FutureFuel Corp. (NYSE:FF) (“FutureFuel”), a manufacturer of custom
and performance chemicals and biofuels, today announced financial
results for the first quarter ended March 31, 2022.
First quarter 2022 Financial
Highlights (all comparisons are with the first quarter of
2021)
- Revenues were $42.3 million,
up 2% from $41.5 million
- Adjusted EBITDA was
$2.1 million, up from ($7.8) million
- Net
loss was $12.4 million, or $0.28 per diluted
share, down from net losses of $8.8 million, or
$0.20 per diluted share.
“The first quarter of 2022 has been strong from
an operational perspective, as compared to the disruption we
experienced at the hands of Winter Storm Uri in the same period of
2021. Nevertheless, our biodiesel business was challenged this
quarter by feedstock price increases that made many of our
traditional feedstock sources uneconomical. We navigated this
challenge by producing and inventorying summer quality biodiesel to
sell later in the year using feedstock that would generate positive
margins. In an environment where fuel prices have risen
significantly during the first three months of the year,
we reported a loss on our derivatives position at the end of
the quarter that would have been offset when we later
sold our inventory. However, since that time,
unprecedented volatility towards the expiry of the New York
Mercantile Exchange May heating oil contract, caused FutureFuel to
incur approximately $12 million of realized derivative losses
during April, and it is uncertain what additional costs will be
incurred subsequently. These costs likely will not be fully
recovered when the physical inventory is sold.
Our chemicals business continues to show
encouraging signs as we execute our plans to grow in this
segment,” said Tom McKinlay, Chief Operating Officer for
FutureFuel Corp.
2022 Cash Dividends
In the first three months of 2022, FutureFuel
paid a regular quarterly cash dividend in the amount of $0.06 per
share on our common stock. The remaining quarterly dividends of
$0.06 per share will be paid in June, September, and December.
Financial Overview and Key Operating
Metrics
Financial and operating metrics, which include
non-GAAP financial measures, include dollars in thousands, except
per share amounts:
|
FutureFuel Corp.Certain Financial and
Operating Metrics (Unaudited) |
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
|
|
Dollar |
|
|
% |
|
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
Change |
|
Revenue |
|
$ |
42,261 |
|
|
$ |
41,516 |
|
|
$ |
745 |
|
|
|
2 |
% |
Loss from operations |
|
$ |
(9,607 |
) |
|
$ |
(13,058 |
) |
|
$ |
3,451 |
|
|
|
26 |
% |
Net loss |
|
$ |
(12,398 |
) |
|
$ |
(8,773 |
) |
|
$ |
(3,625 |
) |
|
|
(41 |
%) |
Loss per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.28 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.08 |
) |
|
|
(40 |
%) |
Diluted |
|
$ |
(0.28 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.08 |
) |
|
|
(40 |
%) |
Adjusted EBITDA |
|
$ |
2,098 |
|
|
$ |
(7,825 |
) |
|
$ |
9,923 |
|
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and Business
Summary
Consolidated sales revenue in the three months
ended March 31, 2022 increased $745 compared to the
three months ended March 31, 2021. This increase resulted from
increased sales prices in both the chemicals and biofuels segments
and increased sales volume in the chemical segment which was
partially offset by reduced sales volumes in the biofuel
segment.
Loss from operations in the three months ended
March 31, 2022 improved $3,451 compared to the three
months ended March 31, 2021. This improvement primarily
resulted from: i) the negative impact in the prior year quarter of
the exorbitant natural gas prices invoiced from Winter Storm Uri
which resulted in an addition to cost of goods sold of $7,800, and
ii) the adjustment in the carrying value of our inventory as
determined utilizing the LIFO method of inventory accounting
which increased gross profit $481 in the current period
as compared to a reduction of $3,913 in the same period
of the prior year. See note 4 to our consolidated financial
statements for additional detail. These improvements were
partially offset by the change in the unrealized and realized
activity in derivative instruments with a loss of $9,129 as
compared to a loss of $2,625 in the three months ended March 31,
2021 whereas inventories related to this change have not yet
been sold. See note 5 to our consolidated financial statements.
Affordable feedstocks were acquired and converted to biodiesel
which will be sold mostly in the three months ended June 30,
2022.
