What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-03-14 compared with 2022-03-15 · 106 added, 140 removed, 304 unchanged (45% of the section changed)

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The payment of cash dividends by us is dependent upon our existing cash and cash equivalents, future earnings, capital requirements, and overall financial condition.

We declared and paid regular cash dividends for 2021 and 2020, a special dividend in 2021 and 2020, and we have also declared dividends for 2022.

We declared and paid regular cash dividends for 2022 and 2021, a special dividend in 2021, and we have also declared dividends for 2023.

While we anticipate similar regular cash dividends after 2023, no assurances can be given that we will declare or pay dividends for years after 2023.

Securities Authorized for Issuance Under Equity Compensation Plan

Our board of directors adopted an omnibus incentive plan, which was approved by our shareholders at our 2017 annual shareholder meeting on September 7, 2017 (the “Incentive Plan”).

We do not have any other equity compensation plan or individual equity compensation arrangement.

Our board of directors adopted an omnibus incentive plan, which was approved by our shareholders at our 2017 annual shareholder meeting (the “Incentive Plan”).

We do not maintain any other equity compensation plan or individual equity compensation arrangement.

Under the Incentive Plan, awards are limited to 10% of the issued and outstanding shares of our common stock in the aggregate.

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Following is additional information regarding the incentive plans as of December 31, 2022.

Number of securities

Weighted-average

Plan Category

Number of securities

to be issued upon

outstanding options,

warrants and rights

Weighted-average

exercise price

remaining available for future

of outstanding

issuance under equity

Plan Category

outstanding options,

options, warrants

Number of securities

remaining available for future

issuance under equity

compensation plans (excluding

warrants and rights

securities reflected in column (a))

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Performance Graph

The graph below matches the cumulative 5-Year total return of holders of FutureFuel Corp's common stock with the cumulative total returns of the Russell 2000 index and a customized peer group of 26 companies grouped by SIC code (chemical industry) that includes:

Aemetis Inc., American Resources Corp, Amyris Inc., Celanese Corp, Cleantech Biofuels Inc., Data443 Risk Mitigation Inc., Easylink Solutions Corp, Glyeco Inc., Green Energy Live Inc., Green Plains Inc., Greenbelt Resources Corp, Koppers Holdings Inc., Methes Energies International Ltd, New America Energy Corp, Newmarket Corp, Nouveau Life Pharmaceuticals Inc., Postd Merchant Banque, Rayonier Advanced Materials Inc., Renewable Energy Group Inc., Rex American Resources Corp, Tantech Holdings Ltd, Westlake Chemical Partners LP, Zeons Corp., and Esp Resources Inc. The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2016 and tracks it through December 31, 2021.

The graph below matches the cumulative 5-Year total return of holders of the Company’s common stock with the cumulative total returns of the Russell 2000 index and a group of 26 companies grouped by SIC code (chemical industry), and customized peer group that includes:

Aemetis Inc., Albemarle Corp, Alto Ingredients Inc., Amyris Inc., Archer-Daniels-Midland Co., Arkema Sa, Bunge Ltd, Cabot Corp, Celanese Corp, Chemours Co, Darling Ingredients Inc, Dow Inc, Eastman Chemical Co, Gevo Inc, Green Plains Inc, Hudson Technologies Inc, Huntsman Corp, Kronos Worldwide Inc, Lanxess Ag, Lyondellbasell Industries Nv, Olin Corp, Rex American Resources Corp, Solvay Sa, Stepan Co, and Westlake Corp.

The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2017 and tracks it through December 31, 2022.

Recent Sales of Securities

We did not sell any of our securities within the three-year period ended December 31, 2021 in transactions that were not registered under the Securities Act.

We did not sell any of our securities within the period covered by this report in transactions that were not registered under the Securities Act.

Purchase of Securities by Us

During 2021, neither we, or anyone acting on our behalf, purchased any shares of our common stock, which is the only class of our equity securities that is registered pursuant to Section 12 of the Exchange Act.

