regi-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35397

RENEWABLE ENERGY GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware			26-4785427
(State of other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

416 South Bell Avenue	Ames	Iowa	50010
(Address of principal executive offices)			(Zip code)

(515) 239-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.0001 per share	REGI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 31, 2021, the registrant had 50,270,502 shares of Common Stock outstanding.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION	1
ITEM 1.	Condensed Consolidated Financial Information	1
ITEM 2.	Management's Discussion and Analysis of Financial Information	26
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	42
ITEM 4.	Controls and Procedures	43

PART II	OTHER INFORMATION	44
ITEM 1.	Legal Proceedings	44
ITEM 1A.	Risk Factors	45
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
ITEM 3.	Defaults Upon Senior Securities	62
ITEM 4.	Mine Safety Disclosures	62
ITEM 5.	Other Information	62
ITEM 6.	Exhibits	62

FORWARD LOOKING STATEMENTS

This quarterly report on Form 10-Q contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations of future operations, are forward-looking statements. The words "believe," "may," "will," "would," "might," "could," "estimate," "continue," "anticipate," "design," "intend," "plan," "seek," "potential," "expect" and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. Forward-looking statements include, but are not limited to, statements about:

•our business plans and strategies, including, but not limited to, our downstream objectives and undertakings and the proposed capacity expansion of our Geismar, Louisiana renewable diesel biorefinery;

•our financial performance, including expectations regarding revenues, cost of revenues and operating expenses;

•changes in governmental programs, policymaking and requirements or encouraged use of biofuels, including Biodiesel Mixture Excise Tax Credit, Renewable Fuels Standard 2 ("RFS2") in the United States, renewable fuel policies in Canada and Europe, and state level programs such as California's Low Carbon Fuel Standard ("LCFS");

•the availability, future price and volatility of feedstocks and other inputs;

•the expansion of our distribution network and transportation costs;

•the future price and volatility of petroleum;

•our liquidity and working capital requirements;

•our leasing practices;

•anticipated trends and challenges in our business and competition in the markets in which we operate;

•our ability to successfully implement our acquisition strategy and integration strategy;

•our ability to protect proprietary technology and trade secrets;

•our risk management activities;

•the industry’s capacity, production and imports;

•product performance, in cold weather or otherwise;

•seasonal fluctuations in our business;

•our current products as well as products we are developing;

•our ability to retain and recruit key personnel;

•our current and future indebtedness and our compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;

•our marketable securities;

•critical accounting policies and estimates, the impact or anticipated impact of recent accounting pronouncements, guidance or changes in accounting principles and future recognition of impairments for the fair value of assets, including goodwill, financial instruments, intangible assets and other assets acquired;

•operating risks and the impact of disruptions to our business including, but not limited to, closures at our plant located in Geismar, Louisiana and the COVID-19 pandemic, including any potential resurgence of COVID-19 such as from the more transmissible Delta and Lambda variant strains; and

•assumptions underlying or relating to any of the foregoing.

These statements reflect current views with respect to future events and are based on assumptions and subject to risks and uncertainties. We note that a variety of factors, including but not limited to those Risk Factors discussed in Item 1A of Part II, could cause actual results and experience to differ materially from the anticipated results or expectations expressed in our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Forward-looking statements contained in this report present management’s views only as of the date of this report. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our 10-Q and 8-K reports filed with the Securities and Exchange Commission after the date hereof.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share and per share amounts)


	September 30, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	585,575	$	84,441
Marketable securities	307,894		149,521
Accounts receivable (net of allowance for doubtful accounts of $1,768 and $1,631, respectively)	196,903		143,475
Inventories	374,106		209,361

Prepaid expenses and other assets	89,051		67,657
Restricted cash	4,556		3,777

Total current assets	1,558,085		658,232
Long-term marketable securities	151,015		120,022
Property, plant and equipment, net	630,915		594,796

Right of use assets	35,379		28,840
Goodwill	16,080		16,080
Intangible assets, net	8,731		10,708


