Renewable Energy Group Reports Fourth Quarter and Full Year 2019 Financial Results

Fourth Quarter 2019 Highlights:

  • 152.9 million gallons of fuel sold
  • 113.7 million gallons produced
  • Revenues of $1.0 billion, inclusive of the retroactive reinstatement of the Biodiesel Mixture Excise Tax Credit (BTC) for 2018 and 2019
  • Net income from continuing operations available to common stockholders of $492.6 million, or $11.52 per diluted share, including the BTC
  • Adjusted EBITDA of $65.0 million
  • Retroactive reinstatement of the BTC for 2018 and 2019 and extension for 2020-2022
  • Net cash benefit of $499.4 million from the BTC reinstatement for 2018 and 2019 is expected to be received in the second quarter of 2020

Full Year 2019 Highlights:

  • 700.3 million gallons of fuel sold
  • 494.7 million gallons produced
  • Revenues of $2.6 billion, including the BTC
  • Net income from continuing operations available to common stockholders of $381.1 million, or $9.01 per diluted share, including the BTC
  • Adjusted EBITDA of $217.9 million
  • Carbon reduction from REG produced biomass-based diesel of 3.7 million metric tons
  • Record safety achievement: 0.44 OSHA incident rate (which is better than both industry average and industry leader)

AMES, Iowa--(BUSINESS WIRE)-- 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, 2019.

REG President and Chief Executive Officer Cynthia "CJ" Warner, commented, "Fourth quarter performance was solid in the face of challenging market conditions. We increased renewable diesel sales and production, while foregoing incremental biodiesel sales that did not meet our profitability hurdles. We believe our strengthened business model has proven resilient under a variety of regulatory and margin scenarios."

On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years, and extended through 2022. The retroactive credit for 2018 and 2019 resulted in a net benefit that was recognized in REG's GAAP financial statements for the quarter ending December 31, 2019.

Warner continued, "We welcome, and are grateful for Congress’ strong support of our industry with the reinstatement and multi-year extension of the BTC. This will provide us around half a billion dollars in cash related to our 2018-2019 operations. This additional capital, combined with the certainty of the incentive being in place through 2022, will enable us to develop and pursue a variety of growth initiatives. We are focused on growing our renewable diesel capacity and expanding downstream to serve our customers directly, with the goal of accelerating the transition to renewable energy, by delivering increasing quantities of low carbon fuels and capturing the associated economic benefits. Overall, we intend to focus on operating performance, balance sheet strength, growth prospects, and ESG initiatives, all with an emphasis on enhancing shareholder and broader stakeholder value."

The Company also announced that its Board of Directors approved a repurchase program of up to $100 million of the Company's shares of common stock and convertible notes. Under the program, REG may repurchase shares and convertible notes from time to time in open market transactions, privately negotiated transactions or by other means. The timing and amount of repurchase transactions will be determined by the Company's management based on its evaluation of market conditions, share price, legal requirements and other factors. The program may be suspended, modified or discontinued at any time without prior notice.

Fourth Quarter 2019 Highlights

All figures refer to the quarter ended December 31, 2019, unless otherwise noted. All comparisons are to the quarter ended December 31, 2018, unless otherwise noted.

REG sold 152.9 million total gallons of fuel, a decrease of 6.3%. The decrease in gallons sold is mostly attributable to volume decreases in biodiesel and petroleum diesel of 10.4 million gallons and 9.7 million gallons, respectively, partially offset by increases of both REG-produced and third party renewable diesel of 5.0 million gallons and 5.3 million gallons, respectively. Third party renewable diesel gallons are used principally for blending with biodiesel.

REG produced 113.7 million gallons of biomass-based diesel during the quarter, a decrease of 13.6%. Gallons produced decreased primarily due to focus on producing profitable gallons, which among other things, resulted in the closure of the Company's facility in New Boston, Texas in July 2019. In contrast, renewable diesel production increased 5.2% as the Company pursued attractive margin opportunities, most notably in the Nordics.

