Renewable Energy Group to sell REG Life Sciences

In Iowa, Renewable Energy Group announced that “the Company’s Board of Directors has decided to pursue a sale of the Company’s life sciences business unit,” known as RE Life Sciences. “As a result, the fourth quarter and year-end financial statements have been adjusted to reflect the life sciences unit as discontinued operations for all historical periods,” the company added, “The Company also recognized a $11.2 million impairment charge related to this business unit in the fourth quarter of 2018.”

Potential bidders could include companies interested in REG Life Sciences’ collaborations with Clariant and ExxonMobil in fuels development, especially the cellulosic sugars-to-biodiesel pathways. REG shares were down $1,54, or 5.08 percent, in trading yesterday, dropping towards the close.

The remarks came as the largest producer of America’s favorite advanced biofuel reported $139 million of Adjusted EBITDA in 2018. REG CEO  CJ Warner, described it as “an outstanding result reflecting strong operational performance and a favorable margin environment,” said “In addition, we remain confident that Congress will reinstate the BTC for 2018 which we estimate would add approximately $237 million to our 2018 Adjusted EBITDA,” Warner added.  “We are excited about the growth opportunities that this level of profitability would permit.”

Revenues for the fourth quarter of 2018 were $519.8 million on 163.2 million gallons sold.  Net income was $19.1 million, net income from continuing operations attributable to common stockholders was $30.4 million, and Adjusted EBITDA was $44.5 million.  Total gallons sold increased by 6.8% compared to the fourth quarter of 2017.  See the table below for the definition of Adjusted EBITDA and reconciliation to net income (loss) determined in accordance with GAAP.

For the full year 2018, revenues were $2.4 billion on 649.2 million gallons sold.  Net income was $292.3 million, net income from continuing operations was $295.8 million and Adjusted EBITDA was $138.9 million.  In 2018, REG sold 62.5 million more gallons and revenue increased by 10.6% compared to 2017.  See the table below for the definition of Adjusted EBITDA and reconciliation to net income determined in accordance with GAAP.

If the currently lapsed BTC is retroactively reinstated for 2018 on the same terms as in 2017, the Company estimates that its net income and Adjusted EBITDA would each increase by approximately $58.3 million for business conducted in the quarter ended December 31, 2018 and by approximately $237.0 million for business conducted in the full year of 2018.

We last looked in depth at REG Life Sciences in “The Bio Wilburys: ExxonMobil, REG add Clariant to monumental effort for cellulosic-to-biodiesel” here, and we last looked at REG in depth in December in “C.J.’s back and REGI’s got her: Warner tapped as new Renewable Energy Group CEO”, here.