BioFuels Journal

Ames, IA - Renewable Energy Group, Inc. ("REG" or the "Company") (NASDAQ:REGI) today announced its financial results for the third quarter ended September 30, 2016.

Revenues for the quarter were $624.6 million. The Company sold 163.1 million gallons of fuel.

Compared to the third quarter of 2015, REG sold 36.0% more gallons of fuel resulting in an increase in revenue of 58.2%.

Net income attributable to common stockholders was $22.9 million, compared to a net loss of $15.7 million in the third quarter of 2015.

Adjusted EBITDA for the quarter was $31.6 million. Results for the quarter include risk management gains of $5.9 million, which reflects the change in market value of various hedging instruments used to protect cash margins in the current and future periods.

The risk management results were impacted by the increase in energy prices in the last week of September resulting from an announcement by OPEC of a purported reduction in output.

Results for the quarter were also affected by reduced operating days at the Company’s Geismar facility, related to local area flooding in August and pulled forward scheduled maintenance from October to September.

Adjusted EBITDA in the third quarter of 2015 was $16.9 million.

The prior year period Adjusted EBITDA includes $23.3 million of risk management gains, as well as an allocation of the benefit from the retroactive reinstatement of the 2015 Biodiesel Mixture Excise Tax Credit (BTC).

"We achieved solid growth in the third quarter with significant increases in gallons sold, gallons produced, revenue and adjusted EBITDA," said REG President and CEO Daniel J. Oh.

"REG Life Sciences delivered its first commercial product last week, our biomass-based diesel fleet is operating efficiently and profitably and REG Geismar is up and running well with no planned downtime for the remainder of the year.

"We believe we are positioned for a strong finish to the year.”

Third Quarter 2016 Highlights

All figures refer to the quarter ending September 30, 2016, unless otherwise noted.

All comparisons are to the quarter ended September 30, 2015 unless otherwise noted.

REG sold a total of 163.1 million gallons of fuel, an increase of 36.0%. REG produced 114.8 million gallons of biomass-based diesel during the quarter, a 35.2% increase.

The average price per gallon of biomass-based diesel sold increased by 22.2% to $3.14 as a result of generally improving market conditions and reinstatement of the BTC.

Revenues were $624.6 million, an increase of 58.2%.

This is primarily attributable to the increase in gallons sold and reinstatement of the BTC.

Gross profit was $47.3 million, or 7.6% of revenues, compared to gross profit of $4.4 million, or 1.1% of revenues.

The increase in gross profit was due to the significant increase in gallons sold and the reinstatement of the BTC.

Net income attributable to common stockholders was $22.9 million, or $0.59 per share on a fully diluted basis.

This compares to a net loss of $15.7 million, or $0.36 per share on a fully diluted basis.

At September 30, 2016, REG had cash and cash equivalents of $86.5 million, an increase of $39.5 million from the prior year end.

At September 30, 2016, accounts receivable were $105.0 million, or 15 days of sales.

Accounts receivable at December 31, 2015 were $310.7 million. The decrease in accounts receivable for the year was due to the collections related to the BTC.

Inventory was $98.2 million at September 30, 2016, or 15 days of sales, an increase of $12.3 million from the prior year end.

Accounts payable were $86.1 million and $236.8 million at September 30, 2016 and December 31, 2015, respectively.

The decrease in accounts payable was mainly driven by payments made to our vendors and customers related to the 2015 BTC.

Revision of First Quarter Financial Statements

During the third quarter 2016 close process, REG identified certain errors in the Company's previously reported interim financial statements for the quarter ended March 31, 2016.

These errors pertain to certain biomass-based diesel sales completed in that quarter that contained BTC sharing terms, resulting in an overstatement of biomass-based diesel sales of $7.7 million and a corresponding understatement of accounts payable, deferred income tax payable and income tax expense of $7.7 million, $0.9 million and $0.9 million, respectively for the prior quarter.

The correction decreased net income (loss) and adjusted EBITDA by $8.6 million and $7.7 million, respectively.

The revised amounts are reflected in the accompanying unaudited Condensed Consolidated Statements of Operations for the nine-month period ended September 30, 2016 and will be reflected in applicable future 10-K and 10-Q filings.

Based on an evaluation of all relevant factors, in accordance with SEC Staff Accounting Bulletin No. 99, codified in the Accounting Standards Classification (ASC) 250, Presentation of Financial Statements, the Company concluded that the revision for this correction was immaterial to the Company’s results for the three months ended March 31, 2016; therefore, the Company determined that an amendment of its previously filed Form 10-Qs are not required.

For more information, please contact Todd Robinson at 515-239-8048 or [email protected]

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