Revenues increased $498.4 million to $1,018.2 million, driven mainly by GAAP recognition of all the 2018 and 2019 BTC benefit in the fourth quarter of 2019. Revenue growth was impacted by lower RIN prices and the 6.3% decrease in gallons sold. The average price per gallon sold (excluding the allocation of the 2018 and 2019 BTC) for biomass-based diesel was $2.90, an increase of 2.8%. After allocation of the BTC benefits for the period in which the gallons were sold (shown in the table below), revenue was essentially flat year over year.

Operating income was $503.9 million compared to $33.4 million for the fourth quarter of 2018. The increase in operating income was mainly driven by GAAP recognition of all of the 2018 and 2019 net BTC benefit of $499.4 million in the fourth quarter of 2019. Additionally, impacts on operating income included a decrease in risk management of $45.0 million and a $15.9 million decrease in North America biodiesel margins driven mostly by lower spreads, as shown on the table below represented by the HOBO spread including RINs. These challenges were offset by improvements to underlying performance, including an increase in total renewable diesel gallons sold of 10.3 million gallons and an increase of biodiesel and renewable diesel sales into the most attractive low carbon fuel markets - North America west coast and the Nordics.

GAAP net income from continuing operations available to common stockholders was $492.6 million, or $11.52 per share, on a fully diluted basis, compared to $30.4 million, or $0.66 per share on a fully diluted basis, in the fourth quarter of 2018. After allocation of the BTC benefits for the period in which the gallons were sold, net income from continuing operations available to common stockholders was $50.9 million compared to $87.0 million.

Adjusted EBITDA was $65.0 million, compared to $103.2 million in the year-earlier period. The differential drivers are the same as those described above for operating income.

At December 31, 2019, REG had cash and cash equivalents, restricted cash, and marketable securities of $53.4 million. For the year, the Company's cash and cash equivalents, restricted cash, and marketable securities decreased by $124.1 million primarily as a result of cash used in operations, the repayment of debt and convertible notes, as well as capital expenditures in connection with plant upgrades. At December 31, 2019, accounts receivable were $858.9 million, an increase of $777.9 million from September 30, 2019. This large increase was primarily due to the receivables associated with the 2018 and 2019 BTC. At December 31, 2019, accounts payable were $369.2 million, an increase of $273.8 million from September 30, 2019. The increase is primarily due to payments due to customers related to sharing of the 2018 and 2019 BTC proceeds.

The table below summarizes REG’s financial results for Q4 2019, as reported and as adjusted in order to reflect the allocation of the BTC benefits for the period in which associated gallons were sold.

REG Q4 2019 Results

(dollars and gallons in thousands, except per gallon data)

 

 

Q4 2019

 

Q4 2018

 

Y/Y Change

Gallons sold

 

152,913

 

 

163,159

 

 

(6.3

)%

 

 

 

 

 

 

 

GAAP (1)

 

 

 

 

 

 

Total revenues

 

$

1,018,169

 

 

$

519,761

 

 

95.9

 %

Risk management gain (loss)

 

$

(3,774

)

 

$

41,273

 

 

N/M 

Operating income

 

$

503,910

 

 

$

33,405

 

 

1,408.5

 %

Net income from continuing operations available to common stockholders

 

$

492,556

 

 

$

30,448

 

 

1,517.7

 %

 

 

 

 

 

 

 

Excluding all BTC - Non GAAP

 

 

 

 

 

 

ASP per gallon

 

$

2.90

 

 

$

2.82

 

 

2.8

 %

Total revenues

 

$

511,428

 

 

$

519,761

 

 

(1.6

)%

Risk management gain (loss)(2)

 

$

(3,774

)

 

$

41,273

 

 

N/M 

Adjusted EBITDA

 

$

16,158

 

 

$

45,090

 

 

(64.2

)%

 

 

 

 

 

 

 

BTC Allocated to Period Earned - Non GAAP (3)

 

 

 

 

 

 

Total revenues

 

$

571,988

 

 

$

575,044

 

 

(0.5

)%

Risk management gain (loss)(2)

 

$

(3,774

)

 

$

41,273

 

 

N/M 

Operating income

 

$

53,300

 

 

$

91,483

 

 

(41.7

)%

Net income from continuing operations available to common stockholders

 

$

50,868

 

 

$

87,003

 

 

(41.5

)%

Adjusted EBITDA

 

$

64,962

 

 

$

103,168

 

 

(37.0

)%

(1) GAAP results reflect recognition in Q4 2019 of all BTC benefits earned in 2018 and 2019.
(2) Risk management gain (loss) is a GAAP measure.
(3) BTC benefits are allocated to the respective periods when associated gallons were sold.

