UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): May 10, 2019

 

 


(Exact Name of Registrant as Specified in Its Charter)

 

Delaware
(State or Other Jurisdiction of Incorporation)

 

0-52577

20-3340900

(Commission File Number)

(IRS Employer Identification No.)

 

 

8235 Forsyth Blvd., Suite 400
St. Louis, Missouri 63105
(Address of Principal Executive Offices)

 

(314) 854-8352
(Registrant’s Telephone Number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

Item 8.01 – Other Events

 

On May 10, 2019, FutureFuel Corp. (NYSE: FF) issued a press release announcing the Company’s financial and operating results for the first quarter ended March 31,  2019.

 

A copy of the press release is furnished as Exhibit 99.1 to this report.

 

Item 9.01 – Financial Statements and Exhibits

 

A copy of the press release is included as Exhibit 99.1.

 

SIGNATURES

 

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 hereunto duly authorized.

 

FUTUREFUEL CORP.

 


By:      /s/ Paul A. Novelly                
     Paul A. Novelly, Chairman and Chief Executive Officer     

 

Date: May 10, 2019

 

 

 

ex_143945.htm

Exhibit 99.1

 

 

 

FutureFuel Releases First Quarter 2019 Results

 

FutureFuel First Quarter Net Income of $5.5 Million

 

Reports Net Income of $5.5 Million or $0.13 per Diluted Share, and Adjusted EBITDA of $5.4 Million

 

 

CLAYTON, Mo., May 10, 2019 (GLOBE NEWSWIRE) -- FutureFuel Corp. (NYSE:FF) (“FutureFuel”), a manufacturer of custom and performance chemicals and biofuels, today announced financial results for the first quarter ended March 31, 2019.

 

First quarter 2019 Financial Highlights (all comparisons are with the first quarter of 2018)

 

●   Revenues were $48.5 million, down 13.0% from $55.7 million

●   Adjusted EBITDA was $5.4 million, down 85.6% from $37.6 million

●   Net income decreased to $5.5 million, or $0.13 per diluted share, from $35.8 million, or $0.82 per diluted share.

 

“Our Chemicals segment continues to perform solidly and is well positioned for the year ahead.

 

In our Biofuels segment, the contrast between our first quarter results in 2018, that included the benefit of the reinstated Blenders’ Tax Credit for 2017 with this quarter, highlights the challenge facing the Biodiesel industry today. This tax credit should be a powerful catalyst and incentive for investment in Renewable Fuels, however, it remains in limbo in Congress for 2018 and 2019. In this environment, we have operated prudently at lower production volumes than the same period last year.” said Tom McKinlay, Chief Operating Officer for FutureFuel Corp.

 

 

2019 Regular Cash Dividends

 

 

FutureFuel paid a normal quarterly dividend of $0.06 per share in the first quarter of 2019. The remaining quarterly dividends of $0.06 per share will be paid in June, September, and December.

 

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 March 31,

 
                   

Dollar

   

%

 
   

2019

   

2018

   

Change

   

Change

 

Revenues

  $ 48,501     $ 55,747     $ (7,246 )     (13.0% )

Income from operations

  $ 1,211     $ 34,567     $ (33,356 )     (96.5% )

Net income

  $ 5,499     $ 35,826     $ (30,327 )     (84.7% )

Earnings per common share:

                               

Basic

  $ 0.13     $ 0.82     $ (0.69 )     (84.1% )

Diluted

  $ 0.13     $ 0.82     $ (0.69 )     (84.1% )

Capital expenditures and intangibles (net of customer reimbursements and regulatory grants)

  $ 423     $ 361     $ 62       17.2 %

Adjusted EBITDA

  $ 5,415     $ 37,597     $ (32,182 )     (85.6% )

 

 

 

 

Financial and Business Summary

 

Consolidated sales revenue in the three months ended March 31, 2019 decreased $7,246, compared to the three months ended March 31, 2018. This decrease primarily resulted from decreased sales volumes of biodiesel and to a lesser extent, reduced sales volumes of chemicals. This reduction was partially offset by a favorable price variance in the biofuels segment as compared to the same period in 2018. Sales revenue in the three months ended March 31, 2018 included rebates that resulted from the retroactive reinstatement of the 2017 blenders’ tax credit (BTC) passed into law on February 9, 2018. The BTC has not been reinstated beyond December 31, 2017.

 

Gross profit in the three months ended March 31, 2019 decreased $34,245, compared to the three months ended March 31, 2018. This decrease was primarily from the biofuel segment as the result of the retroactive reinstatement of the BTC in the same period of 2018 which was not in law in the current period. Also negatively impacting gross profit in the current period was reduced sales volumes in the biofuels segment given the unfavorable market conditions and to a lesser extent, reduced sales volumes in the chemical segment. Furthermore, gross profit was negatively impacted by the change in the unrealized and realized activity in derivative instruments with a loss of $1,476 in the three months ended March 31, 2019 as compared to a loss of $162 in the same period of 2018.

