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Renewable Energy Group 3Q16 results

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Hydrocarbon Engineering,

The Renewable Energy Group, Inc. (REG or the company) has announced its financial results for the third quarter (3Q16) ended 30 September 2016.

Revenues for the quarter were US$624.6 million. The company sold 163.1 million gallons of fuel, compared to the third quarter of 2015 (3Q15), REG sold 36.0% more gallons of fuel resulting in an increase in revenue of 58.2%. Net income attributable to common stockholders was US$22.9 million, compared to a net loss of US$15.7 million in the third quarter of 2015 (3Q15).

Adjusted EBITDA for the quarter was US$31.6 million. Results for the quarter include risk management gains of US$5.9 million, which reflects the change in market value of various hedging instruments used to protect cash margins in the current and future periods. The risk management results were impacted by the increase in energy prices in the last week of September resulting from an announcement by OPEC of a purported reduction in output. Results for the quarter were also affected by reduced operating days at the Company’s Geismar facility, related to local area flooding in August and pulled forward scheduled maintenance from October to September.

Adjusted EBITDA in the third quarter of 2015 (3Q15) was US$16.9 million. The prior year period Adjusted EBITDA includes US$23.3 million of risk management gains, as well as an allocation of the benefit from the retroactive reinstatement of the 2015 Biodiesel Mixture Excise Tax Credit (BTC).

"We achieved solid growth in the third quarter with significant increases in gallons sold, gallons produced, revenue and adjusted EBITDA," said REG President and CEO Daniel J. Oh. "REG Life Sciences delivered its first commercial product last week, our biomass-based diesel fleet is operating efficiently and profitably and REG Geismar is up and running well with no planned downtime for the remainder of the year. We believe we are positioned for a strong finish to the year.”


REG sold a total of 163.1 million gallons of fuel, an increase of 36.0%. REG produced 114.8 million gallons of biomass-based diesel during the quarter, a 35.2% increase. The average price per gallon of biomass-based diesel sold increased by 22.2% to US$3.14 as a result of generally improving market conditions and reinstatement of the BTC.

Revenues were US$624.6 million, an increase of 58.2%. This is primarily attributable to the increase in gallons sold and reinstatement of the BTC. Gross profit was US$47.3 million, or 7.6% of revenues, compared to gross profit of US$4.4 million, or 1.1% of revenues. The increase in gross profit was due to the significant increase in gallons sold and the reinstatement of the BTC.

Net income attributable to common stockholders was US$22.9 million, or US$0.59 per share on a fully diluted basis. This compares to a net loss of US$15.7 million, or $0.36 per share on a fully diluted basis. On 30 September, 2016, REG had cash and cash equivalents of US$86.5 million, an increase of US$39.5 million from the prior year end.

At 30 September 2016, accounts receivable were US$105 million, or 15 days of sales. Accounts receivable at 31 December 2015 were US$310.7 million. The decrease in accounts receivable for the year was due to the collections related to the BTC. Inventory was US$98.2 million at 30 September 2016, or 15 days of sales, an increase of US$12.3 million from the prior year end.

Accounts payable were US$86.1 million and US$236.8 million at 30 September 2016 and 31 December 2015, respectively. The decrease in accounts payable was mainly driven by payments made to our vendors and customers related to the 2015 BTC.

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