REG Biodiesel Sales Up But Revenues Down

REG LogoSales and production of biodiesel are up for Iowa-based Renewable Energy Group (REG), but revenues have taken quite a hit. The latest information from the biodiesel behemoth shows during the first quarter of 2014 sales were up 22 percent compared to a year earlier, along with a 5 percent increase in production. But REG also reports a revenue drop of 17 percent and an adjusted EBITDA down by 91 percent.

“This quarter was very challenging, coming off an outstanding year,” said Daniel J. Oh, President and Chief Executive Officer. “Despite the challenges, we were able to generate positive adjusted EBITDA, which is evidence of the durability of our business model. While some of the challenges that affected the first quarter remain, in the near-term we are focusing our efforts to respond when markets normalize, and on executing our longer-term strategies.”

Oh continued, “We recently achieved two very positive milestones in REG’s history, both of which are a tribute to the efforts of many people, partners and the strength of our business model. The Company reached cumulative sales of over 1 billion gallons in mid-April. And, in late March, we redeemed the last of the remaining preferred shares outstanding, eliminating the dividend obligation and resulting in a more simplified capital structure.”

The drop in revenues is being attributed to the retroactive reinstatement of the 2012 federal $1-a-gallon biodiesel blenders credit, which again expired at the end of 2013.

REG sold 47.3 million gallons of biodiesel during the first quarter of this year, while producing 41.8 million gallons of the green fuel.

REG Sells One Billion Gallons of Biodiesel

REG LogoCongratulations to our friends at Renewable Energy Group, Inc., as they have sold one billion gallons of biodiesel! The Iowa-based biodiesel behemoth thanked a lot of people who helped them reach this milestone of the company’s 17-year history.

“On behalf of the board of directors and employees of REG, I want to say thank you to all of our customers; vendors; investors; federal, state and local supporters; partners; and team members over the years without whom we could never have met this milestone,” said Daniel J. Oh, REG President and Chief Executive Officer.

“Since our inception we have endeavored to provide customers with a reliable and durable product that helps diversify the energy complex and increases energy security, improves our environment, and supports agriculture,” Oh said. “Our desire to continuously deliver quality products is a driving force behind REG reaching the billion gallon mark.”

REG officials credit their fully integrated value chain including manufacturing, sales & marketing, and supply chain management capabilities for the success, as well as a commitment to research and development and continuous improvement.

For those who might not know, REG’s roots come from its days when it was producing biodiesel as the West Central Coop in Ralston, Iowa. As a grad of good ol’ Glidden-Ralston (probably the BEST school in all of Western Iowa), I can tell you it’s no surprise of the success REG has become. Congrats, guys!

Analysis: Surviving Without Biodiesel Tax Credit

regdarlingWhile the expiration of the federal $1-per-gallon biodiesel tax credit (BTC) has been pretty tough on the industry this year, some biodiesel makers could survive without it. This analysis from The Motley Fool, a website that looks at investments, points to how biodiesel giant Renewable Energy Group and renderer and renewable diesel maker Darling International have business models that seem to make it possible, although not easy, to be successful without the credit that expired at the 2013.

REG, for example, anticipated the expiration and took that into account when doing their earnings forecast for the first quarter of 2014. And even while biodiesel production was even lower than the company anticipated, due to an abnormally cold winter that caused natural gas prices to spike, while feedstock costs rose and biodiesel prices fell, REG seems to be weathering the storm.

The silver lining is that Renewable Energy Group was able to produce positive adjusted EBITDA despite a barrage of unfavorable conditions. That can be chalked up to the company’s commitment to operational efficiency derived from willingness to invest in a national logistics network and the best process technology. And, of course, management’s focus on the long term.

Darling International is not focused solely on producing renewable fuels, but has taken advantage of its leading rendering business (animal fats and used cooking greases, or the inputs for diesel) to create the Diamond Green Diesel joint venture. Renewable diesel is a hydrocarbon, has a different molecular structure than biodiesel, and can capture higher RIN values as a next-generation fuel. Despite the advantages, it is still blended into the existing petroleum-based fuel supply, and therefore benefits from the BTC. Luckily, Darling International’s diverse business structure has insulated it from the expiration of the credit. In fact, the company has benefited from the increase in feedstocks since the end of last year.

The article goes on to say that while the return of the tax credit would be good news for REG and Darling, and of course, other biodiesel makers, at least these two companies show you could survive without the credit. In addition, the authors say this short-term uncertainty for biodiesel might present a great buying and investing opportunity if you’re looking at the long term.

Biodiesel Giant Gets Into Petroleum Distribution

REG LogoThe country’s biggest biodiesel maker is getting into the petroleum distribution business. This news release from Renewable Energy Group (REG) says it has launched a new division that will sell petroleum-based heating oil and diesel fuel, which will also give the company a chance to offer more biofuel blends.

