FutureFuel Releases 2021 Results: Reports Net Income of $26.3 Million or $0.60 per Diluted Share, and Adjusted EBITDA of $33.8 Million
Source: Nasdaq GlobeNewswire / 15 Mar 2022 16:15:00 America/New_York
CLAYTON, Mo., March 15, 2022 (GLOBE NEWSWIRE) -- FutureFuel Corp. (NYSE: FF) (“FutureFuel”), a manufacturer of custom and performance chemicals and biofuels, today announced financial results for the fourth quarter and year ended December 31, 2021.
Fourth Quarter 2021 Financial Highlights (all comparisons are with the fourth quarter of 2020)
- Revenues were $107.1 million, up 115% from $49.9 million
- Adjusted EBITDA was $25.7 million, up 141% from $10.8 million
- Net income increased to $22.3 million, or $0.51 per diluted share, from $5.5 million, or $0.13 per diluted share.
2021 Financial Highlights (all comparisons are with the year ended December 31, 2020)
- Revenues were $321.4 million, up 57% from $204.5 million
- Adjusted EBITDA was $33.8 million, up 16.1% from $29.2 million
- Net income decreased to $26.3 million, or $0.60 per diluted share, from $46.6 million, or $1.06 per diluted share.
“We ended the year with a strong fourth quarter that capped our recovery from a tumultuous beginning to 2021, when in February 2021, Winter Storm Uri brought severe disruption to the operation of our Batesville, AR manufacturing site. Its impact reduced our revenue by approximately $3 million and increased our energy costs by $7.8 million. Since then, our revenues have risen significantly, driven by our Biofuels segment, which saw fuel prices rise relentlessly and feedstock prices also reach record high levels. Our cost controls and buying strategy during this time ensured that biodiesel margins remained robust throughout the year.
Our chemicals business has stabilized, and we are now witnessing signs of increased demand as the economy adjusts to the impacts of COVID-19. We have recruited fresh talent to our Commercial and Technology teams, and we are executing plans to grow this segment in the year ahead.” said Tom McKinlay, Chief Operating Officer for FutureFuel Corp.
2022 Regular Cash Dividends
FutureFuel declared a regular quarterly cash dividend in the amount of $0.06 per share on our common stock in the first quarter of 2022.
Financial Overview and Key Operating Metrics
Financial and operating metrics, which include non-GAAP financial measures, include dollars in thousands, except per share amounts:
Certain Financial and Operating Metrics
Three months ended December 31: Dollar % 2021 2020 Change Change Revenues $ 107,070 $ 49,863 $ 57,207 115 % Income from operations $ 21,817 $ 5,695 $ 16,122 283 % Net income $ 22,345 $ 5,472 $ 16,873 308 % Earnings per common share: Basic $ 0.51 $ 0.13 $ 0.38 292 % Diluted $ 0.51 $ 0.13 $ 0.38 292 % Adjusted EBITDA $ 25,861 $ 10,753 $ 15,108 141 % Twelve months ended December 31: Dollar % 2021 2020 Change Change Revenues $ 321,386 $ 204,505 $ 116,881 57 % Income from operations $ 12,898 $ 22,339 $ (9,441 ) (42 %) Net income $ 26,255 $ 46,564 $ (20,309 ) (44 %) Earnings per common share: Basic $ 0.60 $ 1.06 $ (0.46 ) (43 %) Diluted $ 0.60 $ 1.06 $ (0.46 ) (43 %) Adjusted EBITDA $ 33,848 $ 29,157 $ 4,691 16 %
Consolidated Financial Results Q4 2021 versus Q4 2020
Fourth quarter revenue and gross profit increased primarily from higher average selling prices of biodiesel in the biofuel segment inclusive of RIN sales. Chemical revenue increased from the prior year quarter primarily from increased sales volumes on chemicals used in the energy market.
Operating expenses increased $1,136 from higher research and development expense primarily for the benefit of Good Manufacturing Practices (GMP) and compensation expense.
Other income decreased $2,997 in 2021 primarily from a reduction in realized and unrealized gains on equity securities.
Net income was $22,345 or $0.51 per diluted share for fourth quarter 2021 as compared with $5,472 or $0.13 per diluted share for fourth quarter 2020 for the same reasons described above.
Consolidated Financial Results 2021 versus 2020
Consolidated sales revenue increased $116,881 in 2021 compared to 2020. This increase primarily resulted from higher average selling prices in the biofuel segment reduced in part by lower sales volumes in the biofuel segment from the uncontrollable Winter Storm Uri event and in the chemical segment from two contracts that ended in 2020. Our strategic plan is to utilize this available capacity for products requiring GMP and other processes for higher value specialty chemicals.
