What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-14 compared with 2023-03-14 · 432 added, 583 removed, 523 unchanged (66% of the section changed)

6 unchanged sentences

Notes to Consolidated Financial Statements of FutureFuel Corp.

 Description of business and operations

 Significant accounting policies and basis of presentation

 Government tax credits

 Revenue Recognition

Note 5.  Inventory

Note 6.  Derivative instruments

Note 7.  Marketable securities

Note 8.  Fair value measurements

Note 9.  Property, plant, and equipment

Note 10.  Other assets

Note 11.  Accrued expenses and other current liabilities

Note 12.  Borrowings

Note 13.  Asset retirement obligations and environmental reserves

Note 14.  Lease commitments and purchase obligations

Note 15.  Income tax benefit

Note 16.  Earnings per share

Note 17.  Stock-based compensation

Note 18.  Stockholders' equity

Note 19.  Employee benefit plans

Note 20.  Related party transactions

Note 21.  Segment information

Note 22.  Quarterly financial information (unaudited)

Note 23.  Legal proceedings

Description of business and operations

Significant accounting policies and basis of presentation

Government tax credits

Revenue Recognition

Derivative instruments

Marketable securities

Fair value measurements

Property, plant, and equipment

Accrued expenses and other current liabilities

Asset retirement obligations and environmental reserves

Lease commitments and purchase obligations

Income tax benefit

Earnings per share

Stock-based compensation

Stockholders' equity

Employee benefit plans

Related party transactions

Segment information

Quarterly financial information (unaudited)

Legal proceedings

Subsequent events

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of FutureFuel Corp.

and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 14, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 14, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of this critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of this critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Deferred income tax asset valuation allowance relating to the account balances Noncurrent deferred income tax liability and Income tax benefit - see also Note 1 and Note 15 to the consolidated financial statements

As described in Note 1 and Note 15 to the consolidated financial statements, the Company records deferred taxes which 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. Additionally, valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Determining the required valuation allowance requires management’s judgment regarding projected future taxable income.

Additionally, valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

Determining the required valuation allowance requires management’s judgment regarding projected future taxable income.

We identified the income tax valuation allowance as a critical audit matter because auditing the valuation allowance involved significant auditor effort and judgement due to the subjective and complex nature of income tax projections and determining whether management can appropriately rely on such projections for purposes of calculating the valuation allowance.

Our audit procedures related to the Company’s income tax valuation allowance included the following, among others:

We obtained an understanding of the relevant controls over management’s accounting for the income tax valuation allowance, and their related financial reporting disclosures and tested such controls for design and operating effectiveness as of December 31, 2022

We obtained management’s calculation of the income tax valuation allowance, including the sources of projected taxable income

We tested the mathematical accuracy of management’s calculations

Our audit procedures related to the Company’s income tax valuation allowance included the following, among others:

We obtained management’s calculation of the income tax valuation allowance, including the sources of projected taxable income

We tested the mathematical accuracy of management’s calculations

With the assistance of our income tax subject matter specialists, we performed the following procedures:

We evaluated the appropriateness of management’s decision to not rely on projections of future taxable income due to the three year history of cumulative income tax losses and the Company’s related income tax policy

We evaluated management’s considerations of both positive and negative evidence regarding other sources of taxable income, including any relevant tax planning strategies and reversal patterns of deferred tax liabilities into taxable income

o We considered relevant tax laws and regulations in evaluating the appropriateness of management’s estimates of future sources of taxable income

We evaluated management’s conclusion that the valuation allowance sufficiently reduces the amount of the deferred tax assets to an amount that is more likely than not to be realized

We evaluated the appropriateness of management’s decision to not rely on projections of future taxable income due to the three-year history of cumulative income tax losses and the Company’s related income tax policy

o We considered relevant tax laws and regulations in evaluating the appropriateness of management’s estimates of future sources of taxable income

We evaluated management’s conclusion that the valuation allowance sufficiently reduces the amount of the deferred tax assets to an amount that is more likely than not to be realized

/s/ RSM US LLP

We have served as the Company’s auditor since 2019.

Louis, Missouri

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Consolidated Balance Sheets

As of December 31, 2022  

As of December 31, 2023 and 2022

(Dollars in thousands)

Cash and cash equivalents

$ 175,640  

$ 137,521  

Accounts receivable, inclusive of the blenders’

tax credit of $ 8,970 and $ 8,232 , and net of allowances for bad debt of $ 48 and $ 67 , respectively

26,198  

29,316  

Accounts receivable –

related parties

26,761  

26,920  

$ 219,444 $ 175,640

Accounts receivable, inclusive of the blenders’ tax credit of $ 11,381 and $ 8,970 , and net of allowances for credit losses of $ 55 and $ 48 , respectively

28,406 26,198

Accounts receivable – related parties

32,978 26,761

Income tax receivable

Prepaid expenses

Prepaid expenses –

related parties

Prepaid expenses – related parties

Marketable securities

37,126  

47,190  

Other current assets

Total current assets

273,776  

255,833  

290,546 273,776

Property, plant and equipment, net

76,941  

82,901  

72,711 76,941

Total noncurrent assets

82,193  

88,497  

$ 355,969  

$ 344,330  

Liabilities and Stockholders ’

Accounts payable, inclusive of the blenders’

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

$ 28,546  

$ 14,912  

Accounts payable –

related parties

Deferred revenue –

76,535 82,193

$ 367,081 $ 355,969

Liabilities and Stockholders’ Equity

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

$ 22,178 $ 28,546

Accounts payable – related parties

Deferred revenue – current

Dividends payable

10,503  

10,503 10,503

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities –

related parties

Accrued expenses and other current liabilities – related parties

Total current liabilities

56,098  

35,056  

Deferred revenue –

15,079  

16,755  

Noncurrent deferred income tax liability

41,344 56,098

Deferred revenue – non-current

12,570 15,079

Other noncurrent liabilities

Total noncurrent liabilities

16,871  

20,346  

15,857 16,871

Total liabilities

72,969  

55,402  

57,201 72,969

Commitments and contingencies:

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Additional paid in capital

282,489  

282,443  

282,489 282,489

Retained earnings

Total stockholders’

283,000  

288,928  

Total Liabilities and Stockholders ’

$ 355,969  

$ 344,330  

Total stockholders’ equity

309,880 283,000

Total Liabilities and Stockholders’ Equity

$ 367,081 $ 355,969

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

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(Dollars in thousands, except per share amounts)

Revenue –

related parties

$ 368,228 $ 395,555 $ 320,125

Revenue – related parties

Cost of goods sold

Cost of goods sold –

related parties

Distribution –

related parties

324,311 357,182 274,293

Cost of goods sold – related parties

( 315 ) 5,425 16,593

3,099 4,240 6,787

Distribution – related parties

40,979 28,993 23,537

Selling, general, and administrative expenses

Compensation expense

4,545 3,540 2,586

Other expense

4,052 3,881 3,920

Related party expense

Research and development expenses

4,398 3,415 3,484

Total operating expenses

13,611 11,447 10,639

Income from operations

27,368 17,546 12,898

Interest and dividend income

9,577 4,870 3,119

Interest expense

Loss on marketable securities

Other (expense) income

( 138 ) ( 128 ) ( 131 )

Gain (loss) on marketable securities

575 ( 8,546 ) ( 70 )

Other income (expense)

10,015 ( 3,808 ) 3,032

Income before income taxes

Income tax benefit

37,383 13,738 15,930

Income tax provision (benefit)

1 ( 1,473 ) ( 10,325 )

$ 37,382 $ 15,211 $ 26,255

Earnings per common share

$ 0.85 $ 0.35 $ 0.60

Weighted average shares outstanding

43,763,243 43,763,243 43,756,065

43,764,683 43,763,489 43,756,113

Comprehensive income

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

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

Income tax effect

Total unrealized losses, net of tax

Total unrealized gain (loss), net of tax

Comprehensive income

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Cash flows from operating activities

$ 15,211  

$ 26,255  

$ 46,564  

Adjustments to reconcile net income to net cash provided by operating activities:

