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): August 9, 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

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company   ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

FF

NYSE

 

 

 

 

 

 

Item 8.01 – Other Events

 

On August 9, 2019, FutureFuel Corp. (NYSE: FF) (the “Company”) issued a press release announcing the Company’s financial and operating results for the second quarter and six months ended, June 30, 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: August 9, 2019

ex_153452.htm

Exhibit 99.1

 

 

 

FutureFuel Releases Second Quarter and Six-Month 2019 Results

 

FutureFuel Second Quarter Net Income of $3.7 Million

 

Reports Net Income of $3.7 Million or $0.08 per Diluted Share, and Adjusted EBITDA of $3.4 Million

 

 

CLAYTON, Mo., August 09, 2019 (GLOBE NEWSWIRE) -- FutureFuel Corp. (NYSE:FF) (“FutureFuel”), a manufacturer of custom and performance chemicals and biofuels, today announced financial results for the second quarter and the six months ended June 30, 2019.

 

Second quarter 2019 Financial Highlights (all comparisons are with the second quarter of 2018)

 

 

●     Revenues were $70.9 million, down 19.8% from $88.3 million

 

●     Adjusted EBITDA was $3.4 million, down 71.0% from $11.7 million

 

●     Net income decreased to $3.7 million, or $0.08 per diluted share, from $6.1 million, or $0.14 per diluted share.

 

Six month 2019 Financial Highlights (all comparisons are with the first half of 2018)

 

 

●     Revenues were $119.4 million, down 17.2% from $144.1 million

 

●     Adjusted EBITDA was $8.8 million, down 82.1% from $49.3 million

 

●     Net income decreased to $9.2 million, or $0.21 per diluted share, from $41.9 million, or $0.96 per diluted share.

 

 

“The Biodiesel market has been difficult in 2019 absent the Blenders’ Tax Credit which has yet to be reinstated for 2018 or 2019. We have invested significant resources with the expectation that this incentive would be in place and it is particularly disappointing that Congress cannot reach agreement on a measure that has traditionally held wide bipartisan support.

 

In our Chemicals segment, we are investing in the capacity expansion of a custom chemical product line to support the growing agrochemical and energy markets, which, although disrupting our production volumes this year, will serve us well in the future.” 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 second quarter of 2019. The remaining quarterly dividends of $0.06 per share will be paid in 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 June 30,

 
                   

Dollar

   

%

 
   

2019

   

2018

   

Change

   

Change

 

Revenues

  $ 70,864     $ 88,336     $ (17,472 )     (19.8% )

Income from operations

  $ 1,185     $ 5,840     $ (4,655 )     (79.7% )

Net income

  $ 3,687     $ 6,051     $ (2,364 )     (39.1% )

Earnings per common share:

                               

Basic

  $ 0.08     $ 0.14     $ (0.06 )     (42.9% )

Diluted

  $ 0.08     $ 0.14     $ (0.06 )     (42.9% )

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

  $ 451     $ 536     $ (85 )     (15.9% )

Adjusted EBITDA

  $ 3,384     $ 11,667     $ (8,283 )     (71.0% )
                                 
   

Six Months Ended June 30,

 
                   

Dollar

   

%

 
   

2019

   

2018

   

Change

   

Change

 

Revenues

  $ 119,365     $ 144,083     $ (24,718 )     (17.2% )

Income from operations

  $ 2,396     $ 40,407     $ (38,011 )     (94.1% )

Net income

  $ 9,186     $ 41,877     $ (32,691 )     (78.1% )

Earnings per common share:

                               

Basic

  $ 0.21     $ 0.96     $ (0.75 )     (78.1% )

Diluted

  $ 0.21     $ 0.96     $ (0.75 )     (78.1% )

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

  $ 874     $ 897     $ (23 )     (2.6% )

Adjusted EBITDA

  $ 8,799     $ 49,264     $ (40,465 )     (82.1% )

 

  

Financial and Business Summary

 

Consolidated sales revenue in the three and six months ended June 30, 2019 decreased $17,472 and $24,717, respectively, compared to the three and six months ended June 30, 2018. This decrease primarily resulted from decreased sales volumes in biodiesel and in agro/energy chemicals. In addition, in the three-month period ended June 30, 2019, sales revenue was reduced by lower average selling prices in our biofuel segment. Partially offsetting the six-month period decrease was higher average selling prices in the biodiesel as compared with the same period in 2018. The prior year period was unfavorably impacted by rebates to customers 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 2017, therefore, these rebates did not reoccur in 2019.

 

Gross profit in the three and six months ended June 30, 2019 decreased $5,001 and $39,246, respectively, compared to the three and six months ended June 30, 2018. This decrease was primarily from the biofuel segment with the prior year period benefiting from the aforementioned BTC which was not in law in 2019. Also negatively impacting gross profit in the current periods was reduced sales volumes in both the biofuels segment and chemical segment. Partially offsetting these decreases in gross profit was the favorable impact of the change in the unrealized and realized activity in derivative instruments with a gain of $443 in the three months ended June 30, 2019 as compared to a loss of $3,109 in the three months ended June 30, 2018 and a loss of $1,033 in the six months ended June 30, 2019, as compared to a loss of $3,271 in the same period of 2018. Additionally, gross profit was favorably impacted in the three and six months ended June 30, 2019, as compared to the three and six months ended June 30, 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 of $287 and $1,924 in the three and six months ended June 30, 2019 as compared to a decrease in gross profit of $2,330 and $1,998 in the three and six months ended June 30, 2018, respectively.     

