What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-09 · 224 added, 369 removed, 529 unchanged (53% of the section changed)

3 unchanged sentences

(Dollars in thousands)

September 30, 2022  

December 31, 2021

March 31, 2023  

December 31, 2022  

Cash and cash equivalents

$ 175,640  

Accounts receivable, inclusive of the blenders' tax credit of $ 8,462  and $ 8,232 , at September 30, 2022 and December 31, 2021, respectively, and net of allowances for bad debt of $ 43  and $ 67  at September 30, 2022 and December 31, 2021, respectively

Accounts receivable, inclusive of the blenders’

tax credit of $ 7,037  and $ 8,970 , and net of allowances for bad debt of $ 74  and $ 48 , respectively

25,921  

14 unchanged sentences

273,776  

255,833  

Property, plant and equipment, net

7 unchanged sentences

Liabilities and Stockholders ’

Accounts payable, inclusive of the blenders' tax credit rebates due customers of $ 890  and $ 890 , respectively

Accounts payable, inclusive of the blenders’

tax credit rebates due customers of $ 890 and $ 890 , respectively

$ 29,009  

4 unchanged sentences

Dividends payable

10,503  

Accrued expenses and other current liabilities

7 unchanged sentences

15,079  

Noncurrent deferred income tax liability

Other noncurrent liabilities

7 unchanged sentences

Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, none issued and outstanding

Common stock, $ 0.0001 par value, 75,000,000 shares authorized, 43,763,243 and 43,763,243 issued and outstanding as of September 30, 2022 and December 31, 2021

Accumulated other comprehensive income

Common stock, $ 0.0001 par value, 75,000,000 shares authorized, 43,763,243 and 43,763,243 issued and outstanding as of March 31, 2023 and December 31, 2022

Accumulated other comprehensive income (loss)

Additional paid in capital

1 unchanged sentence

282,489  

Retained earnings (accumulated deficit)

Retained earnings

21,589  

9 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,  

$ 74,161  

$ 42,074  

Revenue –

1 unchanged sentence

Cost of goods sold

51,936  

47,219  

Cost of goods sold –

2 unchanged sentences

related parties

Gross profit (loss)

Gross profit (loss)

21,623  

Selling, general, and administrative expenses

4 unchanged sentences

Total operating expenses

Income (loss) from operations

Income (loss) from operations

18,251  

Interest and dividend income

Interest expense

Loss on marketable securities

Other expense

( 33 )  

Gain (loss) on marketable securities

Other income  

Other income ( expense)

Income (loss) before taxes

Income tax provision (benefit)

Earnings per common share

21,088  

Income tax provision (benefit)

Net income (loss)

$ 21,081  

Earnings (loss) per common share

$ 0.48  

Weighted average shares outstanding

Comprehensive income

Other comprehensive loss from unrealized net losses on available-for-sale debt securities

43,763,243  

43,766,536  

43,763,243  

Comprehensive income (loss)

Net income (loss)

$ 21,081  

Other comprehensive income (loss) from unrealized net gains (losses) on available-for-sale debt securities

Income tax effect

Total other comprehensive loss, net of tax

Comprehensive income

Total other comprehensive income (loss), net of tax

Comprehensive income (loss)

$ 21,098  

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

For the Nine Months Ended September 30, 2022

Retained  

For the Three Months Ended March 31, 2023

Comprehensive

Earnings  

Stockholders’

Income (Loss)

 (Loss) Income

Balance - December 31, 2022

43,763,243  

$ 282,443  

$ 6,303  

$ 288,928  

Cash dividends declared, $ 0.24 per common share

( 10,503 )  

Other comprehensive loss  

( 49 )  

Other comprehensive gain

Balance - March 31, 2023

43,763,243  

$ 282,443  

$ ( 16,598 )  

$ 265,978  

Other comprehensive loss

( 68 )  

( 3,104 )  

Balance - June 30, 2022

43,763,243  

$ 282,443  

$ 262,806  

Stock based compensation  

Other comprehensive loss

( 56 )  

15,780  

Balance - September 30, 2022

43,763,243  

$ 282,489  

$ ( 3,922 )  

$ 278,576  

For the Nine Months Ended September 30, 2021

Retained  

For the Three Months Ended March 31, 2022

Comprehensive

Earnings  

Stockholders’

5 unchanged sentences

$ 288,928  

Other comprehensive loss

Balance - March 31, 2021

43,743,243  

$ 282,215  

$ 80,683  

$ 363,050  

Cash dividends declared, $ 2.50 per share

Proceeds for the issuance of stock

Cash dividends declared, $ 0.24 per common share

( 10,503 )  

Other comprehensive income

Balance - June 30, 2021

Other comprehensive loss

( 49 )  

( 12,398 )  

Balance - March 31, 2022

43,763,243  

Other comprehensive loss

Balance - September 30, 2021

$ 282,443  

6 unchanged sentences

(Unaudited) 

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income to net cash from operating activities:

Amortization of deferred financing costs

Benefit from deferred income taxes

Benefit for deferred income taxes

Change in fair value of equity securities

Change in fair value of derivative instruments

(Gain) loss on the sale of investments

Stock based compensation

Loss on the sale of investments

Loss on disposal of property and equipment

Impairment of intangible asset

Noncash interest expense

14 unchanged sentences

Other noncurrent liabilities

Net cash provided by operating activities

Net cash used in operating activities

Cash flows from investing activities

Collateralization of derivative instruments

Purchase of marketable securities

Proceeds from the sale of marketable securities

Proceeds from the sale of property and equipment

Proceeds from the sale of intangible asset

Capital expenditures

Net cash (used in) from  

investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from the issuance of stock

Payment of dividends

Deferred financing costs

Net cash used in financing activities

5 unchanged sentences

Noncash investing and financing activities:

Cash dividends declared, not paid

Noncash capital expenditures

Noncash operating leases

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

The accompanying unaudited consolidated financial statements have been prepared by FutureFuel Corp.

("FutureFuel" or "the Company") in accordance and consistent with the accounting policies stated in the Company’s 2021 Annual Report on Form 10 -K, inclusive of the audited consolidated financial statements and should be read in conjunction with these consolidated financial statements.