REG Energy Services, LLC will sell heating oil and ultra-low sulfur diesel (ULSD) at seven terminals throughout the northeastern U.S. as well as BioHeat® blended heating fuel at an existing REG terminal location.

“REG Energy Services complements our advanced biofuel business as we optimize and grow our fully integrated biodiesel business across North America,” said REG President and CEO, Daniel J. Oh. “It allows us to offer more products to our customers, including more biofuel blends, while also expanding our customer base.”

The new company will be regionally headquartered in Portsmouth, New Hampshire and led by Barry Knox, a long-time downstream petroleum distribution specialist. Before joining REG, Knox served the last 14 years as Chief Operating Officer at Total Energy Solutions, LLC. Knox just completed his term as a board member of the New England Fuel Institute (NEFI), and the Massachusetts Energy Marketers Association (formerly MOC), and was also a board member of the National Oilheat Research Alliance (NORA).

REG Energy Services is now offers heating oil and ULSD at several terminals in New England and has BioHeat in up to 20 percent biodiesel blends at REG’s location at the Clifton, NJ Dutch Hill terminal.

REG Making $13.2 Million Upgrade to Biodiesel Plant

REG LogoRenewable Energy Group, Inc. (REG) is making a $13.2 million improvement to one of its Iowa biodiesel plants. The Ames, Iowa-based biodiesel giant, already the country’s biggest producer of the green fuel, broke ground on the improvements at its Newton biodiesel refinery.

“This investment shows our continuing confidence in biodiesel for the long-term,” said Daniel J. Oh, President and CEO of Renewable Energy Group, Inc. “It furthers our efforts to enhance our lower-cost, multi-feedstock biodiesel business by continuing to broaden our customer base and provide more options for our customers to choose from.”

The upgraded process, including distillation, removes impurities and leaves behind the purest form of the fuel. The final product far exceeds quality standards set by the biodiesel industry, while meeting the company’s more rigorous REG-9000® quality specifications.

“This is a great investment for Newton,” [Iowa Rep. Dan] Kelley said. “I couldn’t be more pleased with the commitment that REG is showing our community. Biodiesel production is important to Iowa. By making biodiesel here in Newton, REG is providing quality jobs while contributing to energy security.”

REG officials added the upgrade allows them to use lower-cost raw materials. REG is already North America’s leading biodiesel producer, with eight active refineries in four states that have a combined nameplate production capacity of 257 million gallons.

Biodiesel Giant Fuels Biggest Game of the Year

REG LogoThis weekend a Midwest biodiesel giant will fuel the biggest game of the year – the Super Bowl. Iowa-based Renewable Energy Group, Inc. says it will provide up to 15,000 gallons of biodiesel blends from B5 to B20 at MetLife Stadium in East Rutherford, New Jersey during Super Bowl XLVIII on Sunday, as well as powering more than 18 generators for events along Super Bowl Boulevard in New York City leading up to the big game.

“All of us at REG are excited and honored to help ‘green’ the Super Bowl with our high-quality, American made biodiesel,” said Daniel J. Oh, Renewable Energy Group, Inc. President and CEO. “We are proud to be working with the NFL to help in their environmental efforts and to promote biodiesel’s other benefits of energy security, energy diversity, and job creation to one of the largest sports audiences in the world.”

Biodiesel is a renewable, clean-burning diesel replacement that is enhancing the American energy complex and increasing energy and food security. Made from a diverse mix of feedstocks including recycled cooking oil, animal fats, waste greases and refined vegetable oils, biodiesel reduces greenhouse gas emissions between 57 and 95 percent when compared to petroleum diesel.

“The NFL has been working on the ‘greening’ of the Super Bowl for 20 years and adding biofuels to our mix is one more step in that process,” said Jack Groh, NFL Environmental Program Director. “We have a comprehensive program that includes solid waste recycling, food recovery, repurposing of decor and construction materials, collection of books and sports equipment for children in need, urban forestry projects and renewable energy use. Integrating biodiesel is another way we can address the environmental impact of our activities at the Super Bowl.”

REG, the Nation’s biggest biodiesel maker, will partner with local heating oil distributors Hart Energy for delivery to Times Square and Majka and Son’s for delivery to Metlife Stadium.

REG Biodiesel Conference Video Series

REG Biodiesel TrendsThe Renewable Energy Group (REG) has produced a series of videos from the 2014 National Biodiesel Conference called Biodiesel Trends.

Biodiesel Trends is a video news series that will recap the conference. You can watch short video interviews with key presenters as they discuss industry trends and topics, meet some of the industry’s up-and-coming researchers, learn about federal and state policy updates; and take a virtual ride in the latest diesel-powered vehicles.

