What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-10 · 118 added, 72 removed, 361 unchanged (34% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2024

June 30, 2024

December 31, 2023

1 unchanged sentence

$ 115,060 $ 219,444

Accounts receivable, inclusive of the blenders’ tax credit of $ 8,294 and $ 11,381 , and net of allowances for expected credit losses of $ 41 and $ 55 , respectively

Accounts receivable, inclusive of the blenders’ tax credit of $ 14,976 and $ 11,381 , respectively, and net of allowances for expected credit losses of $ 145 and $ 55 , respectively

33,386 28,406

Accounts receivable – related parties

Inventory, net

29,516 32,978

16 unchanged sentences

Dividends payable

117,285 10,503

Accrued expenses and other current liabilities

2 unchanged sentences

Deferred revenue – non-current

12,114 12,570

Noncurrent deferred income taxes

4 unchanged sentences

46,790 57,201

Commitments and contingencies (See Note 13)

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

Common stock, $ 0.0001 par value, 75,000,000 shares authorized, 43,763,243 shares issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, $ 0.0001 par value, 75,000,000 shares authorized, 43,763,243 shares issued and outstanding as of June 30, 2024 and December 31, 2023

Additional paid in capital

9 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

$ 72,409 $ 85,308 $ 130,690 $ 159,469

3 unchanged sentences

Cost of goods sold – related parties

910 1,216 1,407 1,774

Distribution – related parties

Gross profit (loss)

8,657 ( 8,592 ) 13,664 13,031

Selling, general, and administrative expenses

Compensation expense

1,061 954 2,048 2,092

Other expense

1,076 874 1,839 1,883

Related party expense

153 156 306 309

Research and development expenses

916 1,007 1,822 2,079

Total operating expenses

Income from operations

3,206 2,991 6,015 6,363

Income (loss) from operations

5,451 ( 11,583 ) 7,649 6,668

Interest and dividend income

1,521 1,732 4,321 4,068

Interest expense

1 unchanged sentence

Gain on marketable securities

Other (expense) income

Other income (expense)

2,639 ( 1 ) 2,638 -

Other income (expense), net

Income before taxes

4,126 1,739 6,890 4,576

Income (loss) before taxes

9,577 ( 9,844 ) 14,539 11,244

Income tax provision

Net income (loss)

$ 9,571 $ ( 9,859 ) $ 13,901 $ 11,222

Earnings per common share

Earnings (loss) per common share

$ 0.22 $ ( 0.23 ) $ 0.32 $ 0.26

3 unchanged sentences

43,763,243 43,763,243 43,763,243 43,764,890

Comprehensive income

Comprehensive income (loss)

Net income (loss)

$ 9,571 $ ( 9,859 ) $ 13,901 $ 11,222

Other comprehensive income from unrealized net gains on available-for-sale debt securities

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

Income tax effect

Total other comprehensive income, net of tax

Comprehensive income

Total other comprehensive (loss) income, net of tax

Comprehensive income (loss)

$ 9,571 $ ( 9,875 ) $ 13,901 $ 11,223

3 unchanged sentences

(Dollars in thousands)

For the Three Months Ended March 31, 2024

For the Six Months Ended June 30, 2024

Comprehensive

10 unchanged sentences

43,763,243 $ 4 $ - $ 204,820 $ - $ 204,824

For the Three Months Ended March 31, 2023

- - - - 9,571 9,571

Balance - June 30, 2024

43,763,243 $ 4 $ - $ 204,820 $ 9,571 $ 214,395

For the Six Months Ended June 30, 2023

Comprehensive

4 unchanged sentences

Balance - March 31, 2023

Other comprehensive loss

Balance - June 30, 2023

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

2 unchanged sentences

(Dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

$ 13,901 $ 11,222

Adjustments to reconcile net income to net cash used in operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Amortization of deferred financing costs