("FutureFuel" or "the Company") in accordance and consistent with the accounting policies stated in the Company's 

2022 Annual Report on Form 10 -K, inclusive of the audited consolidated financial statements and should be read in conjunction with these consolidated financial statements.

In the opinion of FutureFuel, all normal recurring adjustments necessary for a fair presentation have been included in the unaudited consolidated financial statements.

8 unchanged sentences

Recent Accounting Standards

No new accounting standards have been adopted recently and none are pending evaluation.

No new accounting standards have been adopted recently.

Proposed Accounting Standards   

March 2023, the Financial Accounting Standards Board (the "FASB") issued Proposed Accounting Standards Update (ASU) No.

2023 - ED100 Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures, which aims to address requests for improved income tax disclosures from investors that use the financial statements to make capital allocation decisions.

The amendments in this Proposed ASU, if adopted, would address the investor requests for more transparency of income tax information and would apply to all entities that are subject to income taxes.

The Company is in the process of evaluating this accounting standard.

GOVERNMENT TAX CREDITS

3 unchanged sentences

Tax Credit (“BTC”) provides a one dollar per gallon tax credit to the blender of biomass-based diesel with at least 0.1% petroleum-based diesel fuel. 

The BTC was set to expire December 31, 2022.

On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law.

The IRA provides for new and revised tax incentives for clean energy, including the extension of the BTC through December 31, 2024. 

The BTC will expire December 31, 2024 

based on current law. 

The Company records this credit as a reduction to cost of goods sold.

Within the law of the BTC, small agri-biodiesel producers with production capacity not in excess of 60 million gallons are eligible for an additional tax credit of $0.10 per gallon on the first 15 million gallons of agri-biodiesel sold (the “Small Agri-biodiesel Producer Tax Credit”).

The Company recognizes this credit as part of the tax provision.

The Company was eligible for this credit as part of the tax provision.

CARES ACT –

2 unchanged sentences

The Consolidated Appropriations Act, effective January 1, 2021 broadened the eligibility of the credit. 

FutureFuel is in the process of applying for this credit and will recognize the benefit of the credit once reasonable assurance can be made as to the retention of the credit. 

FutureFuel has applied for this credit and will recognize the benefit of the credit once reasonable assurance can be made as to the retention of the credit. 

Notes to Consolidated Financial Statements of FutureFuel Corp.

1 unchanged sentence

 REVENUE RECOGNITION

FutureFuel recognizes revenue when performance obligations of the customer contract are satisfied.

FutureFuel sells to customers through master sales agreements or standalone purchase orders.

The majority of FutureFuel's terms of sale have a single performance obligation to transfer products.

Accordingly, FutureFuel recognizes revenue when control has been transferred to the customer, generally at the time of shipment or delivery of products.

For certain contracts, this occurs upon delivery of the material to a FutureFuel storage location, ready for customer pickup and separated from other FutureFuel inventory.

Revenue is measured as the amount of consideration FutureFuel expects to receive in exchange for transferring products and is generally based upon a negotiated price.

FutureFuel sells its products directly to customers generally under agreements with payment terms of 30 to 75 days for chemical segment customers and 2 to 10 days for biofuels segment customers.

Certain of FutureFuel custom chemical contracts within the chemical segment contain a material right as defined by ASU 2014 - 09, Revenue from Contracts with Customers  ("Topic 606" ), from the provision of a customer option to purchase future goods or services at a discounted price as a result of upfront payments provided by customers.

The majority of revenue is from short term contracts with revenue recognized when a single performance obligation to transfer product under the terms of a contract with a customer are satisfied.

Certain of the Company's custom chemical contracts within the chemical segment contain a material right as defined by ASC Topic 606, from the provision of a customer option to purchase future goods or services at a discounted price as a result of upfront payments provided by customers.

Each contract also has a performance obligation to transfer products with 30 -day payment terms.

FutureFuel recognizes revenue when the customer takes control of the inventory, either upon shipment or when the material is made available for pickup.

If the customer is deemed to take control of the inventory prior to pick up, the Company recognizes the revenue as a bill-and-hold transaction in accordance with Topic 606.

FutureFuel applies the renewal option approach in allocating the transaction price to these material rights and transfer of product.

As a basis for allocating the transaction price to the material right and transfer of product, FutureFuel estimates the expected life of the product, the expected contractual volumes to be sold over that life, and the most likely expected sales price.

The Company recognizes revenue when the customer takes control of the inventory, either upon shipment or when the material is made available for pick up.

If the customer is deemed to take control of the inventory prior to pick up, the Company recognizes the revenue as a bill-and-hold transaction in accordance with ASC Topic 606.

The Company applies the renewal option approach in allocating the transaction price to these material rights and transfer of product.

As a basis for allocating the transaction price to the material right and transfer of product, the Company estimates the expected life of the contract, the expected contractual volumes to be sold over that life, and the most likely expected sales price.

Each estimate is updated quarterly on a prospective basis.

Contract Assets and Liabilities:

Contract assets consist of unbilled amounts typically resulting from revenue recognized through bill-and-hold arrangements which the company invoices upon shipping.

The contract assets at September 30, 2022 and December 31, 2021 consist of unbilled revenue from one customer and are recorded as accounts receivable in the consolidated balance sheets.

Contract assets consist of unbilled amounts typically resulting from revenue recognized through bill-and-hold arrangements.

The contract assets at March 31, 2023 

and December 31, 2022 

consist of unbilled revenue from one customer and are recorded as accounts receivable in the consolidated balance sheets.

Contract liabilities consist of advance payments related to material rights recorded as deferred revenue in the consolidated balance sheets.

Increases to contract liabilities from cash received for a performance obligation of chemical segment plant expansions were $ 733  and $ 178  and $ 733  and $ 707  for the three and nine months ended September 30, 2022 and 2021, respectively.

Increases to contract liabilities from cash received for a performance obligation of chemical segment plant expansions was $ 0  for the three months ended March 31, 2023 

Contract liabilities are reduced as the Company transfers product to the customer under the renewal option approach.