Other assets	44,012		32,720

TOTAL ASSETS	$	2,444,217	$	1,461,398
LIABILITIES AND EQUITY
CURRENT LIABILITIES:

Current maturities of long-term debt	$	3	$	50,088

Current maturities of operating lease obligations	12,328		14,581
Accounts payable	128,865		132,938
Accrued expenses and other liabilities	48,206		34,875

Deferred revenue	11,370		13,488
Total current liabilities	200,772		245,970

Deferred income taxes	6,965		6,607


Long-term debt (net of debt issuance costs of $13,759 and $1,731, respectively)	536,241		15,158

Long-term operating lease obligations	22,920		15,223
Other liabilities	2,045		4,485
Total liabilities	768,943		287,443
COMMITMENTS AND CONTINGENCIES

EQUITY:
Common stock ($0.0001 par value; 300,000,000 shares authorized; 50,267,874 and 39,334,839 shares outstanding, respectively)	6		5
Common stock—additional paid-in-capital	707,069		392,247
Retained earnings	1,052,416		891,211
Accumulated other comprehensive income (loss)	(924)		1,160
Treasury stock (6,220,038 and 10,591,074 shares outstanding, respectively)	(83,293)		(110,668)
Total equity	1,675,274		1,173,955


TOTAL LIABILITIES AND EQUITY	$	2,444,217	$	1,461,398

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share amounts)


	Three months ended				Nine months ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
REVENUES:
Bio-based diesel sales	$	919,051	$	492,769	$	2,139,938	$	1,350,496


Bio-based diesel government incentives	87,287		79,484		222,309		238,006
	1,006,338		572,253		2,362,247		1,588,502
Other revenue	4		105		58		718
	1,006,342		572,358		2,362,305		1,589,220




COSTS OF GOODS SOLD	917,434		498,402		2,076,083		1,387,147
GROSS PROFIT	88,908		73,956		286,222		202,073
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	34,354		31,059		100,546		86,971

GAIN ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT	—		—		(39)		(187)
IMPAIRMENT OF ASSETS	3,498		19,256		5,236		19,256
INCOME FROM OPERATIONS	51,056		23,641		180,479		96,033
OTHER INCOME (EXPENSE), NET:


Gain (loss) on debt extinguishment	—		18		(4,449)		1,809

Gain on lease termination	—		—		—		4,459
Interest income	1,420		777		3,916		1,327
Other income (expense)	(738)		818		(199)		2,178
Interest expense	(8,619)		(1,545)		(14,007)		(6,154)
	(7,937)		68		(14,739)		3,619
INCOME BEFORE INCOME TAXES	43,119		23,709		165,740		99,652
INCOME TAX EXPENSE	(652)		(1,046)		(4,535)		(4,007)









NET INCOME	$	42,467	$	22,663	$	161,205	$	95,645

LESS—EFFECT OF PARTICIPATING SHARE-BASED AWARDS	334		440		1,735		1,895
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	42,133	$	22,223	$	159,470	$	93,750


Basic net income per share available to common stockholders:


Net income per share	$	0.84	$	0.57	$	3.44	$	2.39
Diluted net income per share available to common stockholders:


Net income per share	$	0.83	$	0.51	$	3.41	$	2.17
Weighted-average shares used to compute basic net income per share available to common stockholders:
Basic	50,249,162		39,306,263		46,301,147		39,154,788

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


Diluted	50,563,451		43,624,340		46,739,811		43,107,989

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands)


	Three months ended				Nine months ended
	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net income	$	42,467	$	22,663	$	161,205	$	95,645
Unrealized gains (losses) on marketable securities, net of taxes of $—, $(99), $(11) and $9, respectively	112		(176)		(130)		131

Foreign currency translation adjustments	(956)		982		(1,954)		966
Other comprehensive income (loss)	(844)		806		(2,084)		1,097


Comprehensive income	$	41,623	$	23,469	$	159,121	$	96,742

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)

(in thousands, except share amounts)


