REG provides update of Dynamic Fuels acquisition in Q2 results
Renewable Energy Group Inc. recently announced second quarter financial results and provided an update on its recent acquisition of the former Dynamic Fuels renewable diesel facility.
In June, REG launched REG Synthetic Fuels LLC with the acquisition of Syntroleum Corp., which included Syntroleum’s 50 percent interest in Dynamic Fuels, a 75 MMgy renewable diesel plant in Geismar, Louisiana. A few days following the Syntroleum acquisition, REG acquired the remaining 50 percent of Dynamic Fuels from Tyson Foods. The facility has been renamed REG Geismer.
During a call to discuss the quarterly results, Dan Oh, president and CEO of REG, explained that REG now owns the 75 MMGy facility as well as an intellectual property estate that includes patents, technology and know-how related to products and Fischer-Tropsch process.
According to Oh, the Geismar plant has been in standby mode since late 2012 and has been through some mechanical improvements and installation of a new catalyst bed. Dynamic Fuels was working through some technology and organizational issues, he said, noting REG felt those issues were solvable when it completed the deal. Oh added that REG is applying is technical and operational expertise to wrap up the technology modification and expects to ramp up production in a reasonable timeframe, likely within a few months. According to Oh, feedstock is already being shipped to the plant in anticipation of startup.
Regarding financial results, REG reported revenues of $332.9 million for the quarter. While the company sold 11 percent more biobased diesel during the quarter when compared to the same three months of last year, revenue decreased by 13 percent and EBITDA decreased by 86 percent.
"Our second quarter results demonstrate the resilience of our business in the face of challenging market conditions," Oh said. "We believe the industry has worked through the excess inventory from year-end and we have seen demand increase since the first quarter."
Oh continued, "During second quarter, REG demonstrated its ability to operate an expanding business while also investing for future growth. On top of ramping up gallons sold 63 percent from first quarter, we executed a complex series of transactions in order to acquire Syntroleum and Dynamic Fuels. Integration of both are underway and we are excited about the new employees, technology and products added to REG. With these acquisitions, our total assets now exceed $1 billion."