Revenue recognized in the chemical segment from the contract liability reductions were $ 2,037  and $ 456  for the three months, and $ 5,211  and $ 2,192  for the 

nine months ended September 

Revenue recognized in the chemical segment from the contract liability reductions were $ 1,219  and $ 2,213  in the three months ended March 31, 2023 

and 2022, respectively.

These contract asset and liability balances are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

The following table provides the balances of receivables, contract assets, and contract liabilities from contracts with customers.

Contract Assets and Liability Balances

September 30, 2022

March 31, 2023

December 31, 2022

12 unchanged sentences

Transaction price allocated to the remaining performance obligations:

At September 

30, 2022, approximately $ 14,525  of revenue is expected to be recognized from remaining performance obligations.

FutureFuel expects to recognize this revenue ratably over expected sales over the expected term of its long-term contracts which range from two to four  years.

At March 31, 2023, approximately $ 13,950  of revenue is expected to be recognized from remaining performance obligations.

FutureFuel expects to recognize this revenue ratably over expected sales over the expected term of its long-term contracts which range from three  to four  years.

Approximately 25 % of this revenue is expected to be recognized over the next 12 months, and 75 % is expected to be recognized over the subsequent 36 months.

2 unchanged sentences

and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

The following tables provide revenue from customers disaggregated by the type of arrangement and by the timing of the recognized revenue.

Disaggregation of revenue - contractual and non-contractual :

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,  

Contract revenue from customers with > 1 year arrangements

1 unchanged sentence

$ 10,142  

$ 26,052  

$ 17,109  

Contract revenue from customers with < 1 year arrangements

1 unchanged sentence

32,064  

251,980  

197,041  

Revenue from non-contractual arrangements

2 unchanged sentences

$ 42,261  

$ 278,198  

$ 214,316  

Timing of revenue :

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,  

Bill-and-hold revenue

1 unchanged sentence

$ 9,276  

$ 26,960  

$ 24,612  

Non-bill-and-hold revenue

1 unchanged sentence

32,985  

251,238  

189,704  

Total revenue

1 unchanged sentence

$ 42,261  

$ 278,198  

$ 214,316  

As of September 

30, 2022, $ 3,762  of the bill and hold revenue had not shipped. 

In comparison, $ 3,052  of bill and hold revenue as of 

September 

30, 2021 had not shipped.

The amount unshipped excludes contract assets discussed above.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

As of March 31, 2023 and December 31, 2022, 

$ 3,651 and $ 4,473  of bill-and-hold revenue had not shipped, respectively. 

The carrying values of inventory were as follows as of:

September 30, 2022

March 31, 2023

December 31, 2022

13 unchanged sentences

$ 26,761  

For the nine months ended September 

30, 2022, a LIFO liquidation of $ 11,049  occurred with $ 2,124 related to the exit of the pipeline business and $ 8,925 related to reduced biodiesel feedstock and finished product inventory.

This liquidation of inventory increased biofuel segment profits $ 1,771 in the nine months ended September 30, 2022.

No LIFO liquidation occurred in the nine months ended September 

No liquidation occurred in the three months ended March 31, 2023 

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

DERIVATIVE INSTRUMENTS

8 unchanged sentences

The Company has elected the normal purchase and normal sales exception for certain feedstock purchase contracts and supply agreements.

Realized gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of operations as a component of cost of goods sold and amounted to a gain of $ 4,688  and a loss of $ 21,917  for the three and nine months ended September 

30, 2022, respectively and a loss of $ 2,348  

and $ 10,377  for the three months and nine months ended September 

Realized gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of operations as a component of cost of goods sold and amounted to a gain of $ 8,307  and a loss of $ 9,129  for the three months ended March 31, 2023 

2022, respectively.

1 unchanged sentence

Asset (Liability)

September 30, 2022

March 31, 2023

December 31, 2022

2 unchanged sentences

Regulated fixed price future commitments, included in other current assets (in thousand barrels)

$ 2,567  

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $ 817  and $ 1,684  at September 

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of ($ 2,329 ) and $ 2,088  at March 31, 2023 

and December 31, 2022, respectively, and was classified as other current assets in the consolidated balance sheets.

The carrying values of the margin account and of the derivative instruments are included net, in other current assets.

The estimated fair market value of the underlying physical commodity (feedstock and finished biodiesel inventory and undelivered feedstock commitments) was $0.7  million at September 

This is an estimate only and 

not reflected in the consolidated financial statements for the nine months ended September 

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

MARKETABLE SECURITIES

At September 

At March 31, 2023 

and December 31, 2022, FutureFuel had investments in certain marketable equity and trust preferred (debt) securities which had a fair market value of $ 37,681  and $ 37,126 , respectively. 

1 unchanged sentence

The Company has designated the trust preferred securities as being available-for-sale. 

Accordingly, these securities were recorded at fair value of $ 3,683  and $ 3,902 at September 

30, 2022 and December 31, 2021, respectively, with net unrealized gains of $ 7  and $ 226 , net of taxes, as a component of stockholders' equity. 

In accordance with ASC 321, the change in the fair value of marketable equity securities (preferred and other equity instruments) for the three months ended September 

30, 2022 and 2021, was reported as a component of net income with a loss of $ 602  and $ 805 , respectively. 

The change in the fair value of marketable equity securities (preferred and other equity instruments) for the nine months ended September 

30, 2022 and 2021, was a loss of $ 7,940  and $ 1,027 , respectively. 

The aggregate fair value of debt securities with unrealized losses totaled $ 1,675  at September 

30, 2022 and $ 0 at December 31, 2021.

The Company determined an allowance for credit losses for these debt securities was not necessary as of September 

Accordingly, these securities were recorded at fair value of $ 3,697  and $ 3,675  at March 31, 2023 

and December 31, 2022, respectively, with the unrealized gain of $ 21  and unrealized loss of $ 1 , net of taxes, as a component of stockholders' equity. 

In accordance with ASC 321, the change in the fair value of marketable equity securities (preferred and other equity instruments) for the three months ended March 31, 2023 

and 2022, was reported as a component of net income as a gain of $ 533  and a loss of $ 4,100 , respectively. 

