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Press release from GlobeNewswire (a Nasdaq OMX company)

Renewable Energy Group Reports Second Quarter 2012 Financial Results

Tuesday, August 14, 2012

Renewable Energy Group Reports Second Quarter 2012 Financial Results13:01 EDT Tuesday, August 14, 2012Key Achievements 43 million gallons produced, up 30% y/y 54 million gallons sold, up 63% y/y $272 million revenue, up 39% y/y $20 million operating income, down 12% y/y $14 million net income compared to a net loss y/y Adjusted EBITDA $26.5 million, up 3% y/y Distribution expanded with new wholesale terminal locations in New Mexico, Ohio and California AMES, Iowa, Aug. 14, 2012 (GLOBE NEWSWIRE) -- Renewable Energy Group, Inc. (Nasdaq:REGI) today announced its financial results for the quarter ended June 30, 2012. Revenue for the second quarter was $271.9 million, an increase of 39% compared to revenues of $196.3 million for the same period in 2011. Second quarter 2012 adjusted EBITDA was $26.5 million, an increase of 3% compared to $25.8 million for the same period in 2011. The balance sheet remained strong with cash of $87.1 million at the close of the quarter, compared to $75.2 million at March 31, 2012. "As expected, our growth continued in our second quarter of 2012," said Daniel J. Oh, President and Chief Executive Officer of REG. "Our gallons sold rose significantly, as did revenue. We expanded our distribution capabilities, and progressed in planned upgrades to our fleet of biorefineries. We are optimistic about our strategic position, as we continue to execute our strategy of feedstock diversity and expand our domestic distribution footprint."Operating Highlights REG produced 43 million gallons of biodiesel in the second quarter of 2012, compared to 33 million gallons in the same period in 2011. REG sold 54 million gallons of biodiesel in the second quarter, an increase of 63% compared to the same period in 2011, excluding tolled gallons. The year over year increase in gallons sold was primarily due to increased production capacity online and an increase in biodiesel demand compared to the same period in 2011 as petroleum-fuel refiners and importers sought to meet their renewable volume obligations to purchase biomass-based diesel under the Renewable Fuel Standard 2 ("RFS2") program. RFS2 specifies the consumption of 1 billion gallons of biodiesel in 2012, compared to 800 million in 2011. The company expanded its distribution capabilities by opening three terminals. In early June, the company announced new terminal capabilities at its partially-completed biorefinery in Clovis, New Mexico. Biodiesel sales from the Clovis terminal commenced in early July. Also in late June, the company announced a new terminal in Lebanon Ohio, which is in the southwest corner of the state serving Ohio, Indiana and Kentucky. The terminal is located adjacent to terminals owned by major diesel marketers, and enables efficient blending for local petroleum jobbers. In the later part of July, the company entered into an agreement with Maxum Petroleum to offer REG-9000® at its terminal in Long Beach, California with sales commencing in mid-August. The company also benefited this quarter from an additional 50 million gallons of annual capacity becoming available in combination from both the Albert Lea facility, which was purchased in July 2011, and the completion of the third production line at the Seneca facility, which was initially brought online earlier this year.Second Quarter 2012 Financial Results Revenues for the second quarter were $271.9 million, a 39% increase compared to Q1 2011, due to an increase in gallons sold over the previous period, offset somewhat by lower per-gallon prices. Gallons sold in Q2 2012 increased 63% over Q2 2011 to 54.2 million gallons of biodiesel. Biodiesel demand improved compared to the same period in 2011 due to the increased requirements under RFS2. Biodiesel pricing declined, as lower prices for petroleum-based diesel and lower RIN prices caused a 12% year over year reduction in realized price per gallon. Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and further adjusted for certain items identified below under "Adjusted EBITDA Reconciliation", grew 3% year over year to $26.5 million. Adjusted EBITDA grew 109% from the $12.7 million generated in Q1 2012. Adjusted EBITDA was nearly flat year over year as strong volume growth was offset by lower biodiesel gross margins in the second quarter 2012. The table below summarizes REG's results for Q2 2012:REG Q2 2012 Revenue and Adjusted EBITDA Summary(dollars and gallons in thousands except per gallon data)       Y/Y   Q2 2012 Q2 2011 Growth Gallons sold  54,239  33,300 +63%Revenues $271,927 $196,312+39%         Adjusted EBITDA $26,452  $25,770  +3% Adjusted EBITDA Margin  9.7%  13.1%  Balance Sheet and Liquidity At June 30, 2012, REG had cash and cash equivalents of $87.1 million. Inventories at June 30, 2012 were $58.6 million, a decrease of $19.0 million from March 31, 2012. The decrease in inventory was largely attributable to the recognition in Q2 of five million gallons of biodiesel production shipped in Q1 but not recognized, as disclosed in Q1 earnings release.Adjusted EBITDA Reconciliation REG presents Adjusted EBITDA because the company believes it assists investors in analyzing its performance across reporting periods on a consistent basis. In addition, REG uses Adjusted EBITDA to evaluate, assess and benchmark its financial performance on a consistent and comparable basis.  REG excludes non-cash stock-based compensation and non-cash other income (expense) items because it does not believe that they are indicative of the company's ongoing operating performance.  REG's measure of Adjusted EBITDA might be different than similar financial measures used by other companies. Non-GAAP metrics are not determined in accordance with GAAP and are not a substitute for or superior to financial measures determined in accordance with GAAP.  Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Revenues.  Three Months EndedSix Months Ended  June 30,June 30,(In thousands)2012201120122011           Net income  $ 14,433  $ (948)  $ 28,450  $ 2,787           Adjustments:         Loss from equity investments  --  83  --  148 Income tax expense  4,471  --  5,834  -- Interest expense  1,059  1,751  2,112  3,459 Other income (expense), net  (28)  (200)  (65)  (474) Change in fair value of Seneca Holdco liability  --  2,250  (349)  1,523 Change in fair value of preferred stock conversion feature embedded derivatives  --  19,645  (11,975)  17,088 Expense settled with stock issuance  --  --  1,898  -- Straight-line lease expense  (104)  618  (206)  1,416 Depreciation  2,069  1,705  4,095  3,394 Amortization  (206)  (124)  (345)  (254) Non-cash stock compensation  4,758  990  9,722  1,980          Adjusted EBITDA  $ 26,452  $ 25,770  $ 39,171  $ 31,067          Second Quarter Conference Call REG will sponsor a conference call to discuss results today at 4:30 p.m. EST/3:30 p.m. CST. Daniel J. Oh, President and Chief Executive Officer, and Chad Stone, Chief Financial Officer, will host the call. Investors in the U.S. interested in participating in the live call should dial +1 (877) 810-3368 and enter passcode: 98129516. Those calling from outside the U.S. should dial +1 (760) 298-5082 and use the same passcode: 98129516. A telephone replay will be available approximately two hours after the call concludes through August 28, 2012 by dialing from the U.S. +1 (855) 859-2056, or from international locations +1 (404) 537-3406, and entering passcode: 98129516. A simultaneous live webcast will be available on the Investor Relations section of the Company's website at http://investor.regi.com/. The webcast will be archived on the website for one year.About Renewable Energy Group Renewable Energy Group is the largest producer of biodiesel in the United States. Utilizing an integrated value chain model, Renewable Energy Group is focused on converting natural fats, oils and greases into advanced biofuels. With more than 210 million gallons of owned/operated annual production capacity at biorefineries across the country, REG is a proven biodiesel partner in the distillate marketplace. For more than a decade, REG has been a reliable supplier of biodiesel which meets or exceeds ASTM quality specifications. We sell REG-9000® biodiesel to distributors so Americans can have cleaner burning fuels that help lessen our dependence on foreign oil. REG-9000 branded biodiesel is distributed in nearly every state in the U.S. For more information, please visit the company's website at http://www.REGI.com.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 increased demand for biodiesel. 