FutureFuel is exposed to certain risks relating to its ongoing business operations. Commodity price risk is the primary risk managed by using derivative instruments. Regulated fixed price futures and optionoptions contracts are utilized to manage the price risk associated with future purchases of feedstock used in FutureFuel’sFutureFuel’s biodiesel production along with physical feedstock and finished product inventories attributed to this process.
FutureFuel recognizes all derivative instruments as either assets or liabilities at fair value in its consolidated balance sheets. FutureFuel’sFutureFuel’s derivative instruments do not qualify for hedge accounting under the specific guidelines of ASC 815-20-25, DerivativesandHedging. None of the derivative instruments are designated and accounted for as hedges primarily as a result of the extensive record keeping requirements.
The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $1,518$128 and $758$980 at September 30, 20172019 and December 31, 2016,2018, respectively, and iswas classified as other current assets in the consolidated balance sheets. The carrying values of the margin account and of the derivative instruments are included net, in other current assets.
FutureFuel has two reportable segments organized along similar product groups – chemicals and biofuels.
Chemicals
FutureFuel’s chemicalsFutureFuel’s chemical segment manufactures diversified chemical products that are sold externally to third party customers. This segment is comprised of two components: “custom manufacturing” (manufacturing chemicals for specific customers) and “performance chemicals” (multi-customer specialty chemicals).
Biofuels
FutureFuel’sFutureFuel’s biofuels business segment primarily manufactures and markets biodiesel. Biodiesel revenues are generated through the sale of biodiesel to customers through FutureFuel’s distribution network at the Batesville Plant, through distribution facilities available at leased oil storage facilities, and through a network of remotely located tanks. Biofuels revenues also include the sale of biodiesel blends with petrodiesel,petrodiesel; petrodiesel with no biodiesel added,added; internally generated, separated RINs,Renewable Identification Numbers (“RINs”); biodiesel production byproducts,byproducts; and the purchase and sale of other petroleum products on common carrier pipelines. Biodiesel selling prices and profitability can at times fluctuate based on the timing of unsold, internally generated RINs. FutureFuel does not allocate production costs to internally generated RINs, and, from time to time, can enter into sales of biodiesel on a “RINs-free” basis. Such method of selling resultsbasis, resulting in FutureFuel maintaining possession of the applicable RINs from the sale. The benefit derived from the eventual sale of the RINs is not reflected in results of operations until such time as the RINRINs sale has been completed, which may lead to variability in reported operating results.
Summary of long-lived assets and revenues by geographic area
All of FutureFuel’sFutureFuel’s long-lived assets are located in the United States.
Most of FutureFuel’sFutureFuel’s sales are transacted with control and title passing at the time of shipment from the Batesville Plant, although some sales are transacted with control and title passing at the delivery point. While many of FutureFuel’s chemicals are utilized to manufacture products that are shipped, further processed, and/or consumed throughout the world, the chemical products, with limited exceptions, generally leave the United States only after ownership has transferred from FutureFuel to the customer. FutureFuel is rarely the exporter of record, never the importer of record into foreign countries, and is not always aware of the exact quantities of its products that are moved into foreign markets by its customers. FutureFuel does track the addresses of its customers for invoicing purposes and uses this address to determine whether a particular sale is within or outside the United States. FutureFuel’s revenues attributable to the United States and foreign countries (based upon the billing addresses of its customers) were as follows:
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
United States | | $ | 76,711 | | | $ | 68,462 | | | $ | 197,044 | | | $ | 181,677 | |
All Foreign Countries | | | 895 | | | | 844 | | | | 2,721 | | | | 2,143 | |
Total | | $ | 77,606 | | | $ | 69,306 | | | $ | 199,765 | | | $ | 183,820 | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | |
United States | | $ | 65,340 | | | $ | 81,152 | | | $ | 183,606 | | | $ | 223,943 | |
All Foreign Countries | | | 344 | | | | 270 | | | | 1,443 | | | | 1,562 | |
Total | | $ | 65,684 | | | $ | 81,422 | | | $ | 185,049 | | | $ | 225,505 | |
Revenues from a single foreign country during the threethree- and nine-months ended September 30, 20172019 and 20162018 did not exceed 1% of total revenues.
9
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
Summary of business by segment
| | | Three months ended September 30, | | | Nine months ended September 30, | | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | 2019 | | | 2018 | | | 2019 | | | 2018 | |
Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Custom chemicals | | $ | 23,593 | | | $ | 20,455 | | | $ | 65,189 | | | $ | 60,148 | | | $ | 25,270 | | | $ | 23,973 | | | $ | 70,935 | | | $ | 74,465 | |
Performance chemicals | | | 4,574 | | | | 3,844 | | | | 12,686 | | | | 13,782 | | | | 3,376 | | | | 4,049 | | | | 10,922 | | | | 14,165 | |
Chemicals revenue | | | 28,167 | | | | 24,299 | | | | 77,875 | | | | 73,930 | | | | 28,646 | | | | 28,022 | | | | 81,857 | | | | 88,630 | |
Biofuels revenue | | | 49,439 | | | | 45,007 | | | | 121,890 | | | | 109,890 | | | | 37,038 | | | | 53,400 | | | | 103,192 | | | | 136,875 | |
Total Revenue | | $ | 77,606 | | | $ | 69,306 | | | $ | 199,765 | | | $ | 183,820 | | | $ | 65,684 | | | $ | 81,422 | | | $ | 185,049 | | | $ | 225,505 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment gross profit | | | | | | | | | | | | | | | | | |
Segment gross profit (loss) | | | | | | | | | | | | | | | | | |
Chemicals | | $ | 8,060 | | | $ | 7,853 | | | $ | 20,401 | | | $ | 22,722 | | | $ | 8,488 | | | $ | 8,898 | | | $ | 22,978 | | | $ | 24,470 | |
Biofuels | | | (2,534 | ) | | | 2,466 | | | | (6,947 | ) | | | 6,622 | | | | (3,026 | ) | | | 3,755 | | | | (10,984 | ) | | | 33,961 | |
Total gross profit | | | 5,526 | | | | 10,319 | | | | 13,454 | | | | 29,344 | | | | 5,462 | | | | 12,653 | | | | 11,994 | | | | 58,431 | |
Corporate expenses | | | (2,326 | ) | | | (2,478 | ) | | | (7,405 | ) | | | (7,598 | ) | | | (2,187 | ) | | | (2,424 | ) | | | (6,323 | ) | | | (7,795 | ) |
Income/(loss) before interest and taxes | | | 3,200 | | | | 7,841 | | | | 6,049 | | | | 21,746 | | |
Income before interest and taxes | | | | 3,275 | | | | 10,229 | | | | 5,671 | | | | 50,636 | |
Interest and other income | | | 1,965 | | | | 1,637 | | | | 5,679 | | | | 4,446 | | | | 4,404 | | | | 3,358 | | | | 13,156 | | | | 6,688 | |
Interest and other expense | | | (101 | ) | | | (478 | ) | | | (789 | ) | | | (1,188 | ) | | | (43 | ) | | | (130 | ) | | | (130 | ) | | | (3,666 | ) |
(Provision)/benefit for income taxes | | | (1,730 | ) | | | 3,868 | | | | (3,375 | ) | | | 12,657 | | |
Income tax provision | | | | (1,014 | ) | | | (4,012 | ) | | | (2,889 | ) | | | (2,336 | ) |
Net income | | $ | 3,334 | | | $ | 12,868 | | | $ | 7,564 | | | $ | 37,661 | | | $ | 6,622 | | | $ | 9,445 | | | $ | 15,808 | | | $ | 51,322 | |
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.
10)
| FAIR VALUE MEASUREMENTS
|
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Fair value accounting pronouncements also include a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of FutureFuel. Unobservable inputs are inputs that reflect FutureFuel’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
10
Notes to Consolidated Financial Statements of FutureFuel Corp.