Full Year 2019 Results

All figures refer to the year ended December 31, 2019, unless otherwise noted. All comparisons are to the year ended December 31, 2018, unless otherwise noted.

REG sold 700.3 million total gallons, an increase of 7.9% compared to 649.2 million gallons in 2018. The increase in gallons sold is mostly attributable to volume increases in REG-produced renewable diesel of 7.0 million gallons, third party renewable diesel of 31.3 million gallons, and petroleum diesel of 18.1 million gallons, partially offset by a reduction in biodiesel gallons sold of 4.4 million. Third party renewable diesel is used principally for blending with biodiesel.

REG produced 494.7 million gallons, compared to 501.7 million gallons in 2018. Gallons produced decreased due primarily to focus on producing profitable gallons, which among other things, resulted in the closure of the Company's facility in New Boston, Texas in July 2019. In contrast, renewable diesel production increased 7.2% as the Company pursued attractive margin opportunities, most notably in the Nordics.

Revenues were $2.6 billion, an increase of $258.4 million, or 10.8%. The increase was due primarily to GAAP recognition of all the 2018 and 2019 BTC benefit in the fourth quarter of 2019, although 2018 revenues included a BTC benefit recognized in the first quarter of 2018 relating to gallons sold in 2017. In addition to the BTC, revenue was impacted by an 8% increase in gallons sold, which was partially offset by a 9.2% lower average selling price for biomass-based diesel and lower RIN prices. The average biomass-based diesel price per gallon sold by REG, excluding the allocation of BTC, was $2.75, compared to $3.03 in 2018. After allocation of the BTC benefits for the period in which the gallons were sold (shown in the table below), revenue was essentially flat year over year.

Operating income was $399.7 million compared to $312.4 million for the full-year 2018. The increase in operating income was mainly driven by GAAP recognition of all of the 2018 and 2019 net BTC benefit of $499.4 million in the fourth quarter of 2019, offset by the 2017 net BTC benefit of $206.5 million recognized in the first quarter of 2018. Additionally, impacts on operating income included a decrease in risk management of $47.3 million and a $193.3 million decrease in North America biodiesel margins driven mostly by lower spreads, as shown on the table below represented by the HOBO spread including RINs. As previously noted, due to an administrative change, income from California LCFS credits for 2019 included three quarters compared to 2018 which included four quarters. This negative impact was approximately $30 million, which is not reflective of Company performance and is a one-time occurrence. All of these challenges were offset by improvements to underlying performance, including an increase in total renewable diesel gallons sold of 38.3 million gallons and an increase of biodiesel and renewable diesel sales into the most attractive low carbon fuel markets - North America west coast and the Nordics.

Net income from continuing operations available to common stockholders was $381.1 million, or $9.01 per share on a fully diluted basis for 2019, compared to $295.8 million, or $6.78 per share on a fully diluted basis for 2018. After allocation of the BTC benefits for the period in which the gallons were sold, net income from continuing operations available to common stockholders was $147.8 million compared to $327.0 million.

Adjusted EBITDA was $217.9 million, compared to $388.3 million in 2018. The Company's Adjusted EBITDA margins were 8.3% and 16.3% for 2019 and 2018, respectively. Adjusted EBITDA margins after allocation of the BTC benefits for the period in which the gallons were sold 2018 and 2019 were 9.1% and 16.1%, respectively. The differential drivers are the same as those described above for operating income.