The aggregate fair value of debt securities with unrealized losses totaled $ 1,676 and $ 2,627  at March 31, 2023 

December 31, 2022, respectively.

The Company determined an allowance for credit losses for these debt securities was not necessary as of March 31, 2023.

The large financial institutions have strong credit ratings with no recent history of defaulting on outstanding obligations, nor is the Company aware of any long-term credit risk related to delinquency under these obligations.

There were no sales of debt securities in the nine months ended September 

30, 2022 or 2021.

The debt securities held at September 

30, 2022, had a contractual maturity of greater than ten years.

There were no sales of debt securities in the three months ended March 31, 2023 

The debt securities held at March 31, 2023, had a contractual maturity of greater than ten years.

Notes to Consolidated Financial Statements of FutureFuel Corp.

10 unchanged sentences

Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following tables provide information by level for assets and liabilities that are measured at fair value, on a recurring basis, at September 

The following tables provide information by level for assets and liabilities that are measured at fair value, on a recurring basis, at March 31, 2023 

and December 31, 2022. 

3 unchanged sentences

Inputs Considered as:

September 30, 2022

March 31, 2023

Derivative instruments

$ 2,567  

Preferred stock and other equity instruments

$ 35,070  

Trust preferred stock 

$ 3,683  

Asset (Liability)

4 unchanged sentences

Derivative instruments

$ ( 485 )  

Preferred stock and other equity instruments

$ 43,288  

Trust preferred stock 

$ 3,902  

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at:   

September 30, 2022

March 31, 2023

December 31, 2022

6 unchanged sentences

$ 5,477  

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.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

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, 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”).

The credit facility expires on March 30, 2025. 

The primary amendments from the Prior Credit Agreement were a reduction in the facility by $ 65,000 , a reduction in the facility’s applicable interest rate by 0.25 %, a reduction in the commitment fee, and elimination of the minimum consolidated fixed charge coverage ratio.

The interest rate floats at the following margins over LIBOR or base rate based upon the leverage ratio from time to time:

The Credit Facility expires on March 30, 2025.

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 the Secured Overnight Financing Rate (“SOFR”) and 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.

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.

Consolidated Leverage Ratio

Adjusted LIBOR Rate Loans and

Adjusted SOFR Rate Loans and

Letter of Credit Fee

17 unchanged sentences

The terms of the Credit Facility contain certain negative covenants and conditions including a maximum consolidated leverage ratio and a consolidated minimum interest coverage ratio.

There were no borrowings under the Credit Agreement at September 30, 2022 or December 31, 2021.

There were no borrowings under the Credit Agreement at March 31, 2023 

or December 31, 2022.

INCOME TAX PROVISION

The following table summarizes the income tax provision.  

Three Months Ended September 30,

Nine Months Ended September 30,

Income tax expense (benefit)

$ 1,697  

Three Months Ended March 31,  

Income tax provision (benefit)

Effective tax rate

16.5 %  

The Company’s effective tax rate for the three months ended March 31, 2023 

reflects management’s assessment that none of the tax benefits anticipated to be generated in 2023 are realizable. 

Accordingly, valuation allowances have been recorded such that net deferred tax assets both generated in 2023 and anticipated at year-end are $ 0 . 

The net deferred tax asset at December 31, 2022 was also $ 0 .

The net income tax benefit for the three months ended March 31, 2022 

was unfavorably impacted by the recognition of tax expense for valuation allowances against various tax attributes existing at January 1, 2022.

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

During the first quarter of 2023, based on all available evidence, the Company determined that its assets for net operating loss, capital loss, and tax credit carryforwards as well as its other deferred tax assets are more likely than not realizable only to the extent of its deferred liabilities. 

Accordingly, its net deferred tax asset after application of valuation allowance at March 31, 2023 is $ 0 .

During the first quarter of 2022, based on all available evidence, the Company determined that portions of its deferred tax assets for carryforwards of capital losses, state tax credits, and state net operating losses expiring in the next ten years are not more likely than not to be realized.

The effective tax rate for the three months ended March 31, 2023 and March 31, 2022 

reflected the positive effects of certain tax credits and incentives, the most significant of which are the BTC and Small Agri-biodiesel Producer Tax Credit. 

While the Company remains eligible for these benefits in 2023, realizability concerns have negated their impacts on the effective rate.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

The Company’s effective tax rate for the nine months ended September 30, 2022 reflects the favorable impact of the BTC.

This was partly offset by the derecognition of accumulated tax benefits inherent in carryforwards of certain tax attributes, as discussed below.

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

During the first quarter of 2022, based on all available evidence, the Company determined that portions of its deferred tax assets for carryforwards of federal and state net operating losses, tax credits, and capital losses, do 

not meet the realizability standard of more likely than not.

This assessment was modified in the second quarter, when a reduction in the forecasted annual tax loss facilitated the release of some of the valuation allowance established in the first quarter.

In the three and nine months ended September 30, 2021, because the Company was unable to reliably estimate its annual effective tax rate, the tax benefit was determined by applying an actual year-to-date effective rate to year-to-date pretax income. 

The effective tax rate for the three and nine months ended September 30, 2021 reflected the positive effects of certain tax credits and incentives, the most significant of which are the BTC and Small Agri-biodiesel Producer Tax Credit.

EARNINGS PER SHARE

In the three and nine months ended September 30, 2022 and 2021, FutureFuel used the treasury method in computing earnings per share.

Basic and diluted (losses) earnings per common share were computed as follows:  

Three Months Ended September 30,

Nine Months Ended September 30,

$ 15,780  

$ 9,202  

$ 3,910  

In the three months ended March 31, 2023 

and 2022, FutureFuel used the treasury method in computing earnings per share.