During 2022, neither we, nor anyone acting on our behalf, purchased any shares of our common stock, which is the only class of our equity securities that is registered pursuant to Section 12 of the Exchange Act.

Management ’

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The custom chemicals group historically included a laundry detergent additive manufactured exclusively for a customer for use in a household detergent.

Revenues generated from the laundry detergent additive were based on a supply agreement with the customer which ended in 2020 and no further sales of such products are expected.

In addition, our supply agreement with a major multi-national life sciences company to manufacture an intermediate for a herbicide was not extended past 2020 and no further sales are anticipated.

Revenues generated from the laundry detergent additive were based on a supply agreement with the customer which ended in 2020.

No further sales of such products are expected.

In addition, our supply agreement with a major multi-national life sciences company to manufacture an intermediate for a herbicide was not extended past 2020.

No further sales are anticipated.

Pricing for the other custom manufacturing products is negotiated directly with the customer.

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For our biofuels segment, we procure all of our own feedstock and only sell biodiesel for our own account.

We have the capability to process multiple types of feedstock including vegetable oils, animal fats, and separated food waste oils.

We have the capability to process multiple types of feedstocks including vegetable oils, animal fats, and separated food waste oils.

We can receive feedstock by rail or truck, and we have substantial storage capacity to acquire feedstock at advantaged prices when market conditions permit.

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At December 31, 2022, we had 1.5 million D4 RINs in inventory.

Lastly, we also sell refined petroleum products on common carrier pipelines in part to maintain our status as an active shipper on these pipelines.

Most of our sales are FOB the Batesville plant, although some transfer points are in other states or foreign ports.

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The discussion of results of operations that follows is based on revenue and expenses in total and for individual product lines and does not differentiate related party transactions.

Fiscal Year Ended December 31, 2021 Compared to Fiscal Year Ended December 31, 2020

Fiscal Year Ended December 31, 2022  

Compared to Fiscal Year Ended December 31, 2021

Set forth below is a summary of certain financial information for the periods indicated.

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Non-cash interest expense and amortization of deferred financing costs

Loss (gain) on disposal of property and equipment

Loss (gain) on derivative instruments

Loss (gain) on marketable securities

Other non-operating income

Loss on disposal of property and equipment

Loss on derivative instruments

Loss on marketable securities

Income tax benefit

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Income tax benefit

Loss (gain) on derivative instruments

Loss on derivative instruments

Change in fair value of derivative instruments

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Operating expense

Other expense (income)

Pretax income

Income tax benefit

2021 Compared to 2020

Compared to 2021

Consolidated sales revenue increased 23.2% or $74,628 in 2022 compared to 2021 primarily from higher average sales prices in the biofuel segment and, to a lesser extent, in the chemical segment.

This increase was reduced in part by lower sales volumes primarily in the biofuels segment and, to a lesser extent, in the chemicals segment.

Gross profit increased 23.2% or $5,456 in 2022 compared to 2021.

This comparative increase was primarily attributable to:

(i) improved margins in the chemical segment, and (ii) the prior year was unfavorably impacted by significantly atypical natural gas prices incurred in February 2021 from Winter Storm Uri.

Partially offsetting this improvement in gross profit was the unfavorable change in the realized and unrealized activity of derivative instruments which resulted in a reduction in gross profit of $24,360 in 2022, as compared to a reduction in gross profit in 2021 by $10,377.

The comparative unfavorable change was primarily from the unprecedented volatility in the NYMEX heating oil futures market.

Operating expenses increased $808 in 2022 compared to 2021.

This increase was primarily the result of increased compensation expense.

Other expense increased $6,840 from 2022 primarily from realized and unrealized losses on equity securities with a loss of $8,546 in 2022 as compared to a loss of $70 in 2021 (see Note 7 of our consolidated financial statements for further details).

Income tax benefit  

The income tax benefit in 2022 was $1,473 or an effective tax rate of (10.7%) as compared to a benefit in 2021 of $10,325 or an effective tax rate of (64.8%). 

The Company’s effective tax rates for the years 2022 and 2021 reflect the positive effect of certain tax credits and incentives, the most significant of which are the BTC and the Small Agri-biodiesel Producer Tax Credit.

