November 5, 2020
Q3 2020 Earnings Conference Call
© 2020 Renewable Energy Group, Inc. All Rights Reserved.
Speakers
Cynthia (CJ) Warner
President & Chief Executive Officer
Chad Stone
Chief Financial Officer
Todd Robinson
Treasurer
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 2 |
Safe Harbor
This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including statements regarding our expectations for a strong full year, our planned expansion of our Geismar, Louisiana plant, fourth quarter market forces, our outlook for Q4 2020 for gallons sold and Adjusted EBITDA, and our outlook for full year 2020 for gallons sold and gallons produced.
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 Company's inability to obtain the capital needed to complete the expansion project, cost overruns and construction delays, the inability to obtain governmental permits and third party consents required or necessary to initiate or complete the expansion project, the potential impact of COVID-19 on our business and operations, the Company's financial performance, including revenues, cost of revenues and operating expenses; changes in governmental programs and policies requiring or encouraging the use of biofuels, including RFS2 in the United States, renewable fuel policies in Canada and Europe, and state level programs such as California's Low Carbon Fuel Standard, availability of federal and state governmental tax incentives and incentives for biomass-based diesel production; changes in the spread between biomass- based diesel prices and feedstock costs; the availability, future price, and volatility of feedstocks; the availability, future price and volatility of petroleum and products derived from petroleum; risks associated with fire, explosions, leaks and other natural disasters at our facilities; any disruption of operations at our Geismar renewable diesel refinery (which would have a disproportionately adverse effect on our profitability); the unexpected closure of any of our facilities; the effect of excess capacity in the biomass-based diesel industry and announced large plant expansions and potential co-processing of renewable diesel by petroleum refiners; unanticipated changes in the biomass-based diesel market from which we generate almost all of our revenues; seasonal fluctuations in our operating results; potential failure to comply with government regulations; competition in the markets in which we operate; our dependence on sales to a single customer; technological advances or new methods of biomass-based diesel production or the development of energy alternatives to biomass-based diesel; our ability to successfully implement our acquisition strategy; the Company's ability to retain and recruit key personnel; the Company's indebtedness and its compliance, or failure to comply, with restrictive and financial covenants in its various debt agreements; risk management transaction, and other risks and uncertainties described in REG's annual report Form 10-K for the period ended December 31, 2019 and subsequent quarterly reports on Form 10-Q and other periodic filings with the Securities and Exchange Commission.
All forward-looking statements are made as of the date of this presentation and REG does not undertake to update any forward-looking statements based on new developments or changes in our expectations.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 3 |
REG Performance in Q3 2020
GALLONS SOLD
GALLONS
PRODUCED
REVENUE
ADJUSTED EBITDA1
176 million
137 million $576 million
$58 million
Strong financial results
(1) Adjusted EBITDA is a non-GAAP measure. See Appendix for the definition of Adjusted EBITDA and reconciliation to Net Income (loss) determined in accordance with GAAP.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 4 |
REG Adjusted EBITDA1 Drivers: Q3 2020 vs Q3 2019
SALES OF SELF-
PRODUCED
GALLONS
D4 AVERAGE
PRICE
HOBO SPREAD
+ 1.5 RINS
FEEDSTOCK
COST2
- Adjusted EBITDA is a non-GAAP measure. See Appendix for the definition of Adjusted EBITDA and reconciliation to Net Income (loss) determined in accordance with GAAP.
