FutureFuel Receives Excise Tax Registration Approval

Rhea-AI Summary

FutureFuel Corp. (NYSE: FF) has announced receiving Excise Tax Registration approval from the Internal Revenue Service, marking a important first step towards eligibility for the Internal Revenue Code 45Z credit (clean fuel production tax credit). The tax credit, initially approved in August 2022, became effective January 1, 2025. FutureFuel, which has an annual biodiesel production capacity of 60 million gallons, is awaiting further guidance from the IRS regarding the implementation of this tax credit, along with other Renewable Fuel Producers.

Positive

• Received IRS Excise Tax Registration approval, enabling potential eligibility for clean fuel production tax credits
• Substantial production capacity of 60 million gallons of biodiesel annually

Negative

• Full guidance from IRS still pending, creating uncertainty about actual tax credit benefits

Insights

Tax Policy Expert

The IRS excise tax registration approval for FutureFuel marks a important milestone in accessing the IRC 45Z clean fuel production tax credit. This 60 million gallon capacity biodiesel producer is now positioned to potentially benefit from tax credits ranging from $0.20 to $1.00 per gallon depending on the carbon intensity score of their fuel production process.

The Section 45Z credit represents a significant shift from the previous biodiesel tax credit structure, introducing a sliding scale based on lifecycle emissions rather than a flat rate. For a company with FF's production capacity, this could translate to annual tax benefits between $12 million and $60 million, though actual figures will depend on production volumes and carbon intensity metrics once full IRS guidance is released.

This registration approval comes at an optimal time, coinciding with the credit's effective date of January 1, 2025. However, investors should note that final guidance from the IRS regarding specific credit calculations and carbon intensity thresholds remains pending, creating some near-term uncertainty about the precise financial impact.

Renewable Energy Analyst

The timing of FutureFuel's excise tax registration approval aligns perfectly with the biodiesel industry's transition to the new emissions-based incentive structure. The 60 million gallon annual production capacity positions FF as a significant player in the renewable fuels market, representing meaningful clean energy infrastructure in a growing sector.

While the industry awaits complete IRS guidance, this development signals FF's proactive approach to maintaining competitive advantages in the biofuels market. The new credit structure is designed to reward producers with lower carbon intensity scores, potentially creating additional value for companies with efficient production processes and sustainable feedstock sourcing strategies.

The market implications extend beyond direct tax benefits - this registration enhances FF's ability to compete effectively in a sector where margins are heavily influenced by government incentives. The transition to an emissions-based credit system could drive strategic investments in process improvements and technology upgrades to optimize carbon intensity scores.

CLAYTON, Mo., Jan. 03, 2025 (GLOBE NEWSWIRE) -- FutureFuel Corp. (NYSE: FF) ("FutureFuel”), a manufacturer of custom and performance chemicals and biofuels, today announced that it has received Excise Tax Registration approval from the Internal Revenue Service. This registration is the first requirement to be eligible to claim the Internal Revenue Code 45Z credit, also known as the clean fuel production tax credit. The tax credit was first approved in August 2022, to be effective beginning January 1, 2025. FutureFuel along with other Renewable Fuel Producers, are awaiting full guidance from the Internal Revenue Service regarding the tax credit. FutureFuel has the capacity to produce up to 60 million gallons of biodiesel annually.

About FutureFuel

FutureFuel is a leading manufacturer of diversified chemical products, specialty chemical products, and biofuel products. In its chemicals business, FutureFuel manufactures specialty chemicals for specific customers ("custom chemicals”), as well as multi-customer specialty chemicals ("performance chemicals”). FutureFuel's custom chemicals product portfolio includes proprietary intermediates for major chemical companies and chlorinated polyolefin adhesion promoters and antioxidant precursors for a major chemical company. FutureFuel’s performance chemicals product portfolio includes polymer (nylon) modifiers and several small-volume specialty chemicals for diverse applications. FutureFuel’s biofuels segment primarily produces and sells biodiesel. Please visit www.futurefuelcorporation.com for more information.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements deal with FutureFuel’s current plans, intentions, beliefs, and expectations, and statements of future economic performance. Statements containing such terms as “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate,” and other phrases of similar meaning are considered to contain uncertainty and are forward-looking statements. In addition, from time-to-time FutureFuel or its representatives have made or will make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in various filings that the company makes with United States Securities and Exchange Commission (the “SEC”), in press releases, or in oral statements made by or with the approval of one of FutureFuel’s authorized executive officers.

These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, those set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in FutureFuel’s Form 10-K Annual Report, as amended for the year ended December 31, 2023 and in its future filings made with the SEC. An investor should not place undue reliance on any forward-looking statements contained in this document, which reflect FutureFuel management’s opinions only as of their respective dates. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revisions to forward-looking statements. The risks and uncertainties described in this document and in current and future filings with the SEC are not the only ones faced by FutureFuel. New factors emerge from time to time, and it is not possible for the company to predict which will arise. There may be additional risks not presently known to the company or that the company currently believes are immaterial to its business. In addition, FutureFuel cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, FutureFuel’s business, operating results, liquidity, and financial condition could be materially affected in an adverse manner. An investor should consult any additional disclosures FutureFuel has made or will make in its reports to the SEC on Forms 10-K, 10-Q, and 8-K, and any amendments thereto. All subsequent written and oral forward-looking statements attributable to FutureFuel or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this document.

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FAQ

What is the significance of FutureFuel's (FF) IRS Excise Tax Registration approval?

The approval is the first requirement for FutureFuel to become eligible for the Internal Revenue Code 45Z clean fuel production tax credit, potentially providing financial benefits for their biodiesel production.

When does the clean fuel production tax credit become effective for FutureFuel (FF)?

The clean fuel production tax credit became effective on January 1, 2025, following its initial approval in August 2022.

What is FutureFuel's (FF) current biodiesel production capacity?

FutureFuel has the capacity to produce up to 60 million gallons of biodiesel annually.

What is the current status of IRS guidance for the clean fuel production tax credit for FutureFuel (FF)?

FutureFuel, along with other Renewable Fuel Producers, is currently awaiting full guidance from the Internal Revenue Service regarding the implementation of the tax credit.