What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-11 · 96 added, 66 removed, 150 unchanged (52% of the section changed)

22 unchanged sentences

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

As of March 31, 2026, we held 0.2 million D4 RINs with a fair market value of $298.

Comparatively, as of March 31, 2025, we held 2.3 million D4 RINs with a fair market value of $2,077.

As of June 30, 2026, we held 0.1 million D4 RINs with a fair market value of $210.

Comparatively, as of June 30, 2025, we held 0.5 million D4 RINs with a fair market value of $604.

On March 27, 2026, the EPA finalized the “Set 2” RFS volumes establishing the highest blending mandates in the program’s history targeting a 60% increase over 2025.

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(i) reducing the tax credit for sustainable aviation fuel from $1.75 per gallon to $1.00 per gallon effective January 1, 2026, and (ii) requiring that all feedstock be sourced from North America, as required for biomass-based diesel.

On June 12, 2026, the Department of Energy released the updated 45ZCF-GREET model to help biofuel producers calculate carbon intensity for the CFPC.

On June 30, 2026, the Company contracted with Freepoint Commodities to sell its 2025 CFPC and Small Agri-Biodiesel Producer Tax Credits which were $2,725 net of fees.

The Company recognized a receivable for the 2025 credits.

The Company also committed to sell its 2026 credits which were $6,733 as of June 30, 2026.

The 2026-2029 tax credits will be monetized at each fiscal year end with an early draw provision subject to financing fees.

Summary of Financial Results

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

Three Months Ended March 31,

As Adjusted (Note 1)

Three Months Ended June 30,

As Adjusted *

Income (loss) from operations

Net income (loss)

Income (loss) per common share:

Adjusted EBITDA

Six Months Ended June 30,

As Adjusted *

Loss from operations

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Adjusted EBITDA

* Adjusted to reflect the change in accounting methodology from LIFO to moving average for inventory valuation.

See Note 1 to our consolidated financial statements for additional information.

We use adjusted EBITDA as a key operating metric to measure both performance and liquidity.

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We include the mark-to-market or non-cash portion of this item as an adjustment to adjusted EBITDA as we believe it provides a relevant indicator of the underlying performance of our business in a given period.

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

Three Months Ended March 31,

As Adjusted (Note 1)

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

Three Months Ended June 30,

Six Months Ended June 30,

As Adjusted *

Net income (loss)

Non-cash stock-based compensation

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Extraordinary maintenance costs

Income tax provision (benefit)

Income tax provision

Adjusted EBITDA

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

Three Months Ended March 31,

As Adjusted (Note 1)

Six Months Ended June 30,

As Adjusted *

Net cash used in operating activities

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Interest income, net

Income tax provision (benefit)

Income tax provision

Change in operating assets and liabilities, net

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Results of Operations

Three Months Ended March 31,

As Adjusted (Note 1)

Three Months Ended June 30,

Six Months Ended June 30,

As Adjusted *

Volume/product mix effect

Gross profit (loss)

Operating expenses

Other income, net

Income tax provision (benefit)

Consolidated revenue in the three months ended March 31, 2026, increased 82% or $14,414 compared to the three months ended March 31, 2025, driven by two factors

The change in volume and product mix of $10,800 was largely due to growth in the chemical segment's energy market products, specifically supported by a new plant within our facility that became operational in the fourth quarter of 2025 and additional regulatory clarity, supporting an additional contribution from the biofuels segment.

The biofuel segment added $4,147 following regulatory clarity.

Both segments saw improved price variance totaling $3,614, primarily due to the energy market's performance:

Chemicals (+$1,007) and Biofuels (+$2,607).

Gross loss in the three months ended March 31, 2026 , increased $670 as compared to the same period of 2025 .

This variance was primarily driven by two factors:

Derivative activity within the biofuel segment.

Total gains and losses on derivative instruments and changes in fair value of the derivative instruments were a net loss of $11,629 (including settlements of $9,141) for the three months ended March 31, 2026, and a net loss of $166 (including settlements of $93) for the three months ended March 31, 2025.

While the $9,141 in derivative settlements contributed significantly to the gross loss this quarter, these settlement costs are expected to be offset upon the sale of the underlying physical product.

This timing difference often creates a temporary disconnect between realized derivative losses and the eventual revenue recognition of the physical inventory.

