Income from operations decreased to $46.1 million in 2012 from $51.6 million in 2011. FutureFuel does not report income from operations by segment, but does report segment gross profit. The chemicals segment gross profit increased 14% to $48.7 million in 2012 from $42.7 million in 2011. Biofuels segment gross profit decreased to $8.6 million in 2012 from $19.1 million in 2011. Market conditions were less favorable for biodiesel in 2012 as compared to 2011 partly as a result of the expiration of the $1.00 blenders' credit at December 31, 2011. When in effect, this credit was recorded as a reduction in cost of goods sold and distribution expense in our consolidated statement of operations. After its expiration, no related reduction to cost of goods sold and distribution expense was recorded. The existence of this credit was a significant factor in the profitability of biodiesel production. Further reducing 2012 biofuel gross margin relative to its gross margin in 2011 was a reduction in 2012 of the amount we were awarded under the USDA Section 9005 – Advanced Biofuel Producers program. In 2011 we were awarded approximately $1.9 million and in 2012 we were awarded $0.8 million under this program.       

Biodiesel profitability was particularly low in the fourth quarter of 2012, as the 2012 biodiesel consumption mandate established by the government was largely met early in the quarter. 

On January 3, 2013, the blenders' credit was retroactively reinstated for 2012 and extended through December 31, 2013. This action resulted in our biodiesel blending activities from January 1, 2012 to December 31, 2012 qualifying for this credit. The retroactive credit for 2012 totals $2.5 million and will be recognized as a reduction in cost of goods sold in the first quarter of 2013. 

FutureFuel reported net income of $34.3 million, or $0.83 per diluted share, for 2012, compared with net income of $34.5 million, or $0.84 per diluted share, in 2011. Adjusted EBITDA for the 2012 totaled $52.5 million, down from $61.7 million in 2011.

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