- Weighted average feedstock cost
HOBO = HO NYMEX + 1 - ((CBOT SBO $/lb)/100*7.5)
HOBO + RINs= HOBO + 1.5x D4 RIN
D4 RIN as quoted by OPIS
3% increase
46% increase
$0.59 per gallon lower
$0.04 per gallon increase
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 5 |
REG Produced Gallons Sold Breakout
160,000,000
140,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | |||
Biodiesel | Renewable Diesel | ||||||||
Note: Includes all self-produced gallons sold.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 6 |
Biodiesel Sales to Premium Markets
Gallons Sold
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 |
Note: Includes sales of biodiesel into CA, OR, BC, Alberta and Norway. | ||
All REG Ultra Clean® gallons are sold into Premium Markets as well. | 7 | |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | ||
Total Recordable Incident Rate and DART Rate (Global)
4.00 | |||||||
3.00 | |||||||
Rate | Sept | ||||||
Industry Average: | TRIR | ||||||
(0.92) | |||||||
Incident | |||||||
2.00 | 2.1 | ||||||
1.00 | |||||||
Industry Leaders: 0.7 | |||||||
0.00 | |||||||
Jan-14 | Jan-15 | Jan-16 | Jan-17 | Jan-18 | Jan-19 | Jan-20 |
TRIR (Total Recordable
Incident Rate)
DART Rate
Industry Average (TRIR)
"Industry Leaders" (TRIR)
DART:
Days away
Restricted
Transferred
Note: TRIR calculated on a twelve month rolling average | 8 | |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | ||
REG Produced Gallons Breakout
Gallons Produced
160,000,000
140,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 |
Biodiesel | Renewable Diesel | ||
Note: Includes all self-produced gallons.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 9 |
Industry Sales and Demand
Gasoline Estimated Demand | |||||||
Day | 13,000 | ||||||
12,000 | |||||||
per | 11,000 | ||||||
10,000 | |||||||
Barrels | |||||||
8,000 | |||||||
9,000 | 2019 | ||||||
Thousand | 7,000 | 14% decrease YTD | 2020 | ||||
6,000 | 2020 vs YTD 2019 | ||||||
5,000 | |||||||
4,000 | |||||||
Jan | Feb | Mar Apr May Jun Jul | Aug | Sep Oct Nov | Dec |
Kerosene Jet Fuel Estimated Demand
2,500 | |||||||||||
Day | 2,000 | ||||||||||
per | |||||||||||
Barrels | 1,500 | ||||||||||
2019 | |||||||||||
1,000 | 2020 | ||||||||||
Thousand | |||||||||||
500 | 38% decrease YTD | ||||||||||
2020 vs YTD 2019 | |||||||||||
- | |||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov Dec |
Source: DOE & REG
Distillate Estimated Demand
Day | 6,500 | |||||||||||
6,000 | ||||||||||||
per | 5,500 | |||||||||||
Barrels | 5,000 | 2019 | ||||||||||
4,500 | 2020 | |||||||||||
Thousand | ||||||||||||
4,000 | 9% decrease YTD | |||||||||||
3,500 | 2020 vs YTD 2019 | |||||||||||
3,000 | ||||||||||||
Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
Biobased Diesel Estimated Demand | ||||||
Gallons | 250,000 | |||||
200,000 | ||||||
of | 150,000 | |||||
2019 | ||||||
Thousands | ||||||
100,000 | 2020 | |||||
50,000 | 1% decrease YTD | |||||
2020 vs YTD 2019 | ||||||
0 | ||||||
Jan | Feb Mar Apr May Jun | Jul | Aug | Sep Oct Nov | Dec |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 10 |
HOBO + RIN & HOBO Spread
1.50 | ||
1.00 | ||
$/gal | ||
0.50 | ||
0.00 | ||
-0.50 | ||
HOBO = HO NYMEX + 1 - ((CBOT SBO $/lb)/100*7.5) | HOBO + RINs | HOBO |
HOBO + RINs= HOBO + 1.5x D4 RIN |
D4 RIN as quoted by OPIS
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 11 |
Feedstock Prices
3.25 | |
2.75 | |
$/gal | 2.25 |
1.75 | |
1.25 |
CBOT SBO | Choice White Grease | Distiller's Corn Oil | Tech Tallow | |||
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 12 |
Feedstock Mix
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | |||||||
Feedstock 1 | Feedstock 2 | Feedstock 3 | Feedstock 4 | Feedstock 5 | |||||||||
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 13 |
LCFS & Oregon CFP Price
240.00 | ||
220.00 | ||
200.00 | ||
180.00 | ||
$/MT | 160.00 | |
140.00 | ||
120.00 | ||
100.00 | ||
80.00 | ||
LCFS | Oregon CFP |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 14 |
Planned Geismar Expansion to 340 mmgy
Expected additional capacity:
250 million gallons per year
Expected date of completion: Late 2023
Estimated project cost: $825 million
Proprietary process technology
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 15 |
Sales of Blends of Biodiesel in Renewable Diesel
Gallons Sold
25,000,000 | 70% increase Q3 | 2020 |
vs Q3 2019 | ||
20,000,000 | ||
15,000,000
10,000,000
5,000,000
