FutureFuel’s cost controls, buying strategy salvaged biodiesel margins last year

Chemical manufacturer FutureFuel Corp., owner and operator of a 59-million-gallon-per-year (mgy) biodiesel production facility in Batesville, Arkansas, managed to maintain robust biodiesel margins throughout 2021 despite record-high feedstock prices, the company announced mid-March in its fourth quarter and full-year financial results.

“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, Arkansas, manufacturing site,” said Tom McKinlay, chief operating officer. “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.”

Fourth-quarter revenues were $107.1 million, up 115 percent from fourth quarter 2020. Adjusted EBITDA was $25.7 million, up 141 percent. Net income in the fourth quarter was $22.3 million, up from $5.5 million a year ago.

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.

Full-year 2021 revenues were $321.4 million, up 57 percent. Adjusted EBITDA in 2021 was $33.8 million, up 16.1 percent. Net income decreased from $46.6 million in 2020 to $26.3 million last year.

Consolidated sales revenue increased $116.9 million 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 good manufacturing practices and other processes for higher-value specialty chemicals,” the company stated.

Gross profit decreased $7.8 million due to higher natural gas prices from the storm and curtailed biodiesel production from the event, but higher margins in the biofuel segment partially improved gross profit over the in the same period.

“Our chemicals business has stabilized, and we are now witnessing signs of increased demand as the economy adjusts to the impacts of COVID-19,” McKinlay said. “We have recruited fresh talent to our commercial and technology teams, and we are executing plans to grow this segment in the year ahead.”

FutureFuel’s 59 mgy biodiesel plant also refines its glycerin coproduct, features both batch and continuous processing and is capable of utilizing multiple feedstocks. Raw material inputs include distillers corn oil, used cooking oil, tallow, lard and soybean oil. FutureFuel is a BQ-9000-certified producer.

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