Renewable Energy Group Reports Third Quarter 2012 Financial Results

  Renewable Energy Group Reports Third Quarter 2012 Financial Results

  *62 million gallons sold, up 40% year-over-year
  *Revenue of $323 million, up 26% year-over-year
  *Cash flow from operations of $6.2 million
  *Adjusted EBITDA loss of $2.3 million due to risk management transactions
    and RIN price declines
  *Distribution expanded with new terminal locations in New Mexico and
    California
  *Acquired a 15 million gallon-per-year multi-feedstock plant in New Boston,
    Texas, after the close of the quarter

Business Wire

AMES, Iowa -- November 06, 2012

Renewable Energy Group, Inc. (NASDAQ:REGI) today announced its financial
results for the quarter ended September 30, 2012.

Revenues for the third quarter were $322.9 million, an increase of 26%
compared to revenues of $256.5 million for the same period in 2011. Third
quarter 2012 adjusted EBITDA was a loss of $2.3 million, a decrease of 105%
compared to $46.7 million for the same period in 2011. The balance sheet
remained strong with cash of $88.3 million at the close of the quarter,
compared to $87.1 million at June 30, 2012.

“REG achieved meaningful success in the quarter, even with the adjusted EBITDA
loss that was caused by accounting for risk management positions and RIN price
declines,” said Daniel J. Oh, President and Chief Executive Officer of REG.
“Our revenues continued to increase, our gallons sold were up 40% compared to
third quarter 2011, we acquired additional production capacity at an
attractive price, and we expanded distribution.”

Oh continued, “We remain optimistic about the growing biodiesel industry and
are especially pleased with EPA’s formalized 2013 Renewable Volume Obligation
(RVO). With an RVO that is 28% above this year’s, the industry demand outlook
is solid. Our acquisition of the New Boston, Texas facility is evidence of our
long-term confidence and our commitment to remain a leader in the industry.”

Operating Highlights

REG produced 45 million gallons of biodiesel in the third quarter of 2012,
compared to 39 million gallons in the same period in 2011. REG sold 62 million
gallons of biodiesel in the third quarter, an increase of 40% compared to the
same period in 2011. The increase in gallons sold was primarily due to
increased production capacity compared to last year as well as greater
distribution capabilities from new terminal locations.

REG executed its plan to grow its domestic distribution footprint by
commencing sales at two new terminals in the western U.S. In late July, the
company opened a sales terminal at its partially constructed biorefinery in
Clovis, New Mexico. In August, the company began sales to West Coast regional
distributors from a new terminal agreement near Long Beach, California.

After the close of the quarter, REG acquired a 15 million gallon-per-year
capacity, multi-feedstock biorefinery in New Boston, Texas, near Texarkana.
The company purchased the off-line refinery for 900,000 shares of common stock
and $0.3 million cash. The acquisition will expand the company’s nameplate
capacity to 227 million gallons per year, strengthening its leadership
position within the industry. The company expects to commence production at
New Boston within the first quarter of 2013.

Third Quarter 2012 Financial Results

Revenues for the third quarter were $322.9 million, representing a 25.9%
increase over the third quarter of 2011. Revenue growth was driven by a 40%
year-over-year increase in gallons sold, offset by a 22% decline in average
selling price during the same time period. Average selling price declined
mostly due to a sharp drop in RIN prices late in the quarter.

Gross profit for the quarter was 0.9%, which compares to 21.3% in the prior
year period. Gross profit was impacted negatively by two factors: the
accounting for risk management positions, and the severe decline in RIN prices
late in the quarter. Biodiesel cost of goods sold includes an $18 million loss
on risk management contracts. This was largely a function of timing and the
result of large movements in heating oil and soybean oil price indices in late
September as well as an adjustment of $8.2 million on RIN inventory to reflect
the lower of cost or market as of September 30, 2012.

Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and
amortization and further adjusted for certain items identified below under
“Adjusted EBITDA Reconciliation”, declined 105% year–over-year to a loss of
$2.3 million. REG generated cash flow from operations of $6.2 million in the
quarter, a decline of 62% from the $16.0 million generated in the prior year
period.