0
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 |
Note: Includes gallons sold of REG Ultra Clean® from REG self-produced gallons and 3rd party renewable diesel
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 16 |
End User Customers - Biodiesel Gallons Sold
3,000,000 | |
2,500,000 | |
2,000,000 | |
Sold | |
Gallons | 1,500,000 |
1,000,000 |
500,000
0
26% increase Q3 2020
vs Q3 2019
Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 |
Note: Includes gallons sold to end users, e.g. fleets, municipalities, mining companies, etc.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 17 |
Q3 2020 REG Carbon Saved
(1) | Carbon reduction based on life cycle analysis of REG-produced fuels versus petroleum diesel. | ||
(2) | epa.gov/energy/greenhouse-gas-equivalencies-calculator | ||
(3) | Assuming annual travel of 11,484 miles/year and national grid average electricity versus gasoline using CA-GREET | 18 | |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | |||
Third Quarter Financial Highlights
(in millions except for HOBO + RINs) | Q3 2020 | Q3 2019 | Y/Y Change |
HOBO + RINs1 | $0.85 | $1.44 | (41)% |
Gallons Sold | 176 | 188 | (6)% |
Total Revenues | $576 | $584 | (1)% |
Net income (loss) from continuing operations | $26 | $(14) | N/M |
available to common stockholders | |||
Adjusted EBITDA2,3 | $58 | $88 | (34)% |
- HOBO = HO NYMEX + 1 - ((CBOT SBO $/lb)/100*7.5) --HOBO + RINs= HOBO + 1.5x D4 RIN -- D4 RIN as quoted by OPIS
- Adjusted EBITDA is a non-GAAP measure. See Appendix for the definition of Adjusted EBITDA and reconciliation to Net Income determined in accordance with GAAP
- On December 20, 2019, the BTC was retroactively reinstated for 2019 calendar years. The retroactive credit for 2019 resulted in a net benefit to us that was recognized in our Revenue and GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the operating performance in other periods, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to 2019 based upon the portion of the BTC benefit that related to 2019.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 19 |
SG&A per Gallon
$0.25
$0.20
$0.15
$/gal
$0.10
$0.05
$0.00
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2019 | 2020 |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 20 |
Trailing 12 Month Adjusted EBITDA1
$ in thousands
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2017 | 2018 2 | 2019 2 | 2020 |
Source: REG
- Adjusted EBITDA is a non-GAAP measure (in thousands). See Appendix for the definition of Adjusted EBITDA and a detailed reconciliation to Net Income (loss) determined in accordance with GAAP
- On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our GAAP financial
statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the 2018 operating performance, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to | |||
each of the four quarters of 2018 based upon the portion of the BTC benefit that related to that quarter. The portion of the credit related to 2019 was allocated to each of the four quarters based upon the portion of the BTC | 21 | ||
benefit that related to that quarter. | © 2020 | Renewable Energy Group, Inc. All Rights Reserved. | |
Trailing 12 Month Return on Invested Capital (ROIC)1
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2017 | 2018 | 2019 | 2020 |
- Trailing 12 month ROIC (after-tax EBIT/invested capital). Invested capital= Current assets (excludes cash, restricted cash and marketable securities) - Current liabilities + Net fixed asset + Goodwill + Intangible + Other assets excluding investments - Long term liabilities.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 22 |
Balance Sheet
September 30, | June 30, | December 31, | |
(in millions) | 2020 | 2020 | 2019 |
Cash and Cash Equivalents | $97.2 | $148.0 | $50.4 |
Marketable Securities | $184.9 | $179.8 | ---- |
Receivables | $187.9 | $251.2 | $858.9 |
Inventory | $146.0 | $160.2 | $161.4 |
Net Working Capital1 | $446.6 | $524.6 | $520.8 |
Long-term marketable securities | $101.6 | --- | --- |
Total Assets | $1,460.4 | $1,492.2 | $1,785.3 |
Current Liabilities1 | $232.2 | $275.0 | $588.4 |
Term Debt2 | $67.6 | $72.0 | $106.0 |
Total Liabilities | $276.2 | $321.7 | $653.4 |
- Includes $46.9 million, $50.6 million and $69.7 million 2036 Convertible Senior Notes classified as Current Liabilities as of September 30, 2020, June 30, 2020 and December 31, 2019, respectively.
