Q3 2021 Highlights
Revenues of $1 billion
Net income available to common stockholders of $42 million, or $0.83 per diluted share
Adjusted EBITDA of $68 million, up 25% from Q3 2020
Record quarterly REG Ultra Clean sales
Increased Asset Backed Line of Credit to $250 million
Geismar, LA renewable diesel improvement and expansion project on track to deliver 340 million gallons per year of site production capacity by early 2024
Carbon reduction from REG-produced fuels in the quarter of over one million metric tons
Post-Quarter Announcements:
Initiated partnership with Canadian National Railway Company and Progress Rail to advance sustainability goals using bio-based diesel in locomotives (November 3)
Agreement with GoodFuels to supply and develop sustainable marine solutions (October 26)
Breaking ground on the Geismar improvement and expansion project (October 14)
Hydrotreater operations and novel feedstock conversion pilot plant in collaboration with Iowa State University (October 5)
Renewable Energy Group, Inc. ("REG") announced its financial results for the quarter ended September 30, 2021.
Revenues for the third quarter were $1 billion on 176 million gallons of fuel sold. Net income available to common stockholders was $42 million in the third quarter of 2021, compared to net income of $22 million for the third quarter of 2020. Adjusted EBITDA was $68 million in the third quarter of 2021, compared to $55 million for the third quarter of 2020.
"REG delivered another period of solid performance in the third quarter, with strong operations and commercial optimization," said Cynthia (CJ) Warner, President and Chief Executive Officer. "We delivered these results even while managing disruptions from Hurricane Ida and volatile energy and feedstock markets. Financial results were moderated by hedge-related timing, as a substantial rise in diesel prices at the end of the quarter resulted in a risk management loss in the period, most of which is expected to be offset in the fourth quarter when the hedged gallons are scheduled for delivery."
Warner added, "Our bio-based diesel is delivering critical and valuable carbon reductions now in the on-road sector, and we are continuing to advance our strategy by initiating sales to marine and rail customers, which we anticipate will enable further substantial growth."
4
Third Quarter 2021 Highlights
All figures refer to the quarter ended September 30, 2021, unless otherwise noted. All comparisons are to the quarter ended September 30, 2020, unless otherwise noted.
REG sold 176 million gallons of fuel, essentially flat versus the third quarter of 2020. The Company continued to improve its product mix. Renewable diesel sales increased 9 million gallons. This increase was offset by a 7 million gallon decrease in self-produced biodiesel sales and a one million gallon decrease in both third party biodiesel and petroleum diesel sales.
REG produced 128 million gallons of biodiesel and renewable diesel during the third quarter, a 7% decrease versus the prior years third quarter. Production at Geismar decreased 13%, primarily due to downtime caused by Hurricane Ida, the impact of which will be realized in future periods. North American biodiesel production also decreased 4 million gallons, or 4%, primarily due to production optimization.
Revenues increased from $572 million to $1 billion, largely driven by higher selling prices realized from a combination of a 139% increase in D4 RIN prices and a 78% increase in ULSD prices year over year.
Gross profit was $89 million compared to gross profit of $74 million in the third quarter of last year. The increase in gross profit was driven primarily by an improved margin environment and continued optimization. These positive factors were partially offset by a $19 million negative year-over-year swing in risk management.
Operating income was $51 million compared to operating income of $24 million, driven by the same factors as those described above for gross profit along with a $16 million decrease in impairment charges. The increase was partially offset by a $3 million increase in selling, general and administrative costs.
GAAP net income available to common stockholders increased to $42 million, or $0.83 per share on a fully diluted basis, compared to GAAP net income available to common stockholders of $22 million, or $0.51 per share on a fully diluted basis. The differential drivers are the same as those described above for operating income and gross profit along with an increase in interest expense of $7 million from the green bond issuance that closed in May.
Adjusted EBITDA was $68 million compared to $55 million, with the increase resulting from the same factors as described above for operating income.
At September 30, 2021, REG had cash and cash equivalents, restricted cash, and marketable securities (including long-term marketable securities) of $1.0 billion, an increase of $691 million from December 31, 2020. The increase in cash and cash equivalents is primarily due to the $535 million in funding, net of fees, from the Company's green bond issuance in the second quarter as well the $365 million in funding, net of fees, from the Company's equity raise in the first quarter. The combined proceeds are intended to be used for the improvement and expansion project at the Geismar facility, other strategic investments and working capital.
At September 30, 2021, accounts receivable were $197 million, an increase of $53 million from December 31, 2020 and accounts payable were $129 million, a decrease of $4 million from December 31, 2020. The value of the Company's inventory at the end of the quarter was $374 million, an increase of $165 million from December 31, 2020, due to rising commodity values.
