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New words:
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Removed:
aforementioned, Amending, binding, Boston, Clarification, climb, combined, computation, detected, enactment, ending, explicitly, focusing, foremost, franchise, functional, holding, impacting, incremental, input, institutional, interaction, issuing, Jacobson, load, loading, methodology, misstatement, mix, motor, obsolescence, optimistic, outbreak, overstatement, owed, partial, Performing, petitioned, prevented, preventive, prioritized, readout, rebounding, record, redesigned, regular, reinforce, Sinclair, strict, tornado, understanding, understatement, validate, wavier, weekly, yellow
Financial report summary
?Competition
Westamerica Bancorporation • Darling Ingredients • Valero Energy • Noble • Futurefuel • Yingli Green Energy Holding • Pledge Petroleum • Noble Corp Plc - Ordinary SharesRisks
- The Renewable Fuel Standard Program, a federal law requiring the consumption of qualifying biofuels, could be repealed, curtailed or otherwise changed, which would have a material adverse effect on our revenues, operating margins and financial condition.
- Loss of, substantive changes in or reductions in federal and state government tax incentives for bio-based diesel production or consumption may have a material adverse effect on our revenues and operating margins.
- We derive a significant portion of our revenues from sales of our renewable fuel in the State of California primarily as a result of California’s LCFS; adverse changes in this law, cancellation, suspension or reductions in the value of LCFS credits would harm our revenues and profits.
- We derive a significant portion of our revenues from sales of our renewable fuel in Canada and Europe; adverse changes in the programs, or the cancellation, or suspension of such programs, requiring the use of renewable and lower carbon fuels or reductions in the value of credits would harm our revenues and profits.
- We derive a substantial portion of our profitability from the production of RD at our plant in Geismar, Louisiana and any interruption in our operations would have a material adverse effect on operations and financial conditions.
- Our planned site improvements and capacity expansion at our Geismar, Louisiana facility will require significant capital expenditures and there is no guarantee that the project will be completed on time or on budget, there may be cost overruns and construction delays, the project may suffer from the inability to obtain governmental permits and third party easements required or necessary to initiate or complete the improvement and expansion project which could have a negative effect on revenues and operations.
- Increased industry-wide production of biodiesel due to potential utilization of existing excess production capacity, announced plant expansions of RD and potential co-processing of RD by petroleum refiners, could reduce prices for our fuel and increase costs of feedstocks, which would seriously harm our revenues and operations.
- Our gross margins are dependent on the spread between bio-based diesel prices and feedstock costs, each of which are volatile and can cause our results of operations to fluctuate substantially.
- Risk management transactions could significantly increase our operating costs and may not be effective.
- One customer accounted for a meaningful percentage of revenues and a loss of this customer could have an adverse impact on our total revenues.
- Our facilities and our business, and our customers' facilities, are subject to risks associated with fire, explosions, leaks, natural disasters, including climate change, and political turmoil, which may disrupt our business and increase costs and liabilities.
- Cyberattacks targeting our process control networks or other digital infrastructure could have a material adverse impact on our business and results of operations.
- In addition to biodiesel and RD, we store and transport petroleum-based fuels. The dangers inherent in the storage and transportation of fuels could cause disruptions in our operations and could expose us to potentially significant losses, costs or liabilities.
- Our insurance may not protect us against our business and operating risks.
- We operate in a highly competitive industry and expect that competition in our industry will increase.
- We are dependent upon one supplier to provide hydrogen necessary to execute our RD production process and the loss of this supplier could disrupt our production process.
- Technological advances and changes in production methods in the bio-based diesel industry could render our plants obsolete and adversely affect our ability to compete.
- Our intellectual property is integral to our business. If we are unable to protect our intellectual property, or others assert that our operations violate their intellectual property, our business could be adversely affected.
- Increases in transportation costs or disruptions in transportation services could have a material adverse effect on our business.
- We are dependent upon our key management personnel and other personnel, and the loss of these personnel could adversely affect our business and results of operations.
- We may encounter difficulties in integrating the businesses we acquire, including our international businesses where we have limited operating history.
- We incur significant expenses to maintain and upgrade our operating equipment and plants, and any interruption in the operation of our facilities may harm our operating performance.
- Growth in the use, sale and distribution of biodiesel is dependent on the expansion of related infrastructure which may not occur on a timely basis, if at all, and our operations could be adversely affected by infrastructure limitations or disruptions.
- Our business is subject to seasonal changes based on regulatory factors and weather conditions and this seasonality could cause our revenues and operating results to fluctuate.
- Failure to comply with governmental and state regulations, including EPA requirements relating to RFS2, BTC, LCFS and other programs or new laws designed to deal with climate change, could result in the imposition of higher costs, penalties, fines, or restrictions on our operations and remedial liabilities.
- RD fuel is superior to biodiesel in certain respects and if RD production capacity increases to a sufficient extent, it could largely supplant biodiesel; we may not be successful in expanding our RD production capacity.
- Nitrogen oxide emissions from biodiesel may harm its appeal as a renewable fuel and increase costs.
- The market price for our common stock may be volatile.
- We have never paid dividends on our capital stock and we do not anticipate paying dividends in the foreseeable future.
- We may issue additional common stock as consideration for future investments or acquisitions.
- If we fail to maintain effective internal control over our financial reporting and financial forecasting, we may not be able to report our financial results accurately, provide accurate financial guidance or prevent fraud, and if we fail to maintain effective internal governance and conduct policies, such as our Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers and Trading by Insiders Policy, or if our employees fail to adhere to such policies, we may be unable to maintain a proper control environment. If any of these failures occur, our business could be harmed, our stockholders could lose confidence in our financial reporting and financial guidance or our business integrity and we could suffer negative media attention, which could negatively impact the value of our stock.
- Delaware law and our certificate of incorporation and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.
- The proposed Merger is subject to approval of our stockholders as well as the satisfaction of other closing conditions, including government consents and approvals, some or all of which may not be satisfied or completed within the expected timeframe, if at all.
- We may not complete the proposed Merger within the time frame we anticipate or at all, which could have an adverse effect on our business, financial results and/or operations.
- We will be subject to various uncertainties while the Merger is pending that may cause disruption and may make it more difficult to maintain relationships with customers and other third-party business partners.
- In certain instances, the Merger Agreement requires us to pay a termination fee to Parent, which could affect the decisions of a third party considering making an alternative acquisition proposal.
Management Discussion
- Revenues. Our total revenues for the first quarter of 2022 increased significantly by $396.2 million, or 73%, compared to the same quarter in 2021. The significant increase in revenues was primarily attributable to a substantial increase in the average bio-based diesel price per gallon. In the first three months of 2022, ULSD prices averaged $3.07 per gallon compared to $1.75 per gallon in the same period in 2021. The significant increase in ULSD prices was partially attributable to general market optimism and improving demand stemming from the easing of lockdown measures in the United States and internationally, as well as the conflict between Russia and Ukraine causing volatility in the commodities market and particularly crude oil. The heightened volatility impacted prices for both ULSD and feedstocks, causing the heating oil to soybean oil ("HOBO") spread to move substantially throughout the period. In addition, RIN values trended higher throughout the first three months of 2022. As a result of these factors, our average selling price significantly increased by $1.51, or 41%, in the three months ended March 31, 2022, compared to the same period in 2021.