- Term debt before netting of debt issuance costs of $1.8 million, $1.9 million and $2.8 million at September 30, 2020, June 30, 2020 and December 31, 2019, respectively.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 23 |
Liquidity and Capital Structure
September 30, | June 30, | December 31, | |
2020 | 2020 | 2019 | |
(in millions except for Book value per share) | |||
Term Debt1 | $68 | $72 | $106 |
Term Debt/Total Capitalization | 5% | 6% | 9% |
Net Book Value | $1,184 | $1,170 | $1,132 |
Book value per share2 | $30 | $30 | $29 |
- Term debt before netting of debt issuance costs of $1.8 million, $1.9 million and $2.8 million at September 30, 2020, June 30, 2020, and December 31, 2019, respectively.
- Based on common shares outstanding at the end of each period.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 24 |
Fourth Quarter Market Forces
POSITIVE | NEGATIVE |
Improving diesel inventories | Low crude prices continue, depressing diesel |
Renewable diesel and biodiesel demand | prices |
remains relatively robust | Rising DCO and vegetable oil prices |
CWG availability and pricing | Margins under ongoing pressure |
Broadening public support for clean fuel | COVID resurgence |
solutions with low carbon intensity | |
Overall positive demand outlook with near term tight margin
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 25 |
Q4 2020 and Full Year 2020 Guidance
Estimated | Estimated | ||
(in millions) | Q4 2020 | FY 2020 | |
Gallons Sold1 | 150 | - 170 | 650 - 670 |
Gallons Produced | 115 | - 135 | 505 - 525 |
Adjusted EBITDA2 | $30 | - $45 | $187 - $202 |
This estimate is based on actual performance through October 26th, existing forward contracts expected to be fulfilled, and existing spot margins being stable through the end of the quarter. Any change to the price of diesel, feedstocks, RINs or LCFS credits through the end of the quarter would be expected to impact the estimated results.
- Reflects total gallons sold.
- Adjusted EBITDA is a non-GAAP measure. See Appendix for the definition of Adjusted EBITDA and a detailed reconciliation to Net Income (loss) determined in accordance with GAAP.
Note: This information is based on management's current expectations and estimates, which are based in part on market and industry data. Many factors are outside the control of
management including particularly input costs, and actual results may differ materially from the information set forth above. See "Safe Harbor Statement" in slide 3.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 26 |
Upcoming Virtual Conference
Baird Global Industrial Conference
November 12, 2020
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 27 |
Appendix
28
© 2020 Renewable Energy Group, Inc. All Rights Reserved.