Based on technical guidance from the Internal Revenue Service, the Company excludes the portion of the BTC not used to satisfy excise tax liabilities from income.

See Note 3 to our consolidated financial statements for a discussion of the pretax earnings impact of the BTC.

The Company’s effective tax rate for 2022 includes an expense of $7,392 or 53.8% from the recording of a valuation allowance against its deferred tax assets.

The Company evaluates its deferred tax assets and records a valuation allowance to reduce these assets to the amount that is more likely than not to be realized.

As of December 31, 2022, based on all available and allowable evidence, the Company determined that its deferred tax assets are more likely than not realizable only to the extent of its deferred tax liabilities and recorded the resulting valuation allowance.

The Company’s unrecognized tax benefit totaled $0 at December 31, 2022 and 2021.

Compared to 2020

Consolidated sales revenue increased 57.2% or $116,881 in 2021 compared to 2020.

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Income tax benefit  

The income tax be nefit in 2021 was $10,325 or an effective tax rate of (64.8%) as compar ed to a benefit in 2020 of $14,786 or an effective tax rate of  (46.5%).

The income tax benefit in 2021 was $10,325 or an effective tax rate of (64.8%) as compared to a benefit in 2020 of $14,786 or an effective tax rate of  (46.5%).

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (Pub.L.

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The Company’s unrecognized tax benefit totaled $0 at December 31, 2021 and 2020.

2020 Compared to 2019

Consolidated sales revenue decreased $721 in 2020 compared to 2019.

This net decrease primarily resulted from lower sales volumes in the chemical segment mostly offset by increased sales volumes in the biofuel segment.

Gross profit decreased $42,832 in 2020 compared to 2019.

This decrease was primarily attributable to a benefit in the prior year from the reinstatement of the biodiesel BTC for 2018 recognized in 2019, amounting to $31,301, (see Note 3 of our consolidated financial statements for further details), lower margins on biodiesel sold, the absence of a chemical contract that expired in 2019, and reduced chemical sales volumes primarily driven by the COVID-19 pandemic effect on energy, textile, and automobile markets that we sell to.

Partially offsetting these declines was an improvement in the change in the derivative activity which increased gross profit $4,379 in 2020 as compared to decrease in gross profit of $1,301 in 2019.

Operating expenses decreased $138 in 2020 compared to 2019.

This decrease was primarily the result of lower compensation expense.

Other income decreased $5,047 in 2020 primarily from the change in gain (loss) on marketable securities of $8,994 and a reduction in interest and dividend income of $4,402.

In 2020, the loss on equity securities sold was $4,129 as compared to a loss of $1,837 in 2019.

The mark-to-market change on equity investments was a loss of $246 in 2020 and a gain of $6,283 in 2019.

These decreases were partially offset by other non-operating income of $8,350 (see Note 24 of the consolidated financial statements).

Income tax benefit  

The income tax benefit in 2020 was $14,786 or an effective tax rate of (46.5%) as compared to a benefit in 2019 of $8,386 or an effective tax rate of (10.5%).

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (Pub.L.

116-136) (“CARES Act”).

The CARES Act, among other things, provides that Net Operating Losses (“NOLs”) arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 shall be treated as a carryback available to offset 100% of taxable income in each of the 5 preceding taxable years unless the taxpayer elects to forego the carryback.

The Company’s effective tax rate for the year 2020 was positively impacted by its ability to carry back both its 2019 and 2020 federal NOLs in full to tax years with 35% marginal tax rates, rather than forward to years with anticipated 21% tax rates.

In the fourth quarter of 2020, the Company filed a refund claim of $7,695 and accrued an additional refund claim of $1,211, subsequently filed in January 2021, relating to the carryback of its NOL generated in 2019.

No refunds have been received as of December 31, 2020.

The Company also anticipates filing a refund claim before the end of 2021 relating to the carryback of the NOL anticipated to be generated in 2020.