The table below summarizes the quarterly and annual results for 2019 and 2018:

REG Annual Results Summary

(dollars and gallons in thousands except per gallon data)

 

 

1Q

 

2Q

 

3Q

 

4Q

 

Year

Gallons sold 2019

 

162,452

 

 

197,377

 

 

187,531

 

 

152,913

 

 

700,273

 

Gallons sold 2018

 

135,254

 

 

171,943

 

 

178,798

 

 

163,159

 

 

649,154

 

Y/Y Change

 

20.1

 %

 

14.8

 %

 

4.9

 %

 

(6.3

)%

 

7.9

 %

 

 

 

 

 

 

 

 

 

 

 

ASP per gallon 2019, excluding the BTC

 

$

2.65

 

 

$

2.70

 

 

$

2.76

 

 

$

2.90

 

 

$

2.75

 

ASP per gallon 2018, excluding the BTC

 

$

3.18

 

 

$

3.11

 

 

$

3.03

 

 

$

2.82

 

 

$

3.03

 

Y/Y Change

 

(16.7

)%

 

(13.2

)%

 

(8.9

)%

 

2.8

 %

 

(9.2

)%

 

 

 

 

 

 

 

 

 

 

 

Total revenues 2019

 

$

478,209

 

 

$

560,643

 

 

$

584,372

 

 

$

1,018,169

 

 

$

2,641,393

 

Total revenues 2018

 

$

688,002

 

 

$

578,900

 

 

$

596,324

 

 

$

519,761

 

 

$

2,382,987

 

Y/Y Change

 

(30.5

)%

 

(3.2

)%

 

(2.0

)%

 

95.9

 %

 

10.8

 %

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations available to common stockholders 2019

 

$

(41,387

)

 

$

(57,635

)

 

$

(13,753

)

 

$

492,556

 

 

$

381,112

 

Net income from continuing operations available to common stockholders 2018

 

$

212,608

 

 

$

28,277

 

 

$

24,799

 

 

$

30,448

 

 

$

295,804

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 2019, including BTC allocation (1)

 

$

29,025

 

 

$

36,156

 

 

$

87,790

 

 

$

64,962

 

 

$

217,933

 

Adjusted EBITDA 2018, including BTC allocation (1)

 

$

63,800

 

 

$

110,771

 

 

$

110,562

 

 

$

103,168

 

 

$

388,301

 

Y/Y Change

 

(54.5

)%

 

(67.4

)%

 

(20.6

)%

 

(37.0

)%

 

(43.9

)%

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA including BTC allocation margin 2019 (1) (2)

 

6.1

 %

 

6.4

 %

 

15.0

 %

 

6.4

 %

 

8.3

 %

Adjusted EBITDA including BTC allocation margin 2018 (1) (2)

 

9.3

 %

 

19.1

 %

 

18.5

 %

 

19.8

 %

 

16.3

 %

(1) See Adjusted EBITDA Reconciliation below.
(2) Adjusted EBITDA margin represents Adjusted EBITDA including BTC allocation divided by Total Revenues.

The table below summarizes REG's financial results for 2019, as reported and as adjusted to reflect allocation of the BTC benefits for the period in which the gallons were sold.

REG 2019 Results

(dollars and gallons in thousands, except per gallon data)

 

 

2019

 

2018

 

Y/Y Change

Gallons sold

 

700,273

 

 

649,154

 

 

7.9

 %

 

 

 

 

 

 

 

GAAP (1)

 

 

 

 

 

 

Total revenues

 

$

2,641,393

 

 

$

2,382,987

 

 

10.8

 %

Risk management gain (loss)

 

$

(28,898

)

 

$

18,399

 

 

N/M 

Operating income

 

$

399,652

 

 

$

312,373

 

 

27.9

 %

Net income from continuing operations available to common stockholders

 

$

381,112

 

 

$

295,804

 

 

28.8

 %

 

 

 

 

 

 

 

BTC Allocated to Period Earned - Non GAAP (2)

 

 

 

 

 

 

Total revenues

 

$

2,404,011

 

 

$

2,411,286

 

 

(0.3

)%

Risk management gain (loss)(3)

 

$

(28,898

)

 

$

18,399

 

 

N/M 

Operating income

 

$

161,088

 

 

$

344,413

 

 

(53.2

)%

Net income from continuing operations available to common stockholders

 

$

147,824

 

 

$

327,018

 

 

(54.8

)%

Adjusted EBITDA

 

$

217,933

 

 

$

388,301

 

 

(43.9

)%

LCFS one-time differential

 

$

(30,000

)

 

$

 

 

N/M 

HOBO spread including RINs

 

$

1.46

 

 

$

1.65

 

 

(11.5

)%

(1) GAAP results reflect recognition in Q4 2019 of all BTC benefits earned in 2018 and 2019.
(2) BTC benefits are allocated to the respective periods when associated gallons were sold.
(3) Risk management gain (loss) is a GAAP measure.