 

Gross profit was favorably impacted in the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, by the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.  This adjustment increased gross profit $1,637 and $331 in the three months ended March 31, 2019 and 2018, respectively.

 

 

 

Net Income

 

Net income for the three months ended March 31, 2019 decreased $30,327 as compared to the same period in 2018. The decrease was primarily from decreased sales volumes and biodiesel tax credits and incentives that were reinstated in the three months ended March 31, 2018 that were not in effect for 2019.

 

 

Capital Expenditures

 

Capital expenditures and intangibles were $2,246 in the first three months of 2019, compared with $428 in the same period in 2018. FutureFuel was reimbursed for a portion of these expenditures by certain customers as summarized in the following table.

 

   

Three Months Ended March 31,

 
   

2019

   

2018

 

Cash paid for capital expenditures and intangibles

  $ 2,246     $ 428  

Cash received as reimbursement of capital expenditures

  $ (1,823 )   $ (67 )

Cash paid, net of reimbursement, for capital expenditures

  $ 423     $ 361  

 

 

 

Cash and Cash Equivalents and Marketable Securities

 

 

Cash and cash equivalents and marketable securities totaled $290,480 as of March 31, 2019, compared with $294,860 as of December 31, 2018.

 

 

 

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 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, 2018 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)

         
   

March 31, 2019

   

December 31, 2018

 

Assets

               

Cash and cash equivalents

  $ 206,021     $ 214,972  

Accounts receivable, net of allowance for bad debts of $0

    17,738       18,138  

Inventory

    53,329       39,296  

Marketable securities

    84,459       79,888  

Other current assets

    7,987       10,036  

Total current assets

    369,534       362,330  

Property, plant and equipment, net

    102,849       103,575  

Other assets

    7,272       5,250  

Total noncurrent assets

    110,121       108,825  

Total Assets

  $ 479,655     $ 471,155  

Liabilities and Stockholders’ Equity

               

Accounts payable

  $ 24,553     $ 21,670  

Dividends payable

    7,874       10,498  

Other current liabilities

    8,754       7,323  

Total current liabilities

    41,181       39,491  

Deferred revenue – long-term

    20,307       20,319  

Other noncurrent liabilities

    23,388       22,267  

Total noncurrent liabilities

    43,695       42,586  

Total liabilities

    84,876       82,077  

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, 43,743,243, issued and outstanding as of March 31, 2019 and December 31, 2018

    4       4  

Accumulated other comprehensive income

    182       (20 )

Additional paid in capital

    282,145       282,145  

Retained earnings

    112,448       106,949  

Total Stockholders’ Equity

    394,779       389,078  

Total Liabilities and Stockholders’ Equity

  $ 479,655     $ 471,155  

 

 

 

 

 

 

 

FutureFuel Corp.

Condensed Consolidated Statements of Operations

and Comprehensive Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

   

Three Months Ended March 31,

 
   

2019

   

2018

 

Revenue

  $ 48,501     $ 55,747  

Cost of goods sold and distribution

    45,239       18,240  

Gross profit

    3,262       37,507  

Selling, general, and administrative expenses

    1,345       1,758  

Research and development expenses

    706       1,182  
      2,051       2,940  

Income from operations

    1,211       34,567  

Other income/(loss), net

    5,246       (2,420 )

Income before income taxes

    6,457       32,147  

Provision/(benefit) for income taxes

    958       (3,679 )

Net income

  $ 5,499     $ 35,826  
                 

Earnings per common share

               

Basic

  $ 0.13     $ 0.82  

Diluted

  $ 0.13     $ 0.82  

Weighted average shares outstanding

               

Basic

    43,743,243       43,716,670  

Diluted

    43,748,974       43,722,194  
                 

Comprehensive Income

               

Net income

  $ 5,499     $ 35,826  

Other comprehensive income/(loss) from unrealized net gain/(loss) on available-for-sale securities

    256       (74 )

Income tax effect

    (54 )     16  

Total unrealized gain/(loss), net of tax

    202       (58 )

Comprehensive income

  $ 5,701     $ 35,768  

 

 

 

 

 

 

 

 

FutureFuel Corp.