States in which the Company conducts the majority of its business have not conformed to the CARES Act’s enhanced NOL carryback provisions, and the anticipated benefits of these state NOL carryforwards are accordingly classified as deferred tax assets.

The Company’s effective tax rate for the year 2020 reflected the positive effect of certain tax credits and incentives, the most significant of which were the BTC and the Small Agri-biodiesel Producer Tax Credit.

Based on technical guidance from Internal Revenue Service, the Company excludes the portion of the BTC not used to satisfy excise tax liabilities from income.

The Company’s effective tax rate for the year 2019 reflected the positive effect of the reinstatement of certain tax credits and incentives for 2018 and 2019, the most significant of which was the BTC and Small Agri-biodiesel Producer Tax Credit.

The BTC and the Small Agri-biodiesel Producer Tax Credit were retroactively extended for 2018 and 2019 on December 20, 2019 and further extended through December 31, 2022.

This tax benefit was recorded in the Company’s fourth quarter 2019 results.

See Note 3 for a discussion of the impact of the BTC for the years ended December 31, 2020 and 2019.

The 2019 effective tax rate was also favorably impacted by the Company being granted a retroactive research and development credit for a prior year in the state of Arkansas where it does significant business.

Additionally, the Company’s 2019 effective tax rate reflected a one-time benefit from state legislation enacted during the year which applied a lower tax rate to future reversals of deferred tax liabilities.

The Company’s unrecognized tax benefit totaled $0 at December 31, 2020 and 2019.

Chemicals Segment

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Volume/product mix effect

2021 Compared to 2020

Compared to 2021

Chemical sales revenue increased 19.8% or $13,351 in 2022 compared with 2021.

Sales revenue for our custom chemical product line (chemicals produced for specific customers) totaled $58,737, an increase of 15.9% or $8,062 from 2021.

This increase was primarily from higher sales volumes of chemical intermediates in the oil and gas industry.

Performance chemicals revenue (comprised of multi-customer products which are sold based on specification) was $22,156 in 2022, an increase of 31.4% or $5,289 from 2021.

This increase resulted from higher selling prices of our glycerin products partially offset by lower volumes of polymer modifiers.

Gross profit for the chemicals segment increased 83.6% or $11,675 in 2022 compared with 2021.

This increase resulted primarily from stronger margins and higher sales volumes in products sold into the oil and gas industry and glycerin markets.

In addition, the prior year gross profit was negatively impacted from higher natural gas prices incurred from Winter Storm Uri.

Compared to 2020

Chemical sales revenue decreased 14.7% or $11,636 in 2021 compared with 2020.

Sales revenue for our custom chemicals product line (chemicals produced for specific customers) totaled $50,675, a decrease of 20.7% or $13,219 from 2020.

Sales revenue for our custom chemical product line (chemicals produced for specific customers) totaled $50,675, a decrease of 20.7% or $13,219 from 2020.

This decrease was primarily driven by the loss of two products we no longer sell partially offset by increased volumes of other custom chemicals.

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and (iii) increased material cost driven by inflation and the supply chain disruption caused by the COVID-19 pandemic and the responses to it.

2020 Compared to 2019

Chemical sales revenue decreased 24.5% or $25,649 in 2020 compared with 2019.

Sales revenue for our custom chemical product line (chemicals produced for specific customers) totaled $63,894, a decrease of $27,068 from 2019.

This decrease was primarily driven by:

i) an agrochemical product we no longer manufacture of $15,256;

ii) a slowdown in near-term business in both automotive and energy related applications resulting from COVID-19 of approximately $8,000;

and iii) the phase out of a laundry detergent additive of $6,886.

Partially offsetting these declines was the contract revenue of $2,896 upon the termination of a custom chemical contract which expired (see Note 2 of the consolidated financial statements).

Performance chemicals revenue (comprised of multi-customer products which are sold based on specification) was $15,284 in 2020, an increase of $1,419 from 2019.

This increase resulted from higher sales volumes of our glycerin and was partially offset by reduced sales volumes of our polymer modifier, primarily from COVID-19 weakened effects in the carpet industry.

Gross profit for the chemicals segment decreased 14.7% or $4,405 in 2020 compared with 2019.