Mostly offsetting these gross losses was the improvement in margins in product sold into the chemical energy market and in biodiesel with clarity obtained from the Treasury Department and the EPA on previously mentioned renewable energy regulations.

Income tax provision

Net income (loss)

Consolidated revenue in the three months ended June 30, 2026 , increased 121% or $43,053 compared to the three months ended June 30, 2025, primarily driven by two factors:

The change in volume and product mix of $14,451 was largely due to growth in the chemical segment's energy market products adding $8,167, specifically supported by a new plant within our facility that became operational in the fourth quarter of 2025 and additional regulatory clarity, supporting an additional contribution of $6,284 from the biofuels segment.

Both segments saw improved price variance totaling $28,602, p rimarily due to the energy market's performance given certain geopolitical events with the backdrop of regulatory clarity in biofuels (+$27,539) and chemicals (+$1,063).

Consolidated revenue in the six months ended June 30, 2026, increased 108% or $57,467 compared to the six months ended June 30, 2025.

The change in volume and product mix of $25,250 was largely due to growth in the chemical segment's energy market products adding $17,427 as noted above.

The biofuel segment added $7,823 from energy market performance and regulatory clarity.

Gross profit (loss) in the three and six months ended June 30, 2026 , improved $27,416 and $26,746, respectively, as compared to the same periods of 2025 .

This variance was primarily driven by growth in the chemical segment, energy regulatory clarity in the biofuel segment, and energy market performance in both segments.

Operating e xpenses

Operating expenses increased $710 in the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

The net increase was primarily from winter storm Fern freeze repair expenses of $1,357, partially offset by reduced compensation and research and development expenses.

Operating expenses increased $611 in the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

The net increase was primarily from additional expenditures related to Winter Storm Fern of $260 and $281 for expenses incurred from a fire which was safely and quickly contained.

Operating expenses increased $1,321 in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

The net increase was primarily from extraordinary maintenance and repair expenses of $1,898, partially offset by reduced compensation and research and development expenses.

Other income, net

Other income, net decreased $932 in the three months ended March 31, 2026, as compared to the same period of 2025 primarily from the reduction of interest income.

Other income, net decreased $1,359 in the three months ended June 30, 2026, as compared to the same period of 2025, primarily from the reduction in interest income.

In the current three-month period interest income was $209 as compared to $1,068 in the prior period.

Other income, net decreased $2,291 in the six months ended June 30, 2026, as compared to the same period of 2025 primarily from the reduction in interest income.

In the current six-month period interest income was $507 as compared to $2,305 in the prior period.

Income tax provision

The Company’s income tax provision for the three months ended March 31, 2026, is comprised of immaterial state taxes and miscellaneous items.

The income tax benefit for the three months ended March 31, 2025, was comprised of immaterial state taxes and miscellaneous items.

The Company’s income tax provision for the three and six months ended June 30, 2026 and 2025, was comprised primarily of an increase in the valuation allowance against net deferred assets, plus immaterial state taxes and miscellaneous items.

Chemical Segment

Three Months Ended March 31,

As Adjusted (Note 1)

Three Months Ended June 30,

Six Months Ended June 30,

As Adjusted *

Volume/product mix effect

Chemical revenue in the three months ended March 31, 2026, increased 110% or $10,267 compared to the three months ended March 31, 2025.

Revenue from custom chemicals for the three months ended March 31, 2026 totaled $13,872, a net increase of $5,463 from the same period in 2025, primarily resulting from higher sales volumes of products sold in the energy market of $4,405.

Performance chemicals revenue was $5,760, an increase of $4,804 from the three months ended March 31, 2025 from sales of a new energy market product brought online in the fourth quarter of 2025.

Gross loss for the chemical segment was $2,519 for the three months ended March 31, 2026, an improvement of $3,496 compared to the same period of 2025.

The improvement was primarily driven by new product revenue sold into the energy market as noted above.

Gross profit (loss)

Chemical revenue in the three months ended June 30, 2026, increased 56% or $9,230 compared to the three months ended June 30, 2025.

Revenue from custom chemicals for the three months ended June 30, 2026 totaled $18,519, a net increase of $4,269 from the same period in 2025, primarily resulting from higher sales volumes of products sold in the energy market of $4,103.

Performance chemicals revenue was $7,330, an increase of $4,961 from the three months ended June 30, 2025 from sales of a new energy market product brought online in the fourth quarter of 2025.