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 sets forth Adjusted EBITDA for the periods presented, as well as a reconciliation to net income (loss) determined in accordance with GAAP for the applicable period:

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

 

 

 

 

 

 

Year ended

(In thousands)

 

December 31,

December 31,

 

 

1Q-2019

 

2Q-2019

 

3Q-2019

 

4Q-2019

 

2019

 

1Q-2018

 

2Q-2018

 

3Q-2018

 

4Q-2018

 

2018

Net income (loss) from continuing operations

 

$

(41,387

)

 

$

(57,635

)

 

$

(13,753

)

 

$

502,506

 

 

$

389,731

 

 

$

217,844

 

 

$

29,042

 

 

$

25,472

 

 

$

31,270

 

 

$

303,628

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

4,219

 

 

3,737

 

 

2,866

 

 

1,354

 

 

12,176

 

 

4,651

 

 

4,925

 

 

4,003

 

 

3,955

 

 

17,534

 

Income tax (benefit) expense

 

(430

)

 

(90

)

 

(629

)

 

579

 

 

(570

)

 

(1,203

)

 

3,835

 

 

854

 

 

2,385

 

 

5,871

 

Depreciation

 

9,099

 

 

9,142

 

 

9,107

 

 

8,950

 

 

36,298

 

 

8,739

 

 

9,004

 

 

8,977

 

 

9,604

 

 

36,324

 

Amortization of intangible assets

 

334

 

 

510

 

 

397

 

 

391

 

 

1,632

 

 

42

 

 

44

 

 

52

 

 

45

 

 

183

 

EBITDA

 

(28,165

)

 

(44,336

)

 

(2,012

)

 

513,780

 

 

439,267

 

 

230,073

 

 

46,850

 

 

39,358

 

 

47,259

 

 

363,540

 

Gain on involuntary conversion

 

 

 

 

 

 

 

 

 

 

 

(4,000

)

 

(454

)

 

 

 

(3

)

 

(4,457

)

Gain on sale of assets

 

 

 

 

 

 

 

 

 

 

 

(990

)

 

 

 

(13

)

 

(2

)

 

(1,005

)

Change in fair value of contingent consideration

 

304

 

 

398

 

 

(136

)

 

 

 

566

 

 

458

 

 

30

 

 

185

 

 

444

 

 

1,117

 

(Gain) loss on debt extinguishment

 

2

 

 

 

 

 

 

(490

)

 

(488

)

 

232

 

 

(2,337

)

 

(788

)

 

(3,404

)

 

(6,297

)

Other expense, net

 

(854

)

 

(691

)

 

(179

)

 

(39

)

 

(1,763

)

 

(225

)

 

(2,067

)

 

(486

)

 

(1,240

)

 

(4,018

)

Impairment of assets

 

 

 

468

 

 

11,145

 

 

595

 

 

12,208

 

 

 

 

 

 

 

 

879

 

 

879

 

Straight-line lease expense

 

 

 

 

 

 

 

 

 

 

 

(33

)

 

(3

)

 

(61

)

 

(31

)

 

(128

)

Executive severance

 

 

 

 

 

 

 

 

 

 

 

165

 

 

50

 

 

 

 

 

 

215

 

Non-cash stock compensation

 

1,353

 

 

1,824

 

 

1,804

 

 

1,726

 

 

6,707

 

 

1,794

 

 

2,203

 

 

1,227

 

 

1,188

 

 

6,412

 

Adjusted EBITDA excluding BTC allocation

 

$

(27,360

)

 

$

(42,337

)

 

$

10,622

 

 

$

515,572

 

 

$

456,497

 

 