This decrease resulted primarily from volume effects resulting from COVID-19 in the automotive, energy, textile applications and the absence of an herbicide intermediate product we no longer make.

Partially offsetting the decrease was the benefit of the recognition of contract revenue of $2,896 upon the termination of a custom contract that was not renewed 12/31/2020.

Biofuel Segment

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Volume/product mix effect

2021 Compared to 2020

Compared to 2021

Biofuels sales revenue increased 24.1% or $61,277 in 2022 compared to 2021, primarily from increased selling prices of biodiesel and biodiesel blends, inclusive of separated RIN sales.

Sales revenue declined in part on lower sales volumes as a result of Winter Storm Uri in February 2021 with its after effects in bringing the plant back to normal operations.

A portion of our biodiesel sold was to three major refiners in the United States in 2021 as compared with one major refiner in 2020.

Sales revenue declined in part on lower sales volumes as margins narrowed from the prior year.

A portion of our biodiesel sold was to two major refiners in the United States in 2022 as compared with three major refiners in 2021.

No assurances can be given that we will continue to sell to such major refiners, or, if we do sell, the volume we will sell or the profit margin we will realize.

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and (iv) the prices we receive from this customer are based upon then-market rates, as would be the case with sales of this commodity to other customers.

Biofuels gross profit increased 65.3% or $3,778 in 2021 compared to 2020.

Gross profit primarily increased due to improved profit margins experienced in the petroleum and renewable industry.

The comparative margins in 2020 were weakened from COVID-19 effects on the transportation market.

Partially reducing gross profit in 2021 was the change in the realized and unrealized activity of derivative instruments in comparison to the prior year with a loss of $10,377 as compared to a gain of $4,379 in 2020.

2020 Compared to 2019

Biofuels sales revenue increased $24,928 in 2020 compared to 2019, primarily from increased sales volumes of biodiesel and biodiesel blends.

Sales volumes improved on greater availability of feedstocks with the BTC in law during 2020.

Revenue was also improved by the reduction of rebates to customers (shown as a price effect) of $2,017 in 2020 as compared to $39,423 in 2019 (see Note 3 of the consolidated financial statements for further information).

A portion of our biodiesel sold was to one major refiner in the United States in 2020 and 2019.

Biofuels gross profit decreased 65.0% or $6,219 in 2022 compared to 2021.

Gross profit primarily decreased due to the unprecedented volatility in the heating oil futures market which resulted in a basis risk loss of $10,500 and lower sales volumes.

Partially improving gross profit was (i) the change in adjustments in the carrying value of our inventory as determined utilizing the last-in, first-out (“LIFO”) method of inventory accounting reduced gross profit $9,921 in 2021 as compared to $5,794 in 2022, (ii) the liquidation effect of exiting the pipeline business, which increased profits $1,851 in 2022, and (iii) 2021 gross profit was unfavorably impacted by higher natural gas prices incurred from Winter Storm Uri.

Compared to 2020

Biofuels sales revenue increased 102.5% or $128,517 in 2021 compared to 2020, primarily from increased selling prices of biodiesel and biodiesel blends, inclusive of separated RIN sales.

Sales revenue declined in part on lower sales volumes as a result of Winter Storm Uri in February 2021 with its after effects in bringing the plant back to normal operations.

A portion of our biodiesel sold was to three major refiners in the United States in 2021 as compared with one major refiner in 2020.

No assurances can be given that we will continue to sell to such major refiners, or, if we do sell, the volume we will sell or the profit margin we will realize.

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and (iv) the prices we receive from this customer are based upon then-market rates, as would be the case with sales of this commodity to other customers.

Biofuels gross profit decreased $38,427 in 2020 compared to 2019.

Gross profit compared to 2019 primarily decreased due to the recognition of the 2018 BTC for $31,301 which was retroactively reinstated on December 20, 2019.

See Note 3 of the consolidated financial statements for additional discussion.

Gross profit was also unfavorably impacted by lower margins from COVID-19 weakened effects on the transportation market in 2020 as compared to 2019.