	Company Stockholders’ Equity
	Common Stock Shares	Common Stock		Common Stock - Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
BALANCE, January 1, 2021	39,334,839	$	5	$	392,247	$	891,211	$	1,160	$	(110,668)	$	1,173,955
Conversion of restricted stock units to common stock (net of 150,906 shares of treasury stock purchased)	254,396	—		—		—		—		(10,026)		(10,026)
Settlement of stock appreciation rights in common stock (net of 2,598 shares of treasury stock purchased)	4,673	—		(176)		—		—		(1,431)		(1,607)
Equity issuance (net of issuance costs of $19,970)	5,750,000	1		365,279		—		—		—		365,280

Settlement of 2036 convertible senior notes conversions (net of tax impact of $1,143)	2,195,836	—		(26,183)		—		—		22,946		(3,237)
Stock compensation expense	—	—		1,844		—		—		—		1,844


Other comprehensive loss	—	—		—		—		(1,510)		—		(1,510)

Net income	—	—		—		39,222		—		—		39,222
BALANCE, March 31, 2021	47,539,744	$	6	$	733,011	$	930,433	$	(350)	$	(99,179)	$	1,563,921
Conversion of restricted stock units to common stock (net of 39,053 shares of treasury stock purchased)	99,802	—		—		—		—		(2,732)		(2,732)
Settlement of stock appreciation rights in common stock (net of 92,264 shares of treasury stock purchased)	107,095	—		(502)		—		—		(5,568)		(6,070)

Settlement of 2036 convertible senior notes conversions (net of tax impact of $1,294)	2,488,427	—		(29,352)		—		—		25,680		(3,672)



Stock compensation expense	—	—		1,962		—		—		—		1,962


Other comprehensive income	—	—		—		—		270		—		270
Net income	—	—		—		79,516		—		—		79,516
BALANCE, June 30, 2021	50,235,068	$	6	$	705,119	$	1,009,949	$	(80)	$	(81,799)	$	1,633,195
Conversion of restricted stock units to common stock (net of 2,138 shares of treasury stock purchased)	5,039	—		—		—		—		(107)		(107)
Settlement of stock appreciation rights in common stock (net of 26,268 shares of treasury stock purchased)	27,767	—		(14)		—		—		(1,387)		(1,401)

Stock compensation expense	—	—		1,964		—		—		—		1,964
Other comprehensive loss	—	—		—		—		(844)		—		(844)

Net income	—	—		—		42,467		—		—		42,467
BALANCE, September 30, 2021	50,267,874	$	6	$	707,069	$	1,052,416	$	(924)	$	(83,293)	$	1,675,274


	Company Stockholders’ Equity
	Common Stock Shares	Common Stock		Common Stock - Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
BALANCE, January 1, 2020	38,967,079	$	5	$	438,591	$	768,398	$	(1,994)	$	(105,488)	$	1,099,512
Conversion of restricted stock units to common stock (net of 25,134 shares of treasury stock purchased)	38,144	—		—		—		—		(578)		(578)
Settlement of stock appreciation rights in common stock (net of 14,438 shares of treasury stock purchased)	16,704	—		(5)		—		—		(240)		(245)

Convertible debt extinguishment impact (net of tax impact of $1,013)	—	—		(17,829)		—		—		—		(17,829)

Stock compensation expense	—	—		1,367		—		—		—		1,367
Other comprehensive loss	—	—		—		—		(551)		—		(551)

Net income	—	—		—		74,667		—		—		74,667



BALANCE, March 31, 2020	39,021,927	$	5	$	422,124	$	843,065	$	(2,545)	$	(106,306)	$	1,156,343
Conversion of restricted stock units to common stock (net of 86,701 shares of treasury stock purchased)	230,265	—		—		—		—		(2,063)		(2,063)
Settlement of stock appreciation rights in common stock (net of 21,794 shares of treasury stock purchased)	39,962	—		(276)		—		—		(776)		(1,052)

Convertible debt extinguishment impact (net of tax impact of $1,055)	—	—		(20,860)		—		—		—		(20,860)

