REG announces plans to sell Life Sciences division

By Erin Voegele | March 07, 2019

Renewable Energy Group Inc. has released fourth quarter 2018 financial results, announcing plans to sell its Life Sciences business unit and expressing optimism that the tax credit for biodiesel and renewable diesel will be retroactively extended for 2018.

During a March 5 earnings call, Cynthia Warner, president and CEO of REG, said the company is evaluated selected divestures, as demonstrated by its intent to sell the Life Sciences business unit. She said REG’s board of directors has decided to pursue an outright sale of the business unit as the most attractive way to achieve the company’s strategic objective.

In early 2014, REG announced the acquisition of chemical technology developer LS9 Inc. and renamed the business REG Life Sciences LLC. The company announced it would conduct a strategic review of its Life Sciences subsidiary in late 2016.

During the question and answer portion of the March 5 earnings call, Warner said REG is in the process of developing a potential sale for the Life Sciences business. She said the company is focused on “finding a very good home for this technology so that it continues to be developed robustly to commercialization.”

Warner also discussed REG’s Geismar renewable diesel project during the earnings call. She said the facility produced nearly 80 million gallons last year, up 10 percent over 2017. She said the company is continuing to evaluate the best path forward for investing in additional renewable diesel capacity at Geismar and other locations.

In November 2018, REG and Phillips 66 announced that planning was underway for the construction of a large-scale renewable diesel plant on the U.S. West Coast. The facility would utilize REG’s proprietary BioSynfining technology and be located adjacent to the Phillips 66 Ferndale Refinery in Washington State.  

During the earnings all, Warner said REG continues to devote significant effort to the evaluation of the potential project with Phillips 66 and will provide an update when appropriate.

REG sold 649.2 million gallons of fuel last year, up 10.6 percent when compared to 2017. The company produced 501.7 million gallons last year, up from 543.7 million gallons in 2017. The growth in production is primarily attributed to the Geismar plant running at higher capacity, along with higher production at the company’s Ralston and Madison biodiesel plants.

REG reported revenues of $2.4 billion for 2018, up 10.6 percent when compared to 2017. The average biomass-based diesel price per gallon, including RINs but excluding the allocation of the 2017 biodiesel tax credit, sold by REG was $3.03, compared to $3.06 in 2017.

Net income for 2018 was $292.3 million, compared to net loss of $79.1 million for 2017. Adjusted EBITDA was $138.9 million, compared to $25.3 million in 2017. After reallocating the net benefit of the biodiesel tax credit to applicable periods in 2017, adjusted EBITDA was $230.2 million for 2017.