10,454  

10,452  

11,150  

Amortization of deferred financing costs

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Stock based compensation

Loss on disposal of property and equipment

Loss on disposal of property, plant, and equipment

Impairment of intangible asset

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Accounts receivable

88,865  

Accounts receivable –

related parties

Accounts receivable – related parties

Income tax receivable

Prepaid expenses

Prepaid expenses –

related party

Prepaid expenses – related party

Accounts payable

13,790  

Accounts payable –

related parties

Accounts payable – related parties

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities –

related parties

Accrued expenses and other current liabilities – related parties

Deferred revenue

1 unchanged sentence

Net cash provided by operating activities

52,451  

44,084  

96,403  

Cash flows from investing activities

2 unchanged sentences

Proceeds from the sale of marketable securities

40,652  

Proceeds from the sale of property and equipment

Proceeds from the sale of property, plant, and equipment

Proceeds from the sale of intangible assets

Capital expenditures

Net cash (used in) provided by investing activities

14,993  

Net cash provided by (used in) investing activities

Cash flows from financing activities

Loan proceeds

Payment on loan

Minimum tax withholding on stock options exercised

1 unchanged sentence

Proceeds from the issuance of stock

Equipment financing proceeds

Payment of dividends

1 unchanged sentence

Net change in cash and cash equivalents

38,119  

Cash and cash equivalents at beginning of period

137,521  

198,122  

243,331  

Cash and cash equivalents at end of period

$ 175,640  

$ 137,521  

$ 198,122  

Cash paid for interest

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Noncash investing and financing activities:

Noncash capital expenditures

Noncash capital expenditures included in accounts payable

Noncash operating leases

Dividends payable

$ 10,503  

$ 10,498  

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

FutureFuel Corp.

Consolidated Statements of Changes in Stockholders ’

Consolidated Statements of Changes in Stockholders ’ Equity

For the Years Ended December 31, 2023, 2022 and 2021

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Comprehensive

Stockholders ’

Balance - December 31, 2019

Prior period adjustment:

Change in accounting principles

Balance - January 1, 2020 - As adjusted

Cash dividends declared

Stock based compensation

Other comprehensive loss

Stockholders’

Balance - December 31, 2020

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Balance - December 31, 2022

Cash dividends declared

Other comprehensive income

Balance - December 31, 2023

The accompanying notes are an integral part of these financial statements

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FutureFuel Corp.

(the “Company”) is a Delaware corporation with its wholly owned subsidiaries, FutureFuel Chemical Company;

FFC Grain, L.L.C.;

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and Legacy Regional Transport, L.L.C.

The Company’s sole operating facility is FutureFuel Chemical Company located in Batesville, Arkansas, a manufacturer of specialty and performance chemicals and biofuels.

SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

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The consolidated financial statements of FutureFuel Corp.

and subsidiaries are prepared in conformity with accounting principles generally accepted (“GAAP”) in the United States and include amounts that are based upon management estimates and judgments which could differ from actual future results. 

Intercompany transactions and balances are eliminated in consolidation.

Certain reclassifications were made to prior year amounts to conform to the 2022  presentation.

Certain reclassifications were made to prior year amounts to conform to the 2023 presentation.

Cash and cash equivalents

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The Company places its temporary cash investments with high credit quality financial institutions.

At times, bank deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit.

Accounts receivable, allowance for doubtful accounts, and credit risk

At times, bank deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit, however, no loss has occurred.

Accounts receivable and allowance for credit losses

Accounts receivable are recorded at the invoiced amount and only bear interest if outstanding beyond the agreed upon payment terms.

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Accounts receivable have been reduced by an allowance for 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 its customers and historical bad debt experience.

Write-offs are recorded at the time a customer receivable is deemed uncollectible.

The Company adopted Accounting Standards Update (“ASU’) 2016 - 13, Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments on January 1, 2020 on a modified retrospective approach.

This methodology reflects expected credit losses based on a broader range of reasonable and supportable information to inform credit loss estimates.

The adoption did not have a material impact on the Company’s consolidated financial statements.

In accordance with Accounting Standards Update (“ASU”) 2016 - 13, Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments the Company recognizes expected credit losses based on a broader range of reasonable and supportable information to inform credit loss estimates.

Customer concentrations

For the twelve months ended December 31, 2022, 2021, and 2020, significant portions of the Company’s sales were made to a relatively small number of customers.

Sales to two biodiesel customers totaled $ 107,898  ( 27 % of revenue) in 2022.

Sales to three biodiesel customers totaled $ 133,231 ( 41 % of total revenue) in 2021 and sales to one customer totaled $ 25,460 ( 12 % of revenue) in 2020.

For the year ended December 31, 2023, 2022 and 2021 , significant portions of the Company’s sales were made to a relatively small number of customers.

Sales to two biodiesel customers totaled $ 127,763 ( 35 % of revenue) in 2023 .

Sales to two biodiesel customers totaled $ 107,898 ( 27 % of total revenue) in 2022 and sales to three customers totaled $ 133,231 ( 41 % of revenue) in 2021 .

Receivables for the significant customers at December 31, 2023 and 2022 , were 0.2 % and 2 % of total receivables, respectively.

No chemical customers represented a greater than 10% of total sales revenue in 2022, 2021, or 2020.

No chemical customer represented a greater than 10% of total sales revenue in 2023 , 2022 , or 2021 .

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

Inventories are valued at the lower of cost or market. The Company determines the cost of raw materials, work in process, and finished goods inventories by the last-in, first -out (“LIFO”) method. The cost of all other inventories is determined by the average cost method, which approximates the first -in, first -out (“FIFO”) method. The Company writes-down its inventories for estimated obsolescence or unmarketable inventory equal to the difference between the carrying value of inventory and the estimated market value based upon assumptions about future demand and market conditions.

Inventories are valued at the lower of cost or market.

The Company determines the cost of raw materials, work in process, and finished goods inventories by the last-in, first -out (“LIFO”) method.

The cost of all other inventories is determined by the average cost method, which approximates the first -in, first -out (“FIFO”) method.

The Company writes-down its inventories for estimated obsolescence or unmarketable inventory equal to the difference between the carrying value of inventory and the estimated market value based upon assumptions about future demand and market conditions.

Derivative instruments

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In order to manage commodity price risk caused by market fluctuations in biofuel prices, future purchases of feedstock used in biodiesel production, physical feedstock, finished product inventories attributed to the process, and other petroleum products purchased or sold, the Company may enter into exchange-traded commodity futures and options contracts.

The Company accounts for these derivative instruments in accordance with Accounting Standards Codification (“ASC”) 815 - 20 - 25, Derivatives and Hedging .

Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship.

To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained.

The Company had no derivative instruments that qualified under these rules as designated accounting hedges in 2022  or 2021.

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

The Company had no derivative instruments that qualified under these rules as designated accounting hedges in 2023 or 2022 .

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

Marketable securities

Investments consist of marketable equity and debt securities stated at fair value.

The debt securities are designated as available-for-sale securities at the time of purchase based upon the intended holding period.

Gains and losses from the sale of marketable securities and the changes in the fair value of equity securities are recognized as “gains (losses) on marketable securities”

as a component of other income (expense) in the consolidated statements of income and comprehensive income.

The debt securities are designated as available-for-sale securities at the time of purchase based upon the intended holding period.

Gains and losses from the sale of marketable securities and the changes in the fair value of equity securities are recognized as “gains (losses) on marketable securities” as a component of other income (expense) in the consolidated statements of income and comprehensive income.

The cost basis used for all marketable securities is specific identification.

Changes in the fair value of debt securities are recognized in “accumulated other comprehensive income”

on the consolidated balance sheets, unless the Company determines that an unrealized loss will not be recovered before it is sold, in which case, the Company will recognize the loss as a component of other income (expense).

See Notes 7 and 

8 for further information on marketable securities and fair value measurements.

Changes in the fair value of debt securities are recognized in “accumulated other comprehensive income” on the consolidated balance sheets, unless the Company determines that an unrealized loss will not be recovered before it is sold, in which case, the Company will recognize the loss as a component of other income (expense).

See Notes 7 and 8 for further information on marketable securities and fair value measurements.

Notes to Consolidated Financial Statements of FutureFuel Corp.

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Fair value measurements

The Company records recurring and non-recurring financial assets and liabilities as well as all non-financial assets and liabilities subject to fair value measurement at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. These fair value principles prioritize valuation inputs across three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. An asset or liability's classification within the various levels is determined based on the lowest level input that is significant to the fair value measurement.

These fair value principles prioritize valuation inputs across three broad levels.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value.

An asset or liability's classification within the various levels is determined based on the lowest level input that is significant to the fair value measurement.

