REG posts Q2 financials, begins Geismar renewable diesel plant expansion

Renewable Energy Group Inc. has officially moved into the construction phase of its major renewable diesel plant expansion and improvement project in Geismar, Louisiana, the company announced in its second-quarter financials. REG said its board of directors has approved moving forward with construction and that the project is on track to be mechanically complete in 2023, with full operation underway in early 2024.

The expansion aspect of the project will nearly quadruple production capacity from 90 million gallons per year (mgy) to 340 mgy. Additionally, the project seeks to enhance existing operations and improve operational reliability and logistics.

Total project costs will approach $1 billion, estimated at $950 million. REG has received all the required permits to move forward and has secured funding. Furthermore, REG has agreed on a long-term lease for marine terminal and logistics services, the company said.

In the second quarter, REG produced 132 million gallons of biobased diesel and sold 163 million gallons, which brought $816 million in revenue. Net income was $79 million and adjusted EBITDA was $103 million.

“Our flexible feedstock capabilities, diverse production fleet, and commercial optimization systems helped us to manage through the volatile market conditions of the second quarter and deliver strong financial results,” said Cynthia “CJ” Warner, president and CEO of REG. “This solid performance, alongside our successful navigation of the many external challenges of the past year, reinforces our optimism about the future.” She added that expanding the Geismar renewable diesel plant continues to be a key pillar of REG's growth strategy.

“[It] is a significant milestone for us,” Warner said.

REG’s self-produced North American renewable diesel sales in the second quarter increased 2 million gallons over the same period in 2020, while renewable diesel sales to Norway dropped by 7 million gallons. REG-produced North American biodiesel sales decreased by 15 million gallons in the second quarter of this year compared to the same period last year.

The company’s Emden, Germany, biodiesel plant saw record production in the second quarter, increasing by 2 million gallons compared to the same timeframe in 2020. Production increases in Europe and Louisiana, however, were offset by a 10-million-gallon drop in North American biodiesel production “due largely to production optimization,” the company said.

Gross profit in the second quarter of this year was $124 million, or 15 percent of revenues, compared to gross profit of $23 million, or 4 percent of revenues, during the same period last year.

“The increase in gross profit on an absolute basis and as a percentage of revenue was driven primarily by improved realized margins, made possible by ongoing product placement improvement and wider spreads between feedstock options, the latter captured by optimizing our production and shifting our feedstock mix to a higher percentage of lower cost, low carbon intensity raw materials,” REG stated. “A $36 million increase in gross profit for separated RINs and a positive $18 million swing in risk management were also contributing factors to improved profitability.”

For more information on REG’s second-quarter financials, click here.