$

227,474

 

 

$

44,272

 

 

$

39,422

 

 

$

45,090

 

 

$

356,258

 

Biodiesel tax credit 2017(1)

 

 

 

 

 

 

 

 

 

 

 

(206,521

)

 

 

 

 

 

 

 

(206,521

)

Biodiesel tax credit 2018(2)

 

 

 

 

 

 

 

(238,564

)

 

(238,564

)

 

42,847

 

 

66,499

 

 

71,140

 

 

58,078

 

 

238,564

 

Biodiesel tax credit 2019(2)

 

56,385

 

 

78,493

 

 

77,168

 

 

(212,046

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

29,025

 

 

$

36,156

 

 

$

87,790

 

 

$

64,962

 

 

$

217,933

 

 

$

63,800

 

 

$

110,771

 

 

$

110,562

 

 

$

103,168

 

 

$

388,301

 

(1) On February 9, 2018, the BTC was retroactively reinstated for the 2017 calendar year. The retroactive credit for 2017 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ending March 31, 2018. However, because this credit relates to the 2017 operating performance, we have removed the net benefit of the 2017 BTC from our 2018 results.

(2) On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the 2018 operating performance, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to each of the four quarters of 2018 based upon the portion of the BTC benefit that related to that quarter. The portion of the credit related to 2019 was allocated to each of the four quarters based upon the portion of the BTC benefit that related to that quarter.

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 an alternative 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 or the impact of certain cash clauses that the Company considers 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 the Company has 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., (Nasdaq: REGI) is leading the energy industry's transition to sustainability by transforming renewable resources into high-quality, cleaner fuels. REG is an international producer of cleaner fuels and North America’s largest producer of biodiesel. REG solutions are alternatives for petroleum diesel and produce significantly lower carbon emissions. REG utilizes an integrated procurement, distribution and logistics network to operate 13 biorefineries in the U.S. and Europe. In 2019, REG produced 495 million gallons of cleaner fuel delivering 3.7 million metric tons of carbon reduction. REG is meeting the growing global demand for lower-carbon fuels and leading the way to a more sustainable future.

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 future market conditions, the Company’s business model, the future regulatory environment, the BTC reinstatement and continuation into 2022, the Company’s use of future capital, the Company’s growth initiatives and strategic focus on renewable diesel capacity, expansion and blending, the Company’s repurchase program, the Company’s future operating performance, balance sheet strength, growth prospects, and ESG initiatives. 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, the Company’s financial performance, including revenues, cost of revenues and operating expenses; changes in governmental programs and policies requiring or encouraging the use of biofuels, including RFS2 on the federal level, and on the state level, programs such as California's Low Carbon Fuel Standard; availability of federal and state governmental tax incentives and incentives for biomass-based diesel production; changes in the spread between biomass-based diesel prices and feedstock costs; the availability, future price, and volatility of feedstocks; the availability, future price and volatility of petroleum and products derived from petroleum; risks associated with fire, explosions, leaks and other natural disasters at our facilities; any disruption of operations at our Geismar renewable diesel refinery (which would have a disproportionately adverse effect on our profitability); the effect of excess capacity in the biomass-based diesel industry and announced large plant expansions and potential co-processing of renewable diesel by petroleum refiners; unanticipated changes in the biomass-based diesel market from which we generate almost all of our revenues; seasonal fluctuations in our operating results; potential failure to comply with government regulations; 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; the Company’s ability to retain and recruit key personnel; the Company’s indebtedness and its compliance, or failure to comply, with restrictive and financial covenants in its various debt agreements; risk management transaction, and other risks and uncertainties described in REG's annual report on Form 10-K for the year ended December 31, 2018 and subsequently filed Form 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, 2019, 2018 AND 2017

 

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

(UNAUDITED)

 
 

 

 

2019

 

2018

 

2017

REVENUES:

 

 

 

 

 

 

Biomass-based diesel sales

 

$

1,875,076

 

 

$

1,875,316

 

 

$

1,787,308

 

Separated RIN sales

 

98,285

 

 

137,895

 

 

337,501

 

Biomass-based diesel government incentives

 

666,392

 

 

