FutureFuel Corp.
Mar 10, 2016

FutureFuel Releases 2015 Results

Reports Net Income of $46.4 Million or $1.06 Per Diluted Share, and Adjusted EBITDA of $50.1 Million

CLAYTON, Mo., March 10, 2016 (GLOBE NEWSWIRE) -- FutureFuel Corp. (NYSE:FF) ("FutureFuel"), a manufacturer of custom and performance chemicals and biofuels, today announced financial results for the year ended December 31, 2015.

Fourth Quarter 2015 Financial Highlights (all comparisons are with the fourth quarter of 2014)

2015 Financial Highlights (all comparisons are with the year ended December 31, 2014)

"Managing through a challenging business environment in both the chemicals and biofuels segments, FutureFuel generated net income of $46 million. We welcomed the reinstatement of the U.S. biofuels blenders' tax credit, which helped earnings in our biofuels segment. Our chemicals segment sales finished softer based on year end inventory adjustments by key customers in the energy and agricultural crop chemistry markets," said Paul Flynn, Executive Vice President of Business and Marketing for FutureFuel Chemical Company.

2016 Regular Cash Dividends

FutureFuel declared normal quarterly dividends of $0.06 per share for 2016.

Financial Overview and Key Operating Metrics

Financial and operating metrics, which include non-GAAP financial measures, include dollars in thousands, except per share amounts:

FutureFuel Corp.
 
Certain Financial and Operating Metrics
 
(Unaudited)
 
  
  Three
Months

Ended
December
31, 

2015
   Three
Months

Ended
December
31, 

2014(1)
  Dollar 
Change
  %
Change
 
Revenues $33,872  $88,467  $ (54,595)    (61.7%)
Income from operations $27,084  $26,331  $ 753     2.9% 
Net income $29,647  $30,128  $ (481)    (1.6%)
Earnings per common share:                 
Basic $0.68  $0.69  $ (0.01)    (1.4%)
Diluted $0.68  $0.69  $ (0.01)    (1.4%)
Capital expenditures (net of customer reimbursements and regulatory grants) $831  $1,212  $ (381)    (31.4%)
Adjusted EBITDA $25,352  $21,211  $ 4,141     19.5% 
                 
(1) Adjusted EBITDA for 2014 has been modified to exclude certain cash settled items. 
  
  Twelve
Months

Ended
December
31, 

2015
   Twelve
Months

Ended
December
31, 

2014(1)
  Dollar
Change
  %
Change
 
Revenues $299,611  $341,838  $ (42,227)    (12.4%)
Income from operations $46,971  $56,128  $ (9,157)    (16.3%)
Net income $46,421  $53,200  $ (6,779)    (12.7%)
Earnings per common share:                 
Basic $1.06  $1.22  $  (0.16)    (13.1%)
Diluted $1.06  $1.22  $ (0.16)    (13.1%)
Capital expenditures (net of customer reimbursements and regulatory grants) $6,798  $7,002  $ (204)    (2.9%)
Adjusted EBITDA $50,097  $53,930  $ (3,833)    (7.1%)
                  
(1) Adjusted EBITDA for 2014 has been modified to exclude certain cash settled items. 
  

2015 Financial and Business Summary

Revenues for the year ended December 31, 2015 were $299,611 as compared to revenues for the year ended December 31, 2014 of $341.8 million, a decrease of 12.4%.

Revenues from the chemicals segment decreased 13.9% and accounted for 42% of total revenues in the year ended December 31, 2015 as compared to 43% in 2014. Revenues in the chemicals segment were impacted by the continued reductions in the sales of the laundry detergent additive. This decrease in chemicals revenue is also reflective of a contract termination payment of $8,816, which was recorded in revenue in 2014 and did not recur in 2015.