 

 

Net Income

 

Net income for the three and six months ended June 30, 2019 decreased $2,364 and $32,691, respectively, as compared to the same periods in 2018. The decrease in the three-month period resulted primarily from lower sales volumes of agro/energy chemicals and biodiesel. The decrease in the six-month period resulted primarily from the absence of biodiesel tax credits and incentives that were in law in the prior year and not in effect for 2019.

 

 

Capital Expenditures

 

Capital expenditures and intangibles were $4,659 in the six months of 2019, compared with $1,103 in the same period in 2018. FutureFuel was reimbursed for a portion of these expenditures by certain customers as summarized in the following table.

 

   

Six Months Ended June 30,

 
   

2019

   

2018

 

Cash paid for capital expenditures and intangibles

  $ 4,659     $ 1,103  

Cash received as reimbursement of capital expenditures

  $ (3,785 )   $ (206 )

Cash paid, net of reimbursement, for capital expenditures

  $ 874     $ 897  

 

 

Cash and Cash Equivalents and Marketable Securities

 

Cash and cash equivalents and marketable securities remain strong at $303,431 as of June 30, 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)

         
   

June 30, 2019

   

December 31, 2018

 

Assets

               

Cash and cash equivalents

  $ 222,871     $ 214,972  

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

    21,671       18,138  

Inventory

    36,116       39,296  

Marketable securities

    80,560       79,888  

Other current assets

    7,310       10,036  

Total current assets

    368,528       362,330  

Property, plant and equipment, net

    102,374       103,575  

Other assets

    6,767       5,250  

Total noncurrent assets

    109,141       108,825  

Total Assets

  $ 477,669     $ 471,155  

Liabilities and Stockholders’ Equity

               

Accounts payable

  $ 21,146     $ 21,670  

Dividends payable

    5,249       10,498  

Other current liabilities

    9,269       7,323  

Total current liabilities

    35,664       39,491  

Deferred revenue – long-term

    20,233       20,319  

Other noncurrent liabilities

    23,289       22,267  

Total noncurrent liabilities

    43,522       42,586  

Total liabilities

    79,186       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 June 30, 2019 and December 31, 2018

    4       4  

Accumulated other comprehensive income

    199       (20 )

Additional paid in capital

    282,145       282,145  

Retained earnings

    116,135       106,949  

Total Stockholders’ Equity

    398,483       389,078  

Total Liabilities and Stockholders’ Equity

  $ 477,669     $ 471,155  

 

 

 

 

 

 

 

FutureFuel Corp.

Condensed Consolidated Statements of Operations

and Comprehensive Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2019

   

2018

   

2019

   

2018

 

Revenue

  $ 70,864     $ 88,336     $ 119,365     $ 144,083  

Cost of goods sold and distribution

    67,594       80,065       112,833       98,305  

Gross profit

    3,270       8,271       6,532       45,778  

Selling, general, and administrative expenses

    1,297       1,647       2,642       3,405  

Research and development expenses

    788       784       1,494       1,966  
      2,085       2,431       4,136       5,371  

Income from operations

    1,185       5,840       2,396       40,407  

Other income/(expense), net

    3,419       2,214       8,665       (206 )

Income before income taxes

    4,604       8,054       11,061       40,201  

Provision/(benefit) for income taxes

    917       2,003       1,875       (1,676 )

Net income

  $ 3,687     $ 6,051     $ 9,186     $ 41,877  
                                 

Earnings per common share

                               

Basic

  $ 0.08     $ 0.14     $ 0.21     $ 0.96  

Diluted

  $ 0.08     $ 0.14     $ 0.21     $ 0.96  

Weighted average shares outstanding

                               

Basic

    43,743,243       43,716,726       43,743,243       43,716,698  

Diluted

    43,743,243       43,720,942       43,746,109       43,721,568  
                                 

Comprehensive income

                               

Net income

  $ 3,687     $ 6,051     $ 9,186     $ 41,877  

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

    22       55       278       (19 )

Income tax effect

    (5 )     (12 )     (59 )     4  

Total unrealized gain/(loss), net of tax

    17       43       219       (15 )

Comprehensive income

  $ 3,704     $ 6,094     $ 9,405     $ 41,862  

 

 

 

 

 

 

 

FutureFuel Corp.