367,490

 

 

28,728

 

 

 

2,639,753

 

 

2,380,701

 

 

2,153,537

 

Other revenues

 

1,640

 

 

2,286

 

 

1,118

 

 

 

2,641,393

 

 

2,382,987

 

 

2,154,655

 

COSTS OF GOODS SOLD:

 

 

 

 

 

 

Biomass-based diesel

 

2,072,139

 

 

1,887,292

 

 

1,805,408

 

Separated RINs

 

39,174

 

 

75,704

 

 

264,765

 

Other costs of goods sold

 

11

 

 

 

 

128

 

 

 

2,111,324

 

 

1,962,996

 

 

2,070,301

 

GROSS PROFIT

 

530,069

 

 

419,991

 

 

84,354

 

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

 

118,209

 

 

106,739

 

 

95,843

 

IMPAIRMENT OF PROPERTY, PLANT, AND EQUIPMENT

 

12,208

 

 

879

 

 

49,873

 

INCOME (LOSS) FROM OPERATIONS

 

399,652

 

 

312,373

 

 

(61,362

)

OTHER EXPENSE, NET

 

(10,491

)

 

(2,874

)

 

(35,407

)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

 

389,161

 

 

309,499

 

 

(96,769

)

INCOME TAX BENEFIT (EXPENSE)

 

570

 

 

(5,871

)

 

30,490

 

NET INCOME (LOSS) FROM CONTINUING OPERATIONS

 

$

389,731

 

 

$

303,628

 

 

$

(66,279

)

NET LOSS ON DISCONTINUED OPERATIONS

 

$

(9,667

)

 

$

(11,312

)

 

$

(12,800

)

NET INCOME (LOSS)

 

$

380,064

 

 

$

292,316

 

 

$

(79,079

)

 

 

 

 

 

 

 

NET INCOME (LOSS) FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

 

$

381,112

 

 

$

295,804

 

 

$

(66,279

)

NET LOSS FROM DISCONTINUED OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

 

$

(9,667

)

 

$

(11,312

)

 

$

(12,800

)

Basic net income (loss) per share available to common stockholders:

 

 

 

 

 

 

Continuing operations

 

$

9.95

 

 

$

7.85

 

 

$

(1.71

)

Discontinued operations

 

$

(0.25

)

 

$

(0.30

)

 

$

(0.33

)

Net income (loss) per share

 

$

9.71

 

 

$

7.56

 

 

$

(2.04

)

Diluted net income (loss) per share available to common stockholders

 

 

 

 

 

 

Continuing operations

 

$

9.01

 

 

$

6.78

 

 

$

(1.71

)

Discontinued operations

 

$

(0.25

)

 

$

(0.30

)

 

$

(0.33

)

Net income (loss) per share

 

$

8.78

 

 

$

6.52

 

 

$

(2.04

)

Weighted-average shares used to compute basic net income (loss) per share available to common stockholders:

 

 

 

 

 

 

Basic

 

38,288,610

 

 

37,687,552

 

 

38,731,015

 

Weighted-average shares used to compute diluted net income (loss) per share available to common stockholders:

 

 

 

 

 

 

Continuing operations

 

42,320,980

 

 

43,653,720

 

 

38,731,015

 

Discontinued operations

 

38,288,610

 

 

37,687,552

 

 

38,731,015

 

Net income (loss)

 

42,320,980

 

 

43,653,720

 

 

38,731,015

 

RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES

 

 

 

CONDENSED SUPPLEMENTAL QUARTERLY RESULTS OF OPERATIONS

 

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018

 

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

(UNAUDITED)

 
 

 

 

Three Months

 

Three Months

 

Twelve Months

 

Twelve Months

Ended

 

Ended

 

Ended

 

Ended

December 31,

 

December 31,

 

December 31,

 

December 31,

2019

 

2018

 

2019

 

2018

Revenues from continuing operations

 

$

1,018,169

 

 

$

519,761

 

 

$

2,641,393

 

 

$

2,382,987

 

Gross profit from continuing operations

 

545,557

 

 

61,863

 

 

530,069

 

 

419,991

 

Selling, general, and administrative expenses including research and development expense