Gross profit decreased $7,770. This decrease was mainly attributable to i) exorbitant natural gas prices incurred in February from Winter Storm Uri along with the curtailed production of biodiesel driven by this event, and ii) the absence of two chemical contracts mentioned above. Partially improving gross profit in the same comparative period was higher margins in the biofuel segment.
Operating expenses increased $1,671 from the impairment of intangible assets in 2021 and higher research and development expense primarily for the benefit of GMP.
Other income decreased $6,407 primarily from non-operating income recognized in 2020 of $8,350. Partially improving other income was the absence of realized and unrealized losses on equity securities in 2021 as compared to 2020.
FutureFuel reported net income of $26,255, or $0.60 per diluted share for 2021, compared with net income of $46,564, or $1.06 per diluted share for 2020.
Capital expenditures were $1,456 in 2021, compared with $4,464 in 2020.
Cash and Cash Equivalents and Marketable Securities
Cash and cash equivalents and marketable securities totaled $184,711 as of December 31, 2021, compared with $262,526 as of December 31, 2020. The reduction in cash and cash equivalents and marketable securities resulted primarily from a special cash dividend paid of $109,408.
FutureFuel is a leading manufacturer of diversified chemical products and biofuels. FutureFuel’s chemicals segment manufactures specialty chemicals for specific customers (“custom chemicals”) as well as multi-customer specialty chemicals (“performance chemicals”). FutureFuel’s custom manufacturing product portfolio includes proprietary agrochemicals, adhesion promoters, a biocide intermediate, and an antioxidant precursor. FutureFuel’s performance chemicals products include a portfolio of proprietary nylon and polyester polymer modifiers and several small-volume specialty chemicals and solvents for diverse applications. FutureFuel’s biofuels segment primarily produces and sells biodiesel to its customers. Please visit www.futurefuelcorporation.com for more information.
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements deal with FutureFuel’s current plans, intentions, beliefs, and expectations, and statements of future economic performance. Statements containing such terms as “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate,” and other phrases of similar meaning are considered to contain uncertainty and are forward-looking statements. In addition, from time to time FutureFuel or its representatives have made or will make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in various filings that the company makes with United States Securities and Exchange Commission (the “SEC”), in press releases, or in oral statements made by or with the approval of one of FutureFuel’s authorized executive officers.
These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, those set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in FutureFuel’s Form 10-K Annual Report for the year ended December 31, 2020 and in its future filings made with the SEC. An investor should not place undue reliance on any forward-looking statements contained in this document, which reflect FutureFuel management’s opinions only as of their respective dates. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revisions to forward-looking statements. The risks and uncertainties described in this document and in current and future filings with the SEC are not the only ones faced by FutureFuel. New factors emerge from time to time, and it is not possible for the company to predict which will arise. There may be additional risks not presently known to the company or that the company currently believes are immaterial to its business. In addition, FutureFuel cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, FutureFuel’s business, operating results, liquidity, and financial condition could be materially affected in an adverse manner. An investor should consult any additional disclosures FutureFuel has made or will make in its reports to the SEC on Forms 10-K, 10-Q, and 8-K, and any amendments thereto. All subsequent written and oral forward-looking statements attributable to FutureFuel or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this document.
Non-GAAP Financial Measures
In this press release, FutureFuel used adjusted EBITDA as a key operating metric to measure both performance and liquidity. Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is not a substitute for operating income, net income, or cash flow from operating activities (each as determined in accordance with GAAP), as a measure of performance or liquidity. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP. FutureFuel defines adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization expenses, excluding, when applicable, non-cash share-based compensation expense, public offering expenses, acquisition-related transaction costs, purchase accounting adjustments, loss on disposal of property and equipment, gains or losses on derivative instruments, other non-operating income or expense. Information relating to adjusted EBITDA is provided so that investors have the same data that management employs in assessing the overall operation and liquidity of FutureFuel’s business. FutureFuel’s calculation of adjusted EBITDA may be different from similarly titled measures used by other companies; therefore, the results of its calculation are not necessarily comparable to the results of other companies.
Adjusted EBITDA allows FutureFuel’s chief operating decision makers to assess the performance and liquidity of FutureFuel’s business on a consolidated basis to assess the ability of its operating segments to produce operating cash flow to fund working capital needs, to fund capital expenditures, and to pay dividends. In particular, FutureFuel management believes that adjusted EBITDA permits a comparative assessment of FutureFuel’s operating performance and liquidity, relative to a performance and liquidity based on GAAP results, while isolating the effects of depreciation and amortization, which may vary among its operating segments without any correlation to their underlying operating performance, and of non-cash stock-based compensation expense, which is a non-cash expense that varies widely among similar companies, and gains and losses on derivative instruments, whose immediate recognition can cause net income to be volatile from quarter to quarter due to the timing of the valuation change in the derivative instruments relative to the sale of biofuel.