Stock compensation expense	—	—		1,855		—		—		—		1,855
Other comprehensive income	—	—		—		—		842		—		842
Net loss	—	—		—		(1,685)		—		—		(1,685)
BALANCE, June 30, 2020	39,292,154	$	5	$	402,843	$	841,380	$	(1,703)	$	(109,145)	$	1,133,380
Conversion of restricted stock units to common stock (net of 30,624 shares of treasury stock purchased)	23,800	—		—		—		—		(1,185)		(1,185)
Settlement of stock appreciation rights in common stock (net of 7,095 shares of treasury stock purchased)	16,360	—		(279)		—		—		(247)		(526)
Convertible debt extinguishment impact (net of tax impact of $318)	—	—		(13,992)		—		—		—		(13,992)
Stock compensation expense	—	—		1,811		—		—		—		1,811
Other comprehensive income	—	—		—		—		806		—		806
Net income	—	—		—		22,663		—		—		22,663
BALANCE, September 30, 2020	39,332,314	$	5	$	390,383	$	864,043	$	(897)	$	(110,577)	$	1,142,957

RENEWABLE ENERGY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine months ended
	September 30, 2021		September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	161,205	$	95,645


Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation expense	33,100		27,425
Amortization expense of assets and liabilities, net	15,014		12,026


Accretion of convertible note discount	247		652
Amortization of marketable securities	2,436		366


Gain on sale of property, plant and equipment	(39)		(187)
(Gain) loss on debt extinguishment	4,449		(1,809)

Provision for doubtful accounts	615		716
Impairment of assets	5,236		19,256

Stock compensation expense	5,770		5,033
Deferred tax expense	2,831		2,092

Gain on lease termination	—		(4,459)
Other operating activities	122		3
Changes in assets and liabilities:
Accounts receivable, net	(54,274)		670,395
Inventories	(164,762)		15,445
Prepaid expenses and other assets	(34,543)		(36,827)
Accounts payable	(17,757)		(228,748)
Accrued expenses and other liabilities	11,035		(12,185)
Operating lease obligations	(11,973)		(11,489)
Deferred revenue	(2,117)		1,034


Cash (used in) provided by operating activities	(43,405)		554,384
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for marketable securities	(419,417)		(305,726)
Cash received from maturities of marketable securities	227,486		19,000



Cash paid for purchase of property, plant and equipment	(63,117)		(46,945)




Other investing activities	(1,501)		187


Cash used in investing activities	(256,549)		(333,484)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments on revolving line of credit	—		(76,990)


Cash received from notes payable	550,000		—
Cash paid on notes payable	(78,058)		(91,590)
Cash paid for debt issuance costs	(13,010)		—





Cash received from equity offering	385,250		—
Cash paid for equity offering costs	(19,970)		—
Cash paid for conversion of restricted stock units and stock appreciation rights	(21,943)		(5,649)


Cash provided from (used in) financing activities	802,269		(174,229)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	502,315		46,671
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning of period	88,218		53,436
Effect of exchange rate changes on cash	(402)		80
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, End of period	$	590,131	$	100,187

(continued)

RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine months ended
	September 30, 2021		September 30, 2020
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid for income taxes	$	4,685	$	15
Cash paid for interest	$	4,254	$	4,651
Capitalized interest	$	289	$	—
Leased assets obtained in exchange for new operating lease liabilities	$	19,038	$	3,807

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Amounts included in period-end accounts payable for:
Purchases of property, plant and equipment	$	15,140	$	5,497

Debt issuance cost	$	1,892	$	—

(concluded)

See notes to condensed consolidated financial statements.