Property, plant , and equipment

Property, plant, and equipment is carried at cost.

Maintenance and repairs are charged to earnings;

replacements and betterments are capitalized.

Maintenance and repairs are charged to earnings; replacements and betterments are capitalized.

When the Company retires or otherwise disposes of an asset, it removes the cost of such asset and related accumulated depreciation from the accounts.

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Building & building equipment (years)

20 – 

Machinery and equipment (years)

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For long-lived assets to be held for use in future operations and for tangible assets, fair value is determined primarily using either the projected cash flows discounted at a rate commensurate with the risk involved or an appraisal.

For long-lived assets to be disposed of by sale or other than sale, fair value is determined in a similar manner, except that fair values are reduced for disposal costs.

For long-lived assets to be disposed of by sale or other than sale, fair value is determined in a similar manner, except those fair values are reduced for disposal costs.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands,

except per share amounts)

(Dollars in thousands, except per share amounts)

Asset retirement obligations and environmental costs

The Company establishes reserves for closure/post-closure costs associated with the environmental and other assets it maintains, which include, but are not limited to, waste management units, such as a chemical waste destructor, storage tanks, and boilers.

When these types of assets are constructed or installed, a liability is established with a corresponding asset 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 the Company’s environmental policies and practices.

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

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The cost of operating and maintaining environmental control facilities is charged to expense.

Litigation  

The Company and its operations from time to time may be parties to or targets of lawsuits, claims, investigations, and proceedings including product liability, personal injury, patent and intellectual property, commercial, contract, environmental, health and safety, and environmental matters, which are handled and defended in the ordinary course of business.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

Revenue recognition  

In accordance with ASC Topic 606, Revenue from Contracts with Customers , the Company recognizes revenue when performance obligations of the customer contract are satisfied.

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

The majority of the Company’s 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 is satisfied.

Accordingly, the Company recognizes revenue when control is transferred to the customer, which is when products are considered to meet customer specification per the customer contract and title and risk of loss are transferred.

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Revenue within the biofuel segment includes revenue from biodiesel RINs.

RINs are renewable identification numbers under the Renewable Fuel Standard ( “RFS2”

) used to incent the use of renewable fuels domestically.

RINs are renewable identification numbers under the Renewable Fuel Standard ( “RFS2” ) used to incent the use of renewable fuels domestically.

RINs are generated at 1.5 RINs per gallon of biodiesel produced and sold.

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Cost of goods sold consists of raw and packaging materials, direct manufacturing costs, depreciation, analytical lab costs, inbound freight, purchasing, and other indirect costs necessary to manufacture products.

Biodiesel cost of goods sold also includes a credit for the one dollar per gallon Blenders’

Tax Credit (“BTC”) for blending biodiesel with petroleum diesel when in law. The BTC was in law during 2021 and 2022 and is in effect until December 31, 2024.

Biodiesel cost of goods sold also includes a credit for the one dollar per gallon Blenders’ Tax Credit (“BTC”) for blending biodiesel with petroleum diesel when in law.

The BTC was in law during 2021, 2022, and 2023 and is in effect until December 31, 2024.

See Note 3 for further discussion.

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Comprehensive income

Comprehensive income is comprised of net income and other comprehensive income (loss) (“OCI”).

Comprehensive income comprises all changes in stockholders’

equity from transactions and other events and circumstances from non-owner sources.

The Company’s OCI comprises unrealized gains and losses resulting from its investments in marketable debt securities classified as available-for-sale (see Note 7 ).

Unrealized gains and losses are determined using the specific identification method and are classified in OCI.

The income tax (benefit) provision 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. 

Comprehensive income is comprised of net income and other comprehensive income (loss) (“OCI”).

Comprehensive income comprises all changes in stockholders’ equity from transactions and other events and circumstances from non-owner sources.

The Company’s OCI comprises unrealized gains and losses resulting from its investments in marketable debt securities classified as available-for-sale (see Note 7 ).

Unrealized gains and losses were determined using the specific identification method and are classified in OCI.

The income tax (benefit) provision 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 represent 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.

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 taxpaying 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 using only the reversing net deferred tax liability as a source of income.

Recently adopted accounting standards

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 using only the reversing net deferred tax liability from temporary differences as a source of income.

Issued accounting standards not yet adopted

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (AS U) No.

2023 - 09 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 ASU address the investor requests for more transparency of income tax information and apply to all entities that are subject to income taxes.

The ASU is effective for years beginning after December 15, 2024, but early adoption is permitted.

This ASU should be applied on a prospective basis, although retrospective application is permitted.

Management is currently evaluating the impact of the changes required by the new standard on the Company's financial statements and related disclosures.

In November 2023, the FASB issued Accounting Standard Update (ASU) No.

2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures, which aims to improve disclosures about a public entity’s reportable segments.

This update addresses requests from investors for more detailed information about a reportable segment’s expenses in order to improve understanding of a public entity’s business activities, overall performance, and potential future cash flows.

The amendments in this ASU include a requirement for public business entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and are included within each reported measure of segment profit or loss.

This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years starting after December 15, 2024.

This ASU must be applied retrospectively to all prior periods presented.

Management is currently evaluating the impact of the changes required by the new standard on the Company's financial statements and related disclosures.

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

Recently issued accounting pronouncements

Reference Rate Reform (ASU No.

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform, if certain criteria are met.

The amendments in this update was effective for all entities from January 1, 2020 through December 31, 2022.

The FASB extended the amendment to December 2024.

The Company is in the process of evaluating and adopting a replacement.

Proposed accounting standards

In July 2023, the FASB issued Proposed Accounting Standards Update (ASU) No.

2023 - ED500 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses, which aims to provide investors with more useful information about an entity’s expenses by improving disclosures on income statement expenses.

The amendments in this Proposed ASU would require public business entities to disclose disaggregated information about specific categories underlying certain income statement expense line items.

The Company is evaluating this proposed accounting standard.

Recently adopted accounting standards

GOVERNMENT TAX CREDITS

BTC and Small Agri-Biodiesel Producer Tax Credit

The 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. 

BTC and Small Agri-Biodiesel Producer Tax Credit and Clean Fuel Production Tax Credit

The 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 Company recorded this credit as a reduction to cost of goods sold as applicable sales were made.

The Further Consolidated Appropriations Act of 2020 was passed by Congress and signed into law on December 20, 2019, retroactively reinstating the BTC for 2018 and 2019 and extending it through December 31, 2022. 

With the passage of the Inflation Reduction Act (“IRA”) in August 2022, 

the BTC was extended through December 31, 2024.

As part of each law from which the BTC mentioned above was reinstated, small agri-biodiesel producers with production capacity not in excess of 60 million gallons were eligible for an additional income 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 was eligible for this credit and recognized $ 1,500 for 2022, 2021, and 2020  in the same accounting period as the benefit from the BTC as described above.  The benefit of this credit is recognized as a component of income tax (benefit) provision.

CARES ACT – EMPLOYEE RETENTION TAX CREDIT

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), was enacted on 

March 27, 2020, 

to encourage eligible employers to retain employees on their payroll. 

The Consolidated Appropriations Act, effective 

January 1, 2021, 

broadened the eligibility of the credit. 

The Company 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. 

With the passage of the Inflation Reduction Act (“IRA”) in August 2022, the BTC was extended through December 31, 2024.

As part of each law from which the BTC mentioned above was reinstated, small agri-biodiesel producers with production capacity not in excess of 60 million gallons were eligible for an additional income 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 was eligible for this credit and recognized $ 1,500 for 2023 , 2022 , and 2021 in the same accounting period as the benefit from the BTC as described above.

The benefit of this credit is recognized as a component of income tax (benefit) provision.

The Inflation Reduction Act (IRA), created the clean fuel production credit (“CFPC”) for qualifying transportation fuel produced after 2024 and sold on or before December 31, 2027.

The CFPC consolidates and replaces several fuel related credits set to expire December 31, 2024 including the BTC and the Small Agri-biodiesel Producer Tax Credit.

The CFPC is an income tax credit structured on a sliding scale so that producers become eligible for larger credits as the GHG emissions of the fuels they produce approach zero.

For producers meeting the prevailing wage and registered apprenticeship requirements, the maximum credit is $1.00 per gallon of nonaviation fuel.

For producers not meeting the prevailing wage and registered apprenticeship requirements, the maximum credit is 20 cents per nonaviation fuel gallon.