(Dollars in thousands, except per share amounts)
(Unaudited)
The following tables provide information by level for assets and liabilities that are measured at fair value, on a recurring basis, at September 30, 2017 and December 31, 2016.
| | | Asset (Liability) | |
| | | | | | | Fair Value Measurements Using | |
| | | Fair Value at | | | Inputs Considered as: | |
Description | | September 30, 2017 | | | Level 1 | | | Level 2 | | | Level 3 | |
Derivative instruments | | $ | (198 | ) | | $ | (198 | ) | | $ | - | | | $ | - | |
Preferred stock, trust preferred securities, exchange traded debt instruments, and other equity instruments | | $ | 123,588 | | | $ | 123,588 | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | |
| | | | |
| | | Asset (Liability) | |
| | | | | | | Fair Value Measurements Using | |
| | | Fair Value at | | | Inputs Considered as: | |
Description | | December 31, 2016 | | | Level 1 | | | Level 2 | | | Level 3 | |
Derivative instruments | | $ | (258 | ) | | $ | (258 | ) | | $ | - | | | $ | - | |
Preferred stock, trust preferred securities, exchange traded debt instruments, and other equity instruments | | $ | 106,146 | | | $ | 106,146 | | | $ | - | | | $ | - | |
11)
| RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME:
|
The following tables summarize changes in accumulated other comprehensive income from unrealized gains and losses on available-for-sale securities in the three and nine months ended September 30, 2017 and 2016.
| Changes in Accumulated Other Comprehensive Income From Unrealized | |
Gains and Losses on Available-for-Sale Securities | |
For the three months ended September 30, 2017 and 2016 | |
(net of tax) | |
| | | 2017 | | | 2016 | |
Balance at July 1 | | $ | 7,499 | | | $ | 3,372 | |
Other comprehensive income before reclassifications | | | 670 | | | | 672 | |
Amounts reclassified from accumulated other comprehensive income | | | (17 | ) | | | 210 | |
Net current-period other comprehensive income | | | 653 | | | | 882 | |
Balance at September 30 | | $ | 8,152 | | | $ | 4,254 | |
| | | | | | | | | |
| | | | | | | | | |
Changes in Accumulated Other Comprehensive Income From Unrealized | |
Gains and Losses on Available-for-Sale Securities | |
For the nine months ended September 30, 2017 and 2016 | |
(net of tax) | |
| | | 2017 | | | 2016 | |
Balance at January 1 | | $ | 3,540 | | | $ | 2,055 | |
Other comprehensive income before reclassifications | | | 4,259 | | | | 1,727 | |
Amounts reclassified from accumulated other comprehensive income | | | 353 | | | | 472 | |
Net current-period other comprehensive income | | | 4,612 | | | | 2,199 | |
Balance at September 30 | | $ | 8,152 | | | $ | 4,254 | |
11
NotestoConsolidatedFinancialStatementsofFutureFuelCorp.
(Dollarsinthousands,exceptpershareamounts)
(Unaudited)
The following tables summarize amounts reclassified from accumulated other comprehensive income in the three and nine months ended September 30, 2017 and 2016:
Reclassifications from Accumulated Other |
Comprehensive Income for the three and nine months ended |
September 30, 2017 and 2016 |
| | | | | | | | | | |
| | | Three months ended September 30, | | |
| | | 2017 | | | 2016 | | Affected Line Item in Statement of Operations |
Unrealized gains/(losses) on available-for-sale securities | | $ | 26 | | | $ | (322 | ) | Gain/(loss) on marketable securities |
Total before tax | | | 26 | | | | (322 | ) | |
Tax (provision)/benefit | | | (9 | ) | | | 112 | | |
Total reclassifications | | $ | 17 | | | $ | (210 | ) | |
| | | | | | | | | | |
| | | Nine months ended September 30, | | |
| | | 2017 | | | 2016 | | Affected Line Item in Statement of Operations |
Unrealized losses on available-for-sale securities | | $ | (543 | ) | | $ | (727 | ) | Loss on marketable securities |
Total before tax | | | (543 | ) | | | (727 | ) | |
Tax benefit | | | 190 | | | | 255 | | |
Total reclassifications | | $ | (353 | ) | | $ | (472 | ) | |
From time to time, FutureFuel and its operations are parties to, or targets of, lawsuits, claims, investigations, regulatory matters, and proceedings, which are being handled and defended in the ordinary course of business. While FutureFuel is unable to predict the outcomes of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows.
13)
| RELATED PARTY TRANSACTIONS
|
FutureFuel enters into transactions with companies affiliated with or controlled by a director and significant shareholder. Revenues, expenses, prepaid amounts, and unpaid amounts related to these transactions are captured in the accompanying consolidated financial statements as related party line items.
Related party revenues are the result of sales of biodiesel, petrodiesel, blends, other petroleum products, and other similar or related products to these related parties.
Related party cost of goods sold and distribution are the result of sales of biodiesel, petrodiesel, blends, and other petroleum products to these related parties along with the associated expense from the purchase of natural gas, storage and terminalling services, and income tax and consulting services by FutureFuel from these related parties.
12
NotestoConsolidatedFinancialStatementsofFutureFuelCorp.
(Dollarsinthousands,exceptpershareamounts)
(Unaudited)
In April of 2015, FutureFuel acquired additional historical line space on a pipeline for $1,408. The acquired line space was recorded as an intangible asset with an indefinite life as there was no foreseeable limit on the time period over which it is expected to contribute to cash flows. The carrying value of the asset was $1,408 as of September 30, 2017 and December 31, 2016. FutureFuel tests the intangible asset for impairment in accordance with ASC 350-30-35-18 through 35-20.
15)
| RECENTLY ISSUED ACCOUNTING STATEMENTSSTANDARDS |
The following table provides a brief description of recent Accounting Standard Updates ("ASU") issued by the FASB: |
|
| | | | | | Standard | | Description | | Effective Date | | Effect on the Financial Statements or Other Significant Matters |
In FebruaryAugust, 2018 the FASB issued ASU 2018-15, Intangibles – Goodwill and Other –Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract | | These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. | | Annual periods beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted, including any interim period. | | The Company plans to adopt the new guidance effective January 1, 2020. The new guidance is expected to have minimal impact. |
In June 2016, the FASB issued ASU 2016-02, Leases.2016-13, Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments.In April and May of 2019, FASB issued ASU 2019-04 and 2019-05 related to codification improvements and targeted transition relief for ASU 2016-13 | | The new guidance supersedesThese amendments require the lease guidance under FASB ASC Topic 840, Leases, resulting inmeasurement of all expected credit losses for financial assets held at the creation of FASB ASC Topic 842, Leases. The guidance requires a lessee to recognize inreporting date based on historical experience, current conditions and reasonable and supportable forecasts. In addition, the statement ofASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases.assets with credit deterioration.
| | Annual periods beginning after December 15, 2018. Early2019. Earlier adoption is permitted.was permitted, for annual periods beginning after December 15, 2018. | | The Company is currently evaluating its populationconsidering the potential impact of leases,this standard on financial reporting and is continuinginternal controls related to assess all potential impactsthe implementation of the standard but currently believes the most significant impactas it relates to its accounting for logistics equipment. The Company anticipates recognition of additional assetsaccounts receivable and corresponding liabilities related to leases upon adoption. The Company plans to adopt the standard effective January 1, 2019. |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. Since that date, the FASB has issued additional ASUs clarifying certain aspects of ASU 2014-09.
| | The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goodsdebt securities and services. To achieve the core principle, the guidance establishes the following five steps: 1) identify the contract(s) with a customer, 2) identify the performance obligation in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also details the accounting treatment for costs to obtain or fulfill a contract. Lastly, disclosure requirements have been enhanced to provide sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
| | Annual periods beginning after December 15, 2017. Earlier adoption was permitted, but not before December 15, 2016.
| | The Company is in the process of evaluating the impact of this guidance. This new guidance, will likely result in a change in the nature and extent of the related footnote disclosures. The Company plans to adopt the new guidance whenon the effective and presently anticipates adopting on a modified retrospective basisdate of January 1, 2020. The new guidance is expected to each prior reporting period presented with the election of applicable practical expedients.have minimal impact.
|
13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.444Operations.
All dollar amounts expressed as numbers in this M D&A are in thousands (except per share amounts).
Certain tables may not add due to rounding.
The following Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with our consolidated financial statements, including the notes thereto, set forth herein. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements. See “Forward Looking Information” below for additional discussion regarding risks associated with forward-looking statements.
Overview
Our company is managed and reported in two reporting segments: chemicals segment and biofuels segment.biofuels. Within the chemicalschemical segment are two product groupings: custom chemicals and performance chemicals. The custom product group is comprised of specialty chemicals manufactured for a single customer whereas the performance product group is comprised of chemicals manufactured for multiple customers. The biofuels segment is comprised of one product group. Management believes that the diversity of each segment strengthens the company in the ability to utilize resources and is committed to growing each segment.
