FutureFuel Corp. (NYSE:FF) (“FutureFuel”), a manufacturer of custom
and performance chemicals and biofuels, today announced financial
results for the first quarter ended March 31, 2021.
First quarter 2021 Financial Highlights (all
comparisons are with the first quarter of 2020)
- Revenues were $41.5 million, down 22% from $53.1 million
- Adjusted EBITDA was ($7.8) million, down (177%) from $10.2
million
- Net losses were $8.8 million, or ($0.20) per diluted share,
from net income of $19.0 million, or $0.44 per diluted share.
“The story of our first quarter is dominated by one week in
February when Winter Storm Uri brought severe disruption to the
operation of our Batesville, AR manufacturing site. Natural Gas
prices soared to 14,000% of their normal values and production was
curtailed in an effort to reduce Natural Gas consumption to its
absolute minimum. Shutting down in such freezing conditions meant
that the subsequent start-up was more problematic and took longer
than we would typically anticipate.
This loss of production reduced our revenue by approximately $3
million and increased energy costs of $7.8 million led to a net
loss for the quarter. Nevertheless, we are encouraged by the
underlying margins on biodiesel, absent the impact of extreme
energy costs. We are beginning to see improved opportunity in our
chemicals segment with a strong sense that the worst effects of the
COVID-19 pandemic in the USA may be behind us.” said Tom McKinlay,
Chief Operating Officer for FutureFuel Corp.
2021 Cash Dividends
In the first three months of 2021, FutureFuel paid a regular
quarterly cash dividend in the amount of $0.06 per share on our
common stock. The remaining quarterly dividends of
$0.06 per share 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 dollars in thousands, except per share
amounts:
FutureFuel
Corp.Certain
Financial and
Operating Metrics (Unaudited)
|
Three Months Ended March 31, |
|
|
|
|
|
Dollar |
|
% |
|
|
2021 |
|
|
|
2020 |
|
|
Change |
|
Change |
Revenue |
$ |
41,516 |
|
|
$ |
53,082 |
|
|
$ |
(11,566 |
) |
|
(22 |
%) |
(Loss) income from
operations |
$ |
(13,058 |
) |
|
$ |
13,979 |
|
|
$ |
(27,037 |
) |
|
(193 |
%) |
Net (loss) income |
$ |
(8,773 |
) |
|
$ |
19,043 |
|
|
$ |
(27,816 |
) |
|
(146 |
%) |
(Loss) earnings per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.20 |
) |
|
$ |
0.44 |
|
|
$ |
(0.64 |
) |
|
(145 |
%) |
Diluted |
$ |
(0.20 |
) |
|
$ |
0.44 |
|
|
$ |
(0.64 |
) |
|
(145 |
%) |
Adjusted EBITDA |
$ |
(7,825 |
) |
|
$ |
10,177 |
|
|
$ |
(18,002 |
) |
|
(177 |
%) |
Financial and Business
Summary
Consolidated sales revenue in the three months ended March
31, 2021 decreased $11,566 compared to the three months ended March
31, 2020. This decrease primarily resulted from decreased
sales volumes in the chemical and biofuels segment that were
partially offset by increased prices of biodiesel as compared to
the prior year three-month period. Sales volumes were down in both
segments from the continued effects of COVID-19 and from reduced
inventory production from the natural gas usage curtailment imposed
during the Winter Storm Uri of approximately $3 million.
Income from operations in the three months ended
March 31, 2021 decreased $27,037 compared to the three months
ended March 31, 2020. This decrease primarily resulted from: i)
exorbitant natural gas prices in February 2021 during Winter Storm
Uri, which at times rose to almost 14,000% of historical averages
and resulted in the natural gas supplier issuing an invoice of
approximately $8 million for February 2021, ii) the change in the
unrealized and realized activity in derivative instruments with a
loss of $2,625 as compared to a gain of $6,857 in the three months
ended March 31, 2020, and iii) the adjustment in the carrying value
of our inventory as determined utilizing the LIFO method of
inventory accounting. This adjustment decreased gross profit
$3,913 in the current period as compared to a benefit of $1,319 in
the same period of the prior year.
