UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020

~~For the quarterly period ended June 30, 2020~~

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number: 0-52577

(Exact Name of Registrant as Specified in Its Charter)

Delaware		20-3340900
(State or Other Jurisdiction of		(IRS Employer Identification No.)
Incorporation or Organization)

8235 Forsyth Blvd., Suite 400, St Louis, Missouri		63105
(Address of Principal Executive Offices)		(Zip Code)

	(314) 854-8352
	(Registrant’s Telephone Number, Including Area Code)

~~(314) 854-8352~~

~~(Registrant’s Telephone Number, Including Area Code)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FF	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer	☑
Non-accelerated filer ☐	Smaller reporting company	☐
	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of ~~August 7,~~November 9, 2020: 43,743,243

	(Unaudited)				(Unaudited)
	June 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Assets
Cash and cash equivalents	$	187,823	$	243,331	$	180,171	$	243,331
Accounts receivable, inclusive of the blenders' tax credit of $16,307 and $97,295 at June 30, 2020 and December 31, 2019, respectively, and net of allowances for bad debt of $53 and $0 at June 30, 2020 and December 31, 2019, respectively		29,223		110,264
Accounts receivable, inclusive of the blenders' tax credit of $25,253 and $97,295 at September 30, 2020 and December 31, 2019, respectively, and net of allowances for bad debt of $43 and $0 at September 30, 2020 and December 31, 2019, respectively						37,211		110,264
Accounts receivable – related parties		312		4,602		1,384		4,602
Inventory		42,183		37,573		29,087		37,573
Income tax receivable		27,442		8,062		22,441		8,062
Prepaid expenses		1,150		1,932		583		1,932
Prepaid expenses – related parties		12		12		12		12
Marketable securities		62,095		73,620		63,476		73,620
Other current assets		4,228		1,493		1,494		1,493
Total current assets		354,468		480,889		335,859		480,889
Property, plant and equipment, net		95,348		98,597		93,598		98,597
Intangible assets		1,408		1,408		1,408		1,408
Other noncurrent assets		5,622		5,611		5,918		5,611
Total noncurrent assets		102,378		105,616		100,924		105,616
Total Assets	$	456,846	$	586,505	$	436,783	$	586,505
Liabilities and Stockholders’ Equity
Accounts payable, inclusive of the blenders' tax credit rebates due customers of $6,802 and $39,423	$	31,503	$	61,299
Accounts payable, inclusive of the blenders' tax credit rebates due customers of $1,365 and $39,423					$	9,479	$	61,299
Accounts payable – related parties		1,475		1,255		914		1,255
Deferred revenue – short-term		3,427		5,237		3,596		5,237
Dividends payable		5,249		10,498		2,625		10,498
Accrued expenses and other current liabilities		6,982		4,410		6,886		4,410
Accrued expenses and other current liabilities – related parties		-		64		0		64
Total current liabilities		48,636		82,763		23,500		82,763
Deferred revenue – long-term		22,442		21,291		22,139		21,291
Noncurrent deferred income tax liability		13,620		12,965		11,969		12,965
Other noncurrent liabilities		2,204		2,388		2,348		2,388
Total noncurrent liabilities		38,266		36,644		36,456		36,644
Total liabilities		86,902		119,407		59,956		119,407
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding		-		-		0		0
Common stock, $0.0001 par value, 75,000,000 shares authorized, 43,743,243, issued and outstanding at June 30, 2020 and December 31, 2019		4		4
Common stock, $0.0001 par value, 75,000,000 shares authorized, 43,743,243, issued and outstanding at September 30, 2020 and December 31, 2019						4		4
Accumulated other comprehensive income		133		296		126		296
Additional paid in capital		282,215		282,166		282,215		282,166
Retained earnings		87,592		184,632		94,482		184,632
Total stockholders’ equity		369,944		467,098		376,827		467,098
Total Liabilities and Stockholders’ Equity	$	456,846	$	586,505	$	436,783	$	586,505

