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:

 
FutureFuel Corp.Certain Financial and Operating Metrics(Unaudited)
 
    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

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.

About FutureFuel

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.

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, 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.

 
FutureFuel Corp.Condensed Consolidated Balance Sheets(Dollars in thousands)(Unaudited)
 
    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 StockholdersEquity                
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 StockholdersEquity     288,928       371,883  
Total Liabilities and StockholdersEquity   $ 344,330     $ 441,304  

FutureFuel Corp.Condensed Consolidated Statements of Income and Comprehensive Income(Dollars in thousands, except per share amounts)(Unaudited)
 
    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)(Unaudited)
 
    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 FlowsFor the Years Ended December 31, 2021 and 2020(Dollars in thousands)(Unaudited)
 
    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)(Unaudited)
 
Reconciliation of Adjusted EBITDA to Net Income
    Three months endedDecember 31:     Twelve months endedDecember 31:  
    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)(Unaudited)
 
    Three months endedDecember 31:     Twelve months endedDecember 31:  
    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.

COMPANY CONTACTFutureFuel Corp.Tom McKinlay(314) 854-8352www.futurefuelcorporation.com

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