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Renewable Energy Group Reports Third Quarter 2012 Financial Results

Stocks in this article: REGI

After the close of the quarter, REG acquired a 15 million gallon-per-year capacity, multi-feedstock biorefinery in New Boston, Texas, near Texarkana. The company purchased the off-line refinery for 900,000 shares of common stock and $0.3 million cash. The acquisition will expand the company’s nameplate capacity to 227 million gallons per year, strengthening its leadership position within the industry. The company expects to commence production at New Boston within the first quarter of 2013.

Third Quarter 2012 Financial Results

Revenues for the third quarter were $322.9 million, representing a 25.9% increase over the third quarter of 2011. Revenue growth was driven by a 40% year-over-year increase in gallons sold, offset by a 22% decline in average selling price during the same time period. Average selling price declined mostly due to a sharp drop in RIN prices late in the quarter.

Gross profit for the quarter was 0.9%, which compares to 21.3% in the prior year period. Gross profit was impacted negatively by two factors: the accounting for risk management positions, and the severe decline in RIN prices late in the quarter. Biodiesel cost of goods sold includes an $18 million loss on risk management contracts. This was largely a function of timing and the result of large movements in heating oil and soybean oil price indices in late September as well as an adjustment of $8.2 million on RIN inventory to reflect the lower of cost or market as of September 30, 2012.

Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and further adjusted for certain items identified below under “Adjusted EBITDA Reconciliation”, declined 105% year–over-year to a loss of $2.3 million. REG generated cash flow from operations of $6.2 million in the quarter, a decline of 62% from the $16.0 million generated in the prior year period.

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