FutureFuel’s third quarter results:
Ian Gilson, CFA
On November 9, 2011 FutureFuels (FF) reported its third quarter 2011 results followed by a conference call on November 10, 2011. The company reported record revenue and earnings. The balance sheet continues to strengthen.
| 3Q10 | 2Q11 | 2Q11 | |
| Dollars in millions | |||
| Chemicals Revenue: | $47.2 | $36.1 | $42.2 |
| Gross profit margin: | 28.2% | 19.6% | $31.0% |
| P&G and Arysta: | $31.4 | $23.7 | $28.0 |
| Other chemicals: | $15.8 | $12.4 | $14.2 |
| Biodiesel: | $18.9 | $37.9 | $48.1 |
| Gross profit margin: | -7.5% | 22.1% | 18.6% |
| All Revenue: | $66.1 | $74.0 | $90.3 |
| Gross profit: | $11.9 | $15.4 | $22.0 |
| Corporate expenses: | $2.3 | $2.8 | $2.6 |
| Pretax income: | $10.0 | $13.4 | $20.0 |
| Net income: | $6.6 | $8.4 | $12.7 |
| EPS: | $0.16 | $0.22 | $0.31 |
| Cash, cash equivalents and marketable securities |
$147.3 | $158.8 |
Chemicals revenue declined from year ago levels but increased sequentially. Revenue from the Proctor & Gamble bleach activator continues to decline as does the herbicide intermediate for Arysta. Despite this, margins improved, partly due to changes in expense allocations between chemicals and biodiesel. Excluding the bleach activator and the herbicide intermediate, revenue from the other chemicals increased sequentially.
Biodiesel revenue increased 155% year over year. Profit margins were impacted by expenses allocated on the basis of revenue. Expenses benefitted from the receipt of $1.9 million in a USDA Section 9005 credit and the $1.00 a gallon tax credit that were treated as reductions in expenses.
The biodiesel continuous production unit is still running at about 50% of rated capacity using white and yellow grease (high fatty acid content material). FutureFuel has batch capacity of about 14 million gallons per year. This capacity can use soy bean feedstock and the company may use this if the economics are favorable, as they were mid-year 2011.
FutureFuel has shipped qualified carbon anode material to its customer and revenue will be booked in the fourth quarter 2011 and the first quarter of 2012 (on a take-or-pay basis). However, the material will need to be qualified at the next customer level and this may take some time.
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