Reports net income of $6.3 million or $0.14 per diluted share, and adjusted EBITDA of $10.1 million
Conference call begins at 9:00 a.m. Eastern time May 9, 2014
CLAYTON, Mo., May 8, 2014 (GLOBE NEWSWIRE) -- FutureFuel Corp. (NYSE:FF), a manufacturer of custom and performance chemicals and biofuels, today announced financial results for the three months ended March 31, 2014.
First Quarter 2014 Financial Highlights (all comparisons are with the first quarter of 2013)
- Revenues were $82.2 million, down 11% from $92.2 million
- Adjusted EBITDA was $10.1 million, down 43% from $17.7 million
- Net income decreased to $6.3 million, or $0.14 per diluted share, from $14.1 million, or $0.33 per diluted share.
"The first quarter was characterized by flat revenue and much lower profitability in biodiesel due to the expiration of the $1 blender's tax credit on 12/31/13 and somewhat lower volume of our chemical division," said Lee Mikles, FutureFuel president. "Comparisons to first quarter of 2013 were also skewed by the $2.5 million retroactive credit for 2012 biodiesel volumes.
We continue to explore acquisition opportunities in both biofuel and chemicals to further our presence in both industries. Our strong balance sheet gives us tremendous flexibility in driving our business."
2014 Regular Cash Dividends
FutureFuel declared normal quarterly dividends of $0.12 per share for 2014. The remaining 2014 dividends will be paid in June, September, and December.
Financial Overview and Key Operating Metrics
Financial and operating metrics, which include non-GAAP financial measures, include:
| FutureFuel Corp. | ||||
| Certain Financial and Operating Metrics | ||||
| (Dollars in thousands, except per share amounts) | ||||
| (Unaudited) | ||||
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2013 |
Dollar Change |
% Change |
|
| Revenues | $ 82,197 | $ 92,165 | $ (9,968) | (11%) |
| Income from operations | $ 7,451 | $ 18,950 | $ (11,499) | (61%) |
| Net income | $ 6,274 | $ 14,050 | $ (7,776) | (55%) |
| Earnings per common share - basic | $ 0.14 | $ 0.33 | $ (0.19) | (58%) |
| Earnings per common share – diluted | $ 0.14 | $ 0.33 | $ (0.19) | (58%) |
| Capital expenditures (net reimbursements) |
$ 2,478 |
$ 1,261 |
$ 1,217 |
97% |
| Adjusted EBITDA | $ 10,108 | $ 17,734 | $ (7,626) | (43%) |
| Cash and cash equivalents and marketable securities | $ 211,574 | $ 158,563 | $ 53,011 | 33% |
First Three Months of 2014 Financial and Business Summary
Revenues for the three months ended March 31, 2014 were $82.2 million as compared to revenues for the three months ended March 31, 2013 of $92.2 million, a decrease of 11%. Revenues from biofuels were $51.9 million as compared to $52.0 million in the first three months of 2013 and accounted for 63% of total revenues in the first quarter of 2014 as compared to 56% in the first quarter of 2013. Revenues from chemicals were $30.3 million in the first three months of 2014 as compared to $40.1 million in the first three months of 2013, a decrease of 25%. Chemical revenue accounted for 37% of total revenue in the first three months of 2014 as compared to 44% of total revenue in the first quarter of 2013. Within the chemicals segment, revenues for the three months ended March 31, 2014 changed as follow compared to the three months ended March 31, 2013: (i) revenues from the bleach activator and the proprietary herbicide intermediates decreased 34%; (ii) revenues from the industrial intermediate utilized in the antimicrobial industry and other custom chemicals decreased 35%; (iii) revenues from DIPB and CPOs increased 16%; and (iv) revenues from other performance chemicals increased 26%.
Revenues from biofuels decreased $0.1 million from $52.0 million in the three months ended March 31, 2013 to $51.9 million in the three months ended March 31, 2014. We experienced an increase in the volume of biodiesel sold, however, the average sales price partially offset the increase. Revenues were impacted from our sales of refined petroleum products as a supplier on a common carrier pipeline which decreased from $9.2 million in the first three months of 2013 to $0.7 million in the first three months of 2014.
Net income decreased from $14.1 million for the three months ended March 31, 2013 to $6.3 million for the three months ended March 31, 2014. Approximately 40% of this decrease is attributed to the chemical segment on reduced sales volumes. The primary additional reduction in net income was in our biofuels segment from the impact of the expiration of the $1.00 blender's credit on December 31, 2013. Additionally, in the same quarter of last year, net income was benefited by the reinstatement of the $1.00 biodiesel blender's credit for 2012 which increased first quarter 2013 net income by $2.5 million on a pretax basis, $1.5 million on an after-tax basis. The retroactive reinstatement of the agri-biodiesel production credit for 2012 benefited net income in the first three months of 2013 by $0.1 million on an after-tax basis. While both of these items pertained to 2012 activity, their benefit was not recorded as a component of our net income until 2013 as the law granting these benefits was not enacted until the first quarter 2013.
Adjusted EBITDA totaled $10.1 million in the first three months of 2014 as compared to $17.7 million in the first three months of 2013.