CARES ACT – EMPLOYEE RETENTION TAX CREDIT

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), was enacted on March 27, 2020, to encourage eligible employers to retain employees on their payroll.

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

The Company 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.

2 unchanged sentences

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.

6 unchanged sentences

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

The contract assets for 2022  and 2021  consist of unbilled revenue from only one customer and are recorded as accounts receivable in the consolidated balance sheets.

The contract assets for 2023 and 2022 consist of unbilled revenue from only 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 $ 1,983  and $ 1,114  in 2022  and 2021, respectively.

Increases to contract liabilities from cash received for a performance obligation of chemical segment plant expansions were $ 538 and $ 1,983 in 2023 and 2022 , respectively.

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 $ 5,816  and $ 3,824  in 2022  and 2021, respectively.

Revenue recognized in the chemical segment from the contract liability reductions were $ 2,734 and $ 5,816 in 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.

3 unchanged sentences

Trade receivables, included in accounts receivable*

$ 16,459  

$ 20,780  

$ 15,897 $ 16,459

Contract assets, included in accounts receivable

1 unchanged sentence

Contract liabilities, included in Deferred revenue - long-term

11,605  

13,059  

* Exclusive of the BTC of $ 8,970  

and $ 8,232 , respectively, and net of allowances for bad debt of $ 48  

and $ 67 , respectively, as of the dates noted.

* Exclusive of the BTC of $ 11,381 and $ 8,970 , respectively, and net of allowances for bad debt of $ 55 and $ 48 , respectively, as of the dates noted.

Notes to Consolidated Financial Statements of FutureFuel Corp.

1 unchanged sentence

Transaction price allocated to the remaining performance obligations

As of December 31, 2022, approximately $ 15,170  of revenue is expected to be recognized in the future from remaining performance obligations.

The Company expects to recognize this revenue ratably based upon the expected sales over the expected term of its long-term contracts which range from one  to five  years.

Approximately 24 % of this revenue is expected to be recognized over the next 12 months, and 76 % is expected to be recognized between one and four  years.

As of December 31, 2023 , approximately $ 12,974 of revenue is expected to be recognized in the future from remaining performance obligations.

The Company expects to recognize this revenue ratably based upon the expected sales over the expected term of its long-term contracts which range from one to four years.

Approximately 28 % of this revenue is expected to be recognized over the next 12 months, and 72 % is expected to be recognized between one and three years.

These amounts are subject to change based upon changes in the estimated contract life, estimated quantities, and most-likely expected sales price over the contract life.

1 unchanged sentence

Disaggregation of revenue - contractual and non-contractual

Twelve months ended

Year ended December 31,

Contract revenue from customers with > 1-year arrangement

$ 33,686  

$ 25,918  

$ 37,055 $ 33,686 $ 25,918

Contract revenue from customer with < 1-year arrangement

362,106  

295,246  

330,973 362,106 295,246

Revenue from non-contractual arrangements

Total revenue

$ 396,014  

$ 321,386  

$ 368,250 $ 396,014 $ 321,386

Timing of revenue

Twelve months ended

Year ended December 31,

Bill-and-hold revenue

$ 36,805  

$ 34,695  

$ 43,766 $ 36,805 $ 34,695

Non-bill-and-hold revenue

359,209  

286,691  

324,484 359,209 286,691

Total revenue

$ 396,014  

$ 321,386  

Bill-and-hold transactions consisted of four  specialty chemical customers in each of 2022, 2021, and 2020 whereby revenue was recognized in accordance with contractual agreements based on product produced, readied for use and loaded into customer provided containers.

$ 368,250 $ 396,014 $ 321,386

Bill-and-hold transactions consisted of five specialty chemical customers in 2023 , and four in each of 2022 and 2021 , whereby revenue was recognized in accordance with contractual agreements based on product produced, readied for use and loaded into customer provided containers.

These sales were subject to written monthly purchase orders with revenue recognized upon production and loading into customer provided containers.

The inventory was segregated from other Company inventory as it 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 transactions are similar to other specialty chemical customers.

Sales revenue under bill-and-hold arrangements totaled $ 36,805 , $ 34,695 , and $ 32,779 , for the years ended December 31, 2022, 2021, and 2020, respectively.

Of the bill and hold sales revenue recognized, $ 4,473  and $ 3,154 had not been shipped for the years ended December 31, 2022 and 2021, respectively. These balances do not include contract assets that have not been billed or shipped as described above.

The Company’s revenues for the years ended December 31, 2022, 2021, and 2020  attributable to the United States and foreign countries (based upon the billing addresses of its customers) were as follows.

Twelve months ended December 31:

Sales revenue under bill-and-hold arrangements totaled $ 43,766 , $ 36,805 , and $ 34,695 , for the years ended December 31, 2023, 2022, and 2021, respectively.

Of the bill-and-hold sales revenue recognized, $ 4,317 , $ 4,473 , and $ 3,154 had not been shipped for the years ended December 31, 2023, 2022, and 2021, respectively.

These balances do not include contract assets that have not been billed or shipped as described above.

The Company’s revenues for the years ended December 31, 2023, 2022 and 2021 attributable to the United States and foreign countries (based upon the billing addresses of its customers) were as follows.

Year ended December 31,

United States

$ 394,671  

$ 320,148  

$ 203,365  

$ 367,368 $ 394,671 $ 320,148

All Foreign Countries

$ 396,014  

$ 321,386  

$ 204,505  

882 1,343 1,238

$ 368,250 $ 396,014 $ 321,386

For the years ended December 31, 2023, 2022 and 2021 , no revenues from a single foreign country were greater than 1% of total revenues.

4 unchanged sentences

Finished goods

$ 11,719  

$ 12,132  

$ 16,235 $ 11,719

Work in process

Raw and indirect materials

33,897  

30,117  

46,495  

42,711  

( 19,734 )  

25,532 33,897

42,378 46,495

( 9,400 ) ( 19,734 )

Total inventory

$ 26,761  

$ 26,920  

In 2022 and 2021, a LIFO liquidation resulted in a decrease of $ 2,124 and $ 3,836 , respectively to “Cost of goods sold”. 

$ 32,978 $ 26,761

In 2022 , a LIFO liquidation resulted in a decrease of $ 2,124 to “Cost of goods sold”.

There was no LIFO liquidation in 2023.

DERIVATIVE INSTRUMENTS

Realized and unrealized gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of income as a component of cost of goods sold and amounted to a net loss of $ 24,360 , net loss of $ 10,377 , and a net gain of $ 4,379  for the years ended December 31, 2022, 2021, and 2020, respectively.

The volumes and carrying values of the Company’s derivative instruments were as follows at December 31:

Realized and unrealized gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of income as a component of cost of goods sold and amounted to a net gain of $ 2,571 for the year ended December 31,2023 and a net loss of $ 24,360 and $ 10,377 for the years ended December 31, 2022 and 2021, respectively.

The volumes and carrying values of the Company’s derivative instruments were as follows at December 31:

Asset/ (Liability)

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

$ ( 142 )  

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $ 2,088  and $ 1,684  at December 31, 2022 

and 2021, respectively, and is classified as other current assets in the consolidated balance sheet. 

354 $ 1,736 305 $ ( 142 )

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $ 745 and $ 2,088 at December 31, 2023 and 2022 , respectively, and is classified as other current assets in the consolidated balance sheet.

Notes to Consolidated Financial Statements of FutureFuel Corp.

1 unchanged sentence

MARKETABLE SECURITIES

At December 31, 2022 

and 2021, the Company had investments in certain marketable equity and debt securities which had a fair market value of $ 37,126 and $ 47,190 , respectively.

These investments are classified as current assets in the consolidated balance sheets.

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

Accordingly, these securities were recorded at fair value of $ 3,675 and $ 3,902 at December 31, 2022 and 2021, respectively, with the unrealized loss of $ 1 and an unrealized gain of $ 226 , net of taxes, as a component of stockholders’

As of December 31, 2022, the contractual maturities of these debt securities were greater than 10 years.

For the years ended December 31, 2022, 2021, and 2020, in accordance with ASC 321, the change in the fair value of equity securities (preferred and other equity instruments) was reported as a loss on marketable securities as a component of net income in the amount of $ 8,297 , $ 904 , and $ 246 , respectively. 

In 2022, 2021, and 2020, the Company recategorized a net gain of $ 0 , $ 0 , and $ 99 , respectively, from accumulated other comprehensive income to a component of net income as a result of sales of available-for-sale securities.