Partially benefiting gross profit in 2020 was the change in the realized and unrealized activity of derivative instruments in comparison to the prior year with a gain of $4,379 as compared to a loss of $1,301 in 2019.

Biofuels gross profit increased 65.3% or $3,778 in 2021 compared to 2020.

Gross profit primarily increased due to improved profit margins experienced in the petroleum and renewable industry.

The comparative margins in 2020 were weakened from the effects of the COVID-19 pandemic on the transportation market.

Critical Accounting Policies and Estimates

Allowance for Doubtful Accounts

We reduce our accounts receivable by amounts that may be uncollectible in the future.

This estimated allowance is based upon management’s evaluation of the collectability of individual invoices and is based upon management’s evaluation of the financial condition of our customers and historical bad debt experience.

This estimate is subject to change based upon the changing financial condition of our customers.

At December 31, 2021 and 2020, we recorded an allowance for doubtful accounts of $67 and $63, respectively.

We historically have not experienced significant problems in collecting our receivables, and we do not expect this to change going forward.

Depreciation is provided for using the straight-line method over the associated assets’

estimated useful lives.

Useful Lives of Property, Plant, and Equipment

We primarily base our estimate of an asset’s useful life on our experience with other similar assets.

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We monitor the estimated useful lives of our assets.

Indefinite-lived intangible asset

Intangible assets with indefinite lives are not amortized but are reviewed for impairment at least annually or whenever events or circumstances indicate the carrying value of the asset may not be recoverable.

The Company performs annual impairment tests of the intangible assets during the fourth quarter of each fiscal year and assesses qualitative factors to determine the likelihood of impairment.

The Company’s qualitative analysis includes, but is not limited to, assessing the changes in macroeconomic conditions, legal and regulatory environment, industry and market conditions, financial performance, and any other relevant events or circumstances specific to the intangible asset.

During 2021, it was determined that the intangible asset had no value and was reduced to $0.

Asset Retirement Obligations

We establish reserves for closure/post-closure costs associated with the environmental and other assets we maintain.

Environmental assets include waste management units, such as a chemical waste destructor, storage tanks, and boilers.

When these types of assets are constructed or installed, a reserve is established for the future costs anticipated to be associated with the closure of the site based on an expected life of the environmental assets, the applicable regulatory closure requirements, and our environmental policies and practices.

These expenses are charged into earnings over the estimated useful life of the assets.

The future costs anticipated to be associated with the closure of the site are based upon estimated current costs for such activities adjusted for anticipated future inflation rates.

Unanticipated changes in either of these two variables or changes in the anticipated timing of closure/post-closure activities may significantly affect the established reserves.

As of December 31, 2021 and December 31, 2020, we recorded a reserve for closure/post-closure liabilities of $1,363 and $1,331, respectively.

We monitor this reserve and the assumptions used in its calculation.

As deemed necessary, we have made changes to this reserve balance and anticipate that future changes will occur.

Depreciation is provided for using the straight-line method over the associated asset’s estimated useful lives.

Revenue Recognition

We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , when performance obligations of the customer contract are satisfied.

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , when performance obligations of the customer contract are satisfied.

We sell to customers through master sales agreements or standalone purchase orders.

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The Company applies the renewal option approach in allocating the transaction price to the material right.

For each of these contracts, the Company estimated the expected contractual volumes to be sold at the most likely expected sales price as a basis for allocating the transaction price to the material right.

For each of these contracts, the Company estimated the expected contractual term and expected volumes to be sold at the most likely expected sales price as a basis for allocating the transaction price to the material right.

Each estimate is updated quarterly on a prospective basis.

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Sales revenue under bill-and-hold arrangements were $36,805, $34,655, and $32,779 for the years ended December 31, 2022, 2021, and 2020, respectively.

At December 31, 2021 and 2020, $3,154 and $2,628, respectively, was included in revenue for products that had not shipped.

At December 31, 2022 and 2021, $4,473 and $3,154, respectively, was included in revenue for products that had not shipped.