Basic and diluted earnings (losses) per common share were computed as follows:  

Three Months Ended March 31,

Net income (loss)

Weighted average shares outstanding –

43,763,243  

43,753,646  

Effect of dilutive securities:

1 unchanged sentence

Weighted average shares outstanding –

43,763,243  

43,753,709  

Basic earnings per share

$ 0.36  

$ 0.21  

$ 0.01  

$ 0.09  

Diluted earnings per share

$ 0.36  

$ 0.21  

$ 0.01  

$ 0.09  

In the three and nine months ended September 30, 2022, 44,000  and 30,667  options to purchase FutureFuel’s common stock were excluded, respectively, in the computation of diluted earnings per share as all were anti-dilutive. 

In the three and nine months ended September 30, 2021, 24,000  and 30,603  options were excluded, respectively.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

Basic earnings (loss) per share

Diluted earnings (loss) per share

For the three months ended March 31, 2023 

and 2022, 40,707  and 24,000 options to purchase FutureFuel’s common stock were excluded in the computation of diluted earnings per share as all were anti-dilutive. 

RELATED PARTY TRANSACTIONS

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Related party revenues are the result of sales of biodiesel, petrodiesel, blends, other petroleum products, and other similar or related products to these related parties.

Related party cost of goods sold and distribution are the result of sales of biodiesel, petrodiesel, blends, and other petroleum products to these related parties along with the associated expense from the purchase of natural gas, storage and terminalling services by FutureFuel from these related parties.

Related party cost of goods sold and distribution are the result of sales of biodiesel, petrodiesel, blends, and other petroleum products to these related parties along with the associated expense from storage and terminalling services provided by these related parties.

During 2021, a related party managed natural gas purchases for FutureFuel, initially paid for the natural gas, and subsequently invoiced FutureFuel for the same plus a nominal fee for such services. 

The natural gas matter as discussed in Note 14, Legal Matters, is in reference to the natural gas supplier, not the related party.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

SEGMENT INFORMATION

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The benefit derived from the eventual sale of the RINs is not reflected in results of operations until such time as the RINs sale has been completed, which may lead to variability in reported operating results.

FutureFuel employs derivative instruments to manage biofuel commodity trading risk. 

See Note 5 for additional discussion regarding the fair market value of unsold inventory and undelivered feedstock commitments at September 30, 2022.

Summary of business by segment

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,  

Custom chemicals

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$ 15,715  

$ 44,028  

$ 35,655  

Performance chemicals

17,233  

12,693  

Chemicals revenue

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21,561  

61,261  

48.348  

Biofuels revenue

1 unchanged sentence

20,700  

216,937  

165,968  

Total Revenue

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$ 42,261  

$ 278,198  

$ 214,316  

Segment gross profit (loss)

$ 8,362  

$ 5,105  

$ 17,976  

Segment gross profit (loss)

$ 8,623  

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$ 21,623  

$ 8,192  

$ 13,807  

Depreciation is allocated to segment cost of goods sold based on plant usage.

The total assets and capital expenditures of FutureFuel have not been allocated to individual segments as large portions of these assets are shared to varying degrees by each segment, causing such an allocation to be of little value.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

LEGAL MATTERS

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At this time, the company is disputing the February 2021 natural gas bill, and payment thereof is pending further investigation.

The natural gas expense was a component of Cost of goods sold-related parties in the Consolidated Statements of Operations and Comprehensive Income in the nine months ended September 30, 2021. 

The natural gas expense was a component of Cost of goods sold-related parties in the Consolidated Statements of Operations and Comprehensive Income in the three months ended March 31, 2021. 

However, as discussed in Note 12, Related Party Transactions, the natural gas supplier is not a related party of FutureFuel.

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RINs are used to monitor the level of renewable fuel traded in a given year in accordance with RFS 2 within the EPA moderated transaction system (EMTS). 

We do not assign cost of goods sold to the generation of RINs as the physical fuel generates the full cost. 

We do not purchase RINs. 

As of September 30, 2022, we held 8.1 million D4 RINs with a market value of $12,752.

Comparatively, we held 12.1 million D4 RINs at September 30,2021 with a market value of $17,145. 

During the COVID-19 pandemic, our objectives have been to protect the well-being of our employees, support our customers, obtain materials from our suppliers, and maintain our manufacturing operations.

While the pandemic has reduced the overall level of activity across much of the economy, we have largely met these objectives.

As the pandemic has evolved, we have seen its effects disrupt supply chains and labor markets in often unpredictable ways.

The three principles areas where COVID-19 may still negatively impact our financial performance are customer demand, raw material procurement, and our ability to operate our manufacturing facility.

Customer Demand – 

Several of our major chemical customers sell the products we produce for them into markets that have been impacted by COVID-19, particularly the energy and automotive markets. 

However, demand on the whole has recovered from the immediate disruption caused by COVID-19, although it has not yet returned to pre-pandemic volumes.

COVID-19 is only one of many factors influencing the energy markets at the moment and we closely align our biodiesel production to match that demand when margins are positive.

Supply Chain Impact  – Our initial concern was that supplier shutdowns might result in raw material or input shortages and negatively impact our ability to manufacture products and meet our customers’

While we have managed supply such that our operations have not been significantly hindered by shortages, timing of deliveries and supply chain disruptions have on occasion tempered demand from our customers.

Operations Impact  - Two years into the pandemic, we have shown that our mitigation measures have been pragmatic and effective, even at the height of the Omicron variant.

However, each wave has presented different challenges, and we will remain agile and flexible in our response to any future variant or surge.

To date we have had no negative impact on our ability to operate the plant safely and in a way that meets our customers’

COVID-19 will be with us for some time, either as an on-going outbreak or as a future threat.

As such, we may continue to experience materially adverse impacts on our financial condition and results of operations.

We do not assign cost of goods sold to the generation of RINs as the physical fuel generates the full cost.

As of March 31, 2023, we held 1.5 million D4 RINs with a market value of $2,357.   

Summary of Financial Results

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

Three Months Ended September 30,

Income from operations

Earnings per common share:

Adjusted EBITDA

Nine Months Ended September 30,

Three Months Ended March 31,

Income (loss) from operations

Net income (loss)

Earnings per common share:

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The following table reconciles net income, the most directly comparable GAAP performance financial measure, with adjusted EBITDA. 