RENEWABLE ENERGY GROUP, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2021 and 2020

(unaudited)

(in thousands, except share and per share amounts)

NOTE 1 — BASIS OF PRESENTATION AND NATURE OF THE BUSINESS

The condensed consolidated financial statements have been prepared by Renewable Energy Group, Inc. and its subsidiaries (the "Company" or "REG"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted as permitted by such rules and regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes that the disclosures are adequate to present fairly the financial position, results of operations and cash flows at the dates and for the periods presented. It is suggested that these interim financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in the Company’s latest annual report on Form 10-K filed on March 1, 2021. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

The Company currently owns and operates a network of twelve bio-based diesel production facilities, with ten locations in North America and two locations in Europe, and an aggregate nameplate production capacity of 505 million gallons per year ("mmgy"). Ten of these plants are “multi-feedstock capable”, which allows them to use a broad range of low carbon feedstocks, such as distillers corn oil, used cooking oil and inedible animal fats in addition to vegetable oils, such as soybean oil, and canola oil. In September 2021, the Company announced the closure of the Houston, Texas biorefinery, expected to be completed in January 2022. The Houston plant's nameplate capacity is 35 mmgy, which will reduce the Company's overall nameplate capacity to 470 mmgy.

The bio-based diesel industry and the Company’s business have benefited from certain federal and state government programs. The federal biodiesel mixture excise tax credit (the "BTC") was retroactively reinstated on December 20, 2019 for the years 2018 and 2019. The BTC has also been extended through December 31, 2022. The modification of federal and state government programs could adversely affect the financial results of the Company.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies should be read in conjunction with a summary of the significant accounting policies the Company has disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020.

Restricted Cash

The Company segregates certain cash balances as restricted cash that represent those funds required to be set aside by a contractual agreement. The Company classifies restricted cash between current and non-current assets based on the length of time of the restricted use.

As of September 30, 2021 and 2020, current restricted cash was $4,556 and $3,000 for each period, representing pledges for outstanding letters of credit issued to support our operations. See the table below for reconciliation of "Cash, Cash Equivalents and Restricted Cash" in the Condensed Consolidated Statements of Cash Flows:


	September 30, 2021		September 30, 2020
Cash and cash equivalents	$	585,575	$	97,187
Restricted cash	4,556		3,000
Total cash, cash equivalents and restricted cash in the Condensed Statements of Cash Flows	$	590,131	$	100,187

Marketable Securities

The Company's marketable securities are classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss). The Company classifies its marketable securities as either current or long-term based on each instrument's underlying contractual maturity date. Realized gains or losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are reported in other income, net. The Company evaluates such investments periodically for possible other-than-temporary impairment. A decline of fair value below amortized costs of debt securities is considered an other-than-temporary impairment if the Company has the intent to sell the security or if it is more likely than not that the Company will be required to sell the security before recovery of the entire amortized cost basis. In those instances, an impairment charge equal to the difference between the fair value and the amortized cost basis is recognized in earnings. Regardless of the Company's intent or requirement to sell a debt security, an impairment is considered other-than-temporary if the Company does not expect to recover the entire amortized cost basis; in those instances, a credit loss equal to the difference between the present value of the cash flows expected to be allocated based on credit risk and the amortized cost basis of the debt security is recognized in earnings. The Company has no current requirement or intent to sell a material portion of marketable securities as of September 30, 2021. The Company expects to recover up to (or beyond) the initial cost of investment for securities held. In computing realized gains and losses on available-for-sale securities, the Company determines cost based on amounts paid, including direct costs such as commissions to acquire the security, using the specific identification method.

Renewable Identification Numbers ("RINs")

When the Company produces and sells a gallon of bio-based diesel for use in the United States, 1.5 to 1.7 RINs per gallon are generated. RINs are used to track compliance with the Renewable Fuel Standard, using the EPA moderated transaction system. RFS2 allows the Company to attach between zero and 2.5 RINs to any gallon of bio-based diesel. As a result, a portion of the selling price for a gallon of bio-based diesel sold in the U.S. is generally attributable to RFS2 compliance. However, RINs that the Company generates are a form of government incentive and not a result of the physical attributes of the bio-based diesel production. Therefore, no cost is allocated to the RIN when it is generated, regardless of whether the RIN is transferred with the bio-based diesel produced or held by the Company pending attachment to other bio-based diesel production sales. Additionally, RINs, once obtained through the production and sale of gallons of bio-based diesel, may be separated by the acquirer and sold separately.