Adjusted EBITDA Reconciliation
(in thousands) | 1Q-2020 | 2Q-2020 | 3Q-2020 | 1Q-2019 | 2Q-2019 | 3Q-2019 | 4Q-2019 | 2019 | ||||||||||||||||||||||||||
Net income (loss) from continuing operations: | $ | 76,853 | $ | 848 | $ | 26,831 | $ | (41,387) | $ | (57,635) | $ | (13,753) | $ | 502,506 | $ | 389,731 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||
Interest expense | 2,472 | 1,190 | 1,070 | 4,219 | 3,737 | 2,866 | 1,354 | 12,176 | ||||||||||||||||||||||||||
Income tax expense (benefit) | 1,331 | 1,629 | 1,046 | (430) | (90) | (629) | 579 | (570) | ||||||||||||||||||||||||||
Depreciation | 8,934 | 9,103 | 9,388 | 9,099 | 9,142 | 9,107 | 8,950 | 36,298 | ||||||||||||||||||||||||||
Amortization of intangible assets | 353 | 318 | 591 | 334 | 510 | 397 | 391 | 1,632 | ||||||||||||||||||||||||||
EBITDA | $ | 89,943 | $ | 13,088 | $ | 38,926 | $ | (28,165) | $ | (44,336) | $ | (2,012) | $ | 513,780 | $ | 439,267 | ||||||||||||||||||
Gain on sale of assets | - | (187) | - | - | - | - | - | - | ||||||||||||||||||||||||||
Change in fair value of contingent liability | - | - | - | 304 | 398 | (136) | - | 566 | ||||||||||||||||||||||||||
Loss (gain) on debt extinguishment | (1,172) | (619) | (18) | 2 | - | - | (490) | (488) | ||||||||||||||||||||||||||
Gain on lease termination | - | (4,459) | - | - | - | - | - | - | ||||||||||||||||||||||||||
Other (income) expense, net | 304 | (2,214) | (1,594) | (854) | (691) | (179) | (39) | (1,763) | ||||||||||||||||||||||||||
Impairment of assets | - | - | 19,256 | - | 468 | 11,145 | 595 | 12,208 | ||||||||||||||||||||||||||
Non-cash stock compensation | 1.367 | 2,611 | 1.811 | 1,353 | 1,824 | 1,804 | 1,726 | 6,707 | ||||||||||||||||||||||||||
Adjusted EBITDA excluding BTC allocation | $ | 90,442 | $ | 8,220 | $ | 58,381 | $ | (27,360) | $ | (42,337) | $ | 10,622 | $ | 515,572 | $ | 456,497 | ||||||||||||||||||
Biodiesel tax credit 20181 | - | - | - | - | - | - | (238,564) | (238,564) | ||||||||||||||||||||||||||
Biodiesel tax credit 20191 | - | - | - | 56,385 | 78,493 | 77,168 | (212,046) | - | ||||||||||||||||||||||||||
Adjusted EBITDA | $ | 90,442 | $ | 8,220 | $ | 58,381 | $ | 29,025 | $ | 36,156 | $ | 87,790 | $ | 64,962 | $ | 217,933 |
Total balance may not foot due to rounding.
