FutureFuel Releases Third Quarter 2024 Results

Rhea-AI Summary

FutureFuel reported a challenging Q3 2024 with revenues declining 56% to $51.1 million from $116.8 million in Q3 2023. The company posted a net loss of $1.2 million ($0.03 per share), compared to net income of $2.8 million ($0.06 per share) in the prior year. The decline was primarily due to lower biofuel sales volumes and prices, along with an unplanned infrastructure outage affecting biodiesel production. The chemical segment faced sluggish demand and margin pressure. For the nine months ended September 30, 2024, revenues decreased 34% to $181.8 million, with net income falling to $12.7 million ($0.29 per share) from $14.0 million ($0.32 per share) in 2023.

Positive

• Robust business development activities continuing with key customers in chemical segment
• Maintained quarterly dividend payment of $0.06 per share
• Strong cash position with $133.4 million in cash and cash equivalents

Negative

• Q3 revenue declined 56% year-over-year to $51.1 million
• Q3 net loss of $1.2 million compared to $2.8 million profit last year
• Adjusted EBITDA turned negative at $(1.0) million from $9.7 million in Q3 2023
• Unplanned biodiesel plant outage reduced production
• Increased margin pressure in both chemical and biodiesel segments
• Nine-month revenue decreased 34% to $181.8 million

Insights

Financial Analyst

FutureFuel's Q3 2024 results show significant operational challenges, with revenues plummeting 56% to $51.1 million. The company swung to a net loss of $1.2 million from a profit of $2.8 million year-over-year. Key concerns include:

• Severe production disruptions in the biodiesel segment due to infrastructure outages
• Chemical segment facing margin pressure from weak demand
• Negative adjusted EBITDA of $(1.0) million, down from $9.7 million

The balance sheet remains strong with $133.4 million in cash, though this decreased from $219.4 million at year-end 2023, primarily due to a special dividend payment. Market uncertainty persists around the upcoming IRA 45Z credit implementation, which could provide relief in 2025.

Energy Market Analyst

The biodiesel segment's performance reflects broader industry challenges, with both volume and pricing headwinds. Key factors include:

• RIN prices declining due to market oversupply relative to EPA mandates
• Operational disruptions impacting production capacity and inventory levels
• Biofuel revenue down $41,015 from volume reductions and $24,678 from price decreases

The upcoming Clean Fuel Production Credit (45Z) implementation in January 2025 could provide margin support, but near-term market conditions remain challenging with excess supply pressuring prices.

Reports Net Loss of $1.2 Million or $0.03 per Diluted Share, and Adjusted EBITDA of $(1.0) Million

CLAYTON, Mo., Nov. 08, 2024 (GLOBE NEWSWIRE) -- FutureFuel Corp. (NYSE: FF) (“FutureFuel”), a manufacturer of custom and performance chemicals and biofuels, today announced financial results for the third quarter ended September 30, 2024.

Third quarter 2024 Financial Highlights (all comparisons are with the third quarter of 2023)

• Revenues were $51.1 million, a decrease of 56% or $65.6 million compared to $116.8 million.
• Net loss was $1.2 million, or $0.03 per diluted share, down from a net income of $2.8 million, or $0.06 per diluted share.
• Adjusted EBITDA⁽¹⁾ was $(1.0) million, down from $9.7 million.

Nine months 2024 Financial Highlights (all comparisons are with the first nine months of 2023)

• Revenues were $181.8 million, a decrease of 34% or $94.4 million compared to $276.2 million.
• Net income was $12.7 million, or $0.29 per diluted share, down from $14.0 million, or $0.32 per diluted share.
• Adjusted EBITDA⁽¹⁾ was $13.0 million, down from $18.2 million.

⁽¹⁾  A non-GAAP financial measure.  See “Non-GAAP Financial Measures” for a description of the measure and a reconciliation to the applicable GAAP measure.

“In the third quarter we continued to see a market-driven slowdown in our chemical segment with increased margin pressure driven by sluggish demand in our end-use markets.  Our biodiesel segment has also experienced increased margin pressure, leading to margin and RIN pricing contraction.  We anticipate that some of this pressure and market uncertainty will turn once there is more clarity around the IRA 45Z or Clean Fuel Production Credit, which takes effect January 1, 2025.  (See Note 2 to our consolidated financial statements for more detail.) 