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2019 and 2018

(Dollars in thousands)

(Unaudited)

 

 

   

Six Months Ended June 30,

 
   

2019

   

2018

 

Cash flows from operating activities

               

Net income

  $ 9,186     $ 41,877  

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

               

Depreciation

    5,472       5,512  

Amortization of deferred financing costs

    72       72  

Benefit for deferred income taxes

    (445 )     (3,885 )

Change in fair value of equity securities

    (4,891 )     6,412  

Change in fair value of derivative instruments

    (297 )     (1,559 )

Impairment of fixed assets

    130       171  

(Gain)/loss on the sale of investments

    1,138       (2,324 )

Stock based compensation

    -       214  

Loss on disposal of fixed assets

    11       37  

Noncash interest expense

    14       14  

Changes in operating assets and liabilities:

               

Accounts receivable

    (5,347 )     (417 )

Accounts receivable – related parties

    1,814       (11 )

Inventory

    3,180       (3,767 )

Income tax receivable

    1,336       3,456  

Prepaid expenses

    712       706  

Prepaid expenses – related parties

    12       -  

Accrued interest on marketable securities

    19       (82 )

Other assets

    520       39  

Accounts payable

    958       16,316  

Accounts payable – related parties

    (1,248 )     (402 )

Accrued expenses and other current liabilities

    688       4,584  

Deferred revenue

    591       (1,603 )

Other noncurrent liabilities

    (98 )     -  

Net cash provided by operating activities

    13,527       65,360  

Cash flows from investing activities

               

Collateralization of derivative instruments

    908       1,237  

Purchase of marketable securities

    (14,323 )     (10,690 )

Proceeds from the sale of marketable securities

    17,682       35,718  

Proceeds from the sale of fixed assets

    13       20  

Capital expenditures

    (4,659 )     (1,103 )

Net cash (used in)/provided by investing activities

    (379 )     25,182  

Cash flows from financing activities

               

Payment of dividends

    (5,249 )     (5,248 )

Net cash used in financing activities

    (5,249 )     (5,248 )

Net change in cash and cash equivalents

    7,899       85,294  

Cash and cash equivalents at beginning of period

    214,972       114,627  

Cash and cash equivalents at end of period

  $ 222,871     $ 199,921  
                 

Cash paid for interest

  $ -     $ -  

Cash paid for income taxes

  $ 898     $ 759  

Noncash items incurred:

               

Noncash capital expenditures

  $ 108     $ -  

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 June 30,

   

Six Months Ended June 30,

 
   

2019

   

2018

   

2019

   

2018

 

Adjusted EBITDA

  $ 3,384     $ 11,667     $ 8,799     $ 49,264  

Depreciation

    (2,747 )     (2,756 )     (5,472 )     (5,512 )

Non-cash stock-based compensation

    -       (107 )     -       (214 )

Interest and dividend income

    2,750       2,153       5,112       4,145  

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

    (44 )     (43 )     (87 )     (86 )

Loss on disposal of property and equipment

    (8 )     (32 )     (11 )     (37 )

Gains/(losses) on derivative instruments

    443       (3,109 )     (1,033 )     (3,271 )

Gains/(losses) on marketable securities

    826       281       3,753       (4,088 )

Income tax (expense)/benefit

    (917 )     (2,003 )     (1,875 )     1,676  

Net income

  $ 3,687     $ 6,051     $ 9,186     $ 41,877  

 

 

 

 

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities

 

 

   

Six Months Ended June 30,

 
   

2019

   

2018

 

Adjusted EBITDA

  $ 8,799     $ 49,264  

Benefit for deferred income taxes

    (445 )     (3,885 )

Impairment of fixed assets

    130       171  

Interest and dividend income

    5,112       4,145  

Income tax (expense)/benefit

    (1,875 )     1,676  

Losses on derivative instruments

    (1,033 )     (3,271 )

Change in fair value of derivative instruments

    (297 )     (1,559 )

Changes in operating assets and liabilities, net

    3,137       18,819  

Other

    (1 )     -  

Net cash provided by operating activities

  $ 13,527     $ 65,360  
 

 

 

 

 

FutureFuel Corp.

Condensed Consolidated Segment Income

(Dollars in thousands)

(Unaudited) 

 

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2019

   

2018

   

2019

   

2018

 

Revenue

                               

Custom chemicals

  $ 21,965     $ 27,072     $ 45,665     $ 50,492  

Performance chemicals

    3,894       4,455       7,546       10,116  

Chemicals revenue

    25,859       31,527       53,211       60,608  

Biofuels revenue

    45,005       56,809       66,154       83,475  

Total Revenue

  $ 70,864     $ 88,336     $ 119,365     $ 144,083  
                                 

Segment gross profit/(loss)

                               

Chemicals

  $ 7,181     $ 8,016     $ 14,490     $ 15,572  

Biofuels

    (3,911 )     255       (7,958 )     30,206  

Total gross profit

    3,270       8,271       6,532       45,778  

Corporate expenses

    (2,085 )     (2,431 )     (4,136 )     (5,371 )

Income before interest and taxes

    1,185       5,840       2,396       40,407  

Interest and other income

    3,576       2,434       8,865       4,145  

Interest and other expense

    (157 )     (220 )     (200 )     (4,351 )

(Provision)/benefit for income taxes

    (917 )     (2,003 )     (1,875 )     1,676  

Net income

  $ 3,687     $ 6,051     $ 9,186     $ 41,877  

 

 

 

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