At December 31, 2023, the Company held no marketable equity or trust preferred (debt) securities.

The previous sale of these securities was recorded as a component of net income with a gain of $ 575 in the year ended December 31, 2023.

At December 31, 2022, the Company had investments in certain marketable equity and debt securities which had a fair market value of $ 37,126 .

These investments were classified as current assets in the consolidated balance sheets.

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

Accordingly, these securities were recorded at fair value of $ 3,675 at December 31, 2022, with the unrealized loss of $ 1 and an unrealized gain of $ 226 , net of taxes, as a component of stockholders' equity.

For the years ended December 31, 2022 and 2021, in accordance with ASC 321, the change in the fair value of equity securities (preferred and other equity instruments) was reported as a loss on marketable securities as a component of net income in the amount of $ 8,297 and $ 904 , respectively.

In 2023, 2022, and 2021, the Company had no recategorized net gain or loss to report from accumulated other comprehensive income.

FAIR VALUE MEASUREMENTS

2 unchanged sentences

Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances.

The hierarchy is broken down into three levels.

3 unchanged sentences

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

Marketable securities and derivative instruments were fair value measurements using inputs considered as Level 1.

The Company had no Level 2 or Level 3 securities. 

Marketable securities and derivative instruments were fair value measurements using inputs considered as Level 1 holdings in the year ended December 31, 2023.

The Company had no Level 2 or Level 3 securities.

Notes to Consolidated Financial Statements of FutureFuel Corp.

3 unchanged sentences

Land and land improvements

$ 5,923  

$ 5,924  

$ 6,044 $ 5,923

Buildings and building equipment

27,226  

27,229  

27,182 27,226

Machinery and equipment

183,999  

180,498  

188,794 183,999

Construction in progress

Accumulated depreciation

( 140,978 )  

$ 76,941  

$ 82,901  

Depreciation expense totaled $ 10,454 , $ 10,452 , and $ 11,150  for the years ended December 31, 2022, 2021, and 2020, respectively. 

( 151,118 ) ( 140,978 )

$ 72,711 $ 76,941

Depreciation expense totaled $ 10,348 , $ 10,454 , and $ 10,452 for the years ended December 31, 2023, 2022 and 2021 , respectively.

Other assets primarily comprise supplies and parts which are not expected to be used in the twelve -month period subsequent to the consolidated balance sheet date.

The balance related to these items totaled $ 4,114  and $ 4,425  at December 31, 2022 

and 2021, respectively.

The balance related to these items totaled $ 3,409 and $ 4,114 at December 31, 2023 and 2022 , respectively.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

1 unchanged sentence

Accrued employee liabilities

$ 3,287  

$ 3,347  

$ 2,179 $ 3,287

Accrued property, franchise, motor fuel and other taxes

Lease liability, current

$ 5,477  

$ 6,081  

Other current liabilities

$ 4,758 $ 5,477

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.

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 the Secured overnight financing rate (“SOFR”) and other conforming changes, in each case as more specifically set forth in the First Amendment.

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

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

1 unchanged sentence

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 SOFR

Consolidated Leverage Ratio

and Letter of Credit Fee

Base Rate Loans

1.00 %  

0.00 %  

0.15 %  

1.25 %  

0.25 %  

0.15 %  

1.50 %  

0.50 %  

0.20 %  

1.75 %  

0.75 %  

0.20 %  

2.00 %  

1.00 %  

0.25 %  

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

There were 

no  borrowings under the Credit Agreement at December 31, 2022 

March 27, 2020, 

the CARES Act was enacted to provide emergency assistance for individuals, families and businesses affected by the coronavirus pandemic. Under the CARES Act, certain subsidiaries of the Company entered into a loan with Saint Louis Bank pursuant to the Paycheck Protection Program (“PPP”) totaling $ 8,180  on 

April 10, 2020 .

 At the time that the Company applied for the PPP loan, it qualified to receive the funds pursuant to the then published eligibility requirements.

Receipt of the PPP loan ensured continued operation as part of the nation’s critical infrastructure.

However, the Small Business Administration and Treasury Department subsequently issued new guidance that cast doubt on the ability of public companies to qualify for a PPP loan.

As a result, the Company repaid the full amount of the PPP loan on 

May 5, 2020 .

Commitment Fee

1.00 % 0.00 % 0.15 %

≥ 1.00:1.0 And < 1.50:1.0

1.25 % 0.25 % 0.15 %

≥ 1.50:1.0 And < 2.00:1.0

1.50 % 0.50 % 0.20 %

≥ 2.00:1.0 And < 2.50:1.0

1.75 % 0.75 % 0.20 %

2.00 % 1.00 % 0.25 %

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

There were no borrowings under the Credit Agreement at December 31, 2023 or 2022.

At December 31, 2023 and 2022 , the Company had $ 7 and $ 46 outstanding with a domestic financing company for computer technology under a three -year financing agreement.

2 unchanged sentences

In addition, the Batesville plant may be required to incur costs for environmental and closure and post-closure costs under the Resource Conservation and Recovery Act.

The Company’s liability for asset retirement obligations and environmental contingencies was $ 1,396  and $ 1,363  as of December 31, 2022 

and 2021, respectively.

The Company’s liability for asset retirement obligations and environmental contingencies was $ 1,431 and $ 1,396 as of December 31, 2023 and 2022 , respectively.

These amounts are recorded in other noncurrent liabilities in the accompanying consolidated balance sheet.

The accretion expense for 2023 , 2022 , and 2021 was $ 35 , $ 32 , and $ 32 , respectively.

The periodic review of the asset retirement obligation calculations resulted in an addition to the reserve of $ 0  in 2022, 2021, and 2020.

The periodic review of the asset retirement obligation calculations resulted in an addition to the reserve of $ 0 in 2023 , 2022 , and 2021 .

Notes to Consolidated Financial Statements of FutureFuel Corp.

5 unchanged sentences

The Company determines lease existence and classification at inception when an agreement conveys the right to control the identified property for a period of time in exchange for consideration.

These leases have remaining terms from one  to two  years with a weighted average remaining term of 1.7  years.

These leases expire by the end of December 31, 2024.

As operating leases do not provide a readily determinable implicit interest rate, the Company uses an incremental borrowing rate based on information available at the commencement date in determining present value of the lease payments.

Following are supplemental income statement and cash flow information related to leases.

Twelve Months Ended

Year ended December 31,

Operating lease expense

$ 881 $ 862 $ 887

Short-term lease expense

$ 8 $ 31 $ 23

Cash paid for operating leases

$ 881 $ 862 $ 887

Right of use assets obtained in exchange for lease obligations

$ - $ 707 $ 269

Weighted average discount rate, per annum

On December 31, 2022 and 2021, a right of use asset was reported as other noncurrent assets of $ 1,109 and $ 956 , other current liabilities of $ 630 and $ 644 , and other noncurrent liabilities of $ 389 and $ 312 , respectively.

Following are maturities of lease liabilities at December 31, 2022.

imputed interest

Present value of lease liabilities

$ 1,019  

5.5 % 5.2 % 3.6 %

On December 31, 2023 and 2022 , a right of use asset was reported as other noncurrent assets of $ 389 and $ 1,019 , other current liabilities of $ 389 and $ 630 , and other noncurrent liabilities of $ 0 and $ 389 , respectively.

The imputed interest of the other noncurrent asset at December 31,2023 was $ 9 .

Purchase obligations

The Company has entered into contracts for the purchase of goods and services including contracts for feedstocks for biodiesel, expansion of the Company’s specialty chemicals segment, and related infrastructure with less than one -year terms.

The Company holds one non-cancelable obligation for software maintenance with payment obligations presented as follows.

The Company holds one non-cancelable obligation for software maintenance with payment obligations presented as follows.

2025 - 2026 43

Notes to Consolidated Financial Statements of FutureFuel Corp.

1 unchanged sentence

Income tax benefit

The following table summarizes the income tax (benefit) provision for the years ended:

The following table summarizes the income tax provision (benefit) for the years ended:

Income before taxes - U.S.

$ 13,738  

$ 15,930  

$ 31,778  

Income tax provision:

( 1,998 )  

$ 37,383 $ 13,738 $ 15,930

Income tax provision (benefit):

- ( 1,998 ) ( 10,417 )

State and other

$ ( 1,473 )  

Differences between the income tax (benefit) provision computed using the U.S.