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 effect of governmental programs on our business; government policymaking and mandates relating to renewable fuels; the future price and volatility of feedstocks; the future price and volatility of petroleum and products derived from petroleum; expected future financial performance; our liquidity and working capital requirements; availability of federal and state governmental tax credits and incentives; anticipated trends and challenges in our business and competition in the markets in which we operate; our ability to estimate our feedstock demands and biodiesel sales; our dependence on sales to a limited number of customers and distributors; technological obsolescence; our expectations regarding future expenses; our ability to successfully implement our acquisition strategy; and other risks and uncertainties described from time to time in REG's public filings with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this press release and REG does not undertake to update any forward-looking statements.          RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)        FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)   Three MonthsThree MonthsSix MonthsSix Months  EndedEndedEndedEnded  June 30,June 30,June 30,June 30,  2012201120122011           REVENUES:         Biodiesel sales  $ 271,035   $ 184,347   $ 453,815   $ 284,421  Biodiesel government incentives  815   11,926   6,202   16,266     271,850   196,273   460,017   300,687  Services  77   39   157   60     271,927   196,312   460,174   300,747            COSTS OF GOODS SOLD:         Biodiesel  240,899   165,895   412,035   262,084  Services  79   24   156   42     240,978   165,919   412,191   262,126            GROSS PROFIT  30,949   30,393   47,983   38,621            SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES  11,014   7,812   23,976   14,090            INCOME FROM OPERATIONS  19,935   22,581   24,007   24,531            OTHER INCOME (EXPENSE), NET:         Change in fair value of preferred stock conversion feature embedded derivatives  --   (19,645)  11,975   (17,088) Change in fair value of Seneca Holdco liability  --   (2,250)  349   (1,523) Other income (expense), net  28   200   65   474  Interest expense  (1,059)  (1,751)  (2,112)  (3,459)    (1,031)  (23,446)  10,277   (21,596)           INCOME (LOSS) BEFORE INCOME TAXES AND LOSS FROM EQUITY INVESTMENTS  18,904   (865)  34,284   2,935  INCOME TAX EXPENSE  (4,471)  --   (5,834)  --  LOSS FROM EQUITY INVESTMENTS  --   (83)  --   (148)           NET INCOME (LOSS)  14,433   (948)  28,450   2,787            EFFECTS OF RECAPITALIZATION  --   --   39,107   --  LESS - ACCRETION OF SERIES A PREFERRED STOCK TO REDEMPTION VALUE  --   (6,180)  (1,808)  (12,076) LESS - CHANGE IN UNDISTRIBUTED DIVIDENDS ALLOCATED TO PREFERRED STOCKHOLDERS  628   (3,185)  (823)  (6,246) LESS - DISTRIBUTED DIVIDENDS TO PREFERRED STOCKHOLDERS  (1,470)  --   (1,470)  --  LESS - EFFECT OF PARTICIPATING PREFERRED STOCK  (1,337)  --   (8,952)  --  LESS - EFFECT OF PARTICIPATING SHARE-BASED AWARDS  (944)  --   (3,145)  --            NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY'S COMMON STOCKHOLDERS  $ 11,310   $ (10,313)  $ 51,359   $ (15,535)           Net income (loss) per share attributable to common stockholders:         Basic  $ 0.39   $ (0.78)  $ 1.91   $ (1.17) Diluted  $ 0.39   $ (0.78)  $ 0.47   $ (1.17)           Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:         Basic  28,822,486   13,276,992   26,948,340   13,268,055  Diluted  28,822,486   13,276,992   32,869,382   13,268,055                 RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES          SELECTED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)    AS OF JUNE 30, 2012 AND DECEMBER 31, 2011    (IN THOUSANDS)   June 30,December 31,  20122011ASSETS     Cash and cash equivalents  $ 87,050   $ 33,575  Total current assets  220,220   150,022  Property, plant and equipment (including variable interest entities)  232,589   232,223  Goodwill  84,864   84,864  TOTAL ASSETS  552,507   484,477       LIABILITIES AND EQUITY           Current maturities of notes payable (including variable interest entities)  27,918   8,473  Total current liabilities  76,491   59,862  Preferred stock embedded conversion feature derivatives  --   53,822  Seneca Holdco Liability, at fair value  --   11,903  Long term notes payable (including variable interest entities)  48,172   73,079  Total liabilities  141,750   216,092  Redeemable preferred stock - Series A  --   147,779  Redeemable preferred stock - Series B  83,165   --  Total stockholders' equity  327,592   120,576  TOTAL LIABILITIES AND EQUITY  552,507   484,447       Selected Condensed Consolidated Balance Sheet Information (historical) The preceding table describes our selected condensed consolidated balance sheet information as of June 30, 2012 and December 31, 2011 on a historical basis.CONTACT: Investor Relations: ICR, LLC Gary Dvorchak, CFA Senior Vice President +1 (310) 954-1123 Gary.Dvorchak@icrinc.com Company: Renewable Energy Group Chad Stone Chief Financial Officer +1 (515) 239-8091 Chad.Stone@regi.com