 

41,052

 

 

27,579

 

 

118,209

 

 

106,739

 

Impairment of property, plant and equipment

 

595

 

 

879

 

 

12,208

 

 

879

 

Income from operations

 

503,910

 

 

33,405

 

 

399,652

 

 

312,373

 

Other income (expense), net

 

(825

)

 

250

 

 

(10,491

)

 

(2,874

)

Net income from continuing operations

 

502,506

 

 

31,270

 

 

389,731

 

 

303,628

 

Net loss from discontinued operations

 

(995

)

 

(12,196

)

 

(9,667

)

 

(11,312

)

Net income

 

$

501,511

 

 

$

19,074

 

 

$

380,064

 

 

$

292,316

 

Net income from continuing operations available to common stockholders

 

$

492,556

 

 

$

30,448

 

 

$

381,112

 

 

$

295,804

 

Net loss from discontinued operations available to common stockholders

 

$

(995

)

 

$

(12,197

)

 

$

(9,667

)

 

$

(11,312

)

Basic net income (loss) per share available to common stockholders:

 

 

 

 

 

 

 

 

Continuing operations

 

$

12.64

 

 

$

0.82

 

 

$

9.95

 

 

$

7.85

 

Discontinued operations

 

$

(0.03

)

 

$

(0.33

)

 

$

(0.25

)

 

$

(0.30

)

Net income per share

 

$

12.62

 

 

$

0.50

 

 

$

9.71

 

 

$

7.56

 

Diluted net income (loss) per share available to common stockholders

 

 

 

 

 

 

 

 

Continuing operations

 

$

11.52

 

 

$

0.66

 

 

$

9.01

 

 

$

6.78

 

Discontinued operations

 

$

(0.03

)

 

$

(0.33

)

 

$

(0.25

)

 

$

(0.30

)

Net income per share

 

$

11.50

 

 

$

0.40

 

 

$

8.78

 

 

$

6.52

 

RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES

 
 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

AS OF DECEMBER 31, 2019 AND 2018 (IN THOUSANDS)

 

(UNAUDITED)

 
 

 

 

2019

 

2018

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

 

$

50,436

 

 

$

123,575

 

Marketable securities

 

 

 

50,932

 

Accounts receivable, net

 

858,922

 

 

74,551

 

Inventories

 

161,429

 

 

168,900

 

Prepaid expenses and other assets

 

35,473

 

 

41,169

 

Restricted cash

 

3,000

 

 

3,000

 

Current assets held for sale

 

 

 

3,250

 

Total current assets

 

1,109,260

 

 

465,377

 

Property, plant and equipment, net

 

584,577

 

 

590,723

 

Right of use assets

 

36,899

 

 

 

Goodwill

 

16,080

 

 

16,080

 

Intangible assets, net

 

12,018

 

 

13,646

 

Other assets

 

26,515

 

 

21,270

 

TOTAL ASSETS

 

$

1,785,349

 

 

$

1,107,096

 

LIABILITIES AND EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Revolving line of credit

 

$

76,990

 

 

$

14,250

 

Current maturities of long-term debt

 

77,131

 

 

149,006

 

Current maturities of operating lease obligations

 

15,690

 

 

 

Accounts payable

 

369,213

 

 

95,866

 

Accrued expenses and other liabilities

 

40,776

 

 

35,256

 

Deferred revenue

 

8,620

 

 

300

 

Total current liabilities

 

588,420

 

 

294,678

 

Deferred income taxes

 

6,975

 

 

8,410

 

Long-term debt, net

 

26,130

 

 

33,421

 

Long-term operating lease obligations

 

30,413

 

 

 

Other liabilities

 

1,505

 

 

5,334

 

Total liabilities

 

653,443

 

 

341,843

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

TOTAL EQUITY

 

1,131,906

 

 

765,253

 

TOTAL LIABILITIES AND EQUITY

 

$

1,785,349

 

 

$

1,107,096

 

 

Renewable Energy Group
Todd Robinson
Treasurer
+1 (515) 239-8048
Todd.Robinson@regi.com

Source: Renewable Energy Group, Inc.