$ 1 $ ( 1,473 ) $ ( 10,325 )

Differences between the income tax provision (benefit) computed using the U.S.

federal statutory income tax rate were as follows:

Amount computed using the statutory rate of 21% for 2023, 2022, and 2021

21.0 % 21.0 % 21.0 %

Agri-biodiesel production credit

( 3.2 ) ( 8.6 ) ( 7.4 )

Federal BTC benefit

( 32.3 ) ( 76.2 ) ( 75.2 )

State BTC benefit

( 4.4 ) ( 7.0 ) ( 8.9 )

Credit for increasing research activities

( 0.5 ) ( 1.0 ) ( 0.7 )

Dividends received deduction

( 0.1 ) ( 1.6 ) ( 1.6 )

State income taxes, net

State research credits

State rate change and other deferred adjustments

( 1.0 ) 3.6 5.0

Valuation allowance for deferred tax assets

- 0.2 ( 0.5 )

Income tax benefit

The income tax benefit in 2022 is $ 1,473 or an effective rate of ( 10.7 %) as compared to an income tax benefit of $ 10,325  or an effective tax rate of ( 64.8 %) in 2021 and an income tax benefit of $ 14,786 or an effective tax rate of ( 46.5 %) in 2020.

On March 27, 2020, President Trump signed into law the 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 five 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.

 All refunds from these filings have been received as of December 31, 2022.

In the fourth quarter of 2021, the Company filed a refund claim of $ 8,463 relating to the carryback of its NOL generated in 2020 of which, $ 2,299 remains outstanding as of December 31, 2022.

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 losses are carryforwards are accordingly classified as deferred tax assets.

The Company’s effective tax rates for the years 2022, 2021, and 2020 reflect the positive effect of the BTC and Small Agri-biodiesel Producer Tax Credit.

0.0 % ( 10.7 )% ( 64.8 )%

The income tax provision in 2023 was $ 1 or an effective tax rate of 0.0 % as compared to an income tax benefit of $ 1,473 or an effective tax rate of 10.7 % in 2022 and an income tax benefit of $ 10,325 or an effective tax rate of 64.8 % in 2021 .

The Company’s effective tax rates for the years 2023 , 2022 , and 2021 reflect the positive effect of the BTC and 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.

Both incentives are currently due to expire in December 2024.

The Company’s 2022 and 2021 effective tax rate provisions reflect the negative impact to the Company’s overall state income tax position of its 2021 decision to phase out its shipments on the petroleum products common carrier pipelines and the termination of these operations in 2022.

This operational change shifts the Company’s business among various states such that its net deferred tax liabilities will be realized at higher rates. Additionally, the Company’s 

2021 state deferred tax provision reflects a one -time benefit from state legislation enacted during the year which applies a lower tax rate to future reversals of deferred tax liabilities.

As further discussed below, in 2022 the Company determined that its deferred tax assets are realizable only to the extent of its deferred tax liabilities and recorded a valuation allowance that reduces its net deferred tax asset to $0.

This operational change shifts the Company’s business among various states such that its net deferred tax liabilities will be realized at higher rates.

Additionally, the Company’s 2023 and 2021 state deferred tax provision reflects a one -time benefit from state legislation enacted during the year which applies a lower tax rate to future reversals of deferred tax liabilities.

In 2023 and 2022, the Company determined that its deferred tax assets are realizable only to the extent of its deferred tax liabilities and recorded a valuation allowance that reduces its net deferred tax asset to $0.

Notes to Consolidated Financial Statements of FutureFuel Corp.

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Trading securities

Intangible asset impairment

Subtotal deferred tax assets

28,056  

20,961  

34,535 28,056

Valuation Allowance

( 14,216 ) ( 7,392 )

Total deferred tax assets

20,664  

20,961  

20,319 20,664

Deferred tax liabilities

Available for sale securities

Derivative instruments

LIFO inventory

Trading securities

( 3,957 ) ( 2,740 )

( 14,978 ) ( 17,046 )

Prepaid expenses

( 981 ) ( 878 )

Total deferred tax liabilities

( 20,319 ) ( 20,664 )

Net deferred tax liabilities

The Company’s federal net operating loss carryforwards at December 31, 2022 do not expire and can be carried forward indefinitely. Utilization of these carryforwards is limited to 80 % of taxable income in any given year. State net operating loss carryforwards at December 31, 2022 reflect losses generated in 2019 through 2022 and, if unused, will expire in years 2024 through 2032.

The Company’s federal net operating loss carryforwards at December 31, 2023 do not expire and can be carried forward indefinitely.

Utilization of these carryforwards is limited to 80 % of taxable income in any given year.

State net operating loss carryforwards at December 31, 2023 reflect losses generated in 2019 through 2023 and, if unused, will expire in years 2024 through 2033.

Federal and state tax losses are primarily a function of the nontaxable nature of the BTC.

5 unchanged sentences

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.

As of December 31, 2022, the Company recorded a valuation allowance of $ 7,392 after determining that its total deferred tax assets are more likely than not realizable only to the extent of its deferred tax liabilities.

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 from temporary differences as sources of income.

As of December 31, 2023 and 2022, the Company recorded valuation allowances of $ 14,216 and $ 7,392 , respectively, after determining that its total deferred tax assets are more likely than not realizable only to the extent of its deferred tax liabilities.

There are no unrecognized tax positions as of December 31, 2023 , 2022 , or 2021 , and the Company does not anticipate any change over the next twelve months.

The Company records interest expense (income) and penalties, net, as a component of income tax (benefit) provision and had accrued interest and penalties of ($ 95 ), ($ 60 ), and $ 27 for December 31, 2022, 2021, and 2020, respectively.

Liabilities for accrued interest and tax penalties on unrecognized tax benefits were $ 0 at both December 31, 2022 

and 2021, respectively.

The Company records interest expense (income) and penalties, net, as a component of income tax (benefit) provision and had accrued interest and penalties of $ 0 , ($ 95 ), and ($ 60 ) for December 31, 2023, 2022 and 2021 , respectively.

Liabilities for accrued interest and tax penalties on unrecognized tax benefits were $ 0 at both December 31, 2023 and 2022 , respectively.

The Company and its subsidiaries file income tax returns in the U.S.

federal jurisdiction and with various state jurisdictions.

In general, the Company is subject to U.S., state, and local examinations by tax authorities from 2019  forward.

In general, the Company is subject to U.S., state, and local examinations by tax authorities from 2020 forward.

Notes to Consolidated Financial Statements of FutureFuel Corp.

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Earnings per share

In the year ended December 31, 2022, 2021  and 2020, the Company used the treasury method in computing earnings per share as all shares with participating security holders had vested.

There were no outstanding restricted stock units for the year ended December 31, 2022, 2021 or 2020.

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

For the twelve months ended December 31:

$ 15,211  

$ 26,255  

$ 46,564  

Weighted average shares outstanding –

43,763,243  

43,756,065  

43,743,243  

In the year ended December 31, 2023, 2022 and 2021 , the Company used the treasury method in computing earnings per share as all shares with participating security holders had vested.

There were no outstanding restricted stock units for the year ended December 31, 2023, 2022 and 2021 .

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

Years ended December 31:

$ 37,382 $ 15,211 $ 26,255

Weighted average shares outstanding – basic

43,763,243 43,763,243 43,756,065

Effect of dilutive securities:

Stock options

Weighted average shares outstanding –

43,763,489  

43,756,113  

43,744,150  

Weighted average shares outstanding – diluted

43,764,683 43,763,489 43,756,113

Basic earnings per share

$ 0.35  

$ 0.60  

$ 1.06  

$ 0.85 $ 0.35 $ 0.60

Diluted earnings per share

$ 0.35  

$ 0.60  

$ 1.06  

Certain options to purchase the Company’s common stock were not included in the computation of diluted earnings per share for the years ended December 31, 2022, 2021  and 2020  because they were anti-dilutive in the period.

$ 0.85 $ 0.35 $ 0.60

Certain options to purchase the Company’s common stock were not included in the computation of diluted earnings per share for the years ended December 31, 2023 , 2022 , and 2021 because they were anti-dilutive in the period.

The weighted number of options excluded on this basis was 40,060 , 33,754 , and 28,953 , respectively.

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Stock-based compensation

The Board of Directors of the Company adopted an omnibus incentive plan which was approved by the shareholders of the Company at its 2017 annual shareholder meeting (the “Incentive Plan”).