Three Months Ended September 30,

Nine Months Ended September 30,

Non-cash stock-based compensation

Three Months Ended March 31,

Net income (loss)

Interest and dividend income

Non-cash interest expense and amortization of deferred financing costs

Loss on disposal of property and equipment

(Gain) loss on derivative instruments

Loss on marketable securities

Income tax provision (benefit)

Loss on disposal of property and equipment

(Gain) loss on derivative instruments

(Gain) loss on marketable securities

Income tax provision (benefit)

Adjusted EBITDA

The following table reconciles cash flows from operations, the most directly comparable GAAP liquidity financial measure, with adjusted EBITDA.

Nine Months Ended September 30,

Net cash provided by operating activities

Three Months Ended March 31,

Net cash used in operating activities

Benefit for deferred income taxes

Interest and dividend income

Income tax benefit

Loss on derivative instruments

Income tax provision (benefit)

(Gain) loss on derivative instruments

Change in fair value of derivative instruments

Change in operating assets and liabilities, net

Impairment of intangible asset

Adjusted EBITDA

Results of Operations  

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Volume/product mix effect

Gross profit (loss)

Gross profit (loss)

Operating expenses

Other income (expense)

Other income (expense)

Income tax provision (benefit)

Consolidated revenue in the three and nine months ended September 30, 2022 increased $19 and $64 million, compared to the three and nine months ended September 30, 2021, respectively.

The increases resulted from higher sales prices in the biofuels segment, and to a lesser extent, from increased prices and sales volumes in the chemicals segment. 

This increase was partially reduced by lower sales volumes in biofuels for both the three-and nine-month periods ending September 30, 2022.  

Gross profit in the three months ended September 30, 2022 increased $11.8 million as compared to the same period of 2021.

The increase primarily resulted from improved margins from the biofuels segment and to a lesser extent, improved sales volume in the chemical segment.

Gross profit for the nine months ended September 30, 2022 increased $16.4 million as compared to the same period of 2021.

This increase primarily resulted from: 

i) improved margins from biofuels, ii) improved margins from the chemical segment from product mix and increased sales volumes, and iii) the prior year period included exorbitantly high natural gas prices experienced in the February 2021 from Winter Storm Uri.

Mostly offsetting these increases was the change in the activity in derivative instruments with a loss of $21.9 million in the current nine-month period, as compared to $10.4 million in the same period of 2021.

We experienced unprecedented volatility in the heating oil futures market which resulted in losses that were not fully recoverable on fuel sold.

We have since amended our derivative strategy to help mitigate reoccurrence.

Also favorably impacting gross profit in the three-month period ended September 30, 2022 as compared to the same period of 2021, was the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. 

 In the three months ended September 30, 2022 and 2021, this adjustment increased gross profit $6.1 million and $1.0 million, respectively. In the nine months ended September 30, 2022 and 2021, this adjustment increased gross profit $1.3 million and decreased gross profit $6.1 million, respectively. 

The change for the nine months ended September 30, 2022 was inclusive of a liquidation of LIFO inventory from our biofuel segment as stated in note 4 to our consolidated financial statements.  

Operating  e xpenses 

Operating expenses increased $1.0 million and $1.7 million in the three and nine months ended September 30, 2022, as compared to the same periods of 2021.

This increase was primarily from increased administrative fees and compensation expense.

Net income (loss)

Consolidated revenue in the three months ended March 31, 2023 increased 75.5% or $31,920 compared to the three months ended March 31, 2022.

This increase resulted from increased sales volume and price in the biofuels segment and to a lesser extent, from increased sales volume in the chemical segment which was partially offset by reduced sales prices in the chemical segment from product mix.

Gross profit in the three months ended March 31, 2023 was $21,623 as compared to a gross loss of $7,155 in the three months ended March 31, 2022.

This increase primarily resulted from i) the change in the activity in derivative instruments with a gain of $8,307 in the three months ended March 31, 2023 and a loss of $9,129 in the same period of the prior year (these include realized gains and losses and a mark to market assessment against inventories yet to be sold -see note 5 of our consolidated financial statements). Affordable feedstocks were acquired and converted to biodiesel which will be sold mostly in the three months ended June 30 and September 30, 2023;

and ii) the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. 

This adjustment increased gross profit $3,783 in the three months ended March 31, 2023 as compared to $481 in the prior year quarter.

Operating  e xpenses

Operating expenses increased $920 in the three months ended March 31, 2023, as compared to the three-months ended March 31, 2022.

This slight increase was primarily from increased compensation and legal expense.

Other income (expense)

Other income (expense) increased pretax profit $0.7 million in the three months ended September 30, 2022 as compared to the prior year period on increased interest and dividends. 

In the nine-month comparison period for 2022 and 2021, pretax profit decreased $6.2 million. This reduction was primarily from unrealized losses on marketable securities. 

In addition, an impairment charge for an intangible asset reduced other income in the prior year period by $1.4 million. 

Income tax benefit 

The Company’s effective tax rate for the nine months ended September 30, 2022 reflects the favorable impact of the BTC. 

This was partly offset by the derecognition of accumulated tax benefits inherent in carryforwards of certain tax attributes, as discussed below.

Other income was $2,837 in the three months ended March 31, 2023, as compared to the same period of the prior year other expense of $3,495 which was primarily from:

i) the change in unrealized gains on marketable securities in the current period as compared to unrealized losses in the same period of the prior year and ii) an increase in interest income.

Income tax provision (benefit)

The Company’s effective tax rate for the three months ended March 31, 2023 was unfavorably impacted by the assessment that net deferred tax assets would not more likely than not be realizable in full. 

The effective tax rate for the three months ended March 31, 2023 reflected the positive effects of certain tax credits and incentives, the most significant of which are the BTC and Small Agri-biodiesel Producer Tax Credit. While the Company remains eligible for these credits in 2023, realizability concerns have negated their impacts on the effective rate.

Additionally, the net income tax benefit for the three months ended March 31, 2022 was unfavorably impacted by the recognition of tax expense for valuation allowances against various tax attribute carryforwards existing at January 1, 2022.

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

This assessment was modified in the second quarter, when a reduction in the forecasted annual tax loss facilitated the release of some of the valuation allowance established in the first quarter.

