REG records $2.0M loss in “very challenging” Q1 2014, as biodiesel prices fall

In Iowa, Renewable Energy Group reported a loss of $2.0M on revenues of $219.0M, a 17% drop in revenues in Q1 2013.

The company reported net income of $38.4M for Q1 2013. REG noted that the decrease in gross profit was primarily due to the retroactive biodiesel tax credit benefit included in first quarter 2013, as well as a decrease of the average B100 sales price per gallon and an increase in utilities expense.

In a release accompanying the results, the company highlighted:

• 47 million gallons sold, up 22% compared to Q1 2013
• 42 million gallons produced, up 5% compared to Q1 2013
• Adjusted EBITDA of $2 million
• Net loss of $2 million
• Redeemed remaining preferred shares in Q1 2014
• Achieved milestone of 1 billion cumulative gallons sold in April 2014

Compared to the first quarter of the prior year, REG sold 22% more gallons of biodiesel in the first quarter of 2014, while revenue decreased by 17% and adjusted EBITDA decreased by 91%.

The growth in production was made possible by additional capacity from the Company’s two latest biodiesel acquisitions, REG Mason City and REG New Boston, as well as upgrades at REG Albert Lea and a toll manufacturing arrangement.

“This quarter was very challenging, coming off an outstanding year,” said Daniel J. Oh, President and Chief Executive Officer. “Despite the challenges, we were able to generate positive adjusted EBITDA, which is evidence of the durability of our business model. While some of the challenges that affected the first quarter remain, in the near-term we are focusing our efforts to respond when markets normalize, and on executing our longer-term strategies.”

REG Energy Services, LLC was launched in February and began selling both Bioheat blended heating fuel and regular heating oil throughout the northeastern U.S. In addition, Energy Services is marketing ultra-low sulfur diesel at many REG terminal locations across the country. Energy Services is ramping up and the Company expects meaningful contributions in the second half of 2014 from the business.

In January 2014, REG acquired substantially all the assets of LS9, Inc., which are now part of REG Life Sciences, LLC. Preliminary valuation of the fair value and the consideration was $58.6 million. The technology acquired is the platform for the Company’s expansion into renewable chemicals and other products.

On June 3, 2014, the shareholders of Syntroleum Corporation will hold a vote to approve an agreement to purchase substantially all the assets of Syntroleum, including 50% ownership interest in Dynamic Fuels, a 75-million gallon renewable diesel refinery located in Giesmar, Louisiana.