Capital Expenditures
Capital expenditures were $977 in the first
three months of 2022, compared with $146 in the same period in
2021.
Cash and Cash Equivalents and Marketable
Securities
Cash and cash equivalents and marketable
securities totaled $163,735 as of March 31, 2022, compared
with $184,711 as of December 31, 2021.
About FutureFuel
FutureFuel is a leading manufacturer of
diversified chemical products and biofuels. FutureFuel's
chemicals segment manufactures specialty chemicals for
specific customers (“custom chemicals”) as well as multi-customer
specialty chemicals (“performance chemicals”). FutureFuel’s custom
manufacturing product portfolio includes proprietary
agrochemicals, adhesion promoters, a biocide
intermediate, and an antioxidant precursor. FutureFuel’s
performance chemicals products include a portfolio of
proprietary nylon and polyester polymer modifiers and
several small-volume specialty chemicals and solvents for
diverse applications. FutureFuel’s biofuels segment primarily
produces and sells biodiesel to its customers. Please visit
www.futurefuelcorporation.com for more information.
Forward-Looking Statements
This document contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements deal with
FutureFuel’s current plans, intentions, beliefs, and expectations,
and statements of future economic performance. Statements
containing such terms as “believe,” “do not believe,” “plan,”
“expect,” “intend,” “estimate,” “anticipate,” and other phrases of
similar meaning are considered to contain uncertainty and are
forward-looking statements. In addition, from time-to-time
FutureFuel or its representatives have made or will make
forward-looking statements orally or in writing. Furthermore, such
forward-looking statements may be included in various filings that
the company makes with United States Securities and Exchange
Commission (the “SEC”), in press releases, or in oral statements
made by or with the approval of one of FutureFuel’s authorized
executive officers.
These forward-looking statements are subject to
certain known and unknown risks and uncertainties, including, but
not limited to the COVID-19 pandemic and the response thereto, as
well as assumptions that could cause actual results to differ
materially from those reflected in these forward-looking
statements. Factors that might cause actual results to differ
include, but are not limited to, those set forth under the headings
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in FutureFuel’s Form
10-K Annual Report for the year ended December 31, 2021 and in
its future filings made with the SEC. An investor should not place
undue reliance on any forward-looking statements contained in this
document, which reflect FutureFuel management’s opinions only as of
their respective dates. Except as required by law, the company
undertakes no obligation to revise or publicly release the results
of any revisions to forward-looking statements. The risks and
uncertainties described in this document and in current and future
filings with the SEC are not the only ones faced by FutureFuel. New
factors emerge from time to time, and it is not possible for the
company to predict which will arise. There may be additional risks
not presently known to the company or that the company currently
believes are immaterial to its business. In addition, FutureFuel
cannot assess the impact of each factor on its business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements. If any such risks occur, FutureFuel’s
business, operating results, liquidity, and financial condition
could be materially affected in an adverse manner. An investor
should consult any additional disclosures FutureFuel has made or
will make in its reports to the SEC on Forms 10-K, 10-Q, and 8-K,
and any amendments thereto. All subsequent written and oral
forward-looking statements attributable to FutureFuel or persons
acting on its behalf are expressly qualified in their entirety by
the cautionary statements contained in this document.
Non-GAAP Financial Measures
In this press release, FutureFuel used adjusted
EBITDA as a key operating metric to measure both performance and
liquidity. Adjusted EBITDA is a non-GAAP financial measure.
Adjusted EBITDA is not a substitute for operating income, net
income, or cash flow from operating activities (each as determined
in accordance with GAAP), as a measure of performance or liquidity.
Adjusted EBITDA has limitations as an analytical tool, and should
not be considered in isolation or as a substitute for analysis of
results as reported under GAAP. FutureFuel defines adjusted EBITDA
as net income before interest, income taxes, depreciation, and
amortization expenses, excluding, when applicable, non-cash
share-based compensation expense, public offering expenses,
acquisition-related transaction costs, purchase accounting
adjustments, loss on disposal of property and equipment, gains or
losses on derivative instruments, other non-operating income or
expense. Information relating to adjusted EBITDA is provided so
that investors have the same data that management employs in
assessing the overall operation and liquidity of FutureFuel’s
business. FutureFuel’s calculation of adjusted EBITDA may be
different from similarly titled measures used by other companies;
therefore, the results of its calculation are not necessarily
comparable to the results of other companies.