A table included in this earnings release reconciles adjusted EBITDA with net income, the most directly comparable GAAP performance financial measure, and a table reconciles adjusted EBITDA with cash flows from operations, the most directly comparable GAAP liquidity financial measure.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
December 31, 2021 December 31, 2020 Assets Cash and cash equivalents $ 137,521 $ 198,122 Accounts receivable, inclusive of the blenders' tax credit of $8,232 and $8,300 and net of allowances for bad debt of $67 and $63, respectively 29,374 22,813 Inventory 26,920 33,889 Marketable securities 47,190 64,404 Other current assets 14,828 23,377 Total current assets 255,833 342,605 Property, plant and equipment, net 82,901 91,544 Other assets 5,596 7,155 Total noncurrent assets 88,497 98,699 Total Assets $ 344,330 $ 441,304 Liabilities and Stockholders’Equity Accounts payable, inclusive of the blenders' tax credit rebates due customers of $890 and $1,116, respectively $ 22,823 $ 13,437 Dividends payable - 10,498 Other current liabilities 12,233 9,053 Total current liabilities 35,056 32,988 Deferred revenue – long-term 16,755 21,861 Other noncurrent liabilities 3,591 14,572 Total noncurrent liabilities 20,346 36,433 Total liabilities 55,402 69,421 Commitments and contingencies: Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding - - Common stock, $0.0001 par value, 75,000,000 shares authorized, 43,763,243 and 43,743,243 issued and outstanding as of December 31, 2021 and 2020 4 4 Accumulated other comprehensive income 178 208 Additional paid in capital 282,443 282,215 Retained earnings 6,303 89,456 Total Stockholders’Equity 288,928 371,883 Total Liabilities and Stockholders’Equity $ 344,330 $ 441,304 FutureFuel Corp.
Condensed Consolidated Statements of Income and Comprehensive Income
(Dollars in thousands, except per share amounts)
Three months ended December 31: 2021 2020 Revenue $ 107,070 $ 49,863 Cost of goods sold and distribution 80,946 42,312 Gross profit 26,124 7,551 Selling, general, and administrative expenses 1,894 1,262 Research and development expenses 1,098 594 2,992 1,856 Income from operations 23,132 5,695 Other income, net 925 3,922 Income before income taxes 24,057 9,617 Income tax provision 1,712 4,145 Net income $ 22,345 $ 5,472 Earnings per common share Basic $ 0.51 $ 0.13 Diluted $ 0.51 $ 0.13 Weighted average shares outstanding Basic 43,763,243 43,743,243 Diluted 43,763,243 43,744,278 Comprehensive income Net income $ 22,345 $ 5,472 Other comprehensive income from unrealized net gains on available-for-sale securities 29 104 Income tax effect (6 ) (22 ) Total unrealized gains, net of tax 23 82 Comprehensive income $ 22,368 $ 5,554 FutureFuel Corp.
Condensed Consolidated Statements of Income and Comprehensive Income
(Dollars in thousands, except per share amounts)
Twelve months ended December 31: 2021 2020 Revenue $ 321,386 $ 204,505 Cost of goods sold and distribution 297,849 173,198 Gross profit 23,537 31,307 Selling, general, and administrative expenses 7,155 5,980 Research and development expenses 3,484 2,988 10,639 8,968 Income from operations 12,898 22,339 Other income, net 3,032 9,439 Income before income taxes 15,930 31,778 Income tax benefit (10,325 ) (14,786 ) Net income $ 26,255 $ 46,564 Earnings per common share Basic $ 0.60 $ 1.06 Diluted $ 0.60 $ 1.06 Weighted average shares outstanding Basic 43,756,065 43,743,243 Diluted 43,756,113 43,744,150 Comprehensive income Net income $ 26,255 $ 46,564 Other comprehensive loss from unrealized net losses on available-for-sale securities (38 ) (111 ) Income tax effect 8 23 Total unrealized losses, net of tax (30 ) (88 ) Comprehensive income $ 26,225 $ 46,476 FutureFuel Corp.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2021 and 2020
(Dollars in thousands)