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

Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019			2020			2019			2020			2019
Revenue	$	47,310		$	70,076		$	99,682		$	117,498		$	53,306		$	65,332		$	152,988		$	182,830
Revenue – related parties		112			788			822			1,867			832			352			1,654			2,219
Cost of goods sold		43,469			61,501			76,250			101,566			44,129			54,037			120,379			155,603
Cost of goods sold – related parties		1,342			4,063			3,557			7,859			1,508			4,455			5,065			12,314
Distribution		1,657			1,994			3,297			3,319			2,007			1,687			5,304			5,006
Distribution – related parties		43			36			90			89			48			43			138			132
Gross profit		911			3,270			17,310			6,532			6,446			5,462			23,756			11,994
Selling, general, and administrative expenses
Compensation expense		724			620			1,579			1,335			769			661			2,348			1,996
Other expense		403			547			985			1,048			927			561			1,912			1,609
Related party expense		155			130			303			259			155			132			458			391
Research and development expenses		768			788			1,603			1,494			791			833			2,394			2,327
Total operating expenses		2,050			2,085			4,470			4,136			2,642			2,187			7,112			6,323
(Loss) income from operations		(1,139	)		1,185			12,840			2,396
Income from operations														3,804			3,275			16,644			5,671
Interest and dividend income		1,519			2,750			3,486			5,112			1,076			2,718			4,562			7,830
Interest expense		(31	)		(44	)		(87	)		(87	)		(32	)		(43	)		(119	)		(130	)
Gain (loss) on marketable securities		1,573			826			(8,486	)		3,753			1,213			1,424			(7,273	)		5,177
Other income (expense)		8,348			(113	)		8,348			(113	)
Other (expense) income														(1	)		262			8,347			149
Other income		11,409			3,419			3,261			8,665			2,256			4,361			5,517			13,026
Income before taxes		10,270			4,604			16,101			11,061			6,060			7,636			22,161			18,697
Income tax (benefit) provision		(4,889	)		917			(18,101	)		1,875			(830	)		1,014			(18,931	)		2,889
Net income	$	15,159		$	3,687		$	34,202		$	9,186		$	6,890		$	6,622		$	41,092		$	15,808

Earnings per common share
Basic	$	0.35		$	0.08		$	0.78		$	0.21		$	0.16		$	0.15		$	0.94		$	0.36
Diluted	$	0.35		$	0.08		$	0.78		$	0.21		$	0.16		$	0.15		$	0.94		$	0.36
Weighted average shares outstanding
Basic		43,743,243			43,743,243			43,743,243			43,743,243			43,743,243			43,743,243			43,743,243			43,743,243
Diluted		43,743,740			43,743,243			43,743,491			43,746,109			43,745,339			43,743,243			43,744,107			43,745,153

Comprehensive income
Net income	$	15,159		$	3,687		$	34,202		$	9,186		$	6,890		$	6,622		$	41,092		$	15,808
Other comprehensive income (loss) from unrealized net gains (losses) on available-for-sale debt securities		190			22			(207	)		278
Other comprehensive (loss) income from unrealized net (losses) gains on available-for-sale debt securities														(8	)		1			(215	)		279
Income tax effect		(40	)		(5	)		44			(59	)		1			0			45			(59	)
Total other comprehensive income (loss), net of tax		150			17			(163	)		219
Total other comprehensive (loss) income, net of tax														(7	)		1			(170	)		220
Comprehensive income	$	15,309		$	3,704		$	34,039		$	9,405		$	6,883		$	6,623		$	40,922		$	16,028