Biofuels sales revenue decreased $21.9 million in 2015 compared to 2014, and accounted for 58% of consolidated revenues in 2015. This decline resulted from decreased sales prices as experienced globally in the industry. The renewable fuel final mandate was set in late 2015 and the U.S. biofuels blenders' tax credit ("BTC") was reinstated in December, retroactive to January 1, 2015, and made effective through December 31, 2016. As a result of contractual provisions with certain customers, a share of the BTC was owed upon reinstatement of a retroactive BTC. Increased sales volume on common carrier pipelines helped reduce the price impact as well as to offset lower sales volumes of biodiesel and diesel blends.

FutureFuel reported net income of $46.4 million, or $1.06 per diluted share, for 2015, compared with net income of $53.2 million, or $1.22 per diluted share in 2014. Adjusted EBITDA for 2015 totaled $50.1 million, down from $53.9 million in 2014.

Capital Expenditures

Capital expenditures and intangibles were $8.6 million in 2015, compared with $8.1 million in 2014. FutureFuel was reimbursed for a portion of these expenditures by certain customers as summarized in the following table.

(Dollars in thousands) 
  
  2015  2014 
Cash paid for capital expenditures and intangible assets $ 8,630   $8,117 
Cash received as reimbursement of capital expenditures   (1,832)   (1,115)
Cash paid, net of reimbursement, for capital expenditures $ 6,798   $7,002 
  

Cash and Cash Equivalents and Marketable Securities

Cash and cash equivalents and marketable securities totaled $229 million as of December 31, 2015, compared with $212 million as of December 31, 2014 .

About FutureFuel

FutureFuel is a leading manufacturer of diversified chemical products, specialty chemical products, and biofuel products. In its chemicals business, FutureFuel manufactures specialty chemicals for specific customers ("custom chemicals") as well as multi-customer specialty chemicals ("performance chemicals"). FutureFuel's custom chemicals product portfolio includes a bleach activator for a major detergent manufacturer, proprietary herbicide and intermediates for major life sciences companies, and chlorinated polyolefin adhesion promoters and antioxidant precursors for a major chemical company. FutureFuel's performance chemicals product portfolio includes polymer (nylon) modifiers and several small-volume specialty chemicals for diverse applications. FutureFuel's biofuels segment involves predominantly the production of biodiesel and sales of petroleum products on common carrier pipelines. Please visit www.futurefuelcorporation.com for more information.

Forward-Looking Statements

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, 2015 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.


FutureFuel Corp.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Audited)
 
 December 31,
2015
 December 31,
2014
Assets     
Cash and cash equivalents$154,049 $124,079
Accounts receivable, inclusive of BTC of $30,895 and $28,954, net of allowances for bad debt of $0 and $0 at December 31, 2015 and December 31, 2014, respectively 46,329  51,308
Inventory 64,957  45,353
Marketable securities 74,667  87,720
Other current assets 19,822  23,005
Total current assets  359,824  331,465
Property, plant and equipment, net 124,330  127,371
Other assets 4,955  2,652
Total noncurrent assets 129,285  130,023
Total Assets$489,109 $461,488
      
Liabilities and Stockholders' Equity     
Accounts payable$34,686 $33,298
Other current liabilities 13,867  18,789
Total current liabilities 48,553  52,087
Deferred revenue - long-term 15,908  15,927
Other noncurrent liabilities 30,336  34,465
Total noncurrent liabilities 46,244  50,392
Total Liabilities 94,797  102,479
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, 43,715,832 and 43,722,388, issued and outstanding as of December 31, 2015 and December 31, 2014, respectively 4  4
Accumulated other comprehensive income 2,055  4,259
Additional paid in capital 279,231  277,652
Retained earnings 113,002  77,094
Total Stockholders' Equity 394,312  359,009
Total Liabilities and Stockholders' Equity$489,109 $461,488
 


FutureFuel Corp.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Dollars in thousands, except per share amounts)
(Unaudited)
 