Provision (benefit) for deferred income taxes

Provision for deferred income taxes

Change in fair value of equity securities

2 unchanged sentences

Stock based compensation

Loss on disposal of property and equipment

Noncash interest expense

1 unchanged sentence

Accounts receivable

( 4,980 ) ( 2,369 )

Accounts receivable – related parties

2 unchanged sentences

Prepaid expenses

555 ( 4,502 )

Accounts payable

2 unchanged sentences

Accrued expenses and other current liabilities

2,354 ( 270 )

Accrued expenses and other current liabilities – related parties

2 unchanged sentences

Other noncurrent liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

15,588 ( 40,665 )

1 unchanged sentence

Collateralization of derivative instruments

( 1,212 ) 4,327

Proceeds from the sale of marketable securities

Capital expenditures

14 unchanged sentences

$ 115,060 $ 166,690

Cash dividends declared in the current period, not paid

$ 109,408 $ 7,877

Noncash investing and financing activities:

Cash paid for income taxes

Noncash capital expenditures

$ 1,182 $ 244

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

4 unchanged sentences

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

(“FutureFuel” or “the Company”) in accordance and consistent with the accounting policies stated in the Company's 2023 Annual Report on Form 10 -K, inclusive of the audited consolidated financial statements and should be read in conjunction with these consolidated financial statements.

(“FutureFuel” or “the Company”) in accordance and consistent with the accounting policies stated in the Company's 2023 Annual Report on Form 10 -K, as amended, inclusive of the audited consolidated financial statements, and should be read in conjunction with these consolidated financial statements.

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

30 unchanged sentences

GOVERNMENT TAX CREDITS

BIODIESEL BLENDERS ’ TAX CREDIT AND SMALL AGRI-BIODIESEL PRODUCER TAX CREDIT

BIODIESEL BLENDERS ’ TAX CREDIT and SMALL AGRI-BIODIESEL PRODUCER TAX CREDIT and CLEAN FUEL PRODUCTION TAX CREDIT

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

The BTC will expire December 31, 2024 based on current law.

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

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

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

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

The Inflation Reduction Act (“IRA”) extended the BTC through December 31, 2024.

As part of each law from which the BTC 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 is eligible for this credit and recognizes the credit in the same accounting period as the benefit from the BTC.

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

The 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 greenhouse gas (“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

6 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.

Certain of the Company's custom chemical contracts within the chemical segment contain a material right as defined by ASC Topic 606, Revenue from Contracts with Customers, 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 typically resulting from revenue recognized through bill-and-hold arrangements.

The contract assets at March 31, 2024 and December 31, 2023 consist of unbilled revenue from one customer and cash due from another customer and are recorded as accounts receivable in the consolidated balance sheets.

The contract assets at June 30, 2024 and December 31, 2023 consist of unbilled revenue from one customer and unbilled capital reimbursement from another customer and are recorded as accounts receivable in the consolidated balance sheets.

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

Increases to contract liabilities from cash received or due for a performance obligation of chemical segment plant expansions were $ 0 for the three months ended March 31, 2024 and 2023 .

Increases to contract liabilities from cash received or due for a performance obligation of chemical segment plant expansions were $ 0 and $ 32 for both the three and six months ended June 30, 2024 and 2023, 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 was $ 806 and $ 1,219 for the three months ended March 31, 2024 and 2023 , respectively.

Revenue recognized in the chemical segment from the contract liability reductions was $ 797 and $ 739 for the three months and $ 1,603 and $ 1,958 for the six months ended June 30, 2024 and 2023 , 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.

1 unchanged sentence

Contract Assets and Liability Balances

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

Transaction price allocated to the remaining performance obligations:

At March 31, 2024 , approximately $ 12,168 of revenue is expected to be recognized from remaining performance obligations.

At June 30, 2024 , approximately $ 11,371 of revenue is expected to be recognized from remaining performance obligations.

