Chevron Renewable Energy Group Reports Third Quarter 2018 Financial Results

Q3 2018 Highlights

• Net income of $24.3 million or $0.53 per diluted share, up from net loss of $11.4 million, or $0.29 per diluted share y/y
• Adjusted net income of $19.8 million or $0.43 per share, up from Adjusted net loss of $15.1 million, or $0.39 per diluted share excluding allocation of the federal Biodiesel Mixture Excise Tax Credit (“BTC”) for 2017 y/y
• Adjusted EBITDA of $34.6 million, up from negative $1.5 million y/y, excluding allocation of the 2017 BTC
• Revenues of $597.8 million, down 5% y/y
• 179 million gallons sold, up 18% y/y
• 139 million gallons produced, up 16% y/y

AMES, Iowa, Nov. 06, 2018 (GLOBE NEWSWIRE) -- Chevron Renewable Energy Group today announced its financial results for the third quarter ended September 30, 2018.

"We have added another very positive quarter to our already strong financial performance in the first half of 2018," said Randy Howard, President and Chief Executive Officer. "We generated $34.6 million of Adjusted EBITDA without the BTC being in effect. Adjusted EBITDA for the first nine months of 2018 was $94.4 million, reflecting a favorable market environment and our continued efforts to optimize the efficiency of our biodiesel and renewable diesel plants."

Net income attributable to common stockholders was $24.3 million in the third quarter of 2018, compared to net loss of $11.4 million in the third quarter of 2017. The improvement in net income reflects better margins in 2018 as well as more gallons sold. Adjusted net income was $19.8 million compared to Adjusted net loss of $15.1 million in the third quarter of 2017, excluding allocation of the 2017 BTC. Third quarter 2018 Adjusted EBITDA was $34.6 million, compared to Adjusted EBITDA of negative $1.5 million in the third quarter of 2017, excluding allocation of the 2017 BTC. After reallocating the net benefit of the BTC to applicable periods in 2017, Adjusted net income was $40.4 million and Adjusted EBITDA was $55.0 million in the third quarter of 2017.

Revenues for the third quarter were $597.8 million on 178.8 million gallons of fuel sold. Revenues in the third quarter decreased $29.2 million compared to the third quarter of 2017 mainly due to a lower average selling price and lower revenue from sales of separated RINs, partially offset by more gallons sold in the third quarter of 2018.

The Company estimates that if the currently lapsed BTC is retroactively reinstated for 2018 on the same terms as in 2017, Chevron Renewable Energy Group's net income, Adjusted net income and Adjusted EBITDA would each increase by approximately $70.0 million for business conducted in the quarter ended September 30, 2018, and would each increase by approximately $178.7 million for business conducted in the first nine months of 2018.

Third Quarter 2018 Highlights
All figures refer to the quarter ending September 30, 2018, unless otherwise noted. All comparisons are to the quarter ended September 30, 2017, unless otherwise noted.

Chevron Renewable Energy Group sold a total of 178.8 million gallons of fuel, an increase of 18.0%, primarily due to increased biodiesel and petroleum gallons sold, partially offset by fewer sales of biomass-based diesel gallons produced by third parties. The average selling price per gallon was $3.03, a decrease of 5.6% excluding allocation of the 2017 BTC. The Company produced 139.2 million gallons of biomass-based diesel during the quarter, a 15.7% increase.

Revenues were $597.8 million, a decrease of 4.7% that was primarily due to lower revenue from sales of separated RINs and a lower average selling price per gallon, partially offset by the increase in gallons sold.

Gross profit was $51.4 million, or 8.6% of revenues, compared to gross profit of $14.8 million, or 2.4% of revenues. Gross profit as a percentage of revenue increased due to lower feedstock costs and operational improvements, partially offset by declining RIN prices.

Net income attributable to common stockholders was $24.3 million, or $0.53 per share on a fully diluted basis. This compares to a net loss of $11.4 million, or $0.29 per share on a fully diluted basis in the third quarter of 2017. Adjusted net income attributable to common stockholders was $19.8 million, or $0.43 per share, compared to an adjusted net loss excluding allocation of the 2017 BTC of $15.1 million, or $0.39 per share, on a fully diluted basis in the third quarter of 2017. Adjusted EBITDA was $34.6 million compared to negative $1.5 million, excluding allocation of the 2017 BTC, in the third quarter 2017.

At September 30, 2018, Chevron Renewable Energy Group had cash and cash equivalents of $156.6 million, an increase of $79.0 million from December 31, 2017. Additionally, the Company had $52.9 million of marketable securities at September 30, 2018 and zero at December 31, 2017. The increase in cash and cash equivalents and marketable securities is mainly due to significant cash flow generated by operations, including the Company's receipt of the 2017 BTC refund in 2018.