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

	Six Months Ended June 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Cash flows from operating activities
Net income	$	34,202		$	9,186		$	41,092		$	15,808
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		5,862			5,602			8,554			9,092
Amortization of deferred financing costs		60			72			84			108
Benefit for deferred income taxes		699			(445	)
Change in deferred income taxes, net								(951	)		(273	)
Change in fair value of equity securities		7,405			(4,891	)		5,445			(6,621	)
Change in fair value of derivative instruments		198			(297	)		(757	)		(357	)
Loss on the sale of investments		1,080			1,138			1,828			1,444
Stock based compensation		49			-			49			21
Loss on disposal of property and equipment		2			11
Gain on disposal of property and equipment								(51	)		(11	)
Noncash interest expense		27			14			35			22
Changes in operating assets and liabilities:
Accounts receivable		81,029			(5,347	)		73,041			(4,526	)
Accounts receivable – related parties		4,290			1,814			3,218			1,822
Inventory		(4,610	)		3,180			8,486			(3,493	)
Income tax receivable		(19,380	)		1,336			(14,379	)		6,491
Prepaid expenses		782			712			1,349			1,257
Prepaid expenses – related parties		-			12
Other assets		350			539			483			221
Accounts payable		(29,702	)		958			(51,711	)		5,951
Accounts payable – related parties		220			(1,248	)		(341	)		(717	)
Accrued expenses and other current liabilities		2,572			688			2,295			1,904
Accrued expenses and other current liabilities – related parties		(64	)		-			(64	)		0
Deferred revenue		(659	)		591			(793	)		(274	)
Other noncurrent liabilities		(211	)		(98	)		(336	)		(3,511	)
Net cash provided by operating activities		84,201			13,527			76,576			24,358
Cash flows from investing activities
Collateralization of derivative instruments		(2,877	)		908			801			852
Purchase of marketable securities		(2,359	)		(14,323	)		(5,073	)		(19,200	)
Proceeds from the sale of marketable securities		5,192			17,682			7,729			28,962
Proceeds from the sale of property and equipment		50			13			104			13
Capital expenditures		(2,759	)		(4,659	)		(3,717	)		(6,139	)
Net cash used in investing activities		(2,753	)		(379	)
Net cash (used in) provided by investing activities								(156	)		4,488
Cash flows from financing activities
Loan proceeds		8,180			-			8,180			0
Payment on loan		(8,180	)		-			(8,180	)		0
Deferred financing costs		(477	)		-			(477	)		0
Payment of dividends		(136,479	)		(5,249	)		(139,103	)		(7,873	)
Net cash used in financing activities		(136,956	)		(5,249	)		(139,580	)		(7,873	)
Net change in cash and cash equivalents		(55,508	)		7,899			(63,160	)		20,973
Cash and cash equivalents at beginning of period		243,331			214,972			243,331			214,972
Cash and cash equivalents at end of period	$	187,823		$	222,871		$	180,171		$	235,945

Cash paid for interest	$	1		$	-		$	2		$	0
Cash paid for income taxes	$	639		$	898		$	660		$	1,076
Noncash investing and financing activities:
Noncash capital expenditures	$	94		$	108		$	98		$	42
Noncash operating leases	$	-		$	432		$	442		$	432

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

Notes to Consolidated Financial Statements of FutureFuel Corp.

FutureFuel Corp. (“FutureFuel” or “the Company”), through its wholly-owned subsidiary, FutureFuel Chemical Company (“FutureFuel Chemical”), owns and operates a chemical production facility located on approximately 2,200 acres of land six miles southeast of Batesville in north central Arkansas fronting the White River (the “Batesville Plant”). FutureFuel Chemical manufactures diversified chemical products, biobased products composed of biofuels, and biobased specialty chemical products. FutureFuel Chemical’s operations are reported in two segments: chemicals and biofuels.

The chemicals segment manufactures a diversified portfolio of chemical products that are sold to third party customers. The majority of the revenues from the chemicals segment are derived from the custom manufacturing of specialty chemicals for specific customers.