In addition, the Company also obtains RINs from third parties who have separated the RINs from gallons of bio-based diesel. From time to time, the Company holds varying amounts of these separated RINs for resale. RINs obtained from third parties are initially recorded at their cost and are subsequently revalued at the lower of cost or net realizable value as of the last day of each accounting period. The resulting adjustments are reflected in costs of goods sold for the period. The value of these RINs is reflected in “Prepaid expenses and other assets” on the Condensed Consolidated Balance Sheets. The cost of goods sold related to the sale of these RINs is determined using the average cost method, while market prices are determined by RIN values, as reported by the Oil Price Information Service ("OPIS").

Low Carbon Fuel Standard

The Company generates LCFS credits for its low carbon fuels when its qualified low carbon fuels are transported into an LCFS market and sold for qualifying purposes. LCFS credits are used to track compliance with the LCFS. As a result, a portion of the selling price for a gallon of bio-based diesel sold into an LCFS market is also attributable to LCFS compliance. However, LCFS credits that the Company generates are a form of government incentive and not a result of the physical attributes of the bio-based diesel production. Therefore, no cost is allocated to the LCFS credit when it is generated, regardless of whether the LCFS credit is transferred with the bio-based diesel produced or held by the Company.

In addition, the Company also obtains LCFS credits from third-party trading activities. From time to time, the Company holds varying amounts of these third-party LCFS credits for resale. LCFS credits obtained from third parties are initially recorded at their cost and are subsequently revalued at the lower of cost or net realizable value as of the last day of each accounting period, and the resulting adjustments are reflected in costs of goods sold for the period. The value of LCFS credits obtained from third parties is reflected in “Prepaid expenses and other assets” on the Condensed Consolidated Balance Sheet. The cost of goods sold related to the sale of these LCFS credits is determined using the average cost method, while market prices are determined by LCFS values, as reported by the OPIS.

The Company records assets acquired and liabilities assumed through the exchange of non-monetary assets based on the fair value of the assets and liabilities acquired or the fair value of the consideration exchanged, whichever is more readily determinable.

Goodwill

Goodwill is tested for impairment annually as of July 31 or when impairment indicators exist. Goodwill is allocated and tested for impairment by reporting segments. At September 30, 2021 and December 31, 2020, the Company had approximately $16,080 of goodwill in the Services segment. As a result of the annual impairment test performed as of July 31, 2021, the Company determined that there were no indications of impairment related to the Services segment's goodwill. No impairment of goodwill was recorded during the three or nine months ended September 30, 2021 and for the year ended December 31, 2020.

Impairment of Long-lived Assets

The Company tests its long-lived assets for recoverability when events or circumstances indicate that its carrying amount may not be recoverable. Significant assumptions used in the undiscounted cash flow analysis, when it is required, include the projected demand for biomass-based diesel based on annual renewable fuel volume obligations under the Renewable Fuel Standards ("RFS2"), the Company's capacity to meet that demand, the market price of biomass-based diesel and the cost of feedstock used in the manufacturing process.

During the three and nine months ended September 30, 2021, the Company recorded impairment charges of $3,498 and $5,236, respectively, related to certain biodiesel property, plant and equipment as the carrying amounts of these assets were deemed not recoverable given the assets' deteriorating physical conditions identified during the periods noted above.

During the third quarter of 2020, the Company recorded impairment charges of $18,984 related to certain equipment where it was no longer probable that the assets will be utilized in future renewable diesel production expansions. In addition, the Company recorded impairment charges of $272 against certain biodiesel property, plant and equipment as the carrying amounts of these assets were deemed not recoverable given the assets' deteriorating physical conditions identified during the quarter.