Summary of Financial Results
Set forth below is a summary of certain consolidated financial information for the periods indicated.
| | | Three months ended September 30, | | | Three Months Ended September 30, | |
| | | | | | | | | | | Dollar | | | % | | | | | | | | | | | Dollar | | | % | |
| | | 2017 | | | 2016 | | | Change | | | Change | | | 2019 | | | 2018 | | | Change | | | Change | |
Revenues | | $ | 77,606 | | | $ | 69,306 | | | $ | 8,300 | | | | 12.0% | | |
Revenue | | | $ | 65,684 | | | $ | 81,422 | | | $ | (15,738 | ) | | | (19.3% | ) |
Income from operations | | $ | 3,200 | | | $ | 7,841 | | | $ | (4,641 | ) | | | (59.2% | ) | | $ | 3,275 | | | $ | 10,229 | | | $ | (6,954 | ) | | | (68.0% | ) |
Net income | | $ | 3,334 | | | $ | 12,868 | | | $ | (9,534 | ) | | | (74.1% | ) | | $ | 6,622 | | | $ | 9,445 | | | $ | (2,823 | ) | | | (29.9% | ) |
Earnings per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.08 | | | $ | 0.29 | | | $ | (0.21 | ) | | | (72.4% | ) | | $ | 0.15 | | | $ | 0.22 | | | $ | (0.07 | ) | | | (31.8% | ) |
Diluted | | $ | 0.08 | | | $ | 0.29 | | | $ | (0.21 | ) | | | (72.4% | ) | | $ | 0.15 | | | $ | 0.22 | | | $ | (0.07 | ) | | | (31.8% | ) |
Capital expenditures and intangibles (net of customer reimbursements and regulatory grants) | | $ | 856 | | | $ | 853 | | | $ | 3 | | | | 0.4% | | |
Capital expenditures (net of customer reimbursements) | | | $ | 572 | | | $ | 642 | | | $ | (70 | ) | | | (10.9% | ) |
Adjusted EBITDA | | $ | 9,553 | | | $ | 10,117 | | | $ | (564 | ) | | | (5.6% | ) | | $ | 6,834 | | | $ | 13,661 | | | $ | (6,827 | ) | | | (50.0% | ) |
| | | | | | | | | | | | | | | | | | |
| | | Nine months ended September 30, | | |
| | | | | | | | | | | Dollar | | | % | | |
| | | 2017 | | | 2016 | | | Change | | | Change | | |
Revenues | | $ | 199,765 | | | $ | 183,820 | | | $ | 15,945 | | | | 8.7% | | |
Income from operations | | $ | 6,049 | | | $ | 21,746 | | | $ | (15,697 | ) | | | (72.2% | ) | |
Net income | | $ | 7,564 | | | $ | 37,661 | | | $ | (30,097 | ) | | | (79.9% | ) | |
Earnings per common share: | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.17 | | | $ | 0.86 | | | $ | (0.69 | ) | | | (80.2% | ) | |
Diluted | | $ | 0.17 | | | $ | 0.86 | | | $ | (0.69 | ) | | | (80.2% | ) | |
Capital expenditures and intangibles (net of customer reimbursements and regulatory grants) | | $ | 2,413 | | | $ | 2,988 | | | $ | (575 | ) | | | (19.2% | ) | |
Adjusted EBITDA | | $ | 17,201 | | | $ | 36,328 | | | $ | (19,127 | ) | | | (52.7% | ) | |
| | | Nine Months Ended September 30, | |
| | | | | | | | | | | Dollar | | | % | |
| | | 2019 | | | 2018 | | | Change | | | Change | |
Revenue | | $ | 185,049 | | | $ | 225,505 | | | $ | (40,456 | ) | | | (17.9% | ) |
Income from operations | | $ | 5,671 | | | $ | 50,636 | | | $ | (44,965 | ) | | | (88.8% | ) |
Net income | | $ | 15,808 | | | $ | 51,322 | | | $ | (35,514 | ) | | | (69.2% | ) |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.36 | | | $ | 1.17 | | | $ | (0.81 | ) | | | (69.2% | ) |
Diluted | | $ | 0.36 | | | $ | 1.17 | | | $ | (0.81 | ) | | | (69.2% | ) |
Capital expenditures (net of customer reimbursements) | | $ | 1,446 | | | $ | 1,539 | | | $ | (93 | ) | | | (6.0% | ) |
Adjusted EBITDA | | $ | 15,633 | | | $ | 63,184 | | | $ | (47,551 | ) | | | (75.3% | ) |
14
We use 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. We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization expenses, excluding, when applicable, non-cash stock-based compensation expenses, public offering expenses, acquisition-related transaction costs, purchase accounting adjustments, losses on disposal of property and equipment, gains or losses on derivative instruments, and other non-operating income or expenses. Information relating to adjusted EBITDA is provided so that investors have the same data that we employ in assessing the overall operation and liquidity of our business. Our calculation of adjusted EBITDA may be different from similarly titled measures used by other companies; therefore, the results of our calculation are not necessarily comparable to the results of other companies.
Adjusted EBITDA allows our chief operating decision makers to assess the performance and liquidity of our business on a consolidated basis to assess the ability of our operating segments to produce operating cash flow to fund working capital needs, to fund capital expenditures, and to pay dividends. In particular, our management believes that adjusted EBITDA permits a comparative assessment of our operating performance and liquidity, relative to a performance and liquidity based on GAAP results, while isolating the effects of certain items, including depreciation and amortization, which may vary among our operating segments without any correlation to their underlying operating performance, 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, which can cause net income to appear volatile from period to period relative to the sale of the underlying physical product.
We enter intoutilize commodity derivative instruments primarily to protect our operations from downward movements in commodity prices, and to provide greater certainty of cash flows associated with sales of our commodities. We enter into hedges, and we utilize mark-to-market accounting to account for these instruments. Thus, our results in any given period can be impacted, and sometimes significantly, by changes in market prices relative to our contract price along with the timing of the valuation change in the derivative instruments relative to the sale of biofuel. We include this item as an adjustment as we believe it provides a relevant indicator of the underlying performance of our business in a given period.
Additionally, we invest in marketable securities of certain debt securities (trust preferred stock and exchange-traded debt instruments) and in preferred stock and other equity instruments. The realized and unrealized gains and losses on these marketable securities can fluctuate significantly from period to period. We include this item as an adjustment as we believe it provides a relevant indicator of the underlying performance of our business in a given period.
The following table reconciles adjusted EBITDA with net income, the most directly comparable GAAP performance financial measure.measure, with adjusted EBITDA.
| | | Three months ended September 30, | | | Nine months ended September 30, | | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | 2019 | | | 2018 | | | 2019 | | | 2018 | |
Adjusted EBITDA | | $ | 9,553 | | | $ | 10,117 | | | $ | 17,201 | | | $ | 36,328 | | |
Net income | | | $ | 6,622 | | | $ | 9,445 | | | $ | 15,808 | | | $ | 51,322 | |
Depreciation | | | (2,927 | ) | | | (2,739 | ) | | | (8,735 | ) | | | (8,068 | ) | | | 3,620 | | | | 2,732 | | | | 9,092 | | | | 8,502 | |
Non-cash stock-based compensation | | | (128 | ) | | | (477 | ) | | | (878 | ) | | | (1,431 | ) | | | 21 | | | | 107 | | | | 21 | | | | 321 | |
Interest and dividend income | | | 1,965 | | | | 1,637 | | | | 5,679 | | | | 4,446 | | | | (2,718 | ) | | | (2,543 | ) | | | (7,830 | ) | | | (6,688 | ) |
Interest expense | | | (43 | ) | | | (9 | ) | | | (129 | ) | | | (22 | ) | |
Losses on disposal of property and equipment | | | (68 | ) | | | (10 | ) | | | (145 | ) | | | (147 | ) | |
Gains/(losses) on derivative instruments | | | (3,314 | ) | | | 803 | | | | (1,511 | ) | | | (5,375 | ) | |
Gains/(losses) on marketable securities | | | 26 | | | | (322 | ) | | | (543 | ) | | | (727 | ) | |
Income tax (expense)/benefit | | | (1,730 | ) | | | 3,868 | | | | (3,375 | ) | | | 12,657 | | |
Net income | | $ | 3,334 | | | $ | 12,868 | | | $ | 7,564 | | | $ | 37,661 | | |
Non-cash interest expense and amortization of deferred financing costs | | | | 43 | | | | 43 | | | | 130 | | | | 130 | |
(Gain) loss on disposal of property and equipment | | | | (22 | ) | | | 4 | | | | (11 | ) | | | 41 | |
(Gain) loss on derivative instruments | | | | (322 | ) | | | 676 | | | | 711 | | | | 3,947 | |
(Gain) loss on marketable securities | | | | (1,424 | ) | | | (815 | ) | | | (5,177 | ) | | | 3,273 | |
Income tax provision | | | | 1,014 | | | | 4,012 | | | | 2,889 | | | | 2,336 | |
Adjusted EBITDA | | | $ | 6,834 | | | $ | 13,661 | | | $ | 15,633 | | | $ | 63,184 | |
15
The following table reconciles adjusted EBITDA with cash flows from operations, the most directly comparable GAAP liquidity financial measure.measure, with adjusted EBITDA.