The biofuels segment primarily produces and sells biodiesel. FutureFuel Chemical also sells petrodiesel in blends with the Company’s biodiesel and, from time to time, with no biodiesel added. FutureFuel Chemical is a shipper of refined petroleum products on common carrier pipelines and buys and sells petroleum products to maintain an active shipper status on these pipelines.

The unaudited consolidated financial statements have been prepared by FutureFuel in accordance and consistent with the accounting policies stated in FutureFuel’s 2019 audited consolidated financial statements and should be read in conjunction with the 2019 audited consolidated financial statements of FutureFuel.

In the opinion of FutureFuel, all normal recurring adjustments necessary for a fair presentation have been included in the unaudited consolidated financial statements. The unaudited consolidated financial statements have been prepared in compliance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, the unaudited consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements, and do include amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The unaudited consolidated financial statements include assets, liabilities, revenues, and expenses of FutureFuel and its direct and indirect wholly owned subsidiaries; namely, FutureFuel Chemical Company; FFC Grain, L.L.C.; FutureFuel Warehouse Company, L.L.C.; and Legacy Regional Transport, L.L.C. Intercompany transactions and balances have been eliminated in consolidation.

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 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. As this act was passed into law in 2019, the Company recognized its impact in the last quarter of 2019 for both periods (2018 and 2019) within the Company’s 2019 financial results. Rebates to customers are recorded as a reduction of revenue. The Company records the BTC as a reduction to cost of goods sold.

Notes to Consolidated Financial Statements of FutureFuel Corp.

As the law from which the BTC mentioned above was reinstated, small agri-biodiesel producers with production capacity not in excess of 60 million gallons were 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 was eligible for this credit and recognized its benefit in the three months ended December 31, 2019 and in the three and ~~six~~nine months ended ~~June~~September 30, 2020 as part of the tax provision.

FutureFuel recognizes revenue when performance obligations of the customer contract are satisfied. FutureFuel sells to customers through master sales agreements or standalone purchase orders. The majority of FutureFuel's terms of sale have a single performance obligation to transfer products. Accordingly, FutureFuel recognizes revenue when control has been transferred to the customer, generally at the time of shipment or delivery of products. For certain contracts, this occurs upon delivery of the material to a FutureFuel storage location, ready for customer pickup and separated from other FutureFuel inventory. Revenue is measured as the amount of consideration FutureFuel expects to receive in exchange for transferring products and is generally based upon a negotiated price. FutureFuel sells its products directly to customers generally under agreements with payment terms of 30 to 75 days for chemicals segment customers and 2 to 10 days for biofuels segment customers.

Certain of FutureFuel custom chemical contracts within the chemicals segment contain a material right as defined by ASU 2014-09,Revenue from Contracts with Customers (“ Topic ~~606,~~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. Each contract also has a performance obligation to transfer products with 30-day payment terms. FutureFuel recognizes revenue when the customer takes control of the inventory, either upon shipment or when the material is made available for pickup. If the customer is deemed to take control of the inventory prior to pick up, the Company recognizes the revenue as a bill-and-hold transaction in accordance with Topic 606. FutureFuel applies the renewal option approach in allocating the transaction price to these material rights and transfer of product. As a basis for allocating the transaction price to the material right and transfer of product, FutureFuel estimates the expected life of the product, the expected contractual volumes to be sold over that life, and the most likely expected sales price. Each estimate is updated quarterly on a prospective basis.

Contract assets consist of unbilled and undelivered amounts typically resulting from revenue recognized through bill-and-hold arrangements. The contract assets at ~~June~~September 30, 2020 and December 31, 2019 consist of unbilled revenue from one customer and are recorded as accounts receivable in the consolidated balance sheets. Contract liabilities consist of advance payments related to material rights recorded as deferred revenue in the consolidated balance sheets. Increases to contract liabilities from cash received for a performance obligation of chemicals segment plant expansions were ~~$1,051~~$95 and ~~$1,471, and $3,358 and $2,909,~~$492, for the three months and $3,453 and $3,402, for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. Contract liabilities are reduced as the Company transfers product to the customer under the renewal option approach. Revenue recognized in the chemicals segment from the contract liability reductions were ~~$2,579~~$174 and ~~$857~~$1,302 for the three months, and ~~$3,906~~$4,080 and ~~$2,208~~$3,510 for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, 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.