Here is one of them:

REG Expands in NJ as Biodiesel Mandate Debated

reg-logoThe country’s leader in biodiesel production is expanding its presence in New Jersey, as lawmakers in that state look to enact a biodiesel heating oil mandate. This news release from Renewable Energy Group (REG) says it entered into an agreement with Dutch Hill Terminals, a leading heating oil terminal in New Jersey, to market biodiesel and biodiesel blended heating oil at its Clifton, New Jersey location.

“This terminal position will give us additional capacity to serve the existing markets in the Northeast and prepare for potential growth moving into 2014,” said Gary Haer, REG Vice President, Sales and Marketing. “As the region increases its consumption of biodiesel in transportation fuel and Bioheat® (heating oil blended with biodiesel) REG will continue to provide a reliable source of high quality, clean burning, advanced biofuel.”

REG Clifton is located at 568 Paulison and now has REG biodiesel blended heating oil available. The company will offer other high quality biodiesel blends for transportation fuel during seasonal periods from the Clifton terminal as well. REG has five other terminal locations in the Northeast, including Whippany and Bayonne, New Jersey and New York locations in New Hyde Park, Port Chester, Ontario and Brookhaven.

The New Jersey State Legislature is currently considering legislation which would require heating oil to contain a three percent biodiesel blend (B3), then increasing to five percent (B5). New York City has already implemented a city-wide requirement of B2 in heating oil and the New York State Legislature passed a bill which would phase in a B2 requirement state wide over two years beginning with the 2014-2015 heating oil season. As data presented by the City of New York shows, cleaner heating oil has had a profound impact on the air quality and health of the residents of the city.

REG officials see the addition of the facility as key to expand the company’s role in an area where the biodiesel market will continue to grow.

REG Opens Biodiesel Barge Berth at Seneca, Illinois

REGsenecabargeribboncut1Renewable Energy Group has opened a new biodiesel loading facility on the Illinois River. This REG news release says it will help move the green fuel from REG’s 60-million gallon biorefinery in Seneca, Ill.

The barge loading facility will be supported by the addition of 2.5 million gallons of new terminal storage. REG’s total investment in these upgrades is about $4.5 million.

“The barge berth at REG Seneca further enhances our lower-cost, efficient business model,” said Daniel J. Oh, President and CEO of Renewable Energy Group, Inc. “Adding more barge capabilities to our network of biorefineries and terminals across the country gives REG another capability for providing high quality biodiesel to our existing and future customers.”

“Every full barge that leaves Seneca equates to about 65 truckloads of biodiesel,” said Brad Albin, REG Vice President, Manufacturing. “This not only increases efficiencies, but expands the geography and customer base we can cover through the inland waterways system.”

Biodiesel is also leaves Seneca by truck and rail, and the company has barge and deepwater ship loading capability In Houston and the New York City area. REG owns and operates eight biodiesel refineries in four states able to produce up to 257 million gallons a year.

Biodiesel Industry Responds to EPA 2014 RVOs

The Environmental Protection Agency (EPA) announced its proposed volume requirements under the Renewable Fuel Standard (RFS) today and the biomass-based diesel category was proposed for 1.28 billion gallons, less than what the industry is currently able to produce. Biodiesel production is on track to set a production record exceeding 1.7 billion gallons this year, using an increasingly diverse mix of feedstocks including recycled cooking oil, agricultural oils and animal fats.

In response, the National Biodiesel Board (NBB) warned that the EPA’s 2014 proposal would cause plant closures and layoffs in the U.S. biodiesel industry and called on the Obama Administration to recommit to developing American-made Advanced Biofuels.

nbb-logo“The growth in domestic biodiesel production dovetails exactly with President Obama’s statement in July of this year that ‘biofuels are already reducing our dependence on oil, cutting pollution and creating jobs around the country,’” said Anne Steckel, NBB’s vice president of federal affairs. “This is why EPA’s action today is so surprising and disappointing.”

Steckel continued, “This proposal, if it becomes final, would create a shrinking market, eliminate thousands of jobs and likely cause biodiesel plants to close across the country. It also sends a terrible signal to investors and entrepreneurs that jeopardizes the future development of biodiesel and other Advanced Biofuels in the United States.”

“This Administration has for years supported strong renewable fuels policies and encouraged investment in this industry,” Steckel added. “The private sector has responded to these policies by meeting or exceeding the Advanced Biofuels requirements in every year of the RFS. The Administration should be celebrating that success and continuing the momentum, not retreating.”

Amanda Cunningham of Veros Energy, a biodiesel producer in Moundville, Alabama, is among those in the industry whose job is at risk under the proposal. Cunningham and her husband both work at the company, supporting a family of six children.

“If biodiesel volumes are decreased, it has a hard, hard trickle down impact,” Cunningham said. “We would surely have layoffs; layoffs reduce production; reduced production drops the bottom line; and at that point the plant might as well shut down.” Continue reading