Renewable Energy Group Reports Fourth Quarter and Full Year 2013 Financial Results
Ames, IA, February 27, 2014 - 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, 2013.
Compared to the fourth quarter of 2012, in the fourth quarter of 2013 REG sold 90% more gallons of biodiesel and increased revenue by 68%. Adjusted EBITDA increased by 165%, in addition to increasing its cash balance by 129%, and reduced its debt as a percent of capital from 10% to 5%.
For the full year 2013, compared to 2012 REG sold 37% more gallons of biodiesel, increased revenue by 48%, increased its gross profit to 16% from 6%, and increased its Adjusted EBITDA by 54%.
“I am pleased to announce strong operational and financial results for 2013. We grew significantly across key metrics and finished the year a much stronger company,” said Daniel J. Oh, President and Chief Executive Officer.
Oh continued, “The past few months were an exciting period for REG. On top of solid quarterly results that concluded an impressive year, we completed one strategic acquisition, completed important feedstock processing upgrades in our existing fleet, and expanded our distribution business. We are excited about the opportunities that these initiatives could offer REG.”
Fourth Quarter Operating Highlights
REG sold 72.9 million gallons of biodiesel, an increase of 89.9% compared to the fourth quarter of 2012. Gallons sold in the quarter included 17.7 million gallons purchased from third parties and resold through the Company’s extensive distribution network.
REG produced 65.9 million gallons of biodiesel during the quarter, an 80.9% production increase when compared to the fourth quarter of 2012. The growth in production resulted from higher capacity utilization across the fleet, as well as the October restart of production at REG Mason City which underwent maintenance, repairs and minor upgrades after being acquired in July 2013. In addition, the Company utilized contract or tolled manufacturing, which contributed 6.1 million gallons in the quarter.
REG announced in October that it would spend approximately $20 million to further upgrade REG Mason City to allow the plant to produce high quality biodiesel from lower-cost raw materials like inedible corn oil. The upgrade will not materially interrupt production and is expected to be completed in 2014. The upgrade follows a similar upgrade at REG Albert Lea biorefinery, that was successfully completed in September. The fourth quarter represented the first full quarter of flexible, multi-feedstock operations at REG Albert Lea.
During the fourth quarter, REG enhanced its distribution capability by completing a new barge-loading facility at REG Seneca. The barge loading berth complements truck and rail shipping capabilities and enables a lower-cost method to ship biodiesel through the inland waterway system. Each full barge load equates to the equivalent of 65 truckloads of biodiesel. The Company also entered a marketing agreement with Dutch Hill Terminals in Clifton, New Jersey, to expand its distribution presence in the Northeast. REG currently markets biodiesel and biodiesel-blended heating oil from the Clifton location. This terminal complements the other five terminals used by REG in New York and New Jersey.
In December 2013 and early 2014, REG announced initiatives intended to broaden its product lines and production technologies.
In December, REG announced its intended entry into the renewable diesel market via an agreement to purchase substantially all of the assets of Tulsa, Oklahoma–based Syntroleum Corporation (NASDAQ: SYNM). The acquisition is subject to approval by a vote of the shareholders of Syntroleum and other customary closing conditions.
In January, REG announced its entry into industrial biotechnology and the renewable chemicals market with the acquisition of substantially all the assets of LS9, Inc., which are now part of REG Life Sciences, LLC. REG Life Sciences technology utilizes microbial fermentation to convert diverse feedstocks into a wide range of valuable chemicals. The Company’s proprietary micro-organisms can transform conventional corn and cane sugars, low-cost crude glycerin from biodiesel production and cellulosic sugars into a wide range of chemicals that REG Life Sciences intends to produce for large markets such as detergents, personal care products, and renewable fuels. LS9 is a cornerstone investment for REG Life Sciences, which also plans to develop adjacent and complementary fermentation technologies. REG paid $15.3 million in cash and issued 2.2 million shares of REG common stock (valued at approximately $24.7 million based on a trading average for REG stock) at closing. In addition, REG may pay up to $21.5 million in cash and/or shares of REG common stock for achievement of certain milestones over the next five years related to the development and commercialization of products from the acquired technology.
In February, the Company announced a new division, REG Energy Services, LLC. REG Energy Services will initially sell heating oil and ultra-low sulfur diesel (ULSD) at seven locations throughout the northeastern U.S., as well as BioHeat® blended heating fuel at an existing REG terminal location. Our plan is to grow the number of locations over time.
Fourth Quarter 2013 Financial Results
All figures refer to the quarter ending December 31, 2013, unless otherwise noted. Adjusted EBITDA comparisons with the fourth quarter of 2012 include pro-rata volume based adjustments to the 2012 results to reflect the retroactive reinstatement of the Biodiesel Mixture Excise Tax Credit (“BTC”).
Revenues of $390.6 million increased 68.4% when compared to the fourth quarter of 2012. The gain in revenue was driven by volume, as the Company sold 89.9% more gallons of biodiesel as compared to the year-ago period. The average B100 price per gallon sold (including RINs) was $4.24, a 2% y/y decrease.
Gross profit was $44.7 million, compared to gross profit of $7.5 million for the fourth quarter of 2012. Gross margin was 11.4%, compared to 3.3% in the year-earlier quarter. The increase in gross profit was due to an increase in gallons sold during the quarter and blenders tax credit revenues, along with slightly lower feedstock prices.
Operating income was $32.1 million, compared to an operating loss of $1.0 million for the fourth quarter of 2012.
Net income attributable to common stockholders was $29.3 million, or $0.80 per share on a fully diluted basis. This compares to a net loss of $1.0 million, or $(0.03) per share on a fully diluted basis in the fourth quarter of 2012.
Adjusted EBITDA was $36.1 million, a 164.5% y/y increase. Fourth quarter 2012 adjusted EBITDA was $13.6 million (including adjustment for the allocation of the retroactive reinstatement of the 2012 BTC). Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization and further adjusted for certain items identified below under “Adjusted EBITDA Reconciliation.” Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of total revenue.
At December 31, 2013, REG had cash and equivalents of $153.2 million, an increase of 12.8% during the quarter. For the year, the Company increased its cash balance inclusive of the $54.4 million of investments in upgrades and acquisitions, as well as $11.0 million in debt repayments. At December 31, 2013, accounts receivable were $82.9 million, or 19 days of sales, an increase of $16.3 million from September 30, 2013. Inventory was $85.8 million, or 22 days of sales, an increase of $25.9 million during the quarter.
On December 4, 2013, REG Newton, LLC entered into an Amended and Restated Master Loan Agreement, which extends the maturity of the existing term loan by five years until December 1, 2018 and made an additional $5 million available to be used for a $13 million upgrades project.