Chemical revenue in the six months ended June 30, 2026, increased 75% or $ 19,497 compared to the six months ended June 30, 2025.

Revenue from custom chemicals for the six months ended June 30, 2026 totaled $32,391, a net increase of $9,732 from the same period in 2025, primarily resulting from higher sales volumes of products sold in the energy market of $8,508.

Performance chemicals revenue was $13,090, an increase of $9,765 from the six months ended June 30, 2025 from sales of the new energy market product brought online in the fourth quarter of 2025.

Gross profit for the chemical segment was $4,937 and $2,418 for the three and six months ended June 30, 2026, respectively, an improvement of $3,823 and $7,319, respectively, compared to the same periods of 2025.

The improvement was primarily driven by increased sales volumes in the energy market including the new product revenue brought online in the fourth quarter of 2025.

Biofuel Segment

Three Months Ended March 31,

As Adjusted (Note 1)

Three Months Ended June 30,

Six Months Ended June 30,

As Adjusted *

Volume/product mix effect

Biofuels revenue in the three months ended March 31, 2026 , increased by $4,147 compared to the prior-year period.

The upward trend was primarily attributed to enhanced clarity surrounding the CFPC and record-high final renewable volume obligation (“RVO”) levels.

However, these gains were partially offset by lower sales volumes, which were adversely impacted by severe winter weather and geopolitical instability in the fuel markets due to the war with Iran.

A significant portion of our biodiesel sold was to one major customer in the three months ended March 31, 2026, as compared to no major customers in the three months ended March 31, 2025.

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

Gross profit (loss)

Biofuels revenue in the three and six months ended June 30, 2026 , increased $ 33,823 and $37,970 , respectively, compared to the prior-year periods.

The upward trend was primarily attributed to enhanced clarity surrounding the CFPC and record-high final renewable volume obligation (“RVO”) levels, and to a lesser degree, increased equipment utilization following an extended turnaround in the prior year, six-month period.

A significant portion of our biodiesel sold was to two major customers in both the three and six months ended June 30, 2026 , as compared to three and two major customers in the three and six months ended June 30, 2025 , respectively.

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

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

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

Biofuel gross loss was $13,339 in the three months ended March 31, 2026 , representing an increase of $4,166 compared to the same period in 2025 .

This increased loss was primarily driven by unfavorable shifts in derivative instruments activity.

During the quarter, we recognized a realized loss of $9,141 and an unrealized loss of $2,488, compared to a realized gain of $93 and an unrealized loss of $259 in the prior-year period.

While the $9,141 in derivative settlements significantly impacted the current quarter’s gross loss, these costs are generally intended to be recovered once the underlying physical product is sold.

Biofuel gross profit increased $23,594 and $19,428 in the three and six months ended June 30, 2026 , respectively, compared to the same periods in 2025 .

These increases were primarily due to regulatory clarity which improved the segment on both volume and margin inclusive of clarified guidelines on the CFPC.

During the quarter, this increase was also partially driven by favorable shifts in derivative instruments activity.

In the three months ended June 30, 2026, we recognized a realized loss of $1,383 and an unrealized gain of $3,223 compared to a realized gain of $77 and an unrealized gain of $540 in the prior-year period.

While the $1,383 in derivative settlements impacted the current period’s gross profit, these costs are generally intended to be recovered once the underlying physical product is sold.

This timing difference often creates a temporary disconnect between realized derivative losses and the eventual revenue recognition of the physical inventory.

During the six-month period ended June 30, 2026, gross profit increases were partially offset by unfavorable shifts in derivative activity.

In the six months ended June 30, 2026, we recognized a realized loss of $10,523 and an unrealized gain of $735, compared to a realized gain of $170 and an unrealized gain of $281 in the prior year period.

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

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Asset (Liability)

March 31, 2026

June 30, 2026

December 31, 2025

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

Bill-and-hold transactions for the three months ended March 31, 2026 and 2025 were related to custom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for use by the customer.

Bill-and-hold transactions for the three and six months ended June 30, 2026 and 2025 were related to custom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for use by the customer.

These sales were subject to written monthly purchase orders.

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

Revenues under bill-and-hold arrangement s were $10,378 for t he three months ended March 31, 2026.

As of March 31, 2026 and December 31, 2025, $5,486 and $5,106 of bill-and-hold revenue had not shipped, respectively.

