REG Q1 report 'reflects challenging market conditions,' Oh says

By Renewable Energy Group Inc. | May 07, 2015

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

Revenues for the quarter were $230.9 million. Compared to the first quarter of 2014, REG sold 26.6 percent more gallons of biomass-based diesel, while revenues increased by 5.4 percent. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was minus $30.2 million compared to $1.9 million in the prior year period, without any adjustments for the 2014 Biodiesel Mixture Excise Tax Credit (BTC). After the December 2014 reinstatement of the BTC, the first quarter of 2014 was retroactively adjusted to reflect this reinstatement, resulting in Adjusted EBITDA of $14.7 million.

“Our first quarter results reflect the challenging market conditions experienced by our industry,” said Daniel J. Oh, president and CEO. “We currently see that industry conditions are improving and are already taking advantage of better margins as energy prices have improved and feedstock prices continue to adjust. We remain committed to our long-term strategies and are executing on these daily.”

Oh continued, “The fire at Geismar was a near-term setback. We are grateful that our two injured employees continue to improve. Meanwhile, we are thoroughly investigating the cause of the fire and are working to resume operations as safely and rapidly as possible.”

First Quarter Highlights

For the quarter, REG sold a total of 59.9 million gallons, an increase of 26.6 percent compared to the first quarter of 2014. REG produced 60.6 million gallons of biomass-based diesel during the quarter, a 45.2 percent increase when compared to the first quarter of 2014.

REG increased its ownership of Petrotec from 69 percent to more than 84 percent through a cash tender offer during the quarter.

Revenues of $230.9 million increased 5.4 percent when compared to the first quarter of 2014. The increase is attributable to the 26.6 percent increase in gallons sold, which was largely offset by a reduction in average sales price. The average price per gallon of biomass-based diesel sold during the first quarter was $3.08, or 13 percent lower than in the same quarter of 2014. Prices were impacted across the industry by the sharp decline in energy prices in the second half of 2014, combined with soft demand due to continued regulatory uncertainty and normal winter seasonality.

Gross loss was $16.2 million, or 7 percent of revenues, compared to gross profit of $11.6 million, or 5.3 percent of revenues, for the first quarter of 2014. The decrease in gross profit was due to unusually tight spreads, as energy and biomass-based diesel prices declined more rapidly than feedstock prices.

Net loss attributable to common stockholders was 86 cents per share on a fully diluted basis or $38.1 million. This compares to a net loss of 6 cents per share on a fully diluted basis or $2 million in the first quarter of 2014.

The share repurchase plan announced in February has resulted in 525,281 shares repurchased by the company to date.

At March 31, REG had liquid assets, which includes cash, cash equivalents and marketable securities, of $216.6 million, an increase of $136.3 million during the quarter. This increase was largely the result of collections related to the retroactive reinstatement for 2014 of the biodiesel mixture excise tax credit.

At March 31, accounts receivable were $51 million, or 20 days of sales. Accounts receivable at Dec. 31, 2014 was $294.7 million and included approximately $236 million related to the biodiesel mixture excise tax credit. Inventory was $120.5 million at March 31, or 44 days of sales, an increase of $23 million during the quarter.

Accounts payable was $180.5 million and $202.8 million at March 31, and Dec. 31, 2014, respectively.

For more information, including detailed financial tables, click here.