Capital
Expenditures
Capital expenditures were $146 in the first three months of
2021, compared with $1,608 in the same period in 2020.
Cash and
Cash Equivalents and
Marketable Securities
Cash and cash equivalents and marketable
securities totaled $244,152 as of March 31, 2021, compared with
$262,526 as of December 31, 2020.
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 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 to its customers. 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, including, but
not limited to the COVID-19 pandemic and the response thereto, 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, 2020 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, 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, 2021 |
|
December 31, 2020 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
193,979 |
|
|
$ |
198,122 |
|
Accounts receivable, inclusive of the blenders' tax credit of
$11,276 and $8,300 and net of allowances for bad debt of $112 and
$63, respectively |
|
|
27,953 |
|
|
|
22,813 |
|
Inventory |
|
|
45,278 |
|
|
|
33,889 |
|
Marketable securities |
|
|
50,173 |
|
|
|
64,404 |
|
Other current assets |
|
|
22,710 |
|
|
|
23,377 |
|
Total current assets |
|
|
340,093 |
|
|
|
342,605 |
|
Property, plant and equipment, net |
|
|
89,200 |
|
|
|
91,544 |
|
Other assets |
|
|
7,129 |
|
|
|
7,155 |
|
Total noncurrent assets |
|
|
96,329 |
|
|
|
98,699 |
|
Total Assets |
|
$ |
436,422 |
|
|
$ |
441,304 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Accounts payable, inclusive of the blenders' tax credit rebates due
customers of $890 and $1,116 |
|
$ |
25,639 |
|
|
$ |
13,437 |
|
Dividends payable |
|
|
7,874 |
|
|
|
10,498 |
|
Other current liabilities |
|
|
9,514 |
|
|
|
9,053 |
|
Total current liabilities |
|
|
43,027 |
|
|
|
32,988 |
|
Deferred revenue – long-term |
|
|
20,322 |
|
|
|
21,861 |
|
Other noncurrent liabilities |
|
|
10,023 |
|
|
|
14,572 |
|
Total noncurrent liabilities |
|
|
30,345 |
|
|
|
36,433 |
|
Total liabilities |
|
|
73,372 |
|
|
|
69,421 |
|
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,
43,743,243, issued and outstanding at March 31, 2021 and December
31, 2020 |
|
|
4 |
|
|
|
4 |
|
Accumulated other comprehensive income |
|
|
148 |
|
|
|
208 |
|
Additional paid in capital |
|
|
282,215 |
|
|
|
282,215 |
|
Retained earnings |
|
|
80,683 |
|
|
|
89,456 |
|
Total Stockholders’ Equity |
|
|
363,050 |
|
|
|
371,883 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
436,422 |
|
|
$ |
441,304 |
|
FutureFuel
Corp.Condensed Consolidated Statements of
Operations and Comprehensive
Income(Dollars in thousands, except per
share
amounts)(Unaudited)
|
Three Months Ended March 31, |
|
|
2021 |
|
|
|
2020 |
|
Revenue |
$ |
41,516 |
|
|
$ |
53,082 |
|
Cost of goods sold and
distribution |
|
52,252 |
|
|
|
36,683 |
|
Gross (loss) profit |
|
(10,736 |
) |
|
|
16,399 |
|
Selling, general, and
administrative expenses |
|
1,548 |
|
|
|
1,585 |
|
Research and development
expenses |
|
774 |
|
|
|
835 |
|
|
|
2,322 |
|
|
|
2,420 |
|
(Loss) income from