Included in the ~~three~~nine months ended ~~June~~September 30, 2020, was the acceleration of the recognition of the remaining material right related to a customer contract which effectively ends December 31, 2020 for which all product shipments have been fulfilled. The amortization of this customer contract liability was ~~$2,909~~$0 and ~~$89,~~$214, for the three months ended ~~June~~September 30, 2020 and 2019, respectively; $3,452 and ~~$570,~~$784, for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

Notes to Consolidated Financial Statements of FutureFuel Corp.

The following table provides the balances of receivables, contract assets, and contract liabilities from contracts with customers.

*Exclusive of the BTC of ~~$16,307~~$25,253 and ~~$97,295,~~$97,295, respectively, and net of allowances for bad debt of ~~$53~~$43 and $0$0 as of the dates noted.

At ~~June~~September 30, 2020, approximately ~~$21,634~~$21,555 of revenue is expected to be recognized from remaining performance obligations. FutureFuel expects to recognize this revenue ratably with product sold over the expected term of its long-term contracts which range from four to six years. Approximately ~~15%~~16% of this revenue is expected to be recognized over the next 12 months, and ~~85%~~84% is expected to be recognized between years two and ~~six~~.six. These amounts are subject to change based upon changes in the estimated contract life and estimated quantities to be sold over the contract life.

The Company applies the practical expedient in ASC 606-10-50-14 and excludes the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less; and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

The following tables provide revenue from customers disaggregated by the type of arrangement and by the timing of the recognized revenue.

Disaggregation of revenue - contractual and ~~non-contractual:~~non-contractual:

As of ~~June~~September 30, 2020, $~~4,105~~2,653 of the three- and ~~six~~nine-months ~~bill and hold~~bill-and-hold revenue had not shipped.

Notes to Consolidated Financial Statements of FutureFuel Corp.

Lower of Cost or Market ("LCM") adjustments are recorded as a decrease in inventory values and an increase in cost of goods sold. The inventory is relieved at the LCM adjusted cost basis when sold. There was an ~~LCM adjustment of $530 in the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2020.~~~~For the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June~~~~30,~~~~2019,~~~~there was 0 LCM adjustment~~.

The Company records all derivative instruments at fair value. Fair value is determined by using the closing prices of the derivative instruments on the New York Mercantile Exchange at the end of an accounting period. Changes in the fair value of derivative instruments are recognized at the end of each accounting period and recorded in the statement of income as a component of cost of goods sold.

In order to manage commodity price risk caused by market fluctuations in biofuel prices, future purchases of feedstock used in biodiesel production, physical feedstock, finished product inventories attributed to the process, and other petroleum products purchased or sold, the Company may enter into exchange-traded commodity futures and options contracts. The Company accounts for these derivative instruments in accordance with ASC 815-20-25, Derivatives and ~~Hedging.~~Hedging. Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship. To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained. The Company had no derivative instruments that qualified under these rules as designated accounting hedges in 2020 or 2019. 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 $935 and a~~ gain of ~~$5,922~~$867 and $6,789 for the three months and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, and a gain of ~~$443~~$322 and a loss of ~~$1,033~~$711 for the three months and ~~six~~nine months ended ~~June~~September 30, 2019, respectively.

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

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of ~~$3,968~~$290 and $1,091 at ~~June~~September 30, 2020 and December 31, 2019, 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.

Notes to Consolidated Financial Statements of FutureFuel Corp.