The latter amounts do not include Contract Assets of $775 and $362 that have not been billed nor shipped at December 31, 2022 and 2021, respectively.

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Shipping and handling fees related to sales transactions were billed to customers and recorded as sales revenue.

The provision for (benefit from) income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for (benefit from) income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax bases of the Company's assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

A tax valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In assessing the recoverability of its deferred tax assets, the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of the existing deferred tax assets in each taxing jurisdiction.

In making this determination, the Company considers positive evidence in the form of projections of future taxable income, reversing temporary differences, and tax planning strategies.

In years in which the Company has experienced objective negative evidence in the form of three cumulative years of tax losses, the Company no longer uses taxable income projections to overcome the presumption of losses and deferred tax asset valuations are computed taking into account tax planning strategies and the reversing net deferred tax liability as a source of income. 

The Company recognizes income tax positions that meet the more likely than not threshold and accrues interest related to unrecognized income tax positions which is recorded as a component of the income tax provision.

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Net cash provided by operating activities

Net cash provided by investing activities

Net cash (used) provided by investing activities

Net cash used in financing activities

Operating Activities

Cash provided by operating activities increased in 2022 to $52,451 from $44,084 in 2021, a net increase of $8,367.

This increase was attributed to the change in (i) accounts receivable, including accounts receivable - related parties, of $9,731 and (ii) accounts payable, including accounts payable-related parties, of $4,656.

Primarily offsetting the increase in cash from operations was the increase of $6,807 in inventory in 2022 compared to 2021.

Cash provided by operating activities decreased in 2021 to $44,084 from $96,403 in 2020, a net decrease of $52,319.

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related parties, of $57,932, $39,423 of which was rebates owed to customers for the BTC.

Cash provided by operating activities increased from$34,638 in 2019 to $96,403 in 2020,a net increase of $61,765.

This increase was attributed to the decrease in accounts receivable, including accounts receivable - related parties, of $188,769;

the 2019 balance included the BTC of $97,295.

Primarily offsetting the increase in cash from operations was:

(i) the decrease in accounts payable, including accounts payable –

related parties, of $90,092, $39,423 of rebates owed to customers for the BTC and (ii) the decrease in net income in 2020 compared to 2019 of $41,617.

Investing Activities

Cash used by investing activities was $3,829 in 2022 compared to cash provided by investing activities of $14,993 in 2021 for a net decrease in cash of $18,822.

This decrease was primarily attributable to sales of marketable securities in 2022 of $1,292 compared to the net sales of marketable securities in 2021 of $17,106.

Increased capital expenditures decreased cash from investing activities by $3,322.

Cash provided by investing activities was $14,993 in 2021 compared to $474 in 2020 for a net increase in cash from investing activities of $14,519.

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Reduced capital expenditures increased cash from investing activities by $3,008.

Cash provided by investing activities was $474 in 2020 compared to $4,219 in 2019 for a net decrease in cash from investing activities of $3,745.

This decrease was primarily attributable to a $6,558 decrease in the net sales of marketable securities in 2020 compared to the net sales of marketable securities in 2019.

Such net sales totaled $4,730 in 2020, as compared to total net sales of $11,288 in 2019.

Reduced capital expenditures increased cash from investing activities by $2,507.

Financing Activities

Cash used in financing activities decreased to $10,503 in 2022, from $119,678 in 2021, a net increase of $109,175.

This increase resulted from the payment of special cash dividends in 2021 of $109,408 compared to $0 in 2022.

Cash used in financing activities decreased from $142,086 in 2020 to $119,678 in 2021, a net decrease of $22,408.

This decrease resulted from the payment of special dividends in 2021 of $109,408 compared to the payment of special dividends in 2020 of $131,230.

Cash used in financing activities increased from $10,498 in 2019 to $142,086 in 2020, a net increase of $131,588.

This increase resulted from the payment of special dividends in 2020 of $131,230.

Capital Expenditure Commitments

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Credit Facility

On March 30, 2020, FutureFuel, with FutureFuel Chemical as the borrower and certain of FutureFuel’s other subsidiaries as guarantors, amended and restated its credit agreement (the “Credit Agreement”) originally entered into on April 16, 2015 (as amended, the “Prior Credit Agreement”) with the lenders party, Regions Bank as administrative agent and collateral agent, and PNC Bank, N.A., as syndication agent.

On March 30, 2020, the Company, with FutureFuel Chemical Company as the borrower and certain of the Company’s other subsidiaries as guarantors, amended and restated its credit agreement (the “Credit Agreement”) originally entered into on April 16, 2015 (as amended, the “Prior Credit Agreement”) with the lenders party thereto, Regions Bank as administrative agent and collateral agent, and PNC Bank, N.A., as syndication agent.

The Credit Agreement consists of a five-year revolving credit facility in a dollar amount of up to $100,000, which includes a sublimit of $30,000 for letters of credit and $15,000 for swingline loans (collectively, the “Credit Facility”).

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The Credit Facility contains certain affirmative and negative covenants, including negative covenants that limit or restrict, among other things, indebtedness, liens and encumbrances, dividends, burdensome agreements, mergers and fundamental changes, assets sales, investments, transactions with affiliates, changes in fiscal years, and other matters customarily restricted in such agreements.

The interest rate floats at the following margins over LIBOR (see Note 2 to our financial statements regarding rate reform) or base rate based upon our leverage ratio.

The material financial covenants, ratios, or tests contained in the Credit Facility are i) a consolidated leverage ratio as of the end of any fiscal quarter less than or equal to 3.00 to 1.0;

and ii) a consolidated interest coverage ratio as of the end of any fiscal quarter of greater than or equal to 1.25 to 1.0.

We do not expect the transition from LIBOR to have a material impact on our credit facility or any new agreement we might enter into.

On March 1, 2023, the Company entered into a First Amendment to the Credit Agreement (the “First Amendment”).

The First Amendment primarily amends the Credit Agreement to transition the Credit Facility from LIBOR to SOFR and to reflect other conforming changes, in each case as more specifically set forth in the First Amendment.

 The First Amendment does not modify the aggregate amount, or expiration date, of the Credit Facility.

We do not expect the transition from LIBOR to have a material impact on the Credit Facility.

Pursuant to the First Amendment, the interest rate floats at the following margins over SOFR or base rate based upon our leverage ratio.

We do not expect the transition from LIBOR to have a material impact on the Credit Facility or any new agreement we might enter into.

Consolidated Leverage Ratio

Adjusted LIBOR Rate Loans

Adjusted SOFR

and Letter of Credit Fee

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Certain of our subsidiaries have entered into guarantees of payment on behalf of the Company for amounts outstanding under the Credit Facility.

In addition, we and certain subsidiaries have entered into a pledge and security agreement with the bank to secure the obligations under the Credit Facility.

In addition, we and certain subsidiaries have entered into a pledge and security agreement with the lender parties to secure the obligations under the Credit Facility.

Pursuant to the pledge and security agreement, we and certain of our subsidiaries have pledged certain collateral, including but not limited to, interests in intellectual property rights and certain equity interests in our subsidiaries.

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The regular cash dividends totaled $10,503.

In 2021, we paid regular cash dividends aggregating $0.24 per share on our common stock with record dates and payment dates as previously discussed.

The regular cash dividends totaled $10,498.

On May 10, 2021, we also declared a special cash dividend of $2.50 per share on our common stock.

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Dividends declared, but not paid, were accrued at December 31, 2020.

In 2019, we paid regular cash dividends aggregating $0.24 per share on our common stock with record dates and payment dates as previously discussed.

The regular cash dividends totaled $10,498.

Dividends declared, but not paid, were accrued at December 31, 2019.

Capital Management

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A significant portion of these funds were held in cash or cash equivalents at multiple financial institutions.

In 2021, we also had investments in certain preferred stock and other equity instruments measured at fair value and changes in fair value recognized in net income.

In 2022 and 2021, we also had investments in certain preferred stock and other equity instruments measured at fair value and changes in fair value recognized in net income.

We also hold certain trust preferred securities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity