Fourth Quarter 2014
Results
- 74 million gallons sold
- Revenue of $337.6 million
- Net income of $69.3 million
- Adjusted EBITDA of $34.0 million
- Retroactive reinstatement of biodiesel
tax credit for 2014
- Commenced production and sales of
renewable hydrocarbon diesel
Full Year 2014 Results
- 287 million gallons sold
- Full year 2014 revenue of $1.27
billion
- Net income of $82.5 million
- Adjusted EBITDA of $107.8 million
- Production capacity increased to 332
million gallons/year
- Expanded product lines into renewable
hydrocarbon diesel and renewable chemicals
- Expanded geographically into
Europe
Renewable Energy Group, Inc. (NASDAQ:REGI) (“REG” or the
“Company”) today announced its financial results for the fourth
quarter and full year ended December 31, 2014.
For the fourth quarter of 2014, REG increased gallons sold of
biomass-based diesel, which includes biodiesel and renewable
hydrocarbon diesel ("RHD"), by 2% compared to the fourth quarter of
2013. Revenue decreased by 14% while Adjusted EBITDA decreased by
6% in the fourth quarter of 2014 compared to the same period in
2013.
For the full year 2014, REG sold 11% more gallons of
biomass-based diesel, although revenue and Adjusted EBITDA
decreased by 15% and 27%, respectively, compared to 2013, as a
result of lower selling prices.
“This past year we delivered solid results despite a rapidly
declining energy market and market uncertainty,” said Daniel J. Oh,
President and Chief Executive Officer. “Our business model has
enabled us to grow consistently, invest in adjacent opportunities,
maneuver through market challenges and do so profitably. Our
business is proving itself to be durable, reliable and
profitable.”
Oh continued, “In 2014, we expanded our product lines by
entering the renewable hydrocarbon diesel and renewable chemical
markets, we extended our geographic reach and asset base into
Europe with our Petrotec investment and we improved distribution
capabilities with the establishment of our Energy Services
division. Looking forward, we continue to see accretive investment
and growth opportunities.”
Fourth Quarter Operating
Highlights
REG sold 74.0 million gallons of biomass-based diesel, an
increase of 2% compared to the fourth quarter of 2013. Gallons sold
in the quarter included 10.4 million gallons of RHD and 7.8 million
gallons purchased from third parties and resold through the
Company’s extensive distribution network.
REG produced 74.0 million gallons of biomass-based diesel during
the quarter, a 12% increase over the fourth quarter of 2013. The
growth in production resulted from REG Geismar ramping up which
contributed 10.8 million gallons of RHD, as well as the completion
of the upgrades at Mason City and Newton, which further expanded
feedstock flexibility. The Company utilized contract or tolled
manufacturing, which contributed 4.8 million gallons in the
quarter.
In October 2014, REG Geismar began producing and selling RHD,
restarting the plant the Company acquired in June. The 75-million
gallon nameplate capacity biorefinery had been in stand-by mode
since December 2012.
In December, the Company expanded its business to Europe by
acquiring a majority interest in the German biodiesel producer
Petrotec AG ("Petrotec"). Petrotec’s nameplate production capacity
is 55.5 million gallons per year, produced predominantly from used
cooking oil. The Company has also made a tender offer to acquire
the remaining shares in Petrotec, which is not yet complete.
Fourth Quarter 2014 Financial
Results
All figures refer to the quarter ending December 31, 2014,
unless otherwise noted.
Revenue of $337.6 million decreased 14% when compared to the
fourth quarter of 2013. The drop in revenue was driven by lower
biomass-based diesel prices caused by lower energy market prices,
which more than offset volume growth of 2%. The average price per
gallon sold (including RINs) for B100 was $3.03, a decrease of 29%
from the same period in 2013.