The purpose of the plan is to:

Encourage ownership in the Company by key personnel whose long-term employment with or engagement by the Company or its subsidiaries is considered essential to its continued progress and, thereby, encourage recipients to act in the Company’s shareholders’ interests and share in its success;

Encourage such persons to remain in the Company’s employ or in the employ of its subsidiaries; and

Provide incentives to persons who are not the Company employees to promote the Company’s success.

Encourage such persons to remain in the Company’s employ or in the employ of its subsidiaries; and

Provide incentives to persons who are not the Company employees to promote the Company’s success.

The Incentive Plan authorizes the Company to issue stock options (including incentive stock options and nonqualified stock options), common stock awards, and stock appreciation rights.

Eligible participants in the plan include:

(i) members of the Company’s board of directors and its executive officers;

(ii) regular, active employees of the Company and any of its subsidiaries;

and (iii) persons engaged by the Company or any of its subsidiaries to render services to the Company or its subsidiaries as an advisor or consultant.

Awards under the Incentive Plan are limited to shares of the Company’s common stock, which may be shares acquired by the Company, including shares purchased in the open market, or authorized but un-issued shares.

Awards are limited to 10 % of the issued and outstanding shares of the Company’s common stock in the aggregate.

The Incentive Plan became effective upon its approval by the Company’s shareholders on September 7, 2017 and continues in effect for a term of ten years thereafter unless amended and extended by the Company or unless otherwise terminated.

(i) members of the Company’s board of directors and its executive officers; (ii) regular, active employees of the Company and any of its subsidiaries; and (iii) persons engaged by the Company or any of its subsidiaries to render services to the Company or its subsidiaries as an advisor or consultant.

Awards are limited to 10 % of the issued and outstanding shares of the Company’s common stock in the aggregate.

The Company recognizes compensation expense in its financial statements for common stock-based options based upon the grant-date fair value over the requisite service period.

No common stock awards were issued in 2022, 2021  or 2020.

In August 2022 and January 2020, the Company granted a total of 20,000 and 24,000 stock options, respectively, to two new members of the Board of Directors and to the Chief Operating Officer, also respectively.

No stock options were granted under the Incentive Plan in 2021.

The options awarded in each of the years have an exercise price equal to the mean between the highest and lowest quoted sales prices for the Company’s common stock as of the grant date as reported by the New York Stock Exchange.

No common stock awards were issued in 2023 , 2022 , or 2021 .

No stock options were granted under the Incentive Plan in 2023 or 2021.

In August 2022, the Company granted a total of 20,000 stock options, respectively, to two new members of the Board of Directors and to the Chief Operating Officer.

The options awarded have an exercise price equal to the mean between the highest and lowest quoted sales prices for the Company’s common stock as of the grant date as reported by the New York Stock Exchange.

All options awarded in 2022 vested immediately and expire in August 2027.

All options awarded in 2020 vested immediately upon grant and expire in January 2025.

The Company has used the Black Scholes Merton option pricing model, which relies on certain assumptions, to estimate the fair value of the options it granted.

The weighted average fair value of options granted was $ 2.30 and $ 2.05  per option in 2022 and 

2020, respectively.

The weighted average fair value of options granted was $ 2.30 per option in 2022.

Notes to Consolidated Financial Statements of FutureFuel Corp.

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There were no stock options exercised in 2023 or 2022.

All of the options exercised in 2021  were exercised on a cash basis.

The assumptions used in the determination of the fair value of the options granted are provided in the following table: 

All of the options exercised in 2021 were exercised on a cash basis.

The assumptions used in the determination of the fair value of the options granted are provided in the following table:

Expected volatility rate

56.61 %  

n/a 56.61 % n/a

Expected dividend yield

3.34 %  

n/a 3.34 % n/a

Risk-free interest rate

3.20 %  

n/a 3.20 % n/a

Expected forfeiture rate

0.00 %  

n/a 0.00 % n/a

Expected term in years

The volatility rate for the options granted in 2022 and 

2020  were derived from the historical stock price volatility of the Company’s common stock over the same time period as the expected term of each stock option award.

The volatility rate for the options granted in 2022 were derived from the historical stock price volatility of the Company’s common stock over the same time period as the expected term of each stock option award.

The volatility rate is derived by a mathematical formula using the daily closing stock price data over the expected term.

The expected dividend yield is calculated using the Company’s expected dividend amount at the date of the option grant over the expected term divided by the fair market value of the Company’s common stock.

For the years ended December 31, 2023, 2022 and 2021 , total share-based compensation expense (before tax) totaled $0, $ 46 , and $0, respectively.

In the years ended December 31, 2022 

and 2020, this balance was recorded as an element of selling, general, and administrative expenses.

As of December 31, 2022 

and 2021, there was no unrecognized compensation expense related to stock options.

A summary of the activity of the Company’s stock options and awards for the period beginning January 1, 2020 

and ending December 31, 2022 

is presented below.

In the year ended December 31, 2022, this balance was recorded as an element of selling, general, and administrative expenses.

As of December 31, 2023 and 2022 , there was no unrecognized compensation expense related to stock options.

A summary of the activity of the Company’s stock options and awards for the period beginning January 1, 2021 and ending December 31, 2023 is presented below.

Exercise Price

Outstanding at January 1, 2021

50,000  

$ 14.05  

24,000  

$ 11.56  

44,000 $ 12.73

( 20,000 ) 11.56

Canceled, forfeited, or expired

$ 13.99  

Outstanding at December 31, 2021

44,000  

$ 12.73  

$ 11.56  

Canceled, forfeited, or expired

Outstanding at December 31, 2022

24,000  

$ 13.71  

20,000  

$ 7.18  

Canceled, forfeited, or expired

( 10,000 ) 16.21

Outstanding at December 31, 2023

44,000  

$ 10.74  

Notes to Consolidated Financial Statements of FutureFuel Corp.

1 unchanged sentence

There were 4,310,167 options available for grant under the Incentive Plan.

The following table provides the remaining contractual term and weighted average exercise prices of stock options outstanding and exercisable from the Incentive Plan at December 31, 2022.

The following table provides the remaining contractual term and weighted average exercise prices of stock options outstanding and exercisable from the Incentive Plan at December 31, 2023 .

Options Outstanding

2 unchanged sentences

Exercisable at

$ 16.21  

10,000  

$ 16.21  

10,000  

$ 16.21  

$ 12.07  

10,000  

$ 12.07  

10,000  

$ 12.07  

$ 11.56  

$ 7.18  

20,000  

$ 7.18  

20,000  

$ 7.18  

44,000  

$ 10.74  

44,000  

$ 10.74  

The aggregate intrinsic values of total options outstanding and exercisable at December 31, 2022 

and 2021  were $ 19  and $ 0 , respectively.

Intrinsic value is the amount by which the last trade price of the common stock closest to December 31, 2022 

and 2021, respectively, exceeded the exercise price of the options granted.

Stockholders’ equity

Albans Global Management, LLC (“St.

Albans”), an entity affiliated with Mr.

Novelly II, a member of the board, is entitled to demand that the Company register under the Securities Act of 1933, as amended (the “Securities Act”), the resale of all shares of the Company’s common stock beneficially owned by it.

Albans exercises its registration rights with respect to all 17,085,100 shares of the Company’s common stock currently owned by it, there will be an additional 6,637,600 registered shares of common stock available for trading in the public market. 

$ 12.07 10,000 0.71 $ 12.07 10,000 $ 12.07

11.56 4,000 1.06 11.56 4,000 11.56

7.18 20,000 3.61 7.18 20,000 7.18

34,000 2.46 9.13 34,000 9.13

The aggregate intrinsic values of total options outstanding and exercisable at December 31, 2023 and 2022 were $ 0 and $ 19 , respectively.

Intrinsic value is the amount by which the last trade price of the common stock closest to December 31, 2023 and 2022 , respectively, exceeded the exercise price of the options granted.

Stockholders’ equity

Albans Global Management, LLC (“St.

Albans”), an entity affiliated with Mr.

Notes to Consolidated Financial Statements of FutureFuel Corp.

3 unchanged sentences

The Company currently offers its employees a company 401 (k) matching savings plan, which covers substantially all employees.

Under this plan, the Company matches the amount of eligible employees’

contributions, subject to specified limits, up to 6 % of earnings.

