FutureFuel Releases First Quarter 2020 Results

FutureFuel First Quarter Net Income of $19.0 Million
Reports Net Income of $19.0 Million or $0.44 per Diluted Share, and Adjusted EBITDA of $10.2 MillionCLAYTON, Mo., May 08, 2020 (GLOBE NEWSWIRE) — 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, 2020.First quarter 2020 Financial Highlights (all comparisons are with the first quarter of 2019)Revenues were $53.1 million, up 9.4% from $48.5 millionAdjusted EBITDA was $10.2 million, up 87.9% from $5.4 millionNet income increased to $19.0 million, or $0.44 per diluted share, from $5.5 million, or $0.13 per diluted share.“Our first quarter earnings reflected the impact of the reinstated Biodiesel Blenders’ Tax Credit and encouraging seasonal demand within our Chemicals segment.Since the onset of the COVID-19 pandemic, we have continued to operate our Batesville, Arkansas manufacturing site as part of the nation’s critical infrastructure. Our people have been magnificent during this period and our priority has been to protect their well-being and support our customers and suppliers. In addition to this, the unprecedented decline in energy prices is also impacting demand, at least in the short term, among our customers in the energy markets. Uncertainty is the key challenge that we face and FutureFuel is well positioned both financially and structurally to respond with the agility, flexibility and creativity that will be needed in the months ahead,” said Tom McKinlay, Chief Operating Officer for FutureFuel Corp.“The strength of our balance sheet allowed us to declare a special dividend to our stockholders and still remain in a robust position moving into what is sure to be a turbulent year ahead,” said Rose Sparks, Chief Financial Officer for FutureFuel Corp.2020 Cash DividendsIn the first three months of 2020, FutureFuel paid a regular quarterly cash dividend in the amount of $0.06 per share on our common stock.  In the three months ended March 31, 2020, we also declared a special cash dividend of $3.00 per share paid in April. The remaining quarterly dividends of $0.06 per share will be paid in June, September, and December.Financial Overview and Key Operating MetricsFinancial 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)Financial and Business SummaryConsolidated sales revenue in the three months ended March 31, 2020 increased $4,581 compared to the three months ended March 31, 2019.  This increase primarily resulted from increased sales volumes in the biofuels segment that were partially offset by decreased prices of biodiesel as compared to the prior year three month period.  Global fuel markets were impacted by reduced demand for oil caused by the economic impact of the COVID-19 pandemic and a lack of support by oil producing nations to cut supply. These factors resulted in significant declines in petroleum and biodiesel oil prices.Income from operations in the three months ended March 31, 2020 increased $12,768 compared to the three months ended March 31, 2019. This increase primarily resulted from:  i) the blenders’ tax credit (“BTC”) being in effect for the current period verses not being in effect in the prior three-month period; and ii) the change in the unrealized and realized activity in derivative instruments with a gain of $6,857 in the three months ended March 31, 2020 as compared to a loss of $1,476 in the three months ended March 31, 2019.  Also benefiting gross profit in both the three months ended March 31, 2020 and 2019 was the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.  This adjustment increased gross profit by $1,319 and $1,637, respectively. Net IncomeNet income for the three months ended March 31, 2020 increased $13,544 as compared to the same period in 2019. This increase resulted primarily from biodiesel tax credits and incentives that were in effect in the three months ended March 31, 2020 that were not in effect for 2019 (see Note 2 to our consolidated financial statements) and tax benefits in effect in the first quarter of 2020 not in effect for the same period in 2019 (see Note 11 to our consolidated financial statements).  Partially offsetting this increase was the unrealized loss on equity securities.Capital ExpendituresCapital expenditures were $1,608 in the first three months of 2020, compared with $2,246 in the same period in 2019. FutureFuel was reimbursed for a portion of these expenditures by certain customers as summarized in the following table.Cash and Cash Equivalents and Marketable SecuritiesCash and cash equivalents and marketable securities totaled $307,746 as of March 31, 2020, compared with $316,951 as of December 31, 2019. About FutureFuelFutureFuel 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 a bleach activator for a major detergent manufacturer, proprietary herbicide and intermediates for major life sciences 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 to its customers. Please visit www.futurefuelcorporation.com for more information. Forward-Looking StatementsThis 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, 2019 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 MeasuresIn 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
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Condensed Consolidated Statements of Operations
and Comprehensive Income
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Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019
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Reconciliation of Non-GAAP Financial Measure to Financial Measure
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(Unaudited)Reconciliation of Adjusted EBITDA to Net IncomeReconciliation of Adjusted EBITDA to Net Cash Provided by Operating ActivitiesFutureFuel Corp.
Condensed Consolidated Segment Income
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(Unaudited) 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 CONTACT
FutureFuel Corp.
Tom McKinlay
(314) 854-8352
www.futurefuelcorporation.com