| | | Nine months ended September 30, | | | Nine Months Ended September 30, | |
| | | 2017 | | | 2016 | | | 2019 | | | 2018 | |
Adjusted EBITDA | | $ | 17,201 | | | $ | 36,328 | | |
Net cash provided by operating activities | | | $ | 24,358 | | | $ | 79,169 | |
Benefit for deferred income taxes | | | (1,303 | ) | | | (9,243 | ) | | | 273 | | | | 3,609 | |
Impairment of fixed assets | | | 28 | | | | 178 | | |
Interest and dividend income | | | 5,679 | | | | 4,446 | | | | (7,830 | ) | | | (6,688 | ) |
Income tax (expense)/benefit | | | (3,375 | ) | | | 12,657 | | |
Losses on derivative instruments | | | (1,511 | ) | | | (5,375 | ) | |
Income tax provision | | | | 2,889 | | | | 2,336 | |
Loss on derivative instruments | | | | 711 | | | | 3,947 | |
Change in fair value of derivative instruments | | | (60 | ) | | | 6,686 | | | | 357 | | | | 2,290 | |
Changes in operating assets and liabilities, net | | | 19,781 | | | | 31,204 | | | | (5,125 | ) | | | (21,479 | ) |
Other | | | - | | | | (2 | ) | |
Net cash provided by operating activities | | $ | 36,440 | | | $ | 76,879 | | |
Adjusted EBITDA | | | $ | 15,633 | | | $ | 63,184 | |
16
Results of Operations
Consolidated
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| | | | | | | | | | | Change | | | | | | | | | | | Change | |
| | | 2017 | | | 2016 | | | Amount | | | % | | | 2017 | | | 2016 | | | Amount | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | $ | 77,606 | | | $ | 69,306 | | | $ | 8,300 | | | 12.0% | | | $ | 199,765 | | | $ | 183,820 | | | $ | 15,945 | | | 8.7% | |
Volume/product mix effect | | | | | | | | | | $ | (3,523 | ) | | (5.1% | ) | | | | | | | | | | $ | (20,033 | ) | | (10.9% | ) |
Price effect | | | | | | | | | | $ | 11,823 | | | 17.1% | | | | | | | | | | | $ | 35,978 | | | 19.6% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit | | $ | 5,526 | | | $ | 10,319 | | | $ | (4,793 | ) | | (46.4% | ) | | $ | 13,454 | | | $ | 29,344 | | | $ | (15,890 | ) | | (54.2% | ) |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | | | | | | | | | Change | | | | | | | | | | | Change | |
| | | 2019 | | | 2018 | | | Amount | | | % | | | 2019 | | | 2018 | | | Amount | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 65,684 | | | $ | 81,422 | | | $ | (15,738 | ) | | | (19.3% | ) | | $ | 185,049 | | | $ | 225,505 | | | $ | (40,456 | ) | | | (17.9% | ) |
Volume/product mix effect | | | | | | | | | | $ | (11,108 | ) | | | (13.6% | ) | | | | | | | | | | $ | (38,678 | ) | | | (17.2% | ) |
Price effect | | | | | | | | | | $ | (4,630 | ) | | | (5.7% | ) | | | | | | | | | | $ | (1,778 | ) | | | (0.7% | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit | | $ | 5,462 | | | $ | 12,653 | | | $ | (7,191 | ) | | | (56.8% | ) | | $ | 11,994 | | | $ | 58,431 | | | $ | (46,437 | ) | | | (79.5% | ) |
Consolidated sales revenue in the threethree- and nine monthsnine-months ended September 30, 2017 increased $8,3002019 decreased $15,738 and $15,945,$40,456, respectively, compared to the threethree- and nine monthsnine-months ended September 30, 2016.2018. This increasedecrease primarily resulted from higherdecreased sales volumes and decreased prices of biodiesel in the biofuel segmentthree- and increasednine-month periods ended September 30, 2019. In addition, in the nine-month period ended September 30, 2019, revenue was reduced by lower sales volumes in the chemical segment. InPartially reducing the nine-month comparison period, the increase from higher prices in the biofuel segmentprice effect was partially offset by lower sales volumes largelyprior year rebates paid to customers that resulted from the expirationretroactive reinstatement of the federal2017 blenders’ tax credit (“BTC”).(BTC) passed into law on February 9, 2018. The BTC has not been reinstated beyond 2017, therefore, these rebates did not reoccur in 2019. Please see Note 2 for additional discussion.
Gross profit in the threethree- and ninenine-months ended September 30, 2019 decreased $7,191 and $46,437, respectively, compared to the three- and nine-months ended September 30, 2018. This decrease was primarily from the biofuels segment with the prior year period benefiting from the aforementioned BTC which was not in law in 2019. Also negatively impacting gross profit in the current periods were reduced sales volumes and average selling price in the biofuels segment. Additionally, chemical segment sales volumes reduced gross profit in the nine-month period. Partially offsetting these decreases in gross profit was the favorable impact of the change in the unrealized and realized activity in derivative instruments with a gain of $322 in the three months ended September 30, 2017 decreased $4,793 and $15,890, respectively,2019 as compared to a loss of $676 in the three and nine months ended September 30, 2016. In the biofuel segment, this decrease largely resulted from the absence2018 and a loss of the BTC which expired on December 31, 2016. We also experienced a reduction$711 in pipeline profits for the nine months ended September 30, 20172019, as compared to a loss of $3,947 in the same period of 2018. Additionally, gross profit was favorably impacted in the three- and nine-months ended September 30, 2019, as compared to the prior year period.
Another significant impact to the reduction in gross profit in the nine monthsthree- and nine-months ended September 30, 2017, as compared to the prior year period, was2018, by the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. This adjustment reducedincreased gross profit $5,329by $557 and $2,480 in the nine monthsthree- and nine-months ended September 30, 2017 and increased gross profit $1,845 in the nine months ended September 30, 2016. This change in LIFO resulted in a lower of cost or market adjustment of $1,877 in the three and nine months ended September 30, 2016 and no such adjustment was necessary in the three and nine months ended September 30, 2017. Please see footnote 2 for additional discussion.
Also contributing to the reduction in gross profit in the three months ended September 30, 2017, was the loss in the unrealized and realized activity in derivative instruments of $3,314,2019 as compared to a gaindecrease in gross profit of $803,$623 and $2,621 in the prior year period. The change in the derivative activity in the nine months endingthree- and nine-months ended September 30, 2017 favorably impacted gross profit with a loss of $1,511, as compared to a loss of $5,375 in the prior year period.2018, respectively.
Operating Expenses
Operating expenses decreased from $2,478 to $2,326 or $152 $237 and $1,472 in the three monthsthree- and nine-months ended September 30, 2017 and from $7,598 to $7,405 or $193 in the nine months ended September 30, 2017,2019, as compared to the threethree- and nine monthsnine-months ended September 30, 2016, respectively.2018. This reductiondecrease was primarily from reduced compensation expense on accrued bonuses related to the benefit of the 2017 BTC reinstated in both periods was from lower compensation cost partially offset by higher researchthe three and development expense.nine-month period ended September 30, 2018.