Chemical Segment

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Volume/product mix effect

Chemical revenue in the three and nine months ended September 30, 2022 increased $4.8 million and $12.9 million compared to the three and nine months ended September 30, 2021.

Revenue from our custom chemicals (unique chemicals produced under contract for specific customers) for the three and nine months ended September 30, 2022 totaled $16.0 million and $44.0 million, an increase of $3.3 and $8.4 from the three-and nine-month comparative periods in 2021, respectively. 

The improvement in the current year periods was primarily from contractual sales prices indexed to raw material prices and general inflation.

Performance chemicals (composed of multi-customer products which are sold to the open market based on specification) revenue was $5.5 million and $17.3 million, an increase of $1.5 million and $4.5 million as compared to the same periods of 2021, respectively.

The increase in the current year periods was from a higher selling price of glycerin partially offset by a weaker market for our monomer additive.  

Gross profit for the chemical segment for the three and nine months ended September 30, 2022 increased $3.3 and $9.9 million, respectively, from product mix and, to a lesser extent, from increased sales volumes and the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting.

For the nine months ended September 30, 2022, gross profit increased when compared to the same period of 2021 from the absence of the unusually high natural gas price in the prior year period. 

Chemical revenue in the three months ended March 31, 2023 increased 1.5% or $320 compared to the three months ended March 31, 2022.

Revenue for our custom chemicals (unique chemicals produced under contract for specific customers) for the three months ended March 31, 2023 totaled $16,620, an increase of $905 from the same period in 2022.

Custom chemicals used in the manufacture of industrial antioxidants experienced stronger volumes and higher selling prices. 

In addition, new business from other custom products contributed $1,129, an increase of $893 from the prior year.

Performance chemicals (composed of multi-customer products which are sold to the open market based on specification) revenue was $5,261, a decrease of $585 from the three months ended March 31, 2022.

This decrease was from lower sales prices of glycerin partially offset by the production timing of certain products which are produced batch-wise during the course of the year.  

Gross profit for the chemical segment for the three months ended March 31, 2023, increased $3,205 when compared to the same period of 2022 primarily from favorable product mix as described above. 

Biofuels Segment

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Volume/product mix effect

Gross profit (loss)

Biofuels revenue in the three and nine months ended September 30, 2022 increased $14.6 million and $51.0 million as compared to the same periods of 2021, respectively.

The biodiesel and biodiesel blend volumes decreased as compared to the prior year periods, primarily from the availability of economical feedstock.

Offsetting these volume decreases as compared to the same period of 2021, was higher selling prices with the overall increase in the fuel market. 

Gross profit (loss)

Biofuels revenue in the three months ended March 31, 2023 increased 152.6% or $31,600 as compared to the same period of 2022.

The biodiesel and biodiesel blend volumes increased as compared to the prior year, primarily from the absence of economical feedstock in the prior year period.

In addition, selling prices increased with the overall improvement in the fuel industry and from improved RIN prices. 

A significant portion of our biodiesel sold was to two major refiner/blender in the three and nine months ended September 30, 2022 and 2021. 

A significant portion of our biodiesel sold was to three major refiners/blenders in the three months ended March 31, 2023 and to two major refiners in the first quarter of 2022. 

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.

We do not believe that the loss of this customer would have a material adverse effect on our biofuels segment or on us as a whole because:

We do not believe that the loss of these customers would have a material adverse effect on our biofuels segment or on us as a whole because:

(i) we believe that we could readily sell our biodiesel to other customers as potential demand from other customers for biodiesel exceeds our production capacity;

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

Biofuels gross profit was $11.6 million in the three months ended September 30, 2022, an improvement of $8.5 million compared to the same period of 2021 primarily from the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting as compared to the same period of 2021. This adjustment increased gross profit this period $5.4 million as compared to an increase in gross profit of $1.1 in the same prior year period.

Also increasing gross profits was improved margins.

Gross losses were $4.2 million in the nine months ended September 30, 2022, a decreased loss of $6.5 million from the same period in 2021.

This gross loss included the unpredicted volatility in the NYMEX Heating Oil contract in the current nine-month period. 

The decreased loss resulted primarily from:  i) the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting as compared to the same period of 2021;

this adjustment increased gross profit this period $1.8 million as compared to a decrease in gross profit of $4.9 million in the same prior year period, and ii) the prior year period was unfavorably impacted by dramatically increased prices of natural gas resulting from Winter Storm Uri which consequently reduced sales volumes when production was curtailed to minimize natural gas consumption.

Biofuels gross profit was $13,000 in the three months ended March 31, 2023, an increase of $25,573 from the gross loss of $12,573 in the same period of 2022. 

This increased profit was from:

i) the change in the activity in derivative instruments with a gain of $8,307 in the three months ended March 31, 2023, as compared to a loss of $9,129 in the three months ended March 31, 2022 (these include realized gains and losses and a mark to market assessment against inventories yet to be sold - see note 5 of our consolidated financial statements), ii) an increase in biodiesel margins, and iii) the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. 

This adjustment increased gross profit $2,614 in the three months ended March 31, 2023 as compared to $967 in the prior year quarter.  

In regards to our derivative activity, we recognize all derivative instruments as either assets or liabilities at fair value in our consolidated balance sheets.

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Asset (Liability)

September 30, 2022

March 31, 2023

December 31, 2022

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Revenue from bill-and-hold transactions in which a performance obligation exists is recognized when the total performance obligation has been met and control of the product has transferred.

Bill-and-hold transactions for the three and nine months ended September 30, 2022 and 2021 were related to custom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for pickup or delivery by the customer.

Bill-and-hold transactions for the three months ended March 31, 2023 and 2022 were related to custom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for use by the customer.

These sales were subject to written monthly purchase orders with agreement that production was reasonable.

The product was custom manufactured and stored at a FutureFuel warehouse at the customer’s request and could not be sold to another buyer.

The product was custom manufactured and stored at the customer’s request and could not be sold to another buyer.

Credit and payment terms for bill-and-hold customers are similar to other custom chemicals customers.