2021 2020 Cash flows from operating activities Net income $ 26,255 $ 46,564 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,452 11,150 Amortization of deferred financing costs 95 108 Benefit for deferred income taxes (10,454 ) (610 ) Change in fair value of equity securities 904 246 Change in fair value of derivative instruments 609 (390 ) Loss (gain) on the sale of investments (834 ) 4,129 Stock based compensation - 49 Loss on disposal of property and equipment 11 31 Impairment of intangible asset 1,315 - Noncash interest expense 32 43 Changes in operating assets and liabilities: Accounts receivable (7,929 ) 88,865 Accounts receivable – related parties 1,368 3,176 Inventory 6,969 3,684 Income tax receivable 7,908 (9,606 ) Prepaid expenses 379 (2,035 ) Prepaid expenses – related party (4 ) 12 Other assets 732 658 Accounts payable 2,095 (48,639 ) Accounts payable – related parties 6,927 (271 ) Accrued expenses and other current liabilities 870 456 Accrued expenses and other current liabilities – related parties 1 (64 ) Deferred revenue (2,931 ) (691 ) Other noncurrent liabilities (686 ) (462 ) Net cash provided by operating activities 44,084 96,403 Cash flows from investing activities Collateralization of derivative instruments (750 ) 158 Purchase of marketable securities (23,546 ) (5,073 ) Proceeds from the sale of marketable securities 40,652 9,803 Proceeds from the sale of property and equipment - 50 Proceeds from the sale of intangible asset 93 1 Capital expenditures (1,456 ) (4,464 ) Net cash provided by investing activities 14,993 474 Cash flows from financing activities Loan proceeds - 8,180 Payment on loan - (8,180 ) Proceeds from the issuance of stock 231 - Minimum tax withholding on stock options exercised (3 ) - Deferred financing costs - (477 ) Equipment financing proceeds - 119 Payment of dividends (119,906 ) (141,728 ) Net cash used in financing activities 119,678 (142,086 ) Net change in cash and cash equivalents (60,601 ) (45,209 ) Cash and cash equivalents at beginning of period 198,122 243,331 Cash and cash equivalents at end of period $ 137,521 $ 198,122 Cash paid for interest $ 47 $ 2 Cash paid for income taxes $ 83 $ 661 Noncash investing and financing activities: Noncash capital expenditures $ 364 $ - Noncash operating leases $ 269 $ 442 Noncash items incurred for dividends $ - $ 10,498 FutureFuel Corp.
Reconciliation of Non-GAAP Financial Measure to Financial Measure
(Dollars in thousands)
Reconciliation of Adjusted EBITDA to Net Income Three months ended
Twelve months ended
2021 2020 2021 2020 Net income $ 22,345 $ 5,472 $ 26,255 $ 46,564 Depreciation 2,565 2,596 10,452 11,150 Non-cash stock-based compensation - - - 49 Interest and dividend income (670 ) (1,086 ) (3,119 ) (5,648 ) Non-cash interest expense and amortization of deferred financing costs 31 32 127 151 Loss on disposal of property and equipment - 82 11 31 Loss (gain) on derivative instruments - 2,410 10,377 (4,379 ) (Gain) loss on marketable securities (122 ) (2,898 ) 70 4,375 Other non-operating income - - - (8,350 ) Income tax provision (benefit) 1,712 4,145 (10,325 ) (14,786 ) Adjusted EBITDA $ 25,861 $ 10,753 $ 33,848 $ 29,157 Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities Twelve months ended December 31: 2021 2020 Net cash provided by operating activities $ 44,084 $ 96,403 Benefit for deferred income taxes 10,454 610 Interest and dividend income (3,119 ) (5,648 ) Income tax provision (10,325 ) (14,786 ) Loss (gain) on derivative instruments 10,377 (4,379 ) Change in fair value of derivative instruments (609 ) 390 Changes in operating assets and liabilities, net (15,699 ) (35,083 ) Other non-operating income - (8,350 ) Impairment of intangible asset (1,315 ) - Adjusted EBITDA $ 33,848 $ 29,157 FutureFuel Corp.
Condensed Consolidated Segment Income
(Dollars in thousands)
Three months ended
Twelve months ended
2021 2020 2021 2020 Revenue Custom chemicals $ 15,020 $ 11,765 $ 50,675 $ 63,894 Performance chemicals 4,174 4,145 16,867 15,284 Chemicals revenue $ 19,194 $ 15,910 $ 67,542 $ 79,178 Biofuels revenue 87,876 33,953 253,844 125,327 Total Revenue $ 107,070 $ 49,863 $ 321,386 $ 204,505 Segment gross profit Chemicals $ 5,881 $ 5,173 $ 13,970 $ 25,518 Biofuels 20,243 2,378 9,567 5,789 Total gross profit $ 26,124 $ 7,551 $ 23,537 $ 31,307
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.