Renewable Energy Group, Inc. (NASDAQ:REGI) Q3 2018 Earnings Conference Call - Final Transcript

Nov 06, 2018 • 04:30 pm ET

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Renewable Energy Group, Inc. (NASDAQ:REGI) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Randy Howard

pleased to report double-digit year-over-year increases in gallons produced and sold. This all happened within a context of a supportive market environment, which I will also briefly review.

I also will talk about our announcement last week of an exciting new relationship with Phillips 66 to explore the possibility of jointly building a renewable diesel refinery on the West Coast. We are hopeful that this will develop into a long-term opportunity to further our ability to leverage our renewable diesel technology and expand production to meet the growing demand for cleaner transportation fuels.

Let me first review some of our solid operating highlights for the quarter and year-to-date. Chad will walk you through more of the details of our third quarter results and overall financials. Adjusted EBITDA for the quarter was $34.6 million after taking into account the impact of risk management losses and without the BTC being in effect. This adds to our already strong first half for a nine-month adjusted EBITDA of $94.4 million or approximately five times the equivalent amount for the same period in 2017, all without the BTC.

Slide four highlights our quarter-over-quarter and year-over-year improvement in adjusted EBITDA. Should the BTC be retroactively reinstated for the full year and on the same terms, which we continue to expect, we estimate that we would capture an additional $70 million for business conducted in the third quarter and $179 million for the first nine months. This would increase net income and adjusted EBITDA by equivalent amounts. As a result, we believe we are on track for another record year of adjusted EBITDA performance.

Our key focus of our efforts is continuous improvement, and we again saw the positive impact in our production numbers this quarter. As shown on Slide seven, we produced 139 million gallons for the quarter, bringing our year-to-date production to 370 million gallons. This represents a 16% increase over third quarter 2017 and an 11% increase over the equivalent nine-month period in 2017. Likewise, gallons sold were 179 million for the quarter, which is 18% above third quarter 2017 as shown on Slide eight.

Our marketing team has done an excellent job generating demand for our growing production. As the North America's -- as North America's largest advanced biofuel producer, we continue to serve a growing demand for cleaner diesel fuels. As you can see on Slide nine, for the first nine months, production of our renewable fuels had saved an estimated 2.9 million metric tons of CO2 compared to petroleum diesel. Every shareholder of REG can see the benefit of their investments in creating cleaner transportation fuels. Per the EPA calculator, 2.9 million metric tons is the equivalent of removing the CO2 produced from over 600,000 automobiles per year.

We continue to grow our list of major trucking fleets and end-user customers, where we supply a range of cleaner burning blends of renewable fuel. Our downstream assets now encompass 41 terminals, serving 23 fleets and end-users. Slide 10 reflects our geographic footprint