  Three months ended
December 31:
  2015 2014
Revenue $ 33,872  $ 88,467 
Cost of goods sold and distribution   4,359    59,546 
Gross profit   29,513    28,921 
Selling, general and administrative expenses   1,811    1,721 
Research and development expenses   618    869 
Operating Earnings   2,429    2,590 
Income from operations   27,084    26,331 
Other (losses)/income, net   (51)   2,817 
Income before income taxes   27,033    29,148 
Benefit from income taxes   (2,614)   (980)
Net income $ 29,647  $ 30,128 
       
Earnings per common share      
Basic $ 0.68  $ 0.69 
Diluted $ 0.68  $ 0.69 
Weighted average shares outstanding      
Basic   43,473,416    43,372,388 
Diluted    43,509,199    43,381,070 
        
Comprehensive Income      
Net income $ 29,647  $ 30,128 
Other comprehensive income/(loss) from unrealized net gains/(losses) on available-for-sale securities, net of tax of $689 in 2015 and of $(2,636) in 2014   961    (4,229)
Comprehensive income $ 30,608  $ 25,899 
 


FutureFuel Corp.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Dollars in thousands, except per share amounts)
(Audited)
 
  Twelve months ended
December 31:
  2015  2014
Revenue $ 299,611  $ 341,838 
Cost of goods sold and distribution   239,725     275,865 
Gross profit   57,046    65,973 
Selling, general and administrative expenses    7,334    6,677 
Research and development expenses   2,741    3,168 
Operating Earnings   10,075     9,845 
Income from operations   46,971    56,128 
Other income, net    4,898    11,217 
Income before income taxes   51,869    67,345 
Provision for income taxes   5,448    14,145 
Net income $ 46,421  $  53,200 
       
Earnings per common share      
Basic $ 1.06   $ 1.22 
Diluted $ 1.06   $ 1.22 
Weighted average shares outstanding      
Basic   43,432,149    43,357,602 
Diluted   43,445,730    43,392,011 
       
Comprehensive Income      
Net income $ 46,421  $ 53,200 
Other comprehensive income (loss) from unrealized net gains (losses) on marketable securities, net of tax benefit of $(1,314) in 2015 and of ($1,980) in 2014   (2,204)   (3,177)
Comprehensive income $ 44,217  $ 50,023 
 


FutureFuel Corp. 
Consolidated Statements of Cash Flows 
For the Years Ended December 31, 2015 and 2014 
(Dollars in thousands) 
(Audited) 
  
  2015  2014 
Cash flows provided by operating activities        
Net income $46,421  $  53,200 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  10,187    8,981 
Provision for (benefit from) deferred income taxes  (3,721)  5,388 
Change in fair value of derivative instruments   (3,295)  (396)
Other than temporary impairment of marketable securities  606   - 
Impairment of fixed assets  -   247 
Gain on sale of investments  (713)  (4,335)
Losses on disposals of fixed assets  178   108 
Stock based compensation  2,043   1,440 
Noncash interest expense  26   25 
Changes in operating assets and liabilities:        
Accounts receivable  3,816   (21,515)
Accounts receivable - related parties  1,163   3,456 
Inventory  (19,604)  (3,189)
Income taxes receivable  5,602   (4,984)
Prepaid expenses   28   173 
Prepaid expenses - related parties  (35)  - 
Accrued interest on marketable securities  30   99 
Other assets  (668)  65 
Accounts payable  4,056   15,459 
Accounts payable - related parties  (2,668)   2,055 
Income taxes payable  -   - 
Accrued expenses and other current liabilities  (1,673)  (3,153)
Accrued expenses and other current liabilities - related parties  (46)  43 
Deferred revenue  721   (2,524)
Other noncurrent liabilities  (2,831)  1,309 
Net cash provided by operating activities  39,623   51,952 
Cash flows from investing activities        
Collateralization of derivative instruments  1,239    (985)
Purchase of marketable securities  (39,136)  (41,369)
Proceeds from the sale of marketable securities  48,546   57,098 
Proceeds from the sale of fixed assets  6   81 
Expenditures for intangible assets  (1,408)  - 
Capital expenditures  (7,222)   (8,117)
Net cash from investing activities  2,025   6,708 
Cash flows from financing activities        
Minimum tax withholding on stock options exercised  (120)  (175)
Excess tax benefits associated with stock awards and options  (344)  59 
Deferred financing costs  (721)  - 
Payment of dividend  (10,493)  (20,928)
Net cash used in financing activities  (11,678)  (21,044)
Net change in cash and cash equivalents  29,970   37,616 
Cash and cash equivalents at beginning of period  124,079   86,463 
Cash and cash equivalents at end of period $154,049  $124,079 
Cash paid for interest $-  $- 
Cash paid for income taxes $13,381  $12,372 
  