Provision/(Benefit)Income tax provisionfor IncomeTaxes
The effective tax rate for the three and nine monthsthree-and nine-months ended September 30, 2017, reflects our expected2019 included a benefit from income tax rate on reported operating income before income tax. Our effective tax rate in the threesettlements for 2014, 2015, and nine months ended September 30, 2017, reflects the elimination of certain tax credits and incentives for 2017.
2016 Internal Revenue Service audits. The effective tax rate for the three and nine monthsnine-months ended September 30, 2016, reflects our expected tax rate on reported operating income earnings before income tax. Our effective tax rate2019 was also favorably impacted by a retroactive research and development credit for a prior year in a state where we had significant business.
The nine-month period ended September 30, 2018 included the favorable effect of the BTC and Small Agri-biodiesel Producer Tax Credit (2017 BTC which was reinstated in the three and nine months ended September 30, 2016, reflects the positive effect of the reinstatement of the certainMarch 31, 2018). These tax credits and incentives for 2016. In addition, during the second quarter of 2016, FutureFuel booked a tax benefit related to the reversal of a state’s treatment of the taxability of the tax credits and incentives.were not in law in 2019.
17
UnrecognizedThere were no unrecognized tax benefits totaled $2,052 and $2,056 at September 30, 20172019 and there were unrecognized tax benefits of $2,804 at December 31, 2018. As mentioned in the previous paragraph, we settled the 2014, 2015, and 2016 IRS audits through resolution of issues previously provided for as unrecognized tax benefits.
We recorded interest and penalties, net, as a component of income tax provision with accrued balances of $748 and $681 at September 30, 2019 and December 31, 2016,2018, respectively.
Net Income
Net income for the threethree- and nine monthsnine-months ended September 30, 20172019 decreased $9,534$2,823 and $30,097,$35,514, respectively, as compared to the same periods in 2016.2018. The decrease in the three-month period resulted primarily from lower sales volumes and lower prices of biodiesel. The decrease in the nine-month period resulted primarily from the lackabsence of the benefit ofbiodiesel tax credits and incentives in effect inthat benefited the threeprior year and nine months ended September 30, 2016 which were not in effect for 2019 and to a lesser extent, lower sales volumes in the three and nine months ended September 30, 2017. Additionally, the adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting negatively impacted net income in both the three and nine months ended September 30, 2017. In comparison, net incomechemical segment.
ChemicalSegment
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | | | | | | | | | Change | | | | | | | | | | | Change | |
| | | 2019 | | | 2018 | | | Amount | | | % | | | 2019 | | | 2018 | | | Amount | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 28,646 | | | $ | 28,022 | | | $ | 624 | | | | 2.2 | % | | $ | 81,857 | | | $ | 88,630 | | | $ | (6,773 | ) | | | (7.6% | ) |
Volume/product mix effect | | | | | | | | | | $ | 466 | | | | 1.7 | % | | | | | | | | | | $ | (7,592 | ) | | | (8.6% | ) |
Price effect | | | | | | | | | | $ | 158 | | | | 0.6 | % | | | | | | | | | | $ | 819 | | | | 0.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit | | $ | 8,488 | | | $ | 8,898 | | | $ | (410 | ) | | | (4.6% | ) | | $ | 22,978 | | | $ | 24,470 | | | $ | (1,492 | ) | | | (6.1% | ) |
Chemical revenue in the three months ended September 30, 2016 was negatively impacted by this adjustment, but this adjustment benefited net income in the nine months ended September 30, 2016.
ChemicalsSegment
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| | | | | | | | | | | Change | | | | | | | | | | | Change | |
| | | 2017 | | | 2016 | | | Amount | | | % | | | 2017 | | | 2016 | | | Amount | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | $ | 28,167 | | | $ | 24,299 | | | $ | 3,868 | | | 15.9% | | | $ | 77,875 | | | $ | 73,930 | | | $ | 3,945 | | | 5.3% | |
Volume/product mix effect | | | | | | | | | | $ | 2,937 | | | 12.1% | | | | | | | | | | | $ | 2,774 | | | 3.8% | |
Price effect | | | | | | | | | | $ | 931 | | | 3.8% | | | | | | | | | | | $ | 1,171 | | | 1.6% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit | | $ | 8,060 | | | $ | 7,853 | | | $ | 207 | | | 2.6% | | | $ | 20,401 | | | $ | 22,722 | | | $ | (2,321 | ) | | (10.2% | ) |
Sales revenue in the three months ended September 30, 20172019 increased by $3,8682.2% or $624 compared to the three months ended September 30, 2016. Sales revenue2018. Revenue for our custom chemicals (unique chemicals produced for specific customers) for the three months ended September 30, 20172019 totaled $23,593,$25,270, an increase of $3,138$1,297 from the comparablesame period in 2016.2018. This increase was primarily attributed to increased sales volumes in the agrochemical and energy markets.timing of products delivered. Performance chemicals (comprised of multi-customer products which are sold based on specification) sales revenues were $4,574revenue was $3,376 in the three months ended September 30, 2017, an increase2019, a decrease of $730$673 from the three months ended September 30, 2016.2018. This increasedecrease was primarily from increasedreduced sales volume of glycerin and slower sales of a polymer modifiers and specialty additives.modifier used in the carpet industry.
SalesChemical revenue in the nine months ended September 30, 2017 increased $3,9452019 decreased 7.6% or $6,773 compared to the nine months ended September 30, 2016.2018. Revenue for our custom chemicals (unique chemicals produced for specific customers) for the nine months ended September 30, 2019 totaled $70,935, a decrease of $3,530 from the same period in 2018. This increasedecrease was primarily attributed to increaseddecreased sales volumevolumes in the agrochemical and energy markets newand included a planned shutdown of a process line to expand capacity. During the current quarter, a custom agrochemical customer product salesinformed us that they would not renew their contract for 2020. For the three- and increased amortizationnine-month period, revenue from this customer totaled $4,877 and $12,195, respectively. Performance chemicals (comprised of deferredmulti-customer products which are sold based on specification) revenue which were mostly offset by the reduced price and volume of the laundry detergent additive. Performance chemical sales revenue were down $1,096 to $12,686,was $10,922 in the nine month periodmonths ended September 30, 2017.2019, a decrease of $3,243 from the nine months ended September 30, 2018. This decrease was primarily from reduced sales volumesvolume of glycerin and slower sales of a polymer modifier product. used in the carpet industry.
Gross profit for the chemicalschemical segment for the three monthsthree- and nine-months ended September 30, 2017 increased by $2072019, decreased 4.6% or $410 and 6.1% or $1,492, respectively, when compared to the three months ended September 30, 2016. Factors positively impactingsame period of 2018. This decrease was driven mostly by sales volume declines in the three-month comparison of gross profit wereagrochemical and energy market as discussed above and partially offset by a benefit from the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting and volume growthaccounting. The change in this adjustment increased the chemical segment gross profit in the agrochemical and energy markets. Items negatively impactingnine-months ended September 30, 2019 by $836, as compared to a decrease in gross profit were a declineof $601, in the sales volume and pricesame period of the laundry detergent additive and a change in product mix.2018.
Gross profit for
BiofuelsSegment
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | | | | | | | | | Change | | | | | | | | | | | Change | |
| | | 2019 | | | 2018 | | | Amount | | | % | | | 2019 | | | 2018 | | | Amount | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 37,038 | | | $ | 53,400 | | | $ | (16,362 | ) | | | (30.6 | %) | | $ | 103,192 | | | $ | 136,875 | | | $ | (33,683 | ) | | | (24.6 | %) |
Volume/product mix effect | | | | | | | | | | $ | (11,574 | ) | | | (21.6 | %) | | | | | | | | | | $ | (31,086 | ) | | | (22.7 | %) |
Price effect | | | | | | | | | | $ | (4,788 | ) | | | (9.0 | %) | | | | | | | | | | $ | (2,597 | ) | | | (1.9 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross (loss) profit | | $ | (3,026 | ) | | $ | 3,755 | | | $ | (6,781 | ) | | | (180.6 | %) | | $ | (10,984 | ) | | $ | 33,961 | | | $ | (44,945 | ) | | | (132.3 | %) |
Biofuels revenue in the chemicals segment for the nine monthsthree- and nine-months ended September 30, 20172019 decreased by $2,321 when$16,362 and $33,683, respectively, as compared to the nine months ended September 30, 2016. Factors negatively impacting the nine-month comparisonsame periods of gross profit were from the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting, a decline in the sales volume and price of the laundry detergent additive, and a decline in the sales volume of the polymer modifier product. Positively impacting the nine-month comparison period was the volume growth in the agrochemical and energy markets.