- On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the 2018 operating performance, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to each of the four quarters of 2018 based upon the portion of the BTC benefit that related to that quarter. The portion of the credit related to 2019 was allocated to each of the four quarters based upon the portion of the BTC benefit that related to that quarter.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 29 |
Adjusted EBITDA Reconciliation
(in thousands) | 1Q-2018 | 2Q-2018 | 3Q-2018 | 4Q-2018 | 2018 | 1Q-2017 | 2Q-2017 | 3Q-2017 | 4Q-2017 | 2017 | ||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations: | $ | 217,844 | $ | 29,042 | $ | 25,472 | $ | 31,270 | $ | 303,628 | $ | (12,106) | $ | (31,884) | $ | (8,413) | $ | (13,876) | $ | (66,279) | ||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||
Interest expense | 4,651 | 4,925 | 4,003 | 3,955 | 17,534 | 4,536 | 4,479 | 4,725 | 5,015 | 18,755 | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | (1,203) | 3,835 | 854 | 2,385 | 5,871 | 1,075 | 1,960 | (115) | (33,410) | (30,490) | ||||||||||||||||||||||||||||||||
Depreciation | 8,739 | 9,004 | 8,977 | 9,604 | 36,324 | 8,313 | 8,413 | 8,475 | 8,578 | 33,779 | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | 42 | 44 | 52 | 45 | 183 | (139) | (117) | 41 | 39 | (176) | ||||||||||||||||||||||||||||||||
EBITDA | $ | 230,073 | $ | 46,850 | $ | 39,358 | $ | 47,259 | $ | 363,540 | $ | 1,679 | $ | (17,149) | $ | 4,713 | $ | (33,654) | $ | (44,411) | ||||||||||||||||||||||
Gain on involuntary conversion | (4,000) | (454) | - | (3) | (4,457) | - | - | (942) | (4,387) | (5,329) | ||||||||||||||||||||||||||||||||
Gain on sale of assets | (990) | - | (13) | (2) | (1,005) | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Change in fair value of convertible debt conversion liability | - | - | - | - | - | 172 | 32,546 | (8,560) | (5,325) | 18,833 | ||||||||||||||||||||||||||||||||
Change in fair value of contingent liability | 458 | 30 | 185 | 444 | 1,117 | 321 | 432 | 1,170 | 231 | 2,154 | ||||||||||||||||||||||||||||||||
Loss (gain) on debt extinguishment | 232 | (2,337) | (788) | (3,404) | (6,297) | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Other (income) expense, net | (225) | (2,067) | (486) | (1,240) | (4,018) | 297 | (32) | (12) | 741 | 994 | ||||||||||||||||||||||||||||||||
Impairment of assets1 | - | - | - | 879 | 879 | - | 1,341 | - | 48,532 | 49,873 | ||||||||||||||||||||||||||||||||
Loss on the Geismar lease termination | - | - | - | - | - | - | 3,967 | - | - | 3,967 | ||||||||||||||||||||||||||||||||
Straight-line lease expense | (33) | (3) | (61) | (31) | (128) | (32) | (85) | (85) | (35) | (237) | ||||||||||||||||||||||||||||||||
Executive Severance | 165 | 50 | - | - | 215 | - | - | 2,420 | 991 | 3,411 | ||||||||||||||||||||||||||||||||
Non-cash stock compensation | 1,794 | 2,203 | 1,227 | 1,188 | 6,412 | 1,308 | 1,688 | 2,023 | 1,890 | 6,909 | ||||||||||||||||||||||||||||||||
Adjusted EBITDA excluding 2017 BTC allocation | $ | 227,474 | $ | 44,272 | $ | 39,422 | $ | 45,090 | $ | 356,258 | $ | 3,745 | $ | 22,708 | $ | 727 | $ | 8,984 | $ | 36,164 | ||||||||||||||||||||||
Biodiesel tax credit 20172 | (206,521) | - | - | - | (206,521) | 36,728 | 59,365 | 57,350 | 53,078 | 206,521 | ||||||||||||||||||||||||||||||||
Biodiesel tax credit 20183 | 42,847 | 66,499 | 71,140 | 58,078 | 238,564 | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 63,800 | $ | 110,771 | $ | 110,562 $ | 103,168 | $ | 388,301 | $ | 40,473 | $ | 82,073 | $ | 58,077 | $ | 62,062 | $ | 242,685 | |||||||||||||||||||||||
Total balance may not foot due to rounding. | ||||||||||||||||||||||||||||||||||||||||||