At ~~June~~September 30, 2020 and December 31, 2019, FutureFuel had investments in certain debt securities (trust preferred securities and exchange-traded debt instruments) and in preferred stock and other equity instruments. These investments are classified as current assets in the consolidated balance sheets. The unrealized gain on equity securities held for the three months ended ~~June~~September 30, 2020 and 2019 were ~~$2,164~~$1,961 and ~~$1,883,~~$1,730, respectively. The unrealized (loss) gain on equity securities held for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 were ($~~7,405)~~5,445) and ~~$4,891,~~$6,621, respectively.

FutureFuel has designated the debt securities as being available-for-sale. The following comprises the available-for-sale debt securities balances included within marketable securities in the consolidated balance sheets at the respective dates:

The aggregate fair value of debt securities with unrealized losses totaled $0 at ~~June~~September 30, 2020 and $151 at December 31, 2019. Effective January 1, 2020 the Company adopted ASU 2016-13 using the modified retrospective approach. Under ASU 2016-13 the Company evaluates the debt securities for credit losses using the current expected credit loss model (“CECL”). At the date of adoption and at ~~June~~September 30, 2020, the Company held no debt securities with a fair value below adjusted cost, and no evaluation under the CECL model was required.

Sales of debt securities amounted to $1,500 in the three and nine months ended September 30, 2020, resulting in gains of $72. There were 0no sales of debt securities in the ~~six~~nine months ended ~~June~~September 30, ~~2020~~ or 2019.

The debt securities held at ~~June~~September 30, 2020, had a contractual maturity of greater than ten years.

Notes to Consolidated Financial Statements of FutureFuel Corp.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Fair value accounting pronouncements also include a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of FutureFuel. Unobservable inputs are inputs that reflect FutureFuel’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following tables provide information by level for assets and liabilities that are measured at fair value, on a recurring basis, at ~~June~~September 30, 2020 and December 31, 2019.

In April of 2015, FutureFuel acquired additional historical line space on a pipeline for $1,408. The acquired line space was recorded as an intangible asset with an indefinite life as there was no foreseeable limit on the time period over which it is expected to contribute to cash flows. The carrying value of the asset was $1,408 at ~~June~~September 30, 2020 and December 31, ~~2019~~2019. FutureFuel tests the intangible asset for impairment in accordance with Topic 350, Intangibles-Goodwill and Other.

Notes to Consolidated Financial Statements of FutureFuel Corp.

On March 30, 2020, FutureFuel, with FutureFuel Chemical as the borrower and certain of FutureFuel’s other subsidiaries as guarantors, amended and restated its credit agreement (the “Credit Agreement”) originally entered into on April 16, 2015 (as amended, the “Prior Credit Agreement”) with the lenders party, Regions Bank as administrative agent and collateral agent, and PNC Bank, N.A., as syndication agent. The Credit Agreement consists of a five-year revolving credit facility in a dollar amount of up to $100,000, which includes a sublimit of $30,000 for letters of credit and $15,000 for swingline loans (collectively, the “Credit Facility”). The Credit Facility expires on March 30, 2025. The primary amendments from the Prior Credit Agreement were a reduction in the facility by $65,000, a reduction in the facility’s applicable interest rate by 0.25%, a reduction in the commitment fee, and elimination of the minimum consolidated fixed charge coverage ratio.

The interest rate floats at the following margins over LIBOR or base rate based upon the leverage ratio from time to time:

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

There were 0 borrowings under the Credit Agreement at ~~June~~September 30, 2020 or under the Prior Credit Agreement at December 31, 2019.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted to provide emergency assistance for individuals, families and businesses affected by the coronavirus pandemic. Under the CARES Act, certain subsidiaries of FutureFuel entered into a loan with Saint Louis Bank pursuant to the Paycheck Protection Program (“PPP”) totaling $8,180 on April 10, 2020. At the time that FutureFuel applied for the PPP loan, it qualified to receive the funds pursuant to the then published eligibility requirements. FutureFuel ensured continued operation as part of the nation’s critical infrastructure on the receipt and availability of these funds. However, the Small Business Administration and Treasury Department subsequently issued new guidance that cast doubt on the ability of public companies to qualify for a PPP loan. As a result, FutureFuel ~~paid~~repaid the full amount of the PPP loan on May 5, 2020.