18
BiofuelsSegment
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| | | | | | | | | | | Change | | | | | | | | | | | Change | |
| | | 2017 | | | 2016 | | | Amount | | | % | | | 2017 | | | 2016 | | | Amount | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | $ | 49,439 | | | $ | 45,007 | | | $ | 4,432 | | | 9.8% | | | $ | 121,890 | | | $ | 109,890 | | | $ | 12,000 | | | 10.9% | |
Volume/product mix effect | | | | | | | | | | $ | (6,460 | ) | | (14.4% | ) | | | | | | | | | | $ | (22,807 | ) | | (20.8% | ) |
Price effect | | | | | | | | | | $ | 10,892 | | | 24.2% | | | | | | | | | | | $ | 34,807 | | | 31.7% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit | | $ | (2,534 | ) | | $ | 2,466 | | | $ | (5,000 | ) | | (202.8% | ) | | $ | (6,947 | ) | | $ | 6,622 | | | $ | (13,569 | ) | | (204.9% | ) |
Biofuels sales revenue in the three and nine months ended September 30, 2017 increased $4,432 and $12,000 when compared to the three and nine months ended September 30, 2016. This increase was primarily from higher prices on2018. The biodiesel biodiesel RINs, and biodiesel blends. The sale of separated, internally generated RINs, comprised a larger component of revenueblend volumes decreased in both the current quarterthree- and nine-month period as compared to the prior year, periods.primarily from the lack of sourcing profitable feedstock. In addition, pipeline sales increased to $1,852 from $1,509 in the three months ended September 30, 2017 and 2016, respectively. For2019 as compared to the same period of 2018, lower selling price reduced revenue 9.0% or $4,788. In the nine-month comparison period pipelineended September 30, 2019 as compared to the same period of 2018, net sales prices decreased to $1,852revenue 1.9% or $2,597. In the nine-month period ended September 30, 2018, revenue included rebates that resulted from $7,390. the retroactive reinstatement of the 2017 BTC. These rebates represented a lower sales price in the nine months ended September 30, 2018; these rebates were not present in the nine-month period ended September 30, 2019. The BTC has not been reinstated beyond 2017. Please see Note 2 for additional discussion.
RevenueBiofuels revenue from common carrier pipelines varies as its revenue recognition depends upon whether a transaction is bought from and sold to the same party. Purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another (including buy/sell agreements) are combined and recorded on a net basis. Additionally, revenue from common carrier pipelines fluctuates with market conditions. Revenue from net transactions increased $121 in the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.
A portion of our biodiesel sold in 2017 was to two major refiners/blenders and one major refinerrefiner/blender in 2016.2019 and two in 2018. No assurances can be given that we will continue to sell to such major refiners, or, if we do sell, the volume we will sell or the profit margin we will realize. We do not believe that the loss of these customers would have a material adverse effect on our biofuels segment or on us as a whole in that:because: (i) unlike our custom manufacturing products, biodiesel is a commodity with a large potential customer base; (ii) we believe that we could readily sell our biodiesel to other customers as potential demand from other customers for biodiesel exceeds our production capacity; (iii) our sales to these customers are not under fixed terms and the customers have no fixed obligation to purchase any minimum quantities except as stipulated by short termshort-term purchase orders; and (iv) the prices we receive from these customers are based upon then-market rates, as would be the case with sales of this commodity to other customers.
Biofuels had a gross profitloss of $3,026 in the three and nine months ended September 30, 2017 decreased $5,000 and $13,569 when compared to the three and nine months ended September 30, 2016. Cost2019, as compared to a gross profit of goods sold increased as a result of the absence of the blenders’ tax credit which expired December 31, 2016 and was in effect$3,755 in the prior year’s period. Gross profits were reduced bysame period of 2018, primarily on lower sales volumes and to a lesser extent, lower sales prices. Partially reducing the gross loss in the three months ended September 30, 2019 was the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.accounting as compared to the same period in 2018. This adjustment decreased gross profit $383 and $4,276loss $465 in the three and nine months ended September 30, 2017, respectively,2019, compared to a decrease in gross profit of $336 and an increase of $898$460 in the three and nine months ended September 30, 2016, respectively. This change in LIFO resulted in a lower of cost or market adjustment of $1,877, in the three and nine months ended September 30, 2016. No such adjustment impacted gross profit in the three and nine months ended September 30, 2017. Please see footnote 2 for additional discussion.2018.
Biofuels gross profit was furtherloss was also reduced by the change in the activity in derivative instruments in comparison to the prior year quarter with a loss of $3,314 as compared to a gain of $803$322 in the three months ended September 30, 2017 and 2016, respectively. The change in the derivative activity in the nine months ending September 30, 2017 favorably impacted gross profit with a loss of $1,511,2019, as compared to a loss of $5,375$676 in the prior year period.same period of 2018. In order to better manage the commodity price risk caused by market fluctuations in biofuel prices, we may enter into exchange tradedexchange-traded commodity futures and options contracts. We account for these derivative instruments in accordance with accounting standards whereby the fair value of FutureFuel’sour derivative instruments is determined based on the closing prices of the derivative instruments on relevant commodity exchanges at the end of an accounting period. Realized gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the statement of operations as a component of cost of goods sold within the biofuels segment.
FutureFuel recognizesWe recognize all derivative instruments as either assets or liabilities at fair value in its consolidated balance sheet. FutureFuel’sOur derivative instruments do not qualify for hedge accounting under the specific guidelines of ASC 815-20-25,Topic 815, DerivativesandHedging. None of the derivative instruments are designated and accounted for as hedges due primarily to the extensive record keeping requirements.
19
In the nine-month period ended September 30, 2019, biofuels gross loss was $10,984 as compared to a gross profit of $33,961 in the same period of 2018. The change was primarily from the retroactive reinstatement of the 2017 BTC, totaling $28,865, which benefited the first nine months of 2018 and has not been reinstated past December 31, 2017. Further increasing gross loss were lower sales volumes in the nine months of 2019 as compared to the same period of 2018. Gross loss was partially reduced in 2019, by the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. This adjustment reduced gross loss $1,645 in the nine months ended September 30, 2019, as compared to a reduction in gross profit of $2,020 in the nine months ended September 30, 2018. In addition, biofuels gross loss was reduced by the change in the activity in derivative instruments with a loss of $711 in the nine months ended September 30, 2019, as compared to a loss of $3,947 in the same period of 2018.
The volumes and carrying values of FutureFuel’sour derivative instruments were as follows:
| | | September 30, 2017 | | | December 31, 2016 | |
| | | Number of Contracts Short | | | Fair Value | | | Number of Contracts Short | | | Fair Value | |
Regulated options, included in other current assets | | 200 | | | $ | (162 | ) | | - | | | $ | - | |
Regulated fixed price future commitments, included in other current assets | | 182 | | | $ | (36 | ) | | 135 | | | $ | (258 | ) |
| | | September 30, 2019 | | | December 31, 2018 | |
| | | Contract Quantity | | | Fair Value | | | Contract Quantity Short | | | Fair Value | |
Regulated options, included in other current assets | | | - | | | $ | - | | | | 100 | | | $ | (484 | ) |
Regulated fixed price future commitments, included in other current assets | | | 10 | | | $ | 60 | | | | 96 | | | $ | 187 | |
*All derivative instruments are entered into with the standard contract terms and conditions in accordance with major trading authorities of the New York Mercantile Exchange.
Critical Accounting Estimates
Revenue Recognition
The Company recognizes revenue under Topic 606, Revenue from Contracts with Customers. Certain long-term contracts had upfront non-cancellable payments considered material rights. The Company applied the renewal option approach in allocating the transaction price to the material rights. For each of these contracts, the Company estimated the expected contractual volumes to be sold at the most likely expected sales price as a basis for allocating the transaction price to the material right. Estimates are updated quarterly on a prospective basis. These custom chemical contracts have payment terms of 30 days. Please see Note 18 for additional discussion.