The table below summarizes REG’s results for Q3 2012:


REG Q3 2012 Revenue and Adjusted EBITDA Summary
(dollars and gallons in thousands)
                                                 
                              Q3 2012      Q3 2011      Change
                                                        
Gallons sold                  61,699       44,217       +40%
                                                        
Revenues                      $322,912     $256,502     +26%
                                                        
Cash flow from Operations     $6,168       $16,034      -62%
                                                        
                                                        
Adjusted EBITDA               ($2,288)     $46,714      -105%
                                                        
Adjusted EBITDA Margin      -0.7%      18.2%      
                                                        

Balance Sheet and Liquidity

At September 30, 2012, REG had cash and cash equivalents of $88.3 million.
Operating cash flow for the quarter was negatively impacted by a $10.6 million
increase in accounts receivable and an $8.9 million reduction in accounts
payable. Accounts receivable grew due to increasing sales volume during the
quarter. The negative impacts were more than offset by a $19.3 million
reduction in inventories. The inventory decline was balanced between a
reduction in raw materials as REG drew down feedstock purchased in earlier
periods at favorable prices and a reduction in finished goods.

Of the $6.2 million of operating cash flow generated in the quarter, $2.0
million was deployed in capital expenditures, $2.7 million was used to
repurchase shares due to tax net settlement on vesting securities, $0.3 was
used for a slight reduction in debt, and the remaining $1.2 million increased
cash.

Adjusted EBITDA Reconciliation

REG presents Adjusted EBITDA because the company believes it assists investors
in analyzing its performance across reporting periods on a consistent basis.
In addition, REG uses Adjusted EBITDA to evaluate, assess and benchmark its
financial performance on a consistent and comparable basis. REG excludes
non-cash stock-based compensation and non-cash other income (expense) items
because it does not believe that they are indicative of the company’s ongoing
operating performance. REG’s measure of Adjusted EBITDA might be different
than similar financial measures used by other companies. Non-GAAP metrics are
not determined in accordance with GAAP and are not a substitute for or
superior to financial measures determined in accordance with GAAP. Adjusted
EBITDA Margin is calculated by dividing Adjusted EBITDA by Revenues.

                                                  
                            Three Months Ended        Nine Months Ended
                            September 30,             September 30,
(In thousands)              2012        2011         2012         2011
                                                                    
Net income (loss)           $ (6,040 )   $ (2,007 )   $ 22,410      $ 781
                                                                    
Adjustments:
Income from equity            -            (649   )     -             (501   )
investments
Income tax expense            (2,165 )     4,752        3,669         4,752
(benefit)
Interest expense              1,150        2,183        3,262         5,642
Other (income) expense,       (56    )     (239   )     (121    )     (713   )
net
Change in fair value of       -            977          (349    )     2,500
Seneca Holdco liability
Change in fair value of
preferred stock               -            38,483       (11,975 )     55,571
conversion feature
embedded derivatives
Expense settled with          -            -            1,898         -
stock issuance
Straight-line lease           (31    )     393          (237    )     1,809
expense
Depreciation                  2,097        1,851        6,192         5,245
Amortization                  (208   )     (97    )     (553    )     (351   )
Non-cash stock               2,965       1,067       12,687       3,047
compensation
                                                                    
Adjusted EBITDA             $ (2,288 )   $ 46,714     $ 36,883      $ 77,782
                                                                             

Third Quarter Conference Call

REG will sponsor a conference call to discuss results today at 4:30 p.m.
EST/3:30 p.m. CST. Daniel J. Oh, President and Chief Executive Officer, and
Chad Stone, Chief Financial Officer, will host the call. Investors in the U.S.
interested in participating in the live call should dial +1 (877) 810-3368 and
enter passcode: 45250184. Those calling from outside the U.S. should dial +1
(760) 298-5082 and use the same passcode: 45250184. A telephone replay will be
available approximately two hours after the call concludes throughNovember
20, 2012by dialing from the U.S. +1 (855) 859-2056, or from international
locations +1 (404) 537-3406, and entering passcode: 45250184. A simultaneous
live webcast will be available on the Investor Relations section of the
Company's website athttp://investor.regi.com/. The webcast will be archived
on the website for one year.

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.
Currently with more than 225 million gallons of 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® biodiesel to
distributors to provide Americans 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 growth in the biodiesel industry and the timing
for commencement of operations at the recently acquired New Boston production
facility. 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 annual report on Form 10-K, quarterly
reports on Forms 10-Q and other periodic 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 based on new developments or changes in our expectations.


RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                                  
                     Three Months     Three Months     Nine Months      Nine Months
                     Ended            Ended            Ended            Ended
                     September 30,    September 30,    September 30,    September 30,
                     2012             2011             2012             2011
                                                                        
REVENUES:
Biodiesel sales      $ 321,005        $ 233,925        $ 774,820        $ 518,346
Biodiesel
government            1,868           22,497         8,070           38,763
incentives
                       322,873          256,422          782,890          557,109
Services              39              80              196             140
                      322,912         256,502         783,086         557,249
                                                                        
COSTS OF GOODS
SOLD:
Biodiesel              320,078          201,878          732,113          463,962
Services              43              79              199             121
                      320,121         201,957         732,312         464,083
                                                                        
GROSS PROFIT           2,791            54,545           50,774           93,166
                                                                        
SELLING,
GENERAL, AND          9,902           11,045          33,878          25,134
ADMINISTRATIVE
EXPENSES
                                                                        
INCOME (LOSS)         (7,111     )    43,500          16,896          68,032
FROM OPERATIONS
                                                                        
OTHER INCOME
(EXPENSE), NET:
Change in fair
value of
preferred stock        -                (38,483    )     11,975           (55,571    )
conversion
feature embedded
derivatives
Change in fair
value of Seneca        -                (977       )     349              (2,500     )
Holdco liability
Other income           56               239              121              713
(expense), net
Interest expense      (1,150     )    (2,183     )    (3,262     )    (5,642     )
                      (1,094     )    (41,404    )    9,183           (63,000    )
                                                                        
INCOME (LOSS)
BEFORE INCOME
TAXES AND
INCOME FROM
EQUITY                 (8,205     )     2,096            26,079           5,032
INVESTMENTS
INCOME TAX
BENEFIT                2,165            (4,752     )     (3,669     )     (4,752     )
(EXPENSE)
INCOME FROM
EQUITY                -               649             -               501
INVESTMENTS
                                                                        
NET INCOME            (6,040     )    (2,007     )    22,410          781
(LOSS)
                                                                        
EFFECTS OF             -                -                39,107           -
RECAPITALIZATION
LESS - ACCRETION
OF SERIES A
PREFERRED STOCK        -                (6,477     )     (1,808     )     (18,553    )
TO REDEMPTION
VALUE
LESS - CHANGE IN
UNDISTRIBUTED
DIVIDENDS              (862       )     (3,221     )     (1,685     )     (9,467     )
ALLOCATED TO
PREFERRED
STOCKHOLDERS
LESS -
DISTRIBUTED
DIVIDENDS TO           -                -                (1,470     )     -
PREFERRED
STOCKHOLDERS
LESS - EFFECT OF
PARTICIPATING          -                -                (8,952     )     -
PREFERRED STOCK
LESS - EFFECT OF
PARTICIPATING         -               -               (3,145     )    -
SHARE-BASED
AWARDS
                                                                        
NET INCOME
(LOSS)
ATTRIBUTABLE TO      $ (6,902     )   $ (11,705    )   $ 44,457         $ (27,239    )
THE COMPANY'S
COMMON
STOCKHOLDERS
                                                                        
Net income
(loss) per share
attributable to
common
stockholders:
Basic                $ (0.24      )   $ (0.34      )   $ 1.60           $ (0.81      )
Diluted              $ (0.24      )   $ (0.34      )   $ 0.28           $ (0.81      )
                                                                        
Weighted-average
shares used to
compute net
income (loss)
per share
attributable to
common
stockholders:
Basic                 29,292,349      34,738,903      27,729,676      33,699,728
Diluted               29,292,349      34,738,903      33,676,699      33,699,728


RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
AS OF SEPTEMBER 30, 2012 AND DECEMBER 31, 2011
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                             
                                                September 30,     December 31,
                                                2012              2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                       $   88,282        $   33,575
Total current assets                                203,647           150,022
Property, plant and equipment, net                  234,594           232,223
(including variable interest entities)
Goodwill                                            84,864            84,864
Total assets                                        538,318           484,447
                                                                  
LIABILITIES AND EQUITY
Current maturities of notes payable                 27,358            8,473
(including variable interest entities)
Total current liabilities                           70,436            59,862
Preferred stock embedded conversion feature         -                 53,822
derivatives
Seneca Holdco Liability, at fair value              -                 11,903
Long term notes payable (including variable         46,144            73,079
interest entities)
Total liabilities                                   133,312           216,092
Redeemable preferred stock - Series A               -                 147,779
Redeemable preferred stock - Series B               83,165            -
Total stockholders' equity                          321,841           120,576
Total liabilities and equity                        538,318           484,447
                                                                      

Selected Condensed Consolidated Balance Sheet Information (historical)
The preceding table describes our selected condensed consolidated balance
sheet information as of September 30, 2012 and December 31, 2011 on a
historical basis.

Contact:

Investor Relations:
ICR, LLC
Gary Dvorchak, CFA, 310-954-1123
Senior Vice President
gary.dvorchak@icrinc.com
or
Company:
Renewable Energy Group
Chad Stone, 515-239-8091
Chief Financial Officer
Chad.Stone@regi.com
 
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