"Also impacting the latter half of the quarter was an unplanned outage of the infrastructure supporting our biodiesel plant which reduced production.  This issue was resolved before the close of the quarter and production has returned to normal rates. 

"It is encouraging within the chemical segment, to see robust activities continuing with key customers on future business development programs as we invest to support future growth,” said Roeland Polet, Chief Executive Officer for FutureFuel Corp.

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2024 Cash Dividends

FutureFuel paid a regular quarterly cash dividend in the third quarter in the amount of $0.06 per share on our common stock. The remaining 2024 quarterly dividend of $0.06 per share will be paid in December.  

Financial Overview and Key Operating Metrics

Financial and operating metrics, which include non-GAAP financial measures (see “Non-GAAP Financial Measures” for additional information), include all dollar amounts in thousands, except per share amounts:

FutureFuel Corp. Certain Financial and Operating Metrics (Unaudited)
		Three Months Ended September 30,
										Dollar				%
		2024				2023				Change				Change
Revenue		$	51,140			$	116,752			$	(65,612	)			(56	)%
(Loss) income from operations		$	(2,888	)		$	297			$	(3,185	)			na
Net (loss) income		$	(1,195	)		$	2,776			$	(3,971	)			na
(Loss) earnings per common share:
Basic		$	(0.03	)		$	0.06			$	(0.09	)			na
Diluted		$	(0.03	)		$	0.06			$	(0.09	)			na
Adjusted EBITDA		$	(973	)		$	9,659			$	(10,632	)			na

		Nine Months Ended September 30,
										Dollar				%
		2024				2023				Change				Change
Revenue		$	181,830			$	276,241			$	(94,411	)			(34	)%
Income from operations		$	4,761			$	6,965			$	(2,204	)			(32	)%
Net income		$	12,706			$	13,998			$	(1,292	)			(9	)%
Earnings per common share:
Basic		$	0.29			$	0.32			$	(0.03	)			(9	)%
Diluted		$	0.29			$	0.32			$	(0.03	)			(9	)%
Adjusted EBITDA		$	13,042			$	18,230			$	(5,188	)			(28	)%

Financial and Business Summary

Consolidated revenue in the three months ended September 30, 2024 decreased $65,612 compared to the three months ended September 30, 2023. This decline was driven mostly by lower sales volumes in the biofuel segment of $41,015. Production issues, primarily stemming from delays by equipment suppliers that created an extended service utility downtime, prevented us from building the biodiesel inventories we would typically have available to sell in the three months ended September 30, 2024. Also reducing sales revenue in the three-month period, were lower prices in the biofuel segment of $24,678 due to a decline in renewable fuel and RIN prices with market supply in excess of the Environmental Protection Agency (“EPA”) Renewable Identification Number (“RIN”) mandate. In our chemical segment, sales revenue increased $81 for the three months ended September 30, 2024, compared to the prior-year period, due primarily to stronger sales volumes in the coatings market $1,457, but was mostly offset by reduced chemical sales prices, $1,376, from chemicals sold into the agricultural and energy markets.

Consolidated revenue in the nine months ended September 30, 2024 decreased $94,411 compared to the nine months ended September 30, 2023. As noted above, this decline was driven mostly by lower sales volumes in the biofuel segment of $48,590 as production issues in the first three months of the year related to harsh winter weather and the production issues noted above in the three months ended September 30, 2024, prevented us from building the biodiesel inventories we would typically have available to sell during the current period.  Also reducing sales revenue in the nine-month period were lower prices in the biofuel segment of $42,560 due to a decline in renewable fuel and RIN prices with market supply in excess of the EPA RIN mandate. In our chemical segment, sales revenue declined a net $3,261 ($5,382 on reduced prices on chemicals sold into the agricultural and energy markets partially offset by increased volumes in the energy market, $2,121), compared to the prior-year period.

Income from operations in the three months ended September 30, 2024 decreased $3,185 as compared to the same period of 2023, due primarily to lower sales prices in the chemical agricultural and energy markets and reduced throughput of biofuel segment volumes primarily due to the issues noted above.