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2019 and 2018

(Dollars in thousands)

(Unaudited)

 

 

   

Three Months Ended March 31,

 
   

2019

   

2018

 

Cash flows from operating activities

               

Net income

  $ 5,499     $ 35,826  

Adjustments to reconcile net income to net cash from operating activities:

               

Depreciation

    2,725       2,756  

Amortization of deferred financing costs

    36       36  

Benefit for deferred income taxes

    (415 )     (3,604 )

Change in fair value of equity securities

    (3,008 )     6,030  

Change in fair value of derivative instruments

    (286 )     (1,789 )

(Gain)/loss on the sale of investments

    80       (1,661 )

Stock based compensation

    -       107  

Loss on disposal of fixed assets

    3       5  

Noncash interest expense

    7       7  

Changes in operating assets and liabilities:

               

Accounts receivable

    (1,320 )     (40,867 )

Accounts receivable – related parties

    1,720       (2,077 )

Inventory

    (13,926 )     (15,764 )

Income tax receivable

    1,340       1,794  

Prepaid expenses

    384       254  

Accrued interest on marketable securities

    21       25  

Other assets

    15       (68 )

Accounts payable

    3,634       16,644  

Accounts payable – related parties

    (619 )     1,394  

Accrued expenses and other current liabilities

    807       5,000  

Deferred revenue

    31       (208 )

Other noncurrent liabilities

    (17 )     -  

Net cash (used in)/provided by operating activities

    (3,289 )     3,840  

Cash flows from investing activities

               

Collateralization of derivative instruments

    590       901  

Purchase of marketable securities

    (9,096 )     (5,844 )

Proceeds from the sale of marketable securities

    7,709       24,921  

Proceeds from the sale of fixed assets

    5       -  

Capital expenditures

    (2,246 )     (428 )

Net cash (used in)/provided by investing activities

    (3,038 )     19,550  

Cash flows from financing activities

               

Payment of dividends

    (2,624 )     (2,624 )

Net cash used in financing activities

    (2,624 )     (2,624 )

Net change in cash and cash equivalents

    (8,951 )     20,766  

Cash and cash equivalents at beginning of period

    214,972       114,627  

Cash and cash equivalents at end of period

  $ 206,021     $ 135,393  
                 

Cash paid for interest

  $ -     $ -  

Cash paid for income taxes

  $ 3     $ -  

Noncash items incurred:

               

Noncash capital expenditures

  $ 210     $ -  

Noncash operating leases

  $ 432     $ -  

 

 

 

 

 

 

 

FutureFuel Corp.

Reconciliation of Non-GAAP Financial Measure to Financial Measure

(Dollars in thousands)

(Unaudited)

 

 

Reconciliation of Adjusted EBITDA to Net Income

 

 

   

Three Months Ended March 31,

 
   

2019

   

2018

 

Adjusted EBITDA

  $ 5,415     $ 37,597  

Depreciation

    (2,725 )     (2,756 )

Non-cash stock-based compensation

    -       (107 )

Interest and dividend income

    2,362       1,992  

Non-cash interest expense (including amortization of deferred financing costs)

    (43 )     (43 )

Losses on disposal of property and equipment

    (3 )     (5 )

Losses on derivative instruments

    (1,476 )     (162 )

Gains/(losses) on marketable securities

    2,927       (4,369 )

Income tax expense

    (958 )     3,679  

Net income

  $ 5,499     $ 35,826  

 

 

 

 

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities

 

 

   

Three Months Ended March 31,

 
   

2019

   

2018

 

Adjusted EBITDA

  $ 5,415     $ 37,597  

Benefit for deferred income taxes

    (415 )     (3,604 )

Interest and dividend income

    2,362       1,992  

Income tax (expense)/benefit

    (958 )     3,679  

Losses on derivative instruments

    (1,476 )     (162 )

Change in fair value of derivative instruments

    (286 )     (1,789 )

Changes in operating assets and liabilities, net

    (7,930 )     (33,873 )

Other

    (1 )     -  

Net cash (used in)/provided by operating activities

  $ (3,289 )   $ 3,840  
 

 

 

 

 

 

FutureFuel Corp.

Condensed Consolidated Segment Income

(Dollars in thousands)

(Unaudited)

 

 

 

 

   

Three Months Ended March 31,

 
   

2019

   

2018

 

Revenue

               

Custom chemicals

  $ 23,700     $ 23,420  

Performance chemicals

    3,652       5,661  

Chemicals revenue

  $ 27,352     $ 29,081  

Biofuels revenue

    21,149       26,666  

Total Revenue

  $ 48,501     $ 55,747  
                 

Segment gross profit/(loss)

               

Chemicals

  $ 7,309     $ 7,556  

Biofuels

    (4,047 )     29,951  

Total gross profit

    3,262       37,507  

Corporate expenses

    (2,051 )     (2,940 )

Income before interest and taxes

    1,211       34,567  

Interest and other income

    5,289       (2,377 )

Interest and other expense

    (43 )     (43 )

(Provision)/benefit for income taxes

    (958 )     3,679  

Net income

  $ 5,499     $ 35,826  

 

 

 

 

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.

Tom McKinlay (314)854-8352

www.futurefuelcorporation.com