At September 30, 2018, accounts receivable were $92.9 million, or 14 days of sales. Accounts receivable at December 31, 2017 were $90.6 million. Inventory was $141.2 million at September 30, 2018, or 23 days of cost of sales, an increase of $5.6 million from December 31, 2017.

The table below summarizes Chevron Renewable Energy Group’s results for the third quarter of 2018.

Chevron Renewable Energy Group Q3 2018 and Q3 2017 Revenues, Net Income (Loss), Adjusted Net Income (Loss) and Adjusted EBITDA Summary (in thousands except per gallon amounts)

Reconciliation of Non - GAAP Measures
The Company believes supplementing its consolidated financial statements presented in accordance with GAAP with non-GAAP measures provides investors with useful information regarding the Company's core operating performance, as well as short-term and long-term trends.

Adjusted net income and adjusted diluted earnings per common share are derived from GAAP results by excluding the non-cash impacts related to the change in the estimated fair value of the convertible debt conversion liability, change in fair value of contingent considerations, impairment of assets, and stock compensation, coupled with allocation of the net benefit of the 2017 BTC and the estimated net benefit of the 2018 BTC if retroactively reinstated on the same terms as 2017, as set forth in the footnotes to the tables below and the other items identified in the tables below that we believe are not related to our core operating activities.

Earnings before interest, taxes, depreciation and amortization, and further adjusted for certain additional items identified in the table below, or Adjusted EBITDA, is presented in order to assist investors in analyzing performance across reporting periods on a consistent basis by excluding items that are not believed to be indicative of core operating performance. Adjusted EBITDA and Adjusted net income are used by the Company to evaluate, assess and benchmark financial performance on a consistent and a comparable basis, and Adjusted EBITDA is used as a factor in determining incentive compensation for Company executives.

Adjusted net income, adjusted diluted earnings per common share and Adjusted EBITDA as presented by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or as superior to, financial performance measures prepared in accordance with GAAP.

Adjusted Net Income (Loss) and Adjusted EPS Reconciliation:
The following table sets forth Adjusted Net Income (Loss) and Adjusted net income (loss) per share for the periods presented, as well as a reconciliation to net income (loss) determined in accordance with GAAP:

Adjusted EBITDA Reconciliation:
The following table sets forth Adjusted EBITDA for the periods presented, as well as a reconciliation to net income (loss) determined in accordance with GAAP:

About Chevron Renewable Energy Group

Chevron Renewable Energy Group is a leading provider of cleaner, lower carbon intensity products and services. We are an international producer of biomass-based diesel, a developer of renewable chemicals and are North America's largest producer of advanced biofuel. Chevron Renewable Energy Group utilizes an integrated procurement, distribution, and logistics network to convert natural fats, oils, greases, and sugars into lower carbon intensity products. With 14 active biorefineries, a feedstock processing facility, research and development capabilities and a diverse and growing intellectual property portfolio, Chevron Renewable Energy Group is committed to being a long-term leader in bio-based fuel and chemicals.

Note Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including statements regarding the possible retroactive reinstatement of the BTC for 2018, the estimated benefits to net income, Adjusted net income and Adjusted EBITDA if the BTC is retroactively reinstated for 2018, the favorable market conditions in which we are operating and our efforts to optimize efficiencies in our operations. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, potential changes in governmental programs and policies requiring or encouraging the use of biofuels, including RFS2; availability of federal and state governmental tax incentives and incentives for biomass-based diesel production, including that the BTC may not be retroactively reinstated for 2018 or that it may be reinstated on less favorable terms; changes in the spread between biomass-based diesel prices and feedstock costs; the future price and volatility of feedstocks; the future price and volatility of petroleum and products derived from petroleum; risks associated with fire, explosions, leaks and other natural disasters at our facilities; the effect of excess capacity in the biomass-based diesel industry; unanticipated changes in the biomass-based diesel market from which we generate almost all of our revenues; seasonal fluctuations in our operating results; competition in the markets in which we operate; our dependence on sales to a single customer; technological advances or new methods of biomass-based diesel production or the development of energy alternatives to biomass-based diesel; our ability to successfully implement our acquisition strategy; our ability to generate revenue from the sale of renewable chemicals, fuels and other products on a commercial scale and at a competitive cost, and customer acceptance of the products produced; whether our Geismar biorefinery will be able to produce renewable diesel consistently or profitably; and other risks and uncertainties described in Chevron Renewable Energy Group's annual report on Form 10-K for the year ended December 31, 2017, Form 10-Q for the quarter ended June 30, 2018 and other reports subsequently filed with the SEC. All forward-looking statements are made as of the date of this press release and Chevron Renewable Energy Group does not undertake to update any forward-looking statements based on new developments or changes in our expectations.

Contacts
Company: Chevron Renewable Energy Group
Todd Robinson
Treasurer
+1 (515) 239-8048
[email protected]