Adjusted EBITDA allows FutureFuel’s chief
operating decision makers to assess the performance and liquidity
of FutureFuel’s business on a consolidated basis to assess the
ability of its operating segments to produce operating cash flow to
fund working capital needs, to fund capital expenditures, and to
pay dividends. In particular, FutureFuel management believes that
adjusted EBITDA permits a comparative assessment of FutureFuel’s
operating performance and liquidity, relative to a performance and
liquidity based on GAAP results, while isolating the effects of
depreciation and amortization, which may vary among its operating
segments without any correlation to their underlying operating
performance, and of non-cash stock-based compensation expense,
which is a non-cash expense that varies widely among similar
companies, and gains and losses on derivative instruments, whose
immediate recognition can cause net income to be volatile from
quarter to quarter due to the timing of the valuation change in the
derivative instruments relative to the sale of biofuel.
A table included in this earnings release
reconciles adjusted EBITDA with net income, the most directly
comparable GAAP performance financial measure, and a table
reconciles adjusted EBITDA with cash flows from operations, the
most directly comparable GAAP liquidity financial measure.
|
FutureFuel Corp.Condensed Consolidated
Balance Sheets(Dollars in thousands) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
120,984 |
|
|
$ |
137,521 |
|
Accounts receivable, inclusive of the blenders' tax credit of
$5,550 and $8,232 and net of allowances for bad debt of
$55 and $67, respectively |
|
|
18,048 |
|
|
|
29,374 |
|
Inventory |
|
|
37,620 |
|
|
|
26,920 |
|
Marketable securities |
|
|
42,751 |
|
|
|
47,190 |
|
Other current assets |
|
|
18,426 |
|
|
|
14,828 |
|
Total current assets |
|
|
237,829 |
|
|
|
255,833 |
|
Property, plant and equipment, net |
|
|
81,056 |
|
|
|
82,901 |
|
Other assets |
|
|
5,498 |
|
|
|
5,596 |
|
Total noncurrent assets |
|
|
86,554 |
|
|
|
88,497 |
|
Total
Assets |
|
$ |
324,383 |
|
|
$ |
344,330 |
|
Liabilities and
Stockholders’Equity |
|
|
|
|
|
|
|
|
Accounts payable, inclusive of the blenders' tax credit rebates due
customers of $890 and $890, respectively |
|
$ |
21,960 |
|
|
$ |
22,823 |
|
Dividends payable |
|
|
7,877 |
|
|
|
- |
|
Other current liabilities |
|
|
11,540 |
|
|
|
12,233 |
|
Total current liabilities |
|
|
41,377 |
|
|
|
35,056 |
|
Deferred revenue – long-term |
|
|
14,261 |
|
|
|
16,755 |
|
Other noncurrent liabilities |
|
|
2,767 |
|
|
|
3,591 |
|
Total noncurrent liabilities |
|
|
17,028 |
|
|
|
20,346 |
|
Total liabilities |
|
|
58,405 |
|
|
|
55,402 |
|
Preferred stock, $0.0001 par value, 5,000,000 shares authorized,
none issued and outstanding |
|
|
- |
|
|
|
- |
|
Common stock, $0.0001 par value, 75,000,000 shares authorized,
43,763,243, issued and outstanding at March 31, 2022 and
December 31, 2021 |
|
|
4 |
|
|
|
4 |
|
Accumulated other comprehensive income |
|
|
129 |
|
|
|
178 |
|
Additional paid in capital |
|
|
282,443 |
|
|
|
282,443 |
|
Retained earnings (accumulated deficit) |
|
|
(16,598 |
) |
|
|
6,303 |
|
Total Stockholders’Equity |
|
|
265,978 |
|
|
|
288,928 |
|
Total Liabilities and
Stockholders’Equity |
|
$ |
324,383 |
|
|
$ |
344,330 |
|
FutureFuel Corp.Condensed Consolidated
Statements of Operationsand Comprehensive
Income(Dollars in thousands, except per share
amounts)(Unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Revenue |
|
$ |
42,261 |
|
|
$ |
41,516 |
|
Cost of goods sold and
distribution |
|
|
49,416 |
|
|
|
52,252 |
|
Gross loss |
|
|
(7,155 |
) |
|
|
(10,736 |
) |
Selling, general, and
administrative expenses |
|
|
1,773 |
|
|
|
1,548 |
|
Research and development
expenses |
|
|
679 |
|
|
|
774 |
|
|
|
|
2,452 |
|
|
|
2,322 |
|
Loss from
operations |
|
|
(9,607 |
) |
|
|
(13,058 |
) |
Other expense, net |
|
|
(3,495 |
) |
|
|
(102 |
) |
Loss before income
taxes |
|
|
(13,102 |
) |
|
|
(13,160 |
) |
Income tax benefit |
|
|
(704 |
) |
|
|
(4,387 |
) |
Net loss |
|
$ |
(12,398 |
) |
|
$ |
(8,773 |
) |
|
|
|
|
|
|
|
|
|
Earnings
(loss) per common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.28 |
) |
|
$ |
(0.20 |
) |
Diluted |
|
$ |
(0.28 |
) |
|
$ |
(0.20 |
) |
Weighted average
shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
43,763,243 |
|
|
|
43,743,243 |
|
Diluted |
|
|
43,763,243 |
|
|
|
43,743,243 |
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(12,398 |
) |
|
$ |
(8,773 |
) |
Other comprehensive loss from unrealized net loss on
available-for-sale debt securities |
|
|
(62 |
) |
|
|
(60 |
) |
Income tax effect |
|
|
13 |
|
|
|
16 |
|
Total other comprehensive loss, net of tax |
|
|
(49 |
) |
|
|
(44 |
) |
Comprehensive loss |
|
$ |
(12,447 |
) |
|
$ |
(8,817 |
) |
FutureFuel Corp.Consolidated Statements of
Cash Flows(Dollars in
thousands)(Unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(12,398 |
) |
|
$ |
(8,773 |
) |
Adjustments to reconcile net income to net cash from operating
activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,570 |
|
|
|
2,608 |
|
Amortization of deferred financing costs |
|
|
24 |
|
|
|
24 |
|
Benefit for deferred income taxes |
|
|
(719 |
) |
|
|
(4,402 |
) |
Change in fair value of equity securities |
|
|
4,100 |
|
|
|
1,765 |
|
Change in fair value of derivative instruments |
|
|
(1,536 |
) |
|
|
(695 |
) |
Loss (gain) on the sale of investments |
|
|
27 |
|
|
|
(690 |
) |
Loss on disposal of property and equipment |
|
|
6 |
|
|
|
- |
|
Noncash interest expense |
|
|
8 |
|
|
|
8 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
11,268 |
|
|
|
(6,515 |
) |
Accounts receivable – related parties |
|
|
58 |
|
|
|
1,375 |
|
Inventory |
|
|
(10,700 |
) |
|
|
(11,389 |
) |
Income tax receivable |
|
|
15 |
|
|
|
774 |
|
Prepaid expenses |
|
|
631 |
|
|
|
751 |
|
Prepaid expenses – related party |
|
|
(8 |
) |
|
|
(12 |
) |
Other assets |
|
|
38 |
|
|
|
(43 |
) |
Accounts payable |
|
|
(730 |
) |
|
|
4,270 |
|
Accounts payable – related parties |
|
|
57 |
|
|
|
7,814 |
|
Accrued expenses and other current liabilities |
|
|
(917 |
) |
|
|
(509 |
) |
Accrued expenses and other current liabilities – related
parties |
|
|
(1 |
) |
|
|
- |
|
Deferred revenue |
|
|
(2,269 |
) |
|
|
(569 |
) |
Other noncurrent liabilities |
|
|
(100 |
) |
|
|
(139 |
) |
Net cash used in operating activities |
|
|
(10,576 |
) |
|
|
(14,347 |
) |
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Collateralization of derivative instruments |
|
|
(2,664 |
) |
|
|
(106 |
) |
Purchase of marketable securities |
|
|
- |
|
|
|
(15,601 |
) |
Proceeds from the sale of marketable securities |
|
|
250 |
|
|
|
28,681 |
|
Proceeds from the sale of property and equipment |
|
|
56 |
|
|
|
- |
|
Capital expenditures |
|
|
(977 |
) |
|
|
(146 |
) |
Net cash (used in) provided by investing
activities |
|
|
(3,335 |
) |
|
|
12,828 |
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Payment of dividends |
|
|
(2,626 |
) |
|
|
(2,624 |
) |
Net cash used in financing activities |
|
|
(2,626 |
) |
|
|
(2,624 |
) |
Net change in cash and cash
equivalents |
|
|
(16,537 |
) |
|
|
(4,143 |
) |
Cash and cash equivalents at
beginning of period |
|
|
137,521 |
|
|
|
198,122 |
|
Cash and cash
equivalents at end of period |
|
$ |
120,984 |
|
|
$ |
193,979 |
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
- |
|
|
$ |
43 |
|
Cash paid for income
taxes |
|
$ |
- |
|
|
$ |
52 |
|
Noncash investing and
financing activities: |
|
|
|
|
|
|
|
|
Cash dividends declared, not paid |
|
$ |
7,877 |
|
|
$ |
- |
|
Noncash capital expenditures |
|
$ |
174 |
|
|
$ |
118 |
|
FutureFuel Corp.Reconciliation of Non-GAAP
Financial Measure to Financial Measure(Dollars in
thousands)(Unaudited) |
|
Reconciliation of Adjusted EBITDA to Net
Income |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Net loss |
|
$ |
(12,398 |
) |
|
$ |
(8,773 |
) |
Depreciation |
|
|
2,570 |
|
|
|
2,608 |
|
Interest and dividend
income |
|
|
(664 |
) |
|
|
(1,005 |
) |
Non-cash interest expense and
amortization of deferred financing costs |
|
|
32 |
|
|
|
32 |
|
Losses on disposal of property
and equipment |
|
|
6 |
|
|
|
- |
|
Loss on derivative
instruments |
|
|
9,129 |
|
|
|
2,625 |
|
Loss on marketable
securities |
|
|
4,127 |
|
|
|
1,075 |
|
Income tax benefit |
|
|
(704 |
) |
|
|
(4,387 |
) |
Adjusted EBITDA |
|
$ |
2,098 |
|
|
$ |
(7,825 |
) |
Reconciliation of Adjusted EBITDA to Net Cash Used
in Operating Activities |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Net cash used in operating activities |
|
$ |
(10,576 |
) |
|
$ |
(14,347 |
) |
Benefit for deferred income
taxes |
|
|
719 |
|
|
|
4,402 |
|
Interest and dividend
income |
|
|
(664 |
) |
|
|
(1,005 |
) |
Income tax benefit |
|
|
(704 |
) |
|
|
(4,387 |
) |
Loss on derivative
instruments |
|
|
9,129 |
|
|
|
2,625 |
|
Change in fair value of
derivative instruments |
|
|
1,536 |
|
|
|
695 |
|
Change in operating assets and
liabilities, net |
|
|
2,658 |
|
|
|
4,192 |
|
Adjusted EBITDA |
|
$ |
2,098 |
|
|
$ |
(7,825 |
) |
FutureFuel Corp.Condensed Consolidated
Segment Income(Dollars in
thousands)(Unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
|
Custom chemicals |
|
$ |
15,715 |
|
|
$ |
10,675 |
|
Performance chemicals |
|
|
5,846 |
|
|
|
5,435 |
|
Chemicals revenue |
|
$ |
21,561 |
|
|
$ |
16,110 |
|
Biofuels revenue |
|
|
20,700 |
|
|
|
25,406 |
|
Total Revenue |
|
$ |
42,261 |
|
|
$ |
41,516 |
|
|
|
|
|
|
|
|
|
|
Segment gross profit
(loss) |
|
|
|
|
|
|
|
|
Chemicals |
|
$ |
5,418 |
|
|
$ |
(1,301 |
) |
Biofuels |
|
|
(12,573 |
) |
|
|
(9,435 |
) |
Total gross loss |
|
$ |
(7,155 |
) |
|
$ |
(10,736 |
) |
|
|
|
|
|
|
|
|
|
Depreciation is allocated to segment cost of
goods sold based on plant usage. The total assets and capital
expenditures of FutureFuel have not been allocated to individual
segments as large portions of these assets are shared to varying
degrees by each segment, causing such an allocation to be of little
value.
COMPANY CONTACTFutureFuel Corp.Tom
McKinlay(314)854-8352www.futurefuelcorporation.com
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