Revenues under bill-and-hold arrangements were $9,713 and $26,960 for the three and months ended September 30, 2022.

Revenues under bill-and-hold arrangements were $10,590 and $9,276 for the three months ended March 31, 2023 and 2022, respectively.

Liquidity and Capital Resources

Our net cash from operating activities, investing activities, and financing activities for the nine months ended September 30, 2022 and 2021 are set forth in the following table.

Nine Months Ended September 30,

Net cash provided by operating activities

Our net cash from operating activities, investing activities, and financing activities for the three months ended March 31, 2023 and 2022 are set forth in the following table.

Three Months Ended March 31,

Net cash used in operating activities

Net cash provided by (used in) investing activities

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We believe that existing cash balances and cash flow to be generated from operating activities and borrowing capacity under the amended and restated credit agreement will be sufficient to fund operations, product development, cash dividends, and capital requirements for the foreseeable future.

However, as the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets.

An extended period of global supply chain and economic disruption could materially affect our business, results of operations, ability to meet debt covenants, access to sources of liquidity and financial condition.

Operating Activities

Cash provided by operating activities was $44,127 in the first nine months of 2022 as compared to $19,828 in the same period of 2021.

This increase in cash was attributable to the change in inventory, demonstrating a cash inflow of $19,328;

the change in benefit for deferred income taxes of $11,935;

the change in accounts receivable, including accounts receivable-related parties, of $9,386; and the change in fair value of equity securities of $6,913 also demonstrating cash inflows.

Partially offsetting cash inflow was a net change in accounts payable, including accounts payable-related parties, demonstrating a cash outflow of $11,429 primarily from the timing of vendor payments; and the change in the fair value of derivative instruments of $5,200 also demonstrating a cash out flow. 

Cash used in operating activities was $29,810 in the three months ended March 31, 2023 as compared to $10,576 in the same period of 2022.

This decrease in cash was primarily attributable to the change in inventory demonstrating a cash outflow of $31,773, the change in accounts receivable, including accounts receivable - related parties, demonstrating a cash outflow of $11,049, primarily from the timing of customer payments, and the change in fair value of equity securities of $4,633. 

Partially offsetting these cash outflows was the change in net income of $33,479.

Investing Activities

Cash used by investing activities was $2,503 in the nine months ended September 30, 2022 as compared to cash provided by investing activities of $15,891 in the nine months ended September 30, 2021. 

Of the $18,394 change, $18,718 was the result of a decrease in net sales of marketable securities. 

Such net sales totaled $263 in the first nine months of 2022, compared to $18,981 in net sales in the first nine months of 2021. 

The remaining change resulted from an increase in the collateralization of derivative instruments of $3,383 and an increase in capital expenditures of $3,027. 

Cash provided by investing activities was $1,868 in the three months ended March 31, 2023 as compared to cash used in investing activities of $3,335 in the three months ended March 31, 2022. 

Of the $5,203 change, $6,991 was the result of a decrease in the collateralization of derivate instruments. 

Offsetting this increase in cash was an increase in capital expenditures of $1,482 and a net decrease in the sales of marketable securities of $250. 

Financing Activities

Cash used in financing activities was $7,877 and $117,053 in the nine months ended September 30, 2022 and 2021, respectively, for payments of dividends on our common stock.

This change resulted from the payment of a special dividend of $109,408 in the first nine months of 2021. 

Cash used in financing activities was $2,640 and $2,626 in the three months ended March 31, 2023 and 2022, respectively, primarily for payments of dividends on our common stock. 

Credit Facility

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We do not believe there will be a need to issue any securities to fund such capital requirements.

In the three and nine months of 2022 and 2021, we paid a regular quarterly cash dividend in the amount of $0.06 per share on our common stock. 

The regular cash dividend amounted to $2,626 in each of the periods in 2022 and $2,624 in each of the periods of 2021.  On May 10, 2021 we declared a special cash dividend of $2.50 per share and paid $109,408 on June 4, 2021.

In the three months ended March 31, 2023 and 2022, we paid a regular quarterly cash dividend in the amount of $0.06 per share on our common stock.

The regular cash dividend amounted to $2,626 in the three months ended March 31, 2023 and $2,626 in the three months ended March 31, 2022.

The declaration of these regular quarterly cash dividends was made in the three months ended December 31, 2022 and March 31, 2022, respectively.

Capital Management

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

In the periods ended September 30, 2022 and December 31, 2021, we also had investments in certain preferred stock, debt securities, and other equity instruments.

In the periods ended March 31, 2023 and December 31, 2022, we also had investments in certain preferred stock, debt securities, and other equity instruments.

We classify these investments as current assets in the accompanying consolidated balance sheets and designate the debt securities as being “available-for-sale.”

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These equity instruments are recorded at fair value, with the unrealized gains and losses reported as a component of net income.

The fair value of the debt securities and equity instruments totaled $39,426 and $47,190 at September 30, 2022 and December 31, 2021, respectively.

The fair value of the debt securities and equity instruments totaled $37,681 and $37,126 at March 31, 2023 and December 31, 2022, respectively.

Lastly, we maintain depositary accounts such as checking accounts, money market accounts, and other similar accounts at selected financial institutions.

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First, we hedge our biofuels sales through the purchase and sale of futures contracts and options on futures contracts of energy commodities.

This activity was captured in our consolidated balance sheets at September 30, 2022 and December 31, 2021.

This activity was captured in our consolidated balance sheets at March 31, 2023 and December 31, 2022.

Second, we hedge our biofuels feedstock through the execution of purchase contracts and supply agreements with certain vendors or they meet the normal purchase and normal sales exception of ASC 815 

Derivatives and Hedging .

These hedging transactions are recognized in earnings and were not recorded in our consolidated balance sheets at September 30, 2022 or December 31, 2021 because they do not meet the definition of a hedge instrument as defined under GAAP.

These hedging transactions are recognized in earnings and were not recorded in our consolidated balance sheets at March 31, 2023 or December 31, 2022 because they do not meet the definition of a hedge instrument as defined under GAAP.

The purchase of biofuels feedstock generally involves two risk components:

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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-Q

Item 1. Financial Statements