Income from operations in the nine months ended September 30, 2024 decreased $2,204 as compared to the same period of 2023, primarily due to: (i) a reduction of RIN sales in the current nine-month period and (ii) the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.  This adjustment increased gross profit by $2,885 in the nine months ended September 30, 2024, as compared to an increase of $6,023 in the same period of 2023.  Income from operations was negatively impacted by the change in the activity of derivative instruments with a realized loss of $354 and unrealized loss of $1,696 in the nine months ended September 30, 2024, as compared to a realized gain of $9,437 and unrealized gain of $3,259 in the same period of 2023.  Gross profit was also negatively impacted in the nine-month period ended September 30, 2024, by higher costs resulting from the impact of extreme winter weather and the production issues noted above. 

Capital Expenditures

Capital expenditures were $10,605 in the first nine months of 2024, compared with $4,994 in the same period in 2023.

Cash and Cash Equivalents

Cash and cash equivalents totaled $133,398 as of September 30, 2024, compared with $219,444 as of December 31, 2023. A special cash dividend of $2.50 per common share was paid April 9, 2024 which totaled $109,408.  

About FutureFuel

FutureFuel is a leading manufacturer of diversified chemical products and biofuels. FutureFuel’s chemicals segment manufactures specialty chemicals for specific customers (“custom chemicals”) as well as multi-customer specialty chemicals (“performance chemicals”). FutureFuel’s custom manufacturing product portfolio includes proprietary agrochemicals, adhesion promoters, a biocide intermediate, and an antioxidant precursor. FutureFuel’s performance chemicals products include a portfolio of proprietary nylon and polyester polymer modifiers and several small-volume specialty chemicals and solvents for diverse applications. FutureFuel’s biofuels segment primarily produces and sells biodiesel to its customers. Please visit www.futurefuelcorporation.com for more information.

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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.

Non-GAAP Financial Measures

In this press release, FutureFuel used adjusted EBITDA as a key operating metric to measure both performance and liquidity. Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is not a substitute for operating income, net income, or cash flow from operating activities (each as determined in accordance with GAAP), as a measure of performance or liquidity. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP. FutureFuel defines adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization expenses, excluding, when applicable, non-cash share-based compensation expense, public offering expenses, acquisition-related transaction costs, purchase accounting adjustments, loss on disposal of property and equipment, non-cash gains or losses on derivative instruments, and other non-operating income or expense. Information relating to adjusted EBITDA is provided so that investors have the same data that management employs in assessing the overall operation and liquidity of FutureFuel’s business. FutureFuel’s calculation of adjusted EBITDA may be different from similarly titled measures used by other companies; therefore, the results of its calculation are not necessarily comparable to the results of other companies.

Adjusted EBITDA allows FutureFuel’s chief operating decision makers to assess the performance and liquidity of FutureFuel’s business on a consolidated basis to assess the ability of its operating segments to produce operating cash flow to fund working capital needs, to fund capital expenditures, and to pay dividends. In particular, FutureFuel management believes that adjusted EBITDA permits a comparative assessment of FutureFuel’s operating performance and liquidity, relative to a performance and liquidity based on GAAP results, while isolating the effects of depreciation and amortization, which may vary among its operating segments without any correlation to their underlying operating performance, and of non-cash stock-based compensation expense, which is a non-cash expense that varies widely among similar companies, and non-cash gains and losses on derivative instruments, whose immediate recognition can cause net income to be volatile from quarter to quarter due to the timing of the valuation change in the derivative instruments relative to the sale of biofuel.

A table included in this earnings release reconciles adjusted EBITDA with net income, the most directly comparable GAAP performance financial measure, and a table reconciles adjusted EBITDA with cash flows from operations, the most directly comparable GAAP liquidity financial measure.

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FutureFuel Corp. Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited)
		September 30, 2024				December 31, 2023
Assets
Cash and cash equivalents		$	133,398			$	219,444
Accounts receivable, inclusive of the blenders' tax credit of $3,964 and $11,381, respectively and net of allowances for expected credit losses of $136 and $55, respectively			15,967				28,407
Inventory, net			24,878				32,978
Other current assets			1,994				9,717
Total current assets			176,237				290,546
Property, plant and equipment, net			76,815				72,711
Other assets			3,414				3,824
Total noncurrent assets			80,229				76,535
Total Assets		$	256,466			$	367,081
Liabilities and Stockholders’ Equity
Accounts payable, inclusive of the blenders' tax credit rebates due customers of $890 and $890, respectively		$	11,711			$	22,220
Dividends payable			2,626				10,503
Other current liabilities			15,314				8,621
Total current liabilities			29,651				41,344
Deferred revenue – long-term			9,593				12,570
Other noncurrent liabilities			3,931				3,287
Total noncurrent liabilities			13,524				15,857
Total liabilities			43,175				57,201
Commitments and contingencies
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding			-				-
Common stock, $0.0001 par value, 75,000,000 shares authorized, 43,763,243 shares issued and outstanding as of September 30, 2024 and December 31, 2023			4				4
Additional paid in capital			204,911				282,489
Retained earnings			8,376				27,387
Total Stockholders’ Equity			213,291				309,880
Total Liabilities and Stockholders’ Equity		$	256,466			$	367,081

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FutureFuel Corp. Condensed Consolidated Statements of Income and Comprehensive Income (Dollars in thousands, except per share amounts) (Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2024				2023				2024				2023
Revenue		$	51,140			$	116,752			$	181,830			$	276,241
Cost of goods sold and distribution			50,757				112,882				167,783				259,340
Gross profit			383				3,870				14,047				16,901
Selling, general, and administrative expenses			2,290				2,410				6,483				6,694
Research and development expenses			981				1,163				2,803				3,242
Total operating expenses			3,271				3,573				9,286				9,936
(Loss) income from operations			(2,888	)			297				4,761				6,965
Interest and dividend income			1,830				2,527				6,151				6,595
Gain on marketable securities			-				-				-				575
Other (expense) income, net			(140	)			(36	)			2,429				(103	)
Other income, net			1,690				2,491				8,580				7,067
(Loss) income before income taxes			(1,198	)			2,788				13,341				14,032
Income tax (benefit) provision			(3	)			12				635				34
Net (loss) income		$	(1,195	)		$	2,776			$	12,706			$	13,998
(Loss) earnings per common share
Basic		$	(0.03	)		$	0.06			$	0.29			$	0.32
Diluted		$	(0.03	)		$	0.06			$	0.29			$	0.32
Weighted average shares outstanding
Basic			43,763,243				43,763,243				43,763,243				43,763,243
Diluted			43,763,243				43,765,709				43,763,243				43,765,163
Comprehensive (loss) income
Net (loss) income		$	(1,195	)		$	2,776			$	12,706			$	13,998
Other comprehensive income from unrealized net gains on available-for-sale securities			-				-				-				2
Income tax effect			-				-				-				(1	)
Total other comprehensive income, net of tax			-				-				-				1
Comprehensive (loss) income		$	(1,195	)		$	2,776			$	12,706			$	13,999

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FutureFuel Corp. Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited)
		Nine Months Ended September 30,
		2024				2023
Cash flows from operating activities
Net income		$	12,706			$	13,998
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			6,923				7,736
Amortization of deferred financing costs			77				75
Provision for deferred income taxes			618				-
Change in fair value of equity securities			-				(3,117	)
Change in fair value of derivative instruments			1,439				3,523
Loss on the sale of investments			-				2,543
Stock based compensation			113				-
Loss on disposal of property, plant, and equipment			24				8
Noncash interest expense			26				26
Changes in operating assets and liabilities:
Accounts receivable			12,439				(3,295	)
Accounts receivable – related parties			1				6
Inventory			8,100				(149	)
Income tax receivable			1,940				32
Prepaid expenses			3,382				2,700
Other assets			872				963
Accounts payable			(11,043	)			(14,910	)
Accounts payable – related parties			82				(800	)
Income tax payable			359				-
Accrued expenses and other current liabilities			6,062				(404	)
Deferred revenue			(2,705	)			(2,030	)
Other noncurrent liabilities			-				1,553
Net cash provided by operating activities			41,415				8,458
Cash flows from investing activities
Collateralization of derivative instruments			423				(2,991	)
Proceeds from the sale of marketable securities			-				37,701
Proceeds from the sale of property and equipment			6				-
Capital expenditures			(10,605	)			(4,994	)
Net cash (used in) provided by investing activities			(10,176	)			29,716
Cash flows from financing activities
Payment of dividends			(117,285	)			(7,877	)
Deferred financing costs			-				(14	)
Net cash used in financing activities			(117,285	)			(7,891	)
Net change in cash and cash equivalents			(86,046	)			30,283
Cash and cash equivalents at beginning of period			219,444				175,640
Cash and cash equivalents at end of period		$	133,398			$	205,923
Noncash capital expenditures		$	452			$	518

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FutureFuel Corp. Reconciliation of Non-GAAP Financial Measure to Financial Measure (Dollars in thousands) (Unaudited)
Reconciliation of Adjusted EBITDA to Net Income
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2024				2023				2024				2023
Net (loss) income		$	(1,195	)		$	2,776			$	12,706			$	13,998
Depreciation			2,163				2,581				6,923				7,736
Non-cash stock-based compensation			91				-				113				-
Interest and dividend income			(1,830	)			(2,527	)			(6,151	)			(6,595	)
Non-cash interest expense and amortization of deferred financing costs			34				35				103				102
Loss on disposal of property and equipment			24				-				24				8
Unrealized (gain) loss on derivative instruments			(257	)			6,782				1,439				3,523
Gain on marketable securities			-				-				-				(575	)
Other income			-				-				(2,750	)			(1	)
Income tax (benefit) provision			(3	)			12				635				34
Adjusted EBITDA		$	(973	)		$	9,659			$	13,042			$	18,230

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
		Nine Months Ended
		September 30,
		2024				2023
Net cash provided by operating activities		$	41,415			$	8,458
Deferred income taxes, net			(618	)			-
Interest and dividend income			(6,151	)			(6,595	)
Income tax provision			635				34
Changes in operating assets and liabilities, net			(19,489	)			16,334
Other income			(2,750	)			(1	)
Adjusted EBITDA		$	13,042			$	18,230

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FutureFuel Corp. Condensed Consolidated Segment Income (Dollars in thousands) (Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2024				2023				2024				2023
Revenue
Custom chemicals		$	15,323			$	14,454			$	46,333			$	46,650
Performance chemicals			2,605				3,393				8,890				11,834
Chemical revenue			17,928				17,847				55,223				58,484
Biofuel revenue			33,212				98,905				126,607				217,757
Total Revenue		$	51,140			$	116,752			$	181,830			$	276,241
Segment gross profit (loss)
Chemical		$	3,407			$	6,878			$	12,105			$	21,917
Biofuel			(3,024	)			(3,008	)			1,942				(5,016	)
Total gross profit		$	383			$	3,870			$	14,047			$	16,901

As of September 30, 2024, FutureFuel held 5.0 million RINs with a fair market value of $2,556 and no cost. Comparatively, at September 30, 2023, FutureFuel held 4.2 million RINs with a fair market value of $6,971 and no cost.

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COMPANY CONTACT
FutureFuel Corp.
Roeland Polet
(314) 854-8352
www.futurefuelcorporation.com

FAQ

What was FutureFuel's (FF) revenue in Q3 2024?

FutureFuel's revenue in Q3 2024 was $51.1 million, representing a 56% decrease from $116.8 million in Q3 2023.

How much did FutureFuel (FF) lose per share in Q3 2024?

FutureFuel reported a net loss of $0.03 per diluted share in Q3 2024, compared to earnings of $0.06 per share in Q3 2023.

What caused FutureFuel's (FF) poor performance in Q3 2024?

The poor performance was due to lower biofuel sales volumes, declining RIN prices, an unplanned infrastructure outage at the biodiesel plant, and increased margin pressure in both chemical and biodiesel segments.

What is FutureFuel's (FF) dividend payment for Q4 2024?

FutureFuel will pay a quarterly dividend of $0.06 per share in December 2024.