(1) Represents the impairment charge to write down the carrying value of certain assets. | ||||||||||||||||||||||||||||||||||||||||||
(2) On February 9, 2018, the BTC was reinstated for the 2017 calendar year. The retroactive credit for 2017 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ended March 31, 2018. However, because this credi t relates to 2017 | ||||||||||||||||||||||||||||||||||||||||||
operating performance, our presentation of Adjusted net income and Adjusted EBITDA reflects the allocation of the | net benefi t of the reinstatement to each of the four quarters of 2017 based upon gallons sold in the quarters. | |||||||||||||||||||||||||||||||||||||||||
(3) On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 in a net benefit to us that was recognized in our GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of | ||||||||||||||||||||||||||||||||||||||||||
this credit relates to the 2018 operating performance, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to each of the four quarters of 2018 based upon the portion of the BTC benefit that related to that quarter. | 30 | |||||||||||||||||||||||||||||||||||||||||
Note: In the fourth quarter of 2018, the operations of REG Life Sciences were classified as discontinued operations. The Company has excluded the results from these discontinued operations from the calculation of Adjusted EBITDA for all periods presented . | © 2020 | Renewable Energy Group, Inc. All Rights Reserved. | ||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA Reconciliation
(in thousands) | 1Q-2016 | 2Q-2016 | 3Q-2016 | 4Q-2016 | 2016 | |||||||||||||||
Net income (loss) from continuing operations: | $ | (3,790) | $ | 10,196 | $ | 26,626 | $ | 30,809 | $ | 63,841 | ||||||||||
Adjustments: | ||||||||||||||||||||
Interest expense | 3,311 | 3,738 | 4,487 | 4,451 | 15,987 | |||||||||||||||
Income tax expense (benefit) | 728 | 1,296 | (1,203) | 3,447 | 4,268 | |||||||||||||||
Depreciation | 7,506 | 7,751 | 7,839 | 8,267 | 31,363 | |||||||||||||||
Amortization of intangible assets | (140) | (134) | (129) | (131) | (534) | |||||||||||||||
EBITDA | $ | 7,615 | $ | 22,847 | $ | 37,620 | $ | 46,843 | $ | 114,925 | ||||||||||
Contingency gain related to insurance payments | (3,543) | (997) | (3,470) | (1,884) | (9,894) | |||||||||||||||
Change in fair value of convertible debt conversion liability | - | (13,432) | (3,013) | 3,400 | (13,045) | |||||||||||||||
Change in fair value of contingent liability | (15) | 573 | 369 | 992 | 1,919 | |||||||||||||||
Other (income) expense, net | 88 | (2,306) | 314 | (854) | (2,758) | |||||||||||||||
Impairment of assets1 | - | - | - | 17,893 | 17,893 | |||||||||||||||
Straight-line lease expense | (94) | (80) | (73) | (38) | (285) | |||||||||||||||
Non-cash stock compensation | 1,076 | 858 | 2,133 | 1,829 | 5,896 | |||||||||||||||
Adjusted EBITDA | $ | 5,127 | $ | 7,463 | $ | 33,880 | $ | 68,181 | $ | 114,651 |
Total balance may not foot due to rounding.
(1) Represents the impairment charge to write down the carrying value of certain assets.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 31 |
Estimated Q4 2020 and FY 2020 Adjusted EBITDA Reconciliation
Q4 2020 | Q4 2020 | FY 2020 | FY 2020 | |||||||||||||
(in thousands) | Low | High | Low | High | ||||||||||||
Net income (loss) from continuing operations: | $ 16,400 | $ 31,100 | $ 121,100 | $ 135,600 | ||||||||||||
Adjustments: | ||||||||||||||||
Income tax expense (benefit) | 300 | 600 | 4,200 | 4,700 | ||||||||||||
Interest expense | 1,900 | 1,900 | 6,600 | 6,600 | ||||||||||||
Depreciation | 9,700 | 9,700 | 37,100 | 37,100 | ||||||||||||
Amortization | 400 | 400 | 1,700 | 1,700 | ||||||||||||
EBITDA | $ | 28,700 | $ | 43,700 | $ | 170,700 | $ | 185,700 | ||||||||
Other (income) expense, net | (600) | (600) | (4,100) | (4,100) | ||||||||||||
Gain on sale of assets | (200) | (200) | ||||||||||||||
(Gain) loss on debt extinguishment | (1,800) | (1,800) | ||||||||||||||
Gain on lease termination | (4,500) | (4,500) | ||||||||||||||
Impairment of assets | 19,300 | 19,300 | ||||||||||||||
Non-cash stock compensation | 1,900 | 1,900 | 7,600 | 1,900 | ||||||||||||
Adjusted EBITDA | $ | 30,000 | $ | 45,000 | $ | 187,000 | $ | 202,000 | ||||||||
Note: This information is based on management's current expectations and estimates, which are based in part on market and industry data. Many factors are outside the control of management including particularly input costs, and actual results may differ materially from the information set forth above. See "Safe Harbor Statement" in slide 3.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 32 |
Adjusted Third Quarter Highlights
Q3 2020 | Q3 2019 | Y/Y Change | |
GAAP | |||
Total Revenues | $576 | $584 | (1)% |
Operating income (loss) | $27 | $(12) | $39 |
Net income (loss) from continuing operations available | $26 | $(14) | $40 |
to common stockholders | |||
BTC Allocated to Period Earned1 - Non GAAP | |||
Total Revenues | $576 | $661 | (13)% |
Net income from continuing operations available to | $26 | $62 | (58)% |
common stockholders | |||
Adjusted EBITDA | $58 | $88 | (34)% |
(1) BTC benefits are allocated to the respective periods when associated gallons were sold.
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 33 |
Risk Management
REG's risk management policy works to minimize earnings volatility from feedstock
costs and fuel prices across varying market conditions
0.5 | 2.5000 | ||||||||||||||||||||||
0.4 | |||||||||||||||||||||||
2.0000 | |||||||||||||||||||||||
0.3 | |||||||||||||||||||||||
0.2 | 1.5000 | ||||||||||||||||||||||
$/gal | 0.1 | ||||||||||||||||||||||
0.0 | 1.0000 | ||||||||||||||||||||||
-0.1 | |||||||||||||||||||||||
0.5000 | |||||||||||||||||||||||
-0.2 | |||||||||||||||||||||||
-0.3 | 0.0000 | ||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | 4Q | 1Q | 2Q | 3Q | |
2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
Hedge gain/(loss) per gallon - LHS | NYMEX HO (at end of the period) | |
Source: REG Analysis | 34 | |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | ||
ULSD vs Biodiesel Price
3.50 |
3.00 |
2.50 |
2.00 |
1.50 |
1.00 |
0.50 |
0.00 |
NYMEX HO | B100 - Chicago | |
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 35 |
Energy and SBO Market Prices
4.00 | ||||
3.50 | ||||
3.00 | ||||
2.50 | ||||
2.00 | ||||
gal | 1.50 | |||
$/ | ||||
1.00 | ||||
0.50 | ||||
0.00 | ||||
-0.50 | ||||
-1.00 | ||||
NYMEX HO | CBOT SBO | B100 - Chicago | WTI Crude Oil |
Source: NYMEX and OPIS
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 36 |
US Petroleum Distillate Stocks and Demand
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 37 |
Market Data
Q3 2020 | Q3 2019 | Y/Y | |
NYMEX ULSD average price per gallon | $1.20 | $1.89 | (36.5)% |
D4 RIN average price per credit | $0.67 | $0.46 | 45.7% |
CBOT Soybean oil average price per gallon | $2.36 | $2.14 | 10.3% |
HOBO + 1.5x D4 RIN1 average price per gallon | $0.85 | $1.46 | (41.0)% |
(1) HOBO = HO NYMEX + 1 - ((CBOT SBO $1/lb)/100*7.5) |
HOBO + RINs= HOBO + 1.5x D4 RIN
D4 RIN as quoted by OPIS
© 2020 Renewable Energy Group, Inc. All Rights Reserved. | 38 |
Attachments
- Original document
- Permalink
Disclaimer
REG - Renewable Energy Group Inc. published this content on 05 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 November 2020 23:24:04 UTC