewable Energy LLC to use its 30 MMgy, multiple feedstock biorefinery in Washington, Iowa.

First Quarter 2013 GAAP Financial Results

 All figures refer to the quarter ending March 31, 2013, unless otherwise noted.

 During the quarter, the average B100 price per gallon sold by REG was $4.44, a decrease of 8 percent from Q1 2012. REG sold 38.9 million gallons of biodiesel, an increase of 14 percent when compared to Q1 2012.

Gross profit was $86.7 million, a 409 percent increase when compared to Q1 2012. Gross margin was 26 percent. Operating income of $77.1 million increased substantially compared to $4.1 million in Q1 2012.

Net income attributable to common stockholders was $38.4 million, or $1.25 fully diluted per share. This compares to $40.0 million, or $0.06 fully diluted per share during the first quarter of 2012.

First Quarter 2013 Adjusted Financial Results

 All figures refer to the quarter ending March 31, 2013, unless otherwise noted.

 On Jan. 2, the American Taxpayer Relief Act of 2012 reinstated the blenders tax credit (BTC) for 2013 and retroactively reinstated the credit for 2012. Although the retroactive benefit is associated with activity that took place in 2012, GAAP requires this benefit to be recognized in the period in which the law was passed. All GAAP results presented here and in the company’s SEC filings reflect the full value of the 2012 benefit in the first quarter of 2013. In order to aid in period-to-period comparisons, the company is also presenting selected financial data adjusted to approximate the effect of the 2012 BTC benefits as if they were earned in the period in which the associated economic activity transpired.

Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and further adjusted for certain items identified below under “Adjusted EBITDA Reconciliation,” was $22 million after adjusting for the $57.4 million net benefit related to the 2012 retroactively reinstated BTC for the quarter. The 2012 adjusted EBITDA presented below allocates the $57.4 million net benefit from the 2012 retroactive reinstatement of the BTC based upon the biodiesel gallons sold during the quarter. First quarter 2013 adjusted EBITDA removes the net benefit of $57.4 million which was previously allocated to 2012.

Our GAAP revenues in the quarter were $339.3 million. This compares to our GAAP revenues in Q1 2012 of $188.2 million. GAAP revenues in the first quarter of 2013 include $127 million related to the 2012 blenders tax credit, of which approximately $70 million was owed by the company to customers under contractual arrangements related to potential reinstatement of the BTC.

For REG’s recent results as adjusted for the reinstatement of the BTC, as well as balance sheet, liquidity and adjusted EBITDA details, click here.












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