Renewable Energy Group, Inc. (REGI)

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Renewable Energy Group (REGI)

Q4 2012 Results Earnings Call

March 04, 2013 04:30 PM ET


Daniel J. Oh - President and CEO

Chad Stone - CFO

Monte Bullock - Treasurer


Mahavir Sanghavi - UBS

Michael Cox - Piper Jaffray

Jeff Osborne - Stifel Nicolaus

John Quealy - Canaccord Genuity

Robert Wagner - Seeking Alpha



Good day, ladies and gentlemen, and welcome to and welcome to the Renewable Energy Group Inc. Fourth Quarter 2012 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions]. Today's conference is being recorded.

I would now like to turn the call to Treasurer, Monte Bullock. Please go ahead sir.

Monte Bullock

Thank you. Good afternoon everyone, and welcome to our fourth quarter 2012 earnings conference call. With me today is our President and Chief Executive Officer, Dan Oh; and our Chief Financial Officer, Chad Stone. We are here to discuss our fourth quarter and full year 2012 financial results and recent developments.

Before we begin, I would like to remind everyone that this call is being webcast and is available at the Investor Relations section of our website at A replay of this webcast will be available on our website for one year. The webcast includes an accompanying slide deck. The slides will appear automatically with the webcast, but you will need to advance them manually as we prompt you. For those of you dialing in, the slides can be downloaded, along with the earnings press release, in the Investor Relations section of our website.

Turning to slide 2, we would like to advise you that some of the information discussed in this conference call will contain forward-looking statements. These statements involve risks, uncertainties, and assumptions that are difficult to predict. Such forward-looking statements are not a guarantee of performance. The company's actual results could differ materially from those contained in such statements. Several factors could cause or contribute to such differences. These factors are described in detail in the risk factors and other sections of our annual report on Form 10-K and quarterly reports on Form 10-Q, which are on file with the SEC. They are also described in our earnings release and other SEC filings.

These forward-looking statements speak only as of the date of this call. The company undertakes no obligation to publicly update any forward-looking statements based on new information or revised expectations.

Today's discussion also includes non-GAAP financial measures. We believe these may be important to investors as a metric to assess the operating performance of our business. Please see the press release for a reconciliation of GAAP and non-GAAP measures.

With that, let me now turn the call over to our Chief Executive Officer, Dan Oh.

Daniel J. Oh

Thank you, Monte, and thank you everyone for joining on the call. I want to start by reviewing all of 2012, our first year as a publicly traded company. After we review the year and recent developments, I will then turn the call over to Chad for additional financial details.

REG has operated independently since 2006, and we have a great track record of growth and success in our market. I know Wall Street is always interested in the new news of the quarter, yet it is important to step back and look at the year, and how it fits in the context of a multiyear story. We intend to be a thriving and much larger company 10 years from now, and 2012 was an important stage in that evolution.

In 2012, we surpassed $1 billion in revenue, a significant milestone for our company. When we spun out of West Central Cooperative in 2006, we owned a single 12 million gallon-per-year biorefinery in Ralston, Iowa. We are now 10 times larger in revenue, with nearly 20 times of production capacity ready to facilitate further growth. In 2012 we represented 17% of the market, that we believe will grow substantially in the future.

Although our adjusted EBITDA declined compared to a record 2011, we were still solidly profitable, and cash flow positive in 2012 and strengthened our balance sheet, increased cash and reduced debt. After managing through many ups and downs over the last several years, including a major recession and the temporary expiration of the blenders tax credit in 2010 and again in 2012, with our durable business model, we were confident in our ability to adapt, survive, and thrive, in the years ahead. REG and the biodiesel industry are in a strong position to serve our nation's RFS to advanced biofuels needs.

Here are some of our key accomplishments in 2012. These accomplishments are evidence of the ability and hard work demonstrated by every employee within REG. We started the year by pushing through a challenging IPO market, especially for so called clean tech or alternative energy companies to complete the initial public offering of our stock. We sold 6.9 million new shares, raising $59.9 million for the company net of expenses. The additional working capital, has allowed us to run a larger production fleet and capital expenditures related to improvements of production processes and logistics, and investments.

Today, we have 227 million gallons of production capacity that will be online by the end of second quarter. Capacity growth came from the acquisition of a 15 million gallon-per-year plant in New Boston, Texas. That biorefinery is scheduled to begin production during the second quarter of 2013.

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