Tanking RIN prices drive biodiesel producer’s quarterly revenue down 21%, net income drops 80%

Biodiesel and chemical manufacturer FutureFuel Corp., owner and operator of a 59-million-gallon-per-year biodiesel production facility in Batesville, Arkansas, saw a 21 percent decrease in revenue in the first quarter of the year compared to the same period last year, the company reported in its financial results May 10.

FutureFuel’s revenue for the quarter was $58.3 million, down from $74.2 million for the first quarter of 2023.

Net Income was down nearly 80 percent in the quarter from $21.1 million in the first three months of 2023 to $4.3 million this year.

Net sales decreased nearly $12 million in the biofuel segment on lower average prices.

Largely contributing to this reduced price, according to the company, was a significant drop in renewable identification number (RIN) values following U.S. EPA’s release of renewable volume obligations (RVOs) in the second quarter of 2023.

Sales revenue was also lower in the chemical segment on both sales volumes and price from chemicals used in the industrial intermediate and additive fuel markets. 

Income from operations decreased more than $16 million in the first quarter of this year compared to the same period in 2023.

“Our earnings in the first quarter of 2024 compared to the same period of 2023 reflect the changes in the biodiesel market,” said CEO Tom McKinlay. “Biodiesel prices have fallen sharply year over year, driven primarily by a significant drop in RIN prices. Nevertheless, we have secured supplies of feedstock, which we expect will generate positive margin when processed.”

To protect those margins, McKinlay said FutureFuel hedges its position using derivative instruments, and the change in the mark-to-market value of those positions resulted in an unrealized loss of nearly $2.3 million in the first quarter of 2024 compared to an unrealized gain of $4.9 million in the same period last year.  

“These unrealized positions will be offset when we ultimately sell the biodiesel produced from those feedstocks,” McKinlay said.

“Also impacting FutureFuel’s earnings during the period was a spell of extreme winter weather in January at the company’s plant in Batesville, Arkansas, which disrupted operations and reduced production.

“We fully recovered from the disruption and production has returned to normal,” McKinlay said. “This severe weather contributed to lower sales in our chemical segment, although this was partially offset by a more favorable product mix and revenue from new custom-chemical contracts.”