Capital Expenditures
Capital expenditures were $2.7 million in the first three months of 2014, compared with $2.3 million in the first three months of 2013. FutureFuel was reimbursed for a portion of these expenditures by certain customers as summarized in the following table.
| (Dollars in thousands) | ||
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2013 |
|
| Capital expenditures | $ 2,682 | $ 2,318 |
| Cash received as reimbursement of capital expenditures | (204) | (1,057) |
| Net cash paid for capital expenditures | $ 2,478 | $ 1,261 |
Cash and Cash Equivalents and Marketable Securities
Cash and cash equivalents and marketable securities totaled $211.6 million as of March 31, 2014, compared with $158.6 million as of December 31, 2013.
Conference Call and Webcast
A conference call and webcast will be held May 9, 2014 beginning at 9:00 a.m. Eastern time (8:00 a.m. Central time). To access the conference call, dial (877) 251-1860 (U.S. and Canada) or (224) 357-2386 (international callers). The webcast will also be available in the investor relations section of the company's website at www.futurefuelcorporation.com. A replay of the call and webcast will begin approximately two hours after the live call has ended. To access the replay, dial (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (international callers) and enter the conference ID number: 36864361.
About FutureFuel
FutureFuel is a leading manufacturer of diversified chemical products and biobased products comprised of biofuels and biobased specialty chemical products. In its chemicals business, it manufactures specialty chemicals for specific customers (custom manufacturing) as well as multi-customer specialty chemicals (performance chemicals). Its custom manufacturing product portfolio includes a bleach activator for a major detergent manufacturer, proprietary herbicide and intermediates for two major life science companies, and chlorinated polyolefin adhesion promoters and antioxidant precursors for a major chemical company. The performance chemicals product portfolio includes polymer (nylon) modifiers and several small-volume specialty chemicals for diverse applications. In its biofuels segment, the company predominantly produces biodiesel. Visit www.futurefuelcorporation.com for more information on FutureFuel.
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 for the year ended December 31, 2013 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's 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 FutureFuel faces. 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, gains or losses on derivative instruments, 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 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.
| FutureFuel Corp. | ||
| Condensed Consolidated Balance Sheets | ||
| (Dollars in thousands) | ||
| (Unaudited) | ||
|
March 31, 2014 |
December 31, 2013 | |
| Assets | ||
| Cash and cash equivalents | $ 101,304 | $ 86,463 |
| Accounts receivable, net of allowances of $0 and $0, respectively | 21,498 | 33,249 |
| Inventory | 42,483 | 42,164 |
| Marketable securities | 110,270 | 104,271 |
| Other current assets | 12,399 | 17,141 |
| Total current assets | 287,954 | 283,288 |
| Property, plant and equipment, net | 128,988 | 128,671 |
| Other assets | 2,667 | 2,488 |
| Total noncurrent assets | 131,655 | 131,159 |
| Total Assets | $ 419,609 | $ 414,447 |
| Liabilities and Stockholders' Equity | ||
| Accounts payable | $ 21,450 | $ 15,784 |
| Other current liabilities | 24,013 | 24,612 |
| Total current liabilities | 45,463 | 40,396 |
| Deferred revenue – long-term | 14,136 | 13,522 |
| Other noncurrent liabilities | 31,121 | 31,939 |
| Total noncurrent liabilities | 45,257 | 45,461 |
| Total liabilities | 90,720 | 85,857 |
| 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, 43,347,430 and 43,342,830 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively | 4 | 4 |
| Accumulated other comprehensive income | 6,672 | 7,436 |
| Additional paid in capital | 276,318 | 276,328 |
| Retained earnings | 45,895 | 44,822 |
| Total stockholders' equity | 328,889 | 328,590 |
| Total Liabilities and Stockholders' Equity | $ 419,609 | $ 414,447 |
| FutureFuel Corp. | ||
| Condensed Consolidated Statements of Operations and Comprehensive Income | ||
| (Dollars in thousands, except per share amounts) | ||
| (Unaudited) | ||
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| Revenues | $ 82,197 | $ 92,165 |
| Cost of goods sold and distribution | 72,595 | 70,784 |
| Gross profit | 9,602 | 21,381 |
| Selling, general and administrative expenses | 1,449 | 1,515 |
| Research and development expenses | 702 | 916 |
| 2,151 | 2,431 | |
| Income from operations | 7,451 | 18,950 |
| Other income, net | 2,545 | 1,206 |
| Income before income taxes | 9,996 | 20,156 |
| Provision for income taxes | 3,722 | 6,106 |
| Net income | $ 6,274 | $ 14,050 |
| Earnings per common share | ||
| Basic | $ 0.14 | $ 0.33 |
| Diluted | $ 0.14 | $ 0.33 |
| Weighted average shares outstanding | ||