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

7 unchanged sentences

Disaggregation of revenue - contractual and non-contractual:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Contract revenue from customers with > one-year arrangements

3 unchanged sentences

Revenue from non-contractual arrangements

56 56 111 111

Total revenue

1 unchanged sentence

Timing of revenue :

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Bill-and-hold revenue

4 unchanged sentences

$ 72,409 $ 85,308 $ 130,690 $ 159,489

As of March 31, 2024 and December 31, 2023 , $ 3,291 and $ 4,317 of bill-and-hold revenue had not shipped, respectively.

As of June 30, 2024 and December 31, 2023 , $ 3,651 and $ 4,317 of bill-and-hold revenue had not shipped, respectively.

The carrying values of inventory were as follows as of:

March 31, 2024

June 30, 2024

December 31, 2023

9 unchanged sentences

$ 29,516 $ 32,978

No liquidation occurred in the three months ended March 31, 2024 and 2023.

A LIFO liquidation of $ 444 occurred in the six months ended June 30, 2024.

No liquidation occurred in the six months ended June 30, 2023.

Notes to Consolidated Financial Statements of FutureFuel Corp.

19 unchanged sentences

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

Realized gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of operations as a component of cost of goods sold and amounted to a loss of $ 3,464 (realized loss of $ 1,190 ) for the three months ended March 31, 2024 , and a gain of $ 8,307 (realized gain of $ 3,405 ) for the three months ended March 31, 2023 .

Total gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of operations as a component of cost of goods sold and amounted to a net gain of $ 1,414 (including settlements of $ 836 ) and a net loss of $ 2,050 (including settlements of $ 354 ) for the three and six months ended June 30, 2024 , and a net gain of $ 4,389 (including settlements of $ 6,032 ) and $ 12,695 (including settlements of $ 9,436 ) for the three and six months ended June 30, 2023 .

The volumes and carrying values of FutureFuel’s derivative instruments were as follows at:

(Liability) Asset

March 31, 2024

Asset (Liability)

June 30, 2024

December 31, 2023

3 unchanged sentences

126 $ 40 354 $ 1,736

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $ 1,957 and $ 745 at March 31, 2024 and December 31, 2023 , respectively, and was classified as other current assets in the consolidated balance sheets.

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $ 787 and $ 745 at June 30, 2024 and December 31, 2023 , respectively, and was classified as other current assets in the consolidated balance sheets.

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

2 unchanged sentences

MARKETABLE SECURITIES

At March 31, 2024 and December 31, 2023, FutureFuel held no marketable equity and trust preferred (debt) securities.

The change in the fair value of marketable equity securities (preferred and other equity instruments) for the three months ended March 31, 2023 was a gain of $ 533 , in accordance with ASC 321.

There was no change for the three months ended March 31, 2024.

At June 30, 2024 and December 31, 2023, FutureFuel held no marketable equity and trust preferred (debt) securities.

During the three months ended June 30, 2023, FutureFuel exited its position in marketable equity and trust preferred (debt) securities.

The sale of these securities was recorded as a component of net income with gains of $ 42 and $ 575 in the three and six months ended June 30, 2023, respectively.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

March 31, 2024

June 30, 2024

December 31, 2023

10 unchanged sentences

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.

The First Amendment primarily amends the Credit Agreement to transition the Credit Facility from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) and other conforming changes, in each case as more specifically set forth in the First Amendment.

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

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

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

13 unchanged sentences

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

There were no borrowings under the Credit Agreement at March 31, 2024 or December 31, 2023 .

There were no borrowings under the Credit Agreement at June 30, 2024 or December 31, 2023 .

Notes to Consolidated Financial Statements of FutureFuel Corp.

2 unchanged sentences

The following table summarizes the income tax provision.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Income tax provision

$ 6 $ 15 $ 638 $ 22

Effective tax rate

The Company’s income tax provision for the three months ended March 31, 2024 comprises primarily an increase in the valuation allowance against net deferred assets, plus immaterial state taxes and miscellaneous items.

No deferred tax benefits on ongoing tax losses have been recognized, reflecting management’s determination that none of the net deferred tax assets generated on the Company's 2023 tax losses are more likely than not to be realized.

The three -month period in 2023 similarly reflected immaterial state taxes and miscellaneous items.

0.1 % ( 0.2 )% 4.4 % 0.2 %

The Company’s income tax provision for the three and six months ended June 30, 2024 comprises primarily an increase in the valuation allowance against net deferred assets, plus immaterial state taxes and miscellaneous items.

No deferred tax benefits on ongoing tax losses or other deferred tax assets have been recognized, reflecting management’s determination that none of the net deferred tax assets are more likely than not to be realized.

The three - and six -month periods in 2023 reflected immaterial state taxes and miscellaneous items.

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

EARNINGS PER SHARE

In the three months ended March 31, 2024 and 2023 , FutureFuel used the treasury method in computing earnings per share.

In the three and six months ended June 30, 2024 and 2023 , FutureFuel used the treasury method in computing earnings per share.

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

Three Months Ended March 31,

$ 4,330 $ 21,081

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

Weighted average shares outstanding – basic

43,763,243 43,763,243

Effect of dilutive securities:

1 unchanged sentence

Weighted average shares outstanding – diluted

43,763,243 43,766,536

Basic earnings per share

$ 0.10 $ 0.48

Diluted earnings per share

$ 0.10 $ 0.48

For the three months ended March 31, 2024 and 2023, 44,000 and 40,707 options to purchase FutureFuel’s common stock were excluded, respectively, in the computation of diluted earnings per share as all were anti-dilutive.

Basic earnings (loss) per share

Diluted earnings (loss) per share

For the three and six months ended June 30, 2024, 22,000 and 44,000 options to purchase FutureFuel’s common stock were excluded, respectively, in the computation of diluted earnings per share as all were anti-dilutive.

In the three and six months ended June 30, 2023, 22,000 and 42,354 options, respectively, were excluded as all were anti-dilutive.

RELATED PARTY TRANSACTIONS

19 unchanged sentences

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

As of March 31, 2024 , FutureFuel held 2.0 million of RINs with a fair market value of $ 1,624 and no cost.

Comparatively, at March 31, 2023 , FutureFuel held no RINs.

As of June 30, 2024 , FutureFuel held 2.1 million RINs with a fair market value of $ 1,055 and no cost.

Comparatively, at June 30, 2023 , FutureFuel held 11.8 million RINs with a fair market value of $ 19,461 and no cost and at December 31, 2023 4.3 million RINs were held with a fair market value of $ 6,567 and no cost.

These fair values are considered Level 1 inputs.

Summary of business by segment

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Custom chemicals

1 unchanged sentence

Performance chemicals

3,653 3,180 6,285 8,441

Chemical revenue

4 unchanged sentences

$ 72,409 $ 85,308 $ 130,690 $ 159,489

Segment gross profit

Segment gross profit (loss)

$ 4,677 $ 6,416 $ 8,698 $ 15,039

Total gross profit

3,980 ( 15,008 ) 4,966 ( 2,008 )

Total gross profit (loss)

$ 8,657 $ ( 8,592 ) $ 13,664 $ 13,031

Operating expenses

$ 3,206 $ 2,991 $ 6,015 $ 6,363

Income (loss) from operations

5,451 ( 11,583 ) 7,649 6,668

Other income (expense), net

4,126 1,739 6,890 4,576

Income (loss) before taxes

$ 9,577 $ ( 9,844 ) $ 14,539 $ 11,244

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

5 unchanged sentences

While FutureFuel is unable to predict the outcomes of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows.

During the three months ended June 30, 2024, the Company resolved a prior-year legal dispute which resulted in a cash payment of $ 2,750 to FutureFuel which was reflected in Other income (expense) in the Consolidated Statements of Operations and Comprehensive Income in the three and six months ended June 30, 2024.

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

What changed 10-Q

Item 1. Financial Statements