operations |
|
(13,058 |
) |
|
|
13,979 |
|
Other expense, net |
|
(102 |
) |
|
|
(8,148 |
) |
(Loss) income before income
taxes |
|
(13,160 |
) |
|
|
5,831 |
|
Income tax benefit |
|
(4,387 |
) |
|
|
(13,212 |
) |
Net (loss) income |
$ |
(8,773 |
) |
|
$ |
19,043 |
|
|
|
|
|
(Loss) earnings per
common share |
|
|
|
Basic |
$ |
(0.14 |
) |
|
$ |
0.44 |
|
Diluted |
$ |
(0.14 |
) |
|
$ |
0.44 |
|
Weighted average
shares outstanding |
|
|
|
Basic |
|
43,743,243 |
|
|
|
43,743,243 |
|
Diluted |
|
43,743,243 |
|
|
|
43,743,243 |
|
|
|
|
|
Comprehensive (Loss)
income |
|
|
|
Net (loss) income |
$ |
(8,773 |
) |
|
$ |
19,043 |
|
Other comprehensive loss from unrealized net |
|
|
|
loss on available-for-sale debt securities |
|
(60 |
) |
|
|
(397 |
) |
Income tax effect |
|
16 |
|
|
|
84 |
|
Total other comprehensive loss, net of tax |
|
(44 |
) |
|
|
(313 |
) |
Comprehensive (loss) income |
$ |
(8,817 |
) |
|
$ |
18,730 |
|
FutureFuel
Corp.Consolidated Statements of
Cash FlowsFor the Three Months
Ended March 31, 2021 and
2020(Dollars in
thousands)(Unaudited)
|
Three Months Ended March 31, |
|
|
2021 |
|
|
|
2020 |
|
Cash flows from operating activities |
|
|
|
Net (loss) income |
$ |
(8,773 |
) |
|
$ |
19,043 |
|
Adjustments to reconcile net income to net cash from operating
activities: |
|
|
|
Depreciation |
|
2,608 |
|
|
|
3,004 |
|
Amortization of deferred financing costs |
|
24 |
|
|
|
36 |
|
Benefit for deferred income taxes |
|
(4,402 |
) |
|
|
(22 |
) |
Change in fair value of equity securities |
|
1,765 |
|
|
|
9,570 |
|
Change in fair value of derivative instruments |
|
(695 |
) |
|
|
(1,874 |
) |
(Gain) loss on the sale of investments |
|
(690 |
) |
|
|
489 |
|
Stock based compensation |
|
- |
|
|
|
49 |
|
Loss on disposal of property and equipment |
|
- |
|
|
|
2 |
|
Noncash interest expense |
|
8 |
|
|
|
19 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(6,515 |
) |
|
|
(17,803 |
) |
Accounts receivable – related parties |
|
1,375 |
|
|
|
4,175 |
|
Inventory |
|
(11,389 |
) |
|
|
(3,878 |
) |
Income tax receivable |
|
774 |
|
|
|
(13,587 |
) |
Prepaid expenses |
|
751 |
|
|
|
171 |
|
Prepaid expenses – related party |
|
(12 |
) |
|
|
- |
|
Other assets |
|
(43 |
) |
|
|
120 |
|
Accounts payable |
|
4,270 |
|
|
|
2,360 |
|
Accounts payable – related parties |
|
7,814 |
|
|
|
(815 |
) |
Accrued expenses and other current liabilities |
|
(509 |
) |
|
|
2,192 |
|
Accrued expenses and other current liabilities – related
parties |
|
- |
|
|
|
(64 |
) |
Deferred revenue |
|
(569 |
) |
|
|
925 |
|
Other noncurrent liabilities |
|
(139 |
) |
|
|
(78 |
) |
Net cash (used in) provided by operating
activities |
|
(14,347 |
) |
|
|
4,034 |
|
Cash flows from investing activities |
|
|
|
Collateralization of derivative instruments |
|
(106 |
) |
|
|
1,876 |
|
Purchase of marketable securities |
|
(15,601 |
) |
|
|
(964 |
) |
Proceeds from the sale of marketable securities |
|
28,681 |
|
|
|
4,484 |
|
Proceeds from the sale of property and equipment |
|
- |
|
|
|
50 |
|
Capital expenditures |
|
(146 |
) |
|
|