The accompanying notes are an integral part of these financial statements. 
  

 

FutureFuel Corp.
Reconciliation of Non-GAAP Financial Measure to Financial Measure
(Dollars in thousands)
(Audited)
 
Reconciliation of Adjusted EBITDA to Net Income
 
 Three months ended December 31: Twelve months ended December 31:
  2015  2014(1)  2015  2014(1)
Adjusted EBITDA$  25,352  $   21,211  $  50,097  $  53,930 
Depreciation and amortization   (2,639 )    (2,259)    (10,187)    (8,981)
Non-cash stock-based compensation   (612)    (532 )    (2,043)    (1,440)
Interest and dividend income   1,098     1,508     5,106     6,877 
Interest expense   (43)    (6)    (134)    (25)
Loss on disposal of property and equipment   (10)    (93)    (178)    (108)
Gains on derivative instruments   4,982     7,812     9,101     12,757 
Other income/(expense)   (1,095)    1,435     107     4,335 
Income tax benefit/(expense)   2,614     980     (5,448)    (14,145)
Net income $  29,647  $   30,128  $46,421  $  53,200 
 
(1) Prior year adjusted EBITDA was revised to be consistent with 2015 to exclude certain cash settled items.
 


Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
 
 Twelve months ended December 31:
 2015 2014(1)
Adjusted EBITDA $ 50,097   $ 53,930 
Amortization of deferred financing costs  (108)   - 
(Provision)/benefit from deferred income taxes  (3,721)   5,388 
Impairment of fixed assets  -    247 
Interest and dividend income  5,106    6,877 
Income tax expense  (5,448)   (14,145)
Gains on derivative instruments  9,101    12,757 
Change in fair value of derivative instruments  (3,295)   (396)
Changes in operating assets and liabilities, net  (12,109)   (12,706)
Net cash provided by operating activities $  39,623   $ 51,952 
 
(1) Prior year adjusted EBITDA was revised to be consistent with 2015 to exclude certain cash settled items.
 


FutureFuel Corp.
Condensed Consolidated Segment Income
(Dollars in thousands)
(Audited)
 
 Three months ended December 31: Twelve months ended December 31:
  2015   2014   2015   2014 
Revenues       
Custom chemicals$  23,539   $  33,750  $  108,160  $  127,956 
Performance chemicals   3,808     4,572     17,688     18,190 
Chemicals   27,347     38,322      125,848     146,146 
Biofuels   6,525     50,145     173,763     195,692 
Revenues$  33,872  $  88,467  $  299,611  $  341,838 
        
Segment gross profit       
Chemicals$  7,293  $  12,073  $  35,452  $  46,062 
Biofuels   22,220     16,848     21,594     19,911 
Segment gross margins   29,513     28,921     57,046     65,973 
Corporate expenses   (2,429)    (2,590)    (10,075)    (9,845)
Income before interest and taxes   27,084     26,331     46,971     56,128 
Interest and other income   1,098     2,943     5,213     11,242 
Interest and other expense   (1,149)    (126)    (315)    (25)
Benefit/(provision) for income taxes   2,614     980     (5,448)    (14,145)
Net income$  29,647  $  30,128  $  46,421  $  53,200 
 
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.


COMPANY CONTACT

FutureFuel Corp.

Paul M. Flynn

(314) 854-8385

www.futurefuelcorporation.com

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