For most product sales, revenue is recognized when product is shipped from our facilities and risk of loss and title have passed to the customer, which is in accordance with our customer contracts and the stated shipping terms. Nearly all custom manufactured products are manufactured under written contracts.master service agreements. Performance chemicals and biodiesel are generally sold pursuant to the terms of written purchase orders. In general, customers do not have any rights of return, except for quality disputes. All of our products are tested for quality before shipment, and historically returns have been inconsequential. We do not offer rebates, or other warranties.except those related to the BTC.
Biodiesel selling prices can at times fluctuate based on the timing of unsold, internally generated RINs. From time to time, sales of biodiesel are on a “RINs-free” basis. Such method of selling results in applicable RINs being held. The value of the RINs is not reflected in revenue until such time as the RIN sale has been completed.
Revenue from bill and holdbill-and-hold transactions in which a performance obligation exists is recognized when the total performance obligation has been met and title tocontrol of the product has transferred. Bill and holdBill-and-hold transactions for the threethree- and nine monthsnine-months ended September 30, 20172019 and 20162018 were related to specialtycustom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for use.use by the customer. These sales were subject to written monthly purchase orders with agreement that production was reasonable. The inventoryproduct was custom manufactured and stored at the customer’s request and could not be sold to another buyer. Credit and payment terms for bill and holdbill-and-hold customers are similar to other specialtycustom chemicals customers. Sales revenueRevenue under bill and holdbill-and-hold arrangements were $4,519$14,417 and $6,759$11,576 for the three months ended September 30, 20172019 and 2016, and $12,477 and $17,103 for2018, respectively. For the nine months ended September 30, 20172019 and 2016,2018, bill-and-hold revenue were $38,179 and $32,470, respectively.
Liquidity and Capital Resources
Our net cash provided by (used in)from operating activities, investing activities, and financing activities for the nine months ended September 30, 20172019 and 20162018 are set forth in the following chart.table.
| | | Nine months ended September 30, | |
| | | 2017 | | | 2016 | |
Net cash provided by operating activities | | $ | 36,440 | | | $ | 76,879 | |
Net cash used in investing activities | | $ | (14,252 | ) | | $ | (40,444 | ) |
Net cash used in financing activities | | $ | (108,215 | ) | | $ | (8,111 | ) |
| | | 2019 | | | 2018 |
Net cash from operating activities | | $ | 24,358 | | | $ | 79,169 | |
Net cash from investing activities | | $ | 4,488 | | | $ | 13,600 | |
Net cash used in financing activities | | $ | (7,873 | ) | | $ | (8,048 | ) |
Operating Activities
Cash from operating activities decreased from $76,879 of cash provided by operating activities$79,169 in the first nine months of 20162018 to $36,440 of cash provided by operating activities$24,358 in the first nine months of 2017.2019. This $54,811 decrease was primarily attributable to the decrease of $30,097$35,514 in net income, the decreaseincome; a gain in the change in accounts receivablefair value of $13,252 and inventoryequity securities of $8,439 offset by the increase$6,621 in the nine months ended September 30, 2019, as compared to a loss of $5,597 in the nine months ended September 30, 2018 for a total change of $12,218, and a lesser increase of $5,234 in accounts payable, including accounts payable - related parties, compared to the increase of $11,278.$14,967 for the nine months ended September 30, 2018, for a net change of $9,733.
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Investing Activities
Cash used infrom investing activities was $14,252decreased from $13,600 in the first nine months of 2017 compared2018 to $40,444 used$4,488 in the first nine months of 2016. This2019. Of the $9,112 change, $4,516 was primarily the result of decreased cash inflows from net purchasessales of marketable securities in the first nine months of 20172019 compared to the first nine months of 2016. Such net purchases totaled $10,882 and $33,328,sales in the first nine months of 2017 and 2016, respectively.2018. Such net sales totaled $9,762, in the first nine months of 2019, compared to $14,278 in net sales in the first nine months of 2018. Our capital expenditures and customer reimbursements for capital expenditures for the nine months ended September 30, 2019 and 2018 are summarized in the following table:
| | | Nine months ended September 30, | |
| | | 2017 | | | 2016 | |
Cash paid for capital expenditures and intangibles | | $ | 2,614 | | | $ | 3,107 | |
Cash received as reimbursement of capital expenditures | | $ | (201 | ) | | $ | (119 | ) |
Cash paid, net of reimbursement, for capital expenditures | | $ | 2,413 | | | $ | 2,988 | |
| | | 2019 | | | 2018 | |
Cash paid for capital expenditures | | $ | 6,139 | | | $ | 3,084 | |
Cash received from customers as reimbursement of capital expenditures* | | $ | (4,693 | ) | | $ | (1,545 | ) |
Cash paid for capital expenditures, net of customer reimbursements | | $ | 1,446 | | | $ | 1,539 | |
*This receipt of cash was reported as an increase in deferred revenue in cash flows from operations.
Financing Activities
Cash used in financing activities increased to $108,215was $7,873 and $8,048, in the first nine months of 2017 from $8,111 in the first nine months of 2016.ended September 30, 2019 and 2018, respectively. This change is primarily the result of payments of dividends on our common stock in the first nine months of 2017 compared to the first nine months of 2016. The payment of dividends totaled $108,0632019 and $7,869 in the first nine months of 2017 and 2016, respectively.
2018.
Credit Facility
Effective April 16, 2015, we entered into a new $150,000 secured committed credit facility with a syndicated group of commercial banks. On May 25, 2016, we increased the facility $15,000. The loan is a revolving facility, the proceeds of which may be used for our working capital, capital expenditures, and general corporate purposes. The facility terminates on April 16, 2020. See Note 6 – “Borrowings” in our consolidated financial statements ended September 30, 2017 7 for additional information regarding our Credit Agreement.
We intend to fund future capital requirements for our businesses from cash flow as well as from existing cash, cash investments, and, if the need should arise, borrowings under our credit facility. We do not believe there will be a need to issue any securities to fund such capital requirements.
Dividends
In the first three quartersnine months of 2017,2019 and 2018, we paid a regular quarterly cash dividend in the amount of $0.06 per share on our common stock. The regular cash dividend amounted to $2,625 per quarter$7,873 and $7,872 in the first, secondnine-month periods ended September 30, 2019 and third quarters of 2017. In the first quarter of 2017, we also paid a special cash dividend of $2.29 per share on our common stock. This special cash dividend amounted to $100,188. Total cash dividends paid were $108,063 in the first nine months of 2017.
In the first three quarters of 2016, we paid a regular cash dividend in the amount of $0.06 per share on our common stock. The regular cash dividend amounted to $2,623 in the first, second, and third quarters of 2016, for aggregate dividend payments of $7,869 in the first nine months of 2016.
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2018, respectively.
Capital Management
As a result of our initial equity offering, our subsequent positive operating results, the exercise of warrants, and the issuance of shares in our at-the-market offering, we accumulated excess working capital. Some of this excess working capital has been paid out as special and regular cash dividends. Additionally, regular cash dividends will be paid in 2017,2019, as previously reported. Third parties have not placed significant restrictions on our working capital management decisions.
A significant portion of these funds was held in cash or cash equivalents at multiple financial institutions. In the periods ended September 30, 20172019 and December 31, 2016,2018, we also had investments in certain preferred stock, trust preferred securities, exchange tradedexchange-traded debt instruments, and other equity instruments. We classify these investments as current assets in the accompanying consolidated balance sheets and designate themthe debt securities as being “available-for-sale.” Accordingly, theythe debt securities are recorded at fair value, with the unrealized gains and losses, net of taxes, reported as a component of stockholders’ equity. We also held equity securities with readily available market values. These equity instruments are recorded at fair value, with the unrealized gains and losses reported as a component of net income. The fair value of these preferred stock, trust preferredthe debt securities exchange traded debt instruments, and other equity instruments totaled $123,588$75,583 and $106,146$79,888 at September 30, 20172019 and December 31, 2016,2018, respectively.
Lastly, we maintain depositary accounts such as checking accounts, money market accounts, and other similar accounts at selected financial institutions.