(1,608 |
) |
Net cash provided by investing activities |
|
12,848 |
|
|
|
3,838 |
|
Cash flows from financing activities |
|
|
|
Deferred financing costs |
|
- |
|
|
|
(477 |
) |
Payment of dividends |
|
(2,624 |
) |
|
|
(2,624 |
) |
Net cash used in financing activities |
|
(2,624 |
) |
|
|
(3,101 |
) |
Net change in cash and cash equivalents |
|
(4,143 |
) |
|
|
4,771 |
|
Cash and cash equivalents at beginning of period |
|
198,122 |
|
|
|
243,331 |
|
Cash and cash equivalents at end of period |
$ |
193,979 |
|
|
$ |
248,102 |
|
|
|
|
|
Cash paid for interest |
$ |
43 |
|
|
$ |
1 |
|
Cash paid for income taxes |
$ |
52 |
|
|
$ |
453 |
|
Noncash investing and financing activities: |
|
|
|
Cash dividends declared, not paid |
$ |
- |
|
|
$ |
131,230 |
|
Noncash capital expenditures |
$ |
118 |
|
|
$ |
- |
|
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, |
|
|
2021 |
|
|
|
2020 |
|
Net (loss) income |
$ |
(8,773 |
) |
|
$ |
19,043 |
|
Depreciation |
|
2,608 |
|
|
|
3,004 |
|
Non-cash stock-based
compensation |
|
- |
|
|
|
49 |
|
Interest and dividend
income |
|
(1,005 |
) |
|
|
(1,967 |
) |
Non-cash interest expense and
amortization of deferred financing costs |
|
32 |
|
|
|
56 |
|
Losses on disposal of property
and equipment |
|
- |
|
|
|
2 |
|
Loss (gain) on derivative
instruments |
|
2,625 |
|
|
|
(6,857 |
) |
Loss on marketable
securities |
|
1,075 |
|
|
|
10,059 |
|
Income tax benefit |
|
(4,387 |
) |
|
|
(13,212 |
) |
Adjusted EBITDA |
$ |
(7,825 |
) |
|
$ |
10,177 |
|
Reconciliation of
Adjusted EBITDA
to Net Cash
Provided by
Operating Activities
|
Three Months Ended March 31, |
|
|
2021 |
|
|
|
2020 |
|
Net cash (used in) provided by
operating activities |
$ |
(14,347 |
) |
|
$ |
4,034 |
|
Benefit for deferred income
taxes |
|
4,402 |
|
|
|
22 |
|
Interest and dividend
income |
|
(1,005 |
) |
|
|
(1,967 |
) |
Income tax benefit |
|
(4,387 |
) |
|
|
(13,212 |
) |
Loss (gain) on derivative
instruments |
|
2,625 |
|
|
|
(6,857 |
) |
Change in fair value of
derivative instruments |
|
695 |
|
|
|
1,874 |
|
Change in operating assets and
liabilities, net |
|
4,192 |
|
|
|
26,282 |
|
Other |
|
- |
|
|
|
1 |
|
Adjusted EBITDA |
$ |
(7,825 |
) |
|
$ |
10,177 |
|
FutureFuel
Corp.Condensed Consolidated Segment
Income(Dollars in
thousands)(Unaudited)
|
Three Months Ended March 31, |
|
|
2021 |
|
|
|
2020 |
|
Revenue |
|
|
|
Custom chemicals |
$ |
10,675 |
|
|
$ |
23,760 |
|
Performance chemicals |
|
5,435 |
|
|
|
3,933 |
|
Chemicals revenue |
$ |
16,110 |
|
|
$ |
27,693 |
|
Biofuels revenue |
|
25,406 |
|
|
|
25,389 |
|
Total Revenue |
$ |
41,516 |
|
|
$ |
53,082 |
|
|
|
|
|
Segment gross profit
(loss) |
|
|
|
Chemicals |
$ |
(1,301 |
) |
|
$ |
8,014 |
|
Biofuels |
|
(9,435 |
) |
|
|
8,385 |
|
Total gross (loss) profit |
$ |
(10,736 |
) |
|
$ |
16,399 |
|
Depreciation is allocated to segment cost 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.
COMPANY CONTACTFutureFuel Corp.Tom
McKinlay(314)854-8352www.futurefuelcorporation.com
FutureFuel (NYSE:FF)
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