Convertible Debt

In June 2016, the Company issued $152,000 aggregate principal amount of 4% convertible senior notes due in 2036 (the "2036 Convertible Senior Notes"). See "Note 7 - Debt" for a further description of the 2036 Convertible Senior Notes and information regarding our April 2021 notice of redemption of all such notes. During the first half of 2021, the Company received notices of conversions related to the 2036 Convertible Senior Notes in total principal amount of $59,619. The Company elected to settle the principal balance in cash and the conversion premium by issuing 4,684,263 of common shares from treasury stock, resulting in a loss on debt extinguishment $4,449. The 2036 Convertible Senior Notes were fully converted as of June 2021 and all obligations thereto have been satisfied and discharged.

During the three and nine months ended September 30, 2020, the Company used $18,086 to repurchase $5,000 principal amount and $75,890 to repurchase $30,008 principal amount of the 2036 Convertible Senior Notes, respectively, reflecting conversion premium, after tax impact, of $13,992 and $52,681, respectively, as a reduction of Additional Paid-in Capital and gains on debt extinguishment of $18 and $1,809, respectively, as reflected in the Condensed Consolidated Statements of Operations.

2028 Green Bonds

On May 20, 2021, the Company completed the sale and issuance of $550,000 aggregate principal amount of 5.875% senior secured notes due in 2028 (the "Green Bonds"). The Company recorded $14,619 in legal, professional and underwriting fees related to the issuance of the Green Bonds. The Company currently intends to use the net proceeds from this offering for capital expenditures related to the improvement and expansion of its Geismar, Louisiana biorefinery. See "Note 7 - Debt" for a further description of the Green Bonds.

Security Repurchase Programs

In January 2019 and February 2020, the Company's Board of Directors approved repurchase programs of up to $75,000 and $100,000, respectively, of the Company's convertible notes and/or shares of common stock (the "2019 Program" and "2020 Program", respectively). Under these programs, the Company may repurchase convertible notes or shares from time to time in open market transactions, privately negotiated transactions or by other means. The timing and amount of repurchase transactions under each program are determined by the Company's management based on its evaluation of market conditions, share price, convertible note price, legal requirements and other factors.

The table below sets out the information regarding the activities under the 2019 and 2020 Programs during the three and nine months ended September 30, 2020:


	Three months ended September 30, 2020						Nine months ended September 30, 2020
	Principal amount in 000's		January 2019 Program		February 2020 Program		Principal amount in 000's		January 2019 Program		February 2020 Program


2036 Convertible Senior Notes Repurchases	$	5,000	$	10,000	$	8,086	$	30,008	$	67,804	$	8,086

The 2019 Program was fully utilized as of September 30, 2020. There were no repurchases under the 2020 Program in the three or nine months ended September 30, 2021, and the remaining amount of the 2020 Program was $91,914 as of September 30, 2021.

Equity Offering

On March 19, 2021, the Company completed an equity offering pursuant to which it sold 5,750,000 shares of common stock to various underwriters at a price of $67.00 per share before underwriting discounts and commissions. The proceeds that the Company received from the financing activity were $385,250 before underwriting discounts and commissions, fees, and other out-of-pocket costs of $19,970. The net proceeds from the transaction were $365,280.

Revenue Recognition

The Company generally has a single performance obligation in its arrangements with customers. The Company believes for most of its contracts with customers, control is transferred at a point in time, typically upon delivery to the customers. When the Company performs shipping and handling activities after the transfer of control to the customers (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. The Company generally expenses sales commissions when incurred because the amortization period would have been less than one year. The Company records these costs within selling, general and administrative expenses.

The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

•sales of biodiesel and renewable diesel produced at our facilities, including RINs and LCFS credits;

•resale of biodiesel, renewable diesel and petroleum acquired from third parties, along with the sale of renewable diesel and petroleum-based products further blended with biodiesel produced at our wholly owned facilities or acquired from third parties;

•sales of separated RINs and LCFS credits;

•sales of raw materials, glycerin and other co-products of the bio-based diesel production process;

•other revenue, including bio-based diesel facility management and operational services; and

•incentive payments from federal and state governments, including the BTC, and from the USDA Advanced Biofuel Program.

Disaggregation of revenue:

All revenue recognized in the income statement, except for Bio-based diesel Government Incentives, is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line and segment:

Reportable Segments

Three months ended September 30, 2021