Revenues under bill-and-hold arrangement s were $13,027 and $23,405 for t he three and six months ended June 30, 2026.

As of June 30, 2026 and December 31, 2025, $4,357 and $5,106 of bill-and-hold revenue had not shipped, respectively.

Liquidity and Capital Resources

Our net cash from operating activities, investing activities, and financing activities for the three months ended March 31, 2026 and 2025 is set forth in the following table.

Three Months Ended March 31,

Our net cash from operating activities, investing activities, and financing activities for the six months ended June 30, 2026 and 2025 is set forth in the following table.

Six Months Ended June 30,

Net cash used in operating activities

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Operating Activities

Cash used in operating activities was $19,996 in the three months ended March 31, 2026, as compared to $5,395 in the same period of 2025.

This increase in cash used was primarily attributable to the change in accounts receivable, including accounts receivable - related parties resulting in a cash outflow of $17,891.

Also contributing to the current period's increase in cash used was the change in accrued expenses and other current liabilities of $2,842.

Partially offsetting these cash outflows was the change in accounts payable, including accounts payable - related parties, resulting in a cash inflow of $4,432, and the change in inventory of $3,359.

Cash used in operating activities was $1,227 in the six months ended June 30, 2026, as compared to $183 in the same period of 2025.

This increase in cash used was primarily attributable to the change in inventory of $26,609 and the change in accounts receivable, including accounts receivable - related parties resulting in a cash outflow of $21,643.

Also contributing to the current period's increase in cash used was the change in deferred revenue of $3,666, the change in accrued expenses and other current liabilities of $2,429, and the change in other assets of $1,698.

Partially offsetting these cash outflows was the change in net income of $23,072, the change in accounts payable, including accounts payable - related parties, resulting in a cash inflow of $16,564, and the change in other noncurrent liabilities of $14,970.

Investing Activities

Cash used in investing activities was $6,321 in the three months ended March 31, 2026, as compared to $4,082 in the three months ended March 31, 2025.

Cash used in investing activities was $12,652 in the six months ended June 30, 2026, as compared to $8,585 in the six months ended June 30, 2025.

This $4,067 increase in cash used was primarily due to an increase in capital expenditure of $3,900.

Financing Activities

Cash used in financing activities was $2,632 and $2,993 in the three months ended March 31, 2026 and 2025, respectively, primarily for payments of dividends on our common stock.

Cash used in financing activities was $3,071 and $5,621 in the six months ended June 30, 2026 and 2025, respectively, primarily for payments of dividends on our common stock.

Credit Facility

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The declaration of these regular quarterly cash dividends was made in the three months ended December 31, 2024.

During the three months ended December 31, 2025, a declaration for cash dividends of $0.06 per share was made for the first quarter of 2026.

The cash dividend in the three months ended March 31, 2026 and 2025, amounted to $2,628 and $2,632, respectively.

During the three months ended March 31, 2026, a cash dividend of $0.01 per share was declared for the second quarter of 2026.

During the three months ended March 31, 2026, a declaration for cash dividends of $0.01 per share was made for the second quarter of 2026.

The cash dividends in the three months ended June 30, 2026 and 2025, amounted to $439 and $2,628, respectively.

During the three months ended June 30, 2026, a cash dividend of $0.01 per share was declared for the third quarter of 2026.

Capital Management

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First, for our biofuel sales, we enter into the purchase and sale of futures contracts and options on futures contracts of energy commodities.

This activity was captured in our consolidated balance sheets at March 31, 2026, and December 31, 2025 as derivative instruments recorded in accordance with ASC 815.

This activity was captured in our consolidated balance sheets at June 30, 2026, and December 31, 2025 as derivative instruments recorded in accordance with ASC 815.

Second, for our biofuel feedstocks, we execute purchase contracts and supply agreements with certain vendors that meet the normal purchase and normal sales exception of ASC 815.

These transactions are recognized in earnings and were not recorded in our consolidated balance sheets at March 31, 2026, or December 31, 2025 to the extent that we are able to apply the normal purchase and normal sales exception of ASC 815.

These transactions are recognized in earnings and were not recorded in our consolidated balance sheets at June 30, 2026, or December 31, 2025 to the extent that we are able to apply the normal purchase and normal sales exception of ASC 815.

The purchase of biofuels feedstock generally involves two risk components:

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis