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Renewable Energy Group, Inc. (REGI) today updated its financial
guidance for the third quarter of 2012.
For the third quarter, REG now expects to report Adjusted EBITDA*
ranging from a loss of $2 million to a loss of $7 million. The company’s
prior guidance for Adjusted EBITDA was a gain of $10 million to $15
million. The company expects to report gallons of biodiesel sold in a
range of 60 to 63 million, compared to prior guidance of 55 to 60
million. The change in guidance is directly related to movements in
commodity prices, a steep depreciation in the price of RINs and tighter
margins than expected.
Mr. Daniel Oh, President and Chief Executive Officer stated, "Despite
these fluctuations in our markets, we remain optimistic about the
long-term prospects for REG and the biodiesel industry. The recent
finalization of the 2013 RVO provides growing demand for the next year.
Our flexible feedstock technology gives us a long term advantage as a
low cost producer, since we can adjust to fluctuations in feedstock
prices. Furthermore, REG continues to have a strong balance sheet with
cash to sustain our growth strategy."
"Our risk management positions serve the economic purpose of reducing
the effect of changing commodity prices and protecting the margin and
profitability of contracted biodiesel sales. Volatile commodity fuel
prices late in the quarter affected the market value of financial
contracts, causing most of the reduction in Adjusted EBITDA; however,
the cash margin earned from biodiesel sales is protected by utilizing
these financial contracts," continued Oh. "From an accounting
perspective, we must recognize such risk management losses in the third
quarter, although the biodiesel sale that a position is protecting may
occur in the fourth quarter."
Oh continued, "A secondary driver of our results was the decline in
biodiesel RIN prices of approximately 35% during the quarter, which
negatively impacted our revenue and resulted in tighter margin per
gallon sold than expected. RINs can and do trade separately from energy
and fluctuate in value based on supply and demand."
The updated outlook reflects REG’s preliminary estimates as of the date
of this press release and is subject to change based on completion of
our financial closing procedures. Accordingly, our actual results may
differ from our estimates and those differences may be material. The
company expects in early November to report third quarter results and
offer new guidance for the full year 2012.
* Adjusted EBITDA is defined as earnings before interest,
taxes, depreciation and amortization and further adjusted for other
income/expense, net change in fair value of Seneca Holdco liability,
change in fair value of preferred stock conversion feature embedded
derivatives, stock issued for glycerin agreement termination,
straight-line lease expense, and non-cash stock compensation. Because
comparable GAAP financial measures are not able to be determined by the
Company at the current time, management does not believe it is able to
reconcile the non-GAAP information provided without unreasonable effort.
Accordingly, such information has not been provided because the
quarter-end financial results have not yet been finalized as part of the
normal quarterly closing process.
About Renewable Energy Group
Renewable Energy Group is the largest producer of biodiesel in the
United States. Utilizing an integrated value chain model, Renewable
Energy Group is focused on converting natural fats, oils and greases
into advanced biofuels. With more than 210 million gallons of
owned/operated annual production capacity at biorefineries across the
country, REG is a proven biodiesel partner in the distillate marketplace.
For more than a decade, REG has been a reliable supplier of biodiesel
which meets or exceeds ASTM quality specifications. We sell REG-9000(R)
biodiesel to distributors so Americans can have cleaner burning fuels
that help lessen our dependence on foreign oil. REG-9000 branded
biodiesel is distributed in nearly every state in the U.S. For more
information, please visit the company’s website at http://www.REGI.com.
Note Regarding Forward-Looking Statements
This press release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 as
amended, including statements regarding REG’s expected financial results
of the third quarter of 2012. 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 effect of
governmental programs on our business; government policymaking and
mandates relating to renewable fuels; the future price and volatility of
feedstocks; the future price and volatility of petroleum and products
derived from petroleum; expected future financial performance; our
liquidity and working capital requirements; availability of federal and
state governmental tax credits and incentives; anticipated trends and
challenges in our business and competition in the markets in which we
operate; our ability to estimate our feedstock demands and biodiesel
sales; our dependence on sales to a limited number of customers and
distributors; technological obsolescence; our expectations regarding
future expenses; our ability to successfully implement our acquisition
strategy; and other risks and uncertainties described from time to time
in REG’s public filings with the Securities and Exchange Commission. The
forward-looking statements are made as of the date of this press release
and REG does not undertake to update any forward-looking statements.
SOURCE: Renewable Energy Group, Inc.
Investor Relations:
ICR, LLC
Gary Dvorchak, CFA, +1 310-954-1123
Senior Vice President
Gary.Dvorchak@icrinc.com
or
Renewable Energy Group
Chad Stone, +1 515-239-8069
Chief Financial Officer
Chad.Stone@REGI.com
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