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Off- Balance Sheet Arrangements
We engage in two types of hedging transactions. First, we hedge our biofuels sales through the purchase and sale of futures contracts and options on futures contracts of energy commodities. This activity was captured on our balance sheet at September 30, 20172019 and December 31, 2016.2018. Second, we hedge our biofuels feedstock through the execution of purchase contracts and supply agreements with certain vendors. These hedging transactions are recognized in earnings and were not recorded on our balance sheet at September 30, 20172019 or December 31, 20162018 because they do not meet the definition of a derivative instrument as defined under GAAP. The purchase of biofuels feedstock generally involves two risk components: basis and price. Basis covers any refining or processing required as well as transportation. Price covers the purchases of the actual agricultural commodity. Both basis and price fluctuate over time. A supply agreement with a vendor constitutes a hedge when we have committed to a certain volume of feedstock in a future period and have fixed the basis for that volume.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
All dollar amounts expressed as numbers in these Market Risk Disclosures are in thousands (except per share amounts).
In recent years, general economic inflation has not had a material adverse impact on our costs and, as described elsewhere herein, we have passed some price increases along to our customers. However, we are subject to certain market risks as described below.
Market risk represents the potential loss arising from adverse changes in market rates and prices. Commodity price risk is inherent in the chemicals and biofuels business both with respect to inputs (electricity, coal, raw materials, biofuels feedstock, etc.) and outputs (manufactured chemicals and biofuels).
We seek to mitigate our market risks associated with the manufacturing and sale of chemicals by entering into long-term sale contracts that include contractual market price adjustment protections to allow changes in market prices of key raw materials to be passed on to the customer. Such price protections are not always obtained, however, and some raw material price risk remains significant.
In order to manage price risk caused by market fluctuations in biofuels prices, we may enter into exchange tradedexchange-traded commodity futures and options contracts. We account for these derivative instruments in accordance with ASC 815-20-25, Topic 815, Derivatives and Hedging. Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship. To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained. We had no derivative instruments that qualified under these rules as designated accounting hedges in the first nine months of 20172019 or 2016.2018. Changes in the fair value of our derivative instruments are recognized at the end of each accounting period and recorded in the statement of operations as a component of cost of goods sold within the biodiesel segment.
Our immediate recognition of derivative instrument gains and losses can cause net income to be volatile from period to period due to the timing of the change in value of the derivative instruments relative to the volume of biofuel being sold. As ofAt September 30, 20172019 and December 31, 2016,2018, the fair values of our derivative instruments were a net asset of $60 and liability in the amount of $198 and $258,$297, respectively.
Our gross profit will be impacted by the prices we pay for raw materials and conversion costs (costs incurred in the production of chemicals and biofuels) for which we do not possess contractual market price adjustment protection. These items are principally comprised of crude corn oil and yellow grease and petrodiesel. The availability and price of these items are subject to wide fluctuations due to unpredictable factors such as weather conditions, overall economic conditions, governmental policies, commodity markets, and global supply and demand.
We prepared a sensitivity analysis of our exposure to market risk with respect to key raw materials and conversion costs for which we do not possess contractual market price adjustment protections, based on average prices for the first nine months of 2017.2019. We included only those raw materials and conversion costs for which a hypothetical adverse change in price would result in a 1% or greater decrease in gross profit. Assuming that the prices of the associated finished goods could not be increased and assuming no change in quantities sold, a hypothetical 10% change in the average price of the commodity listed below would result in the following change in gross profit.
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(VolumeVolume and dollars in thousands)
Item | | Volume Requirements (a) | | Units | | Hypothetical Adverse Change in Price | | Decrease in Gross Profit | | Percentage Decrease in Gross Profit | | Volume Requirements (a) | | Units | | Hypothetical Adverse Change in Price | | | Decrease in Gross Profit | | | Percentage Decrease in Gross Profit | |
Biodiesel Feedstocks | | 247,487 | | LB | | 10% | | $ 7,267 | | 54.0% | |
Ultra Low Sulfur Diesel | | 12,150 | | GAL | | 10% | | $ 1,962 | | 14.6% | |
Biodiesel feedstocks | | | | 256,495 | | LB | | | 10.0 | % | | | 6,977 | | | | 58.2 | % |
Methanol | | 102,450 | | LB | | 10% | | $ 1,660 | | 12.3% | | | 117,689 | | LB | | | 10.0 | % | | | 2,083 | | | | 17.4 | % |
Electricity | | 86 | | MWH | | 10% | | $ 415 | | 3.1% | | | 90 | | MWH | | | 10.0 | % | | | 500 | | | | 4.2 | % |
Natural Gas | | 1,006 | | MCF | | 10% | | $ 343 | | 2.6% | | | 964 | | MCF | | | 10.0 | % | | | 285 | | | | 2.4 | % |
Sodium Methylate | | 8,287 | | LB | | 10% | | $ 332 | | 2.5% | | | 6,951 | | LB | | | 10.0 | % | | | 261 | | | | 2.2 | % |
Coal | | 28 | | Ton | | 10% | | $ 177 | | 1.3% | | | 26 | | Ton | | | 10.0 | % | | | 172 | | | | 1.4 | % |
(a) Volume requirements and average price information are based upon volumes used and prices obtained for the nine months ended September 30, 2017. Volume requirements may differ materially from these quantities in future years as our business evolves. | |
Caustic soda | | | | 9,438 | | LB | | | 10.0 | % | | | 125 | | | | 1.0 | % |
(a) Volume requirements and average price information are based upon volumes used and prices obtained for the nine months ended September 30, 2019. Volume requirements may differ materially from these quantities in future years as our business evolves. | |
We had no borrowings as ofat September 30, 20172019 or December 31, 20162018 and, as such, we were not exposed to interest rate risk for those periods. Due to the relative insignificance of transactions denominated in foreign currency, we consider our foreign currency risk to be immaterial.
Item 4. Controls and Procedures.
Under the supervision and with the participation of our chief executive officer and our principal financial officer and other senior management personnel, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, our chief executive officer and our principal financial officer have concluded that these disclosure controls and procedures as ofat September 30, 20172019 were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.
There were no changes in our internal control over financial reporting during our last fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to, nor is any of our property subject to, any material pending legal proceedings, other than ordinary routine litigation incidental to our business. However, from time to time, we may be a party to, or a target of, lawsuits, claims, investigations, and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which we expect to be handled and defended in the ordinary course of business. While we are unable to predict the outcome of any matters currently pending, we do not believe that the ultimate resolution of any such pending matters will have a material adverse effect on our overall financial condition, results of operations, or cash flows. However, adverse developments could negatively impact earnings or cash flows in future periods.
Item 1A. Risk Factors.
There have been no material changes to the risk factors we previously disclosed in Item 1A of our Form 10-K, Annual
Report for the year ended December 31, 20162018 filed with the SEC on March 16, 2017.15, 2019.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
Exhibit | Description |
11. | Statement re Computation of per Share Earnings |
31(a). | Rule 13a-15(e)/15d-15(e) Certification of chief executive officer |
31(b). | Rule 13a-15(e)/15d-15(e) Certification of chief principal officer |
32. | Section 1350 Certification of chief executive officer and principal financial officer |
101 | Interactive Data Files** |
101.INS | XBRL Instance |
101.SCH | XBRL Taxonomy Extension Schema |
101.CAL | XBRL Taxonomy Extension Calculation |
101.DEF | XBRL Taxonomy Extension Definition |
101.LAB | XBRL Taxonomy Extension Labels |
101.PRE | XBRL Taxonomy Extension Presentation |
** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
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Special Note Regarding Forward Looking Information
This report, and the documents incorporated by reference into this report contain forward-looking statements. Forward- looking statements deal with our 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 we or our 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 we make with the SEC, or in press releases, or in oral statements made by or with the approval of one of our 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“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, 20162018 and in our future filings made with the SEC. You should not place undue reliance on any forward-looking statements contained in this report which reflect our management’s opinions only as of their respective dates. Except as required by law, we undertake no obligation to revise or publicly release the results of any revisions to forward-looking statements. The risks and uncertainties described in this report and in subsequent filings with the SEC are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our 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, our business, operating results, liquidity, and financial condition could be materially affected in an adverse manner. You should consult any additional disclosures we have made or will make in our 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 us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report.
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S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FUTUREFUEL CORP. | |
| | |
By: | /s/ Paul A. Novelly | |
| | |
Paul A. Novelly, Chairman and Chief | |
Executive Officer | |
| | |
Date: November 9, 2017 8, 2019 | |
| |
| | |
By: | /s/ Rose M. Sparks | |
| | |
Rose M. Sparks, Chief Financial Officer | |
and Principal Financial Officer | |
| | |
Date: November 9, 2017 8, 2019 | |
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