Company contributions totaled $ 1,719 , $ 1,770 , and $ 1,906  for the years ended December 31, 2022, 2021, and 2020, respectively.

Under this plan, the Company matches the amount of eligible employees’ contributions, subject to specified limits, up to 6 % of earnings.

Company contributions totaled $ 1,923 , $ 1,719 , and $ 1,770 for the years ended December 31, 2023, 2022 and 2021 , respectively.

Related party transactions

11 unchanged sentences

Natural gas and fuel purchases

$ 7,788  

$ 7,900  

Travel and administrative services

Total accounts payable

$ 7,799  

$ 7,911  

Accrued liabilities

2 unchanged sentences

Related party income statement accounts

For the years ended December 31:

Years ended December 31:

Biodiesel, petrodiesel, blends and other petroleum products

$ 1,261  

$ 1,976  

$ 22 $ 459 $ 1,261

Total revenues

$ 1,261  

$ 1,976  

$ 22 $ 459 $ 1,261

Cost of goods sold

Biodiesel, petrodiesel, blends, and other petroleum products

$ 5,425  

$ 5,233  

$ 3,865  

$ - $ 5,425 $ 5,233

Natural gas purchases

11,360  

( 315 ) - 11,360

Total cost of goods sold

$ 5,425  

$ 16,593  

$ 6,890  

$ ( 315 ) $ 5,425 $ 16,593

Distribution and related services

$ 176 $ 174 $ 176

Total distribution

$ 176 $ 174 $ 176

Selling, general and administrative expenses

Commodity trading advisory fees

$ 308 $ 307 $ 308

Travel and administrative services

1 unchanged sentence

Total selling, general, and administrative expenses

$ 616 $ 611 $ 649

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

Biodiesel, petrodiesel,  

blends, and other petroleum products

Biodiesel, petrodiesel, blends, and other petroleum products

The Company enters into agreements to buy and sell biofuels (biodiesel, petrodiesel, biodiesel/petrodiesel blends, RINs, and biodiesel production byproducts) and other petroleum products, such as gasoline, with an affiliate from time to time.

1 unchanged sentence

Cost of goods sold related to these sales includes variable costs and allocated fixed costs.

The revenue amounts presented in the table above result when the Company sells biodiesel, petrodiesel, blends, and other petroleum products to a related party regardless of who the material was purchased from. 

Likewise, cost of goods sold amounts result when biodiesel, petrodiesel, blends, and other petroleum products are purchased from a related party regardless of who the material was sold to.  

Natural gas purchases

The Company uses natural gas to generate steam for its manufacturing process and to support certain of its air and waste treatment utilities.

This natural gas is purchased through an affiliate provider of natural gas marketing services.

Expenses related to these purchases include the cost of the natural gas only;

transportation charges are paid to an independent third party. The natural gas matter as discussed in Note 23, Legal proceedings, is in reference to the natural gas supplier, not the related party.

During 2021, natural gas was purchased through an affiliate provider of natural gas marketing services.

Expenses related to these purchases include the cost of the natural gas only; transportation charges were paid to an independent third party.

The natural gas matter as discussed in Note 23, Legal proceedings, is in reference to the natural gas supplier, not the related party.

The amount shown in 2023 reflects the settlement on the legal matter.

Distribution and related services

15 unchanged sentences

Segment information

The Company has two reportable segments organized along similar product lines –

chemicals and biofuels.

The Company has two reportable segments organized along similar product lines – chemicals and biofuels.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2.

The Company’s chemicals segment manufactures diversified chemical products that are sold to third party customers.

This segment comprises two product groups:

“custom manufacturing”

(manufacturing chemicals for specific customers) and “performance chemicals”

(multi-customer specialty chemicals).

The Company’s biofuels segment manufactures and markets biodiesel.

Biodiesel revenues are generated through the sale of biodiesel to customers through the Company’s distribution network at the Batesville plant, through distribution facilities available at leased oil storage facilities, and through a network of remotely located tanks.

Results of the biofuels business segment also reflect the sale of biodiesel blends with petrodiesel, petrodiesel with no biodiesel added, RINs, biodiesel production byproducts, and the purchase and sale of other petroleum products on common carrier pipelines.

“custom manufacturing” (manufacturing chemicals for specific customers) and “performance chemicals” (multi-customer specialty chemicals).

The Company’s biofuels segment manufactures and markets biodiesel.

Results of the biofuels business segment also reflect the sale of biodiesel blends with petrodiesel, petrodiesel with no biodiesel added, RINs, and biodiesel production byproducts.

Summary of business by segment

Twelve months ended December 31,

Years ended December 31,

Custom chemicals

$ 58,737  

$ 50,675  

$ 63,894  

$ 64,286 $ 58,737 $ 50,675

Performance chemicals

22,156  

16,867  

15,284  

15,047 22,156 16,867

Chemicals revenue

80,893  

67,542  

79,178  

79,333 80,893 67,542

Biofuels revenue

315,121  

253,844  

125,327  

288,917 315,121 253,844

Total Revenue

$ 396,014  

$ 321,386  

$ 204,505  

$ 368,250 $ 396,014 $ 321,386

Segment gross profit

$ 25,645  

$ 13,970  

$ 25,518  

$ 29,936 $ 25,645 $ 13,970

11,043 3,348 9,567

Total gross profit

$ 28,993  

$ 23,537  

$ 31,307  

$ 40,979 $ 28,993 $ 23,537

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

3 unchanged sentences

Quarterly financial information (unaudited)

$ 42,261  

$ 117,796  

$ 118,141  

$ 117,816  

Gross (loss) profit

$ 19,985  

$ 15,186  

Net (loss) income

$ 15,780  

$ 14,933  

Net income per common share:

$ 0.36  

$ 0.34  

$ 0.36  

$ 0.34  

$ 41,516  

$ 74,118  

$ 98,682  

$ 107,070  

$ 74,181 $ 85,308 $ 116,752 $ 92,009

Gross profit (loss)

$ 21,623 $ ( 8,592 ) $ 3,870 $ 24,078

Net income (loss)

$ 21,081 $ ( 9,859 ) $ 2,776 $ 23,384

Net income (loss) per common share:

$ 0.48 $ ( 0.23 ) $ 0.06 $ 0.53

$ 42,261 $ 117,796 $ 118,141 $ 117,816

Gross (loss) profit

$ 8,192  

$ 26,124  

$ ( 7,155 ) $ 977 $ 19,985 $ 15,186

Net (loss) income

$ 3,481  

$ 9,202  

$ 22,345  

Net income per common share:

$ 0.08  

$ 0.21  

$ 0.51  

$ 0.08  

$ 0.21  

$ 0.51  

$ ( 12,398 ) $ ( 3,104 ) $ 15,780 $ 14,933

Net (loss) income per common share:

$ ( 0.28 ) $ ( 0.07 ) $ 0.36 $ 0.34

Earnings per share is computed independently for each of the quarters presented.

5 unchanged sentences

However, adverse developments could negatively impact earnings or cash flows in future periods.

As a result of the extraordinary increase in natural gas prices in February 2021, the Attorney General of Arkansas launched a civil investigative demand against several natural gas suppliers. 

At this time the Company is disputing its 

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 period ended 

December 31, 2021.  

However, as discussed in Note 

21,  Related Party Transactions, the “ultimate”

natural gas supplier is 

not  a related party of the Company.

The Company entered into a settlement agreement to resolve the previously reported dispute regarding its February 2021 natural gas bill.

The natural gas settlement was a reduction to Cost of goods sold-related parties in the Consolidated Statements of Operations and Comprehensive Income in the period ended December 31, 2023 in the amount of $ 882 .

This settlement reduced Cost of goods sold for each segment equally.

As discussed in Note 21, Related Party Transactions, the “ultimate” natural gas supplier was not a related party of the Company.

Subsequent event

On March 12, 2024, the Company’s board of directors authorized the repurchase of up to $ 25.0 million of Company common stock through a stock repurchase program expiring March 12, 2026.

The program could be suspended or discontinued at any time, based on market, economic, or business conditions.

The timing and amount of repurchase transactions will be determined by management based on its evaluation of market conditions, share price, and other factors.

The Company's board of directors also authorized on March 12, 2024 a special cash dividend of $ 2.50 per share on our common stock payable on April 9, 2024 , to the holders of record of all the issued and outstanding shares of common stock as of the close of business on March 26, 2024.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data