| Basic | 43,343,502 | 42,928,109 |
| Diluted | 43,393,580 | 42,949,854 |
| Comprehensive Income | ||
| Net income | $ 6,274 | $ 14,050 |
| Other comprehensive (loss)/income from unrealized net (losses)/gains on available-for-sale securities, net of tax of $(477) in 2014 and of $3,353 in 2013 | (764) | 5,379 |
| Comprehensive income | $ 5,510 | $ 19,429 |
| FutureFuel Corp. | ||
| Consolidated Statements of Cash Flows | ||
| (Dollars in thousands) | ||
| (Unaudited) | ||
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| Cash flows provided by operating activities | ||
| Net income | $ 6,274 | $ 14,050 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 2,360 | 2,658 |
| Benefit for deferred income taxes | (1,724) | (982) |
| Change in fair value of derivative instruments | 404 | 941 |
| Impairment of fixed assets | -- | 382 |
| (Loss)/gain on the sale of investments | 49 | (59) |
| Losses on disposals of fixed assets | 5 | -- |
| Noncash interest expense | 6 | 6 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 11,247 | (5,121) |
| Accounts receivable – related parties | 504 | (4,485) |
| Inventory | (319) | (28,710) |
| Income tax receivable | 5,240 | -- |
| Prepaid expenses | 346 | 172 |
| Prepaid expenses – related party | 187 | -- |
| Accrued interest on marketable securities | -- | 109 |
| Other assets | (179) | (56) |
| Accounts payable | (2,532) | 9,237 |
| Accounts payable – related parties | 8,198 | (46) |
| Income taxes payable | -- | 4,288 |
| Accrued expenses and other current liabilities | (634) | 916 |
| Accrued expenses and other current liabilities – related parties | 28 | 50 |
| Deferred revenue | 1,998 | (685) |
| Net cash provided by/(used in) operating activities | 31,458 | (7,335) |
| Cash flows from investing activities | ||
| Collateralization of derivative instruments | (1,435) | (1,605) |
| Purchase of marketable securities | (7,677) | (3,399) |
| Proceeds from the sale of marketable securities | 388 | 3,606 |
| Capital expenditures | (2,682) | (2,318) |
| Net cash used in investing activities | (11,406) | (3,716) |
| Cash flows from financing activities | ||
| Proceeds from the issuance of stock | -- | 19,292 |
| Minimum tax withholdings on stock option exercises | (54) | |
| Excess tax benefits associated with stock options | 44 | -- |
| Payment of dividend | (5,201) | (4,767) |
| Net cash (used in)/provided by financing activities | (5,211) | 14,525 |
| Net change in cash and cash equivalents | 14,841 | 3,474 |
| Cash and cash equivalents at beginning of period | 86,463 | 58,737 |
| Cash and cash equivalents at end of period | $ 101,304 | $ 62,211 |
| Cash paid for interest | $ -- | $ -- |
| Cash paid for income taxes | $ 162 | $ 581 |
| 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 March 31, | ||
| 2014 | 2013 | |
| Adjusted EBITDA | $ 10,108 | $ 17,734 |
| Depreciation | (2,360) | (2,658) |
| Retroactive reinstatement of 2012 $1.00 blenders tax credit recognized in 2013 | -- | 2,535 |
| Interest and dividend income | 2,370 | 1,153 |
| Interest expense | (6) | (6) |
| Loss on disposal of property and equipment | (5) | -- |
| (Losses)/gains on derivative instruments | (62) | 1,339 |
| Other (expense)/income, net | (49) | 59 |
| Income tax expense | (3,722) | (6,106) |
| Net income | $ 6,274 | $ 14,050 |
| Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities | ||
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2013 |
|
| Adjusted EBITDA | $ 10,108 | $ 17,734 |
| Benefit for deferred income taxes | (1,724) | (982) |
| Impairment of fixed assets | -- | 382 |
| Retroactive reinstatement of 2012 $1.00 blenders tax credit recognized in 2013 | -- | 2,535 |
| Interest and dividend income | 2,370 | 1,153 |
| Income tax expense | (3,722) | (6,106) |
| (Losses)/gains on derivative instruments | (62) | 1,339 |
| Change in fair value of derivative instruments | 404 | 941 |
| Changes in operating assets and liabilities, net | 24,084 | (24,331) |
| Net cash provided by/(used in) operating activities | $ 31,458 | $ (7,335) |
| FutureFuel Corp. | ||
| Condensed Consolidated Segment Income | ||
| (Dollars in thousands) | ||
| (Unaudited) | ||
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| Revenues | ||
| Chemicals | $ 30,276 | $ 40,136 |
| Biofuels | 51,921 | 52,029 |
| Revenues | $ 82,197 | $ 92,165 |
| Segment gross profit | ||
| Chemicals | $ 9,034 | $ 13,066 |
| Biofuels | 568 | 8,315 |
| Segment gross profit | 9,602 | 21,381 |
| Corporate expenses | (2,151) | (2,431) |
| Income before interest and taxes | 7,451 | 18,950 |
| Interest and other income | 2,551 | 1,212 |
| Interest and other expense | (6) | (6) |
| Provision for income taxes | (3,722) | (6,106) |
| Net income | $ 6,274 | $ 14,050 |
Depreciation is allocated to segment costs of goods sold based on plant usage. The total assets and capital expenditures of FutureFuel have not been allocated to individual segments as large portions of these assets are shared to varying degrees by each segment, causing such an allocation to be of little value.