Gross profit was $111.2 million, compared to $44.7 million for
the fourth quarter of 2013. Gross margin was 33%, compared to 11%
in the year-earlier quarter. The increase in gross profit was
primarily due to the recognition of the full year net effect from
the 2014 federal biodiesel tax credit reinstated on December 19,
2014, as well as slightly lower feedstock prices. Market
participants were acting as if the biodiesel tax credit would be
reinstated throughout the year and entered into agreements to
capture the credit when or if reinstated. In addition, as a result
of the widespread expectation that the credit would be reinstated,
production volumes continued that otherwise might not have occurred
and demand for feedstock persisted, supporting prices.
Operating income was $81.9 million, compared to $32.1 million
for the fourth quarter of 2013.
Net income attributable to common stockholders was $69.4
million, or $1.61 per share on a fully diluted basis. This compares
to a net income of $30.1 million, or $0.80 per share on a fully
diluted basis in the fourth quarter of 2013.
Adjusted EBITDA (including adjustments for the allocation of the
retroactive reinstatement for the first three quarters of 2014) was
$34.0 million, a 6% y/y decrease. Fourth quarter 2013 adjusted
EBITDA was $36.1 million. Adjusted EBITDA is defined as earnings
before interest, taxes, depreciation and amortization and further
adjusted for certain items identified below under “Adjusted EBITDA
Summary.”
At December 31, 2014, REG had cash and equivalents of $63.5
million, a decrease of 6% during the quarter. For the year, the
Company's cash balance decreased by $89.7 million as a result of
the investments in facility upgrades and acquisitions and cash set
aside as collateral for debts assumed from the Geismar acquisition
and other borrowings. At December 31, 2014, accounts
receivable were $294.7 million, an increase of $259.2 million from
September 30, 2014, mainly as a result of all of the 2014 federal
biodiesel tax credit being recorded in the fourth quarter.
Inventory was $97.5 million, an increase of $48.1 million during
the quarter.
The table below summarizes REG’s results for Q4 2014:
REG Q4 2014 Revenue and Adjusted EBITDA Summary
(dollars and gallons in thousands except for per gallon
data) 4Q-2014 4Q-2013 Y/Y
Change Gallons sold 74,005 72,860 2
%
Average Selling Price $ 3.03 $ 4.24 (29 )% Total Revenue $
337,615 $ 390,591 (14 )% Adjusted EBITDA (1)(2) $ 34,033
$ 36,076 (6 )% (1)
On January 2, 2013, the American Taxpayer Relief Act of 2012 was
signed into law, which reinstated a set of tax extender items
including the federal biodiesel mixture excise tax credit for 2013
and retroactively reinstated the credit for 2012. The retroactive
credit for 2012 resulted in a net benefit to us that was recognized
in first quarter 2013, but because this credit relates to the
operating performance and results of 2012, it is excluded from 2013
adjusted EBITDA and allocated to the 2012 periods based upon
gallons sold. (2) On December 19, 2014, the Tax Increase
Prevention Act of 2014 was signed into law, which reinstated a set
of tax extender items including the retroactive reinstatement of
the federal biodiesel mixture excise tax credit for 2014 and
expired on December 31, 2014. The retroactive credit for 2014
resulted in a net benefit to us that was recognized in the fourth
quarter of 2014, however because this credit relates to the full
year operating performance and results, we allocated the first
three quarters of 2014, respectively, based upon gallons sold and
excluded those amounts from the fourth quarter 2014 adjusted
EBITDA.
Full Year 2014 Results
All figures refer to the full year ending December 31, 2014,
unless otherwise noted.
REG sold 287.3 million gallons of biomass-based diesel, an
increase of 11% compared to 258.6 million gallons in 2013. The
average B100 price per gallon (including RINs) sold by REG was
$3.62, compared to $4.58 in 2013.
REG produced 235.9 million gallons of biomass-based diesel,
compared to 219.2 million gallons in 2013. The growth in production
resulted from REG Geismar ramping up and the completion of the
upgrades at Mason City and Newton, which further expanded feedstock
flexibility. The Company utilized contract or tolled manufacturing,
which contributed 15.9 million gallons.
Revenue was $1.27 billion, a 15% decrease versus 2013 revenue of
$1.50 billion. The decrease was due to a sharp decline in
biomass-based diesel prices throughout 2014 as compared to 2013
resulting from the decrease in energy prices, the 2012 biodiesel
tax credit recognized in 2013 and reduction in revenue from
separated RINs inventory, offset by an 11% increase in gallons
sold.
Gross profit was $160.6 million, compared to $239.4 million in
2013.
Operating income was $85.5 million, compared to $193.3 million
in 2013.
Adjusted EBITDA was $107.8 million, compared to $148.4 million
in 2013, resulting in an Adjusted EBITDA margin of 8%. Net income
attributable to common stockholders was $81.6 million as compared
to $165.3 million in 2013.
The tables below summarize the quarterly and year end results
for 2014 and 2013:
REG Annual Results Summary (dollars and gallons in
thousands except per gallon data) 1Q-2014
2Q-2014 3Q-2014 4Q-2014
Year Gallons sold 2014 47,266 77,173 88,821 74,005 287,265
Gallons sold 2013 38,876 69,224 77,626 72,860 258,586 Y/Y Change 22
%
11
%
14
%
2
%
11
%
B100 ASP per gallon 2014 $ 3.81 $ 3.90 $ 3.77 $ 3.03 $ 3.62
B100 ASP per gallon 2013 $ 4.26 $ 4.67 $ 4.95 $ 4.24 $ 4.58
Total Revenue 2014 $ 219,040 $ 332,918 $ 384,258 $ 337,615 $
1,273,831 Total Revenue 2013 $ 264,368 $ 384,735 $ 458,444 $
390,591 $ 1,498,138 Y/Y Change (17 )% (13 )% (16 )% (14 )% (15 )%
Adjusted EBITDA 2014 $ 14,706 $ 24,248 $ 34,780 $ 34,033 $
107,767 Adjusted EBITDA 2013 $ 21,894 $ 41,554 $ 48,901 $ 36,076 $
148,425 Y/Y Change (33 )% (42 )% (29 )% (6 )% (27 )%
Adjusted EBITDA margin 2014 7
%
7
%
9
%
10
%
8
%
Adjusted EBITDA margin 2013 8
%
11
%
11
%
9
%
10
%
Adjusted EBITDA
Reconciliation
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.
The following table provides Adjusted EBITDA for the periods
presented, as well as reconciliation to net income:
Full year
Full year (In
thousands) 1Q-2014 2Q-2014 3Q-2014
4Q-2014 2014 1Q-2013 2Q-2013
3Q-2013 4Q-2013 2013 Net income (loss) $
(2,359 ) $ 11,007 $ 4,572 $ 69,318 $ 82,538 $ 46,403 $ 23,130 $
86,703 $ 30,130 $ 186,366 Adjustments: Income tax (benefit) expense
(107 ) (11,919 ) (248 ) 15,846 3,572 30,189 15,314 (42,051 ) 1,483
4,935 Interest expense 551 1,204 2,867 2,068 6,690 576 604 577 640
2,397 Other income (expense), net (48 ) (384 ) (124 ) (106 ) (662 )
(117 ) (93 ) (66 ) (112 ) (388 ) Change in fair value of contingent
consideration — (384 ) (1,059 ) (5,188 ) (6,631 ) — — — — —
Straight-line lease expense (163 ) (150 ) (142 ) (184 ) (639 ) (159
) (162 ) (163 ) (162 ) (646 ) Depreciation 3,004 3,190 3,332 5,729
15,255 2,080 2,296 2,598 2,731 9,705 Amortization (185 ) (184 ) 303
(150 ) (216 ) (199 ) (191 ) (181 ) (181 ) (752 ) Other — — — 73 73
(863 ) — — — (863 ) Lease cancellation (1) — 1,904 — — 1,904 — — —
— — Biodiesel tax credit (2), (3) 12,778 18,550 23,887 (55,215 ) —
(57,372 ) (373 ) — — (57,745 ) Non-cash stock compensation 1,235
1,414 1,392 1,842 5,883 1,356
1,029 1,484 1,547 5,416
Adjusted EBITDA $ 14,706
$ 24,248 $ 34,780
$ 34,033 $ 107,767
$ 21,894 $
41,554 $ 48,901
$ 36,076 $ 148,425
(1) In April 2014, we bought out the
remaining life of the land lease at our Danville, Illinois facility
and subsequently purchased the land. The amount represents the
portion related to canceling the lease. (2) On January 2,
2013, the American Taxpayer Relief Act of 2012 was signed into law,
which reinstated a set of tax extender items including the federal
biodiesel mixture excise tax credit for 2013 and retroactively
reinstated the credit for 2012. The retroactive credit for 2012
resulted in a net benefit to us that was recognized in first
quarter 2013, but because this credit relates to the operating
performance and results of 2012, it is excluded from 2013 adjusted
EBITDA and allocated to the 2012 periods based upon gallons sold.
(3) On December 19, 2014, the Tax Increase Prevention Act of
2014 was signed into law, which reinstated a set of tax extender
items including the retroactive reinstatement of the federal
biodiesel mixture excise tax credit for 2014 and expired on
December 31, 2014. The retroactive credit for 2014 resulted in a
net benefit to us that was recognized in the fourth quarter of
2014, however because this credit relates to the full year
operating performance and results, we allocated the first three
quarters of 2014, respectively, based upon gallons sold and
excluded those amounts from the fourth quarter 2014 adjusted
EBITDA.
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
alternatives 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 for capital assets or the impact of certain cash
clauses that we consider 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 we have excluded it as an expense when evaluating
our operating performance; 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. is a leading North American
advanced biofuels producer and developer of renewable chemicals.
REG utilizes a nationwide production, distribution and logistics
system as part of an integrated value chain model to focus on
converting natural fats, oils and greases into advanced biofuels
and converting diverse feedstocks into renewable chemicals. With 10
active biorefineries across the country, research and development
capabilities, and a diverse and growing intellectual property
portfolio, REG is committed to being a long-term leader in
bio-based fuels and chemicals.
For more than a decade, REG has been a reliable supplier of
advanced biofuels which meet or exceed ASTM quality specifications.
REG sells REG-9000™ biomass-based diesel to distributors so
consumers can have cleaner burning fuels that help diversify the
energy complex and increase energy security. REG-9000™
biomass-based diesel is distributed in most states in the U.S. REG
also markets ultra-low sulfur diesel and heating oil in the
northeastern US.
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 reliability
and profitability of our business model and future accretive
investment and growth opportunities. 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; changes in the spread between biomass-based diesel
prices and feedstock costs; the future price and volatility of
feedstocks; the future price and volatility of petroleum and
products derived from petroleum; availability of federal and state
governmental tax credits and incentives for biomass-based diesel
production; the effect of excess capacity in the biomass-based
diesel industry; unanticipated changes in the biomass-based diesel
market from which we generate almost all of our revenues; seasonal
fluctuations in our operating results; 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; our ability to use the technology acquired
from LS9 to produce renewable chemicals, fuels and other products
on a commercial scale and at a competitive cost, and customer
acceptance of the products produced; our ability to successfully
integrate Syntroleum and Dynamic Fuels and their employees into our
existing business; whether REG Geismar will be able to produce
renewable hydrocarbon diesel consistently or profitably; and other
risks and uncertainties described from time to time in REG's annual
report on Form 10-K, quarterly reports on Forms 10-Q and other
periodic filings with the Securities and Exchange Commission.
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
FOR THE YEARS ENDED DECEMBER 31,
2014, 2013 AND 2012
(IN THOUSANDS, EXCEPT SHARE AND PER
SHARE AMOUNTS)
(UNAUDITED)
2014 2013 2012 REVENUES: Biomass-based
diesel sales $ 1,052,772 $ 1,207,618 $ 1,006,471 Biomass-based
diesel government incentives 220,634 290,393 8,326
1,273,406 1,498,011 1,014,797 Services 425 127
237 1,273,831 1,498,138 1,015,034 COSTS
OF GOODS SOLD: Biomass-based diesel 1,113,052 1,258,549 956,448
Services 167 156 263 1,113,219
1,258,705 956,711 GROSS PROFIT 160,612 239,433 58,323
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 62,681 45,865 42,408
RESEARCH AND DEVELOPMENT EXPENSE 12,424 258 14
INCOME FROM OPERATIONS 85,507 193,310 15,901 OTHER INCOME
(EXPENSE), NET 603 (2,009 ) 7,812 INCOME BEFORE
INCOME TAXES 86,110 191,301 23,713 INCOME TAX EXPENSE (3,572 )
(4,935 ) (1,454 ) NET INCOME $ 82,538 $ 186,366 $
22,259 NET INCOME ATTRIBUTABLE TO THE COMPANY'S
COMMON STOCKHOLDERS $ 81,620 $ 165,254 $ 43,482
Net income per share attributable to common stockholders:
Basic $ 2.00 $ 5.00 $ 1.53 Diluted $ 1.99
$ 5.00 $ 0.27 Weighted-average shares used to
compute net income per share attributable to common stockholders:
Basic 40,740,411 33,045,164 28,381,676 Diluted
40,749,913 33,052,879 34,340,466
RENEWABLE ENERGY GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
AS OF DECEMBER 31, 2014 AND 2013
(IN THOUSANDS)
(UNAUDITED)
2014 2013 ASSETS CURRENT ASSETS: Cash
and cash equivalents $ 63,516 $ 153,227 Marketable securities
16,770 — Accounts receivable, net 294,669 82,911 Inventories 97,508
85,814 Prepaid expenses and other assets 43,135 25,568 Restricted
cash 12,845 — Total current assets 528,443 347,520
Property, plant and equipment, net 493,196 286,044 Property, plant
and equipment, net—variable interest entity — 5,180 Goodwill
188,275 84,864 Intangible assets, net 28,837 4,867 Investments
9,736 7,351 Other assets 19,586 5,029 Restricted cash 104,815
— TOTAL ASSETS $ 1,372,888 $ 740,855
LIABILITIES
AND EQUITY CURRENT LIABILITIES: Revolving line of credit $
16,679 $ 10,986 Current maturities of long-term debt 5,746 6,729
Current maturities of long-term debt—variable interest entity — 300
Accounts payable 202,821 48,727 Accrued expenses and other
liabilities 28,486 12,305 Deferred income taxes 14,899 3,687
Deferred revenue 16,680 15,503 Total current liabilities
285,311 98,237 Unfavorable lease obligation 19,170 7,905 Deferred
income taxes 6,905 2,691 Contingent consideration for acquisitions
30,091 — Long-term debt 247,183 23,422 Long-term debt—variable
interest entity — 3,729 Other liabilities 5,566 6,838 Total
liabilities 594,226 142,822 COMMITMENTS AND CONTINGENCIES
Series B Preferred Stock — 3,963 TOTAL EQUITY 778,662
594,070 TOTAL LIABILITIES AND EQUITY $ 1,372,888 $ 740,855
Investor Relations:ICR, LLCGary Dvorchak, CFA,
310-954-1123Senior Vice
Presidentgary.dvorchak@icrinc.comorCompany:Renewable
Energy GroupTodd Robinson, 515-239-8048Director, Investor
RelationsTodd.Robinson@regi.com
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