Notes to Consolidated Financial Statements of FutureFuel Corp.

The effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2020 reflects the positive effect of the reinstatement of certain tax credits and incentives for 2020, the most significant of which were the BTC and Small Agri-biodiesel Producer Tax Credit. The BTC and Small Producer Agri-biodiesel Producer Credit were retroactively extended for 2018 and 2019 on December 20, 2019 and further extended through December 31, 2022. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) (“CARES Act”). The CARES Act provides that Net Operating Losses (“NOLs”) arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 shall be treated as a carryback to each of the 5 preceding taxable years unless the taxpayer elects to forego the carryback. This enacted NOL provision had a positive effect on the effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2020 as FutureFuel will be able to ~~carryback~~carry back its 2019 and 2020federal ~~NOL~~NOLs to ~~a year~~years with a higher tax rate rather than forward to ~~a year~~years with a lower tax rate.

The effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2019 reflects the unfavorable effect of the BTC and Small Producer Agri-biodiesel Producer Credit not being in the law for the first ~~six~~nine months of 2019. The ~~six~~nine months ended ~~June~~September 30, 2019 rate was also favorably impacted from a retroactive research and development credit for 2018 in a state where FutureFuel does significant business.

There were 0no unrecognized tax benefits at ~~June~~September 30, 2020 or December 31, 2019.

FutureFuel recorded interest and penalties, net, as a component of income tax provision and had accrued balances of ~~$13~~$15 and ($557) at ~~June~~September 30, 2020 and December 31, 2019, respectively.

In the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, FutureFuel used the treasury method in computing earnings per share.

For the three and ~~six~~nine months ended ~~June~~September 30, 2020, ~~50,000~~40,000 and ~~62,000~~54,667 options were excluded on a weighted average basis respectively, as these options were anti-dilutive in the computation of diluted earnings per share. For the three and ~~six~~nine months ended ~~June~~September 30, 2019, ~~40,000~~50,000 and ~~20,000~~30,000 options were excluded on a weighted average basis, respectively.

Notes to Consolidated Financial Statements of FutureFuel Corp.

The following tables summarize changes in accumulated other comprehensive income from unrealized gains and losses on available-for-sale debt securities in the three and nine months ended September 30, 2020 and 2019.

The following tables summarize amounts reclassified from accumulated other comprehensive income in the three and nine months ended September 30, 2020 and 2019.

There were 0 reclassifications from accumulated other comprehensive income in the three and nine months ended September 30, 2019.

FutureFuel enters into transactions with companies affiliated with or controlled by a director and significant shareholder. Revenues, expenses, prepaid amounts, and unpaid amounts related to these transactions are captured in the accompanying consolidated financial statements as related party line items.

Related party revenues are the result of sales of biodiesel, petrodiesel, blends, other petroleum products, and other similar or related products to these related parties.

Related party cost of goods sold and distribution are the result of sales of biodiesel, petrodiesel, blends, and other petroleum products to these related parties along with the associated expense from the purchase of natural gas, storage and terminalling services by FutureFuel from these related parties.

FutureFuel has two reportable segments organized along similar product groups – chemicals and biofuels.

FutureFuel’s chemicals segment manufactures diversified chemical products that are sold externally to third party customers. This segment is composed of two components: “custom manufacturing” (manufacturing chemicals for specific customers) and “performance chemicals” (multi-customer specialty chemicals).

FutureFuel’s biofuels segment primarily manufactures and markets biodiesel. Biodiesel revenues are generated through the sale of biodiesel to customers through FutureFuel’s distribution network at the Batesville Plant, through distribution facilities available at leased oil storage facilities, and through a network of remotely located tanks. Biofuels revenues also include the sale of biodiesel blends with petrodiesel; the sale of petrodiesel with no biodiesel added; the sale of internally generated, separated Renewable Identification Numbers (“RINs”); the sale of biodiesel production byproducts; and the purchase and sale of other petroleum products on common carrier pipelines. Biodiesel selling prices and profitability can at times fluctuate based on the timing of unsold, internally generated RINs. FutureFuel does not allocate production costs to internally generated RINs, and, from time to time, can enter into sales of biodiesel on a “RINs-free” basis, resulting in FutureFuel maintaining possession of the applicable RINs from the sale. 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.

Notes to Consolidated Financial Statements of FutureFuel Corp.

Depreciation is allocated to segment cost of goods sold based on plant usage. The total assets and capital expenditures of FutureFuel have not been allocated to individual segments as large portions of these assets are shared to varying degrees by each segment, causing such an allocation to be of little value.

On March 23, 2020, the Company declared a special cash dividend of $3.00 per share on common stock in the amount of $131,230 that was paid on April 17, 2020.

In the first quarter of 2020, the Company adopted ASU 2016-13, ~~"Financial~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments"~~Instruments and the associated ASUs (collectively “Topic 326”) on a modified retrospective approach. The amendments replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company recorded a $12 reduction to opening retained earnings and an allowance for bad debt of $12 on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, ~~"Income~~Income Taxes (Topic 740): Simplifying the Accounting for Income ~~Taxes."~~Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, "Income Taxes" and improve consistent application by clarifying and amending existing guidance. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. The Company is currently evaluating the impact of adopting this guidance.

Notes to Consolidated Financial Statements of FutureFuel Corp.

ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Effective March 12, 2020, the guidance in the update is in response to concerns about structural risks of interbank offered rates (IBORs), and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR). Regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This guidance will ease the accounting burden associated with transitioning away from reference rates that are expected to be discontinued within our credit facility as described in Note 10.

From time to time, FutureFuel and its operations are parties to, or targets of, lawsuits, claims, investigations, regulatory matters, and proceedings, which are being handled and defended in the ordinary course of business. 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~~nine months ended ~~June~~September 30, 2020, the Company reached a legal resolution of a prior year contractual matter for which an accrual of $8,350 was relieved as other income.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations of FutureFuel Corp. (“FutureFuel”, “the Company”, “we”, or “our”) should be read together with our consolidated financial statements, including the notes thereto, set forth herein. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements. See “Forward-Looking Information” below for additional discussion regarding risks associated with forward-looking statements.

Our Company is managed and reported in two reporting segments: chemicals and biofuels. Within the chemicals segment are two product groupings: custom chemicals and performance chemicals. The custom product group is composed of specialty chemicals manufactured for a single customer whereas the performance chemical product group is composed of chemicals manufactured for multiple customers. The biofuels segment is composed of one product group. Management believes that the diversity of each segment strengthens the Company in the ability to utilize resources and is committed to growing each segment.

In March 2020, the World Health Organization categorized COVID-19 as a pandemic. COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of its effects remain unknown. Our priority remains to protect the well-being of our employees, support our customers, obtain materials from our suppliers, and maintain our manufacturing operations. We have been able to continue supplying our products to our customers to date, however, some customers have reduced their near-term demand. We have also been able to find alternative sources for raw materials and inputs to meet our near-term supply requirements.

We continue to closely monitor the impact of COVID-19 on all aspects of our business, including its impact on our customers, employees, and suppliers. The extent to which COVID-19 impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and are difficult to predict; these developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

Because the magnitude and duration of the COVID-19 pandemic and its economic consequences are unclear, the pandemic’s impact on our performance is difficult to predict. The ~~three~~ principle ~~areas~~area we continue to anticipate COVID-19 to negatively impact our financial performance ~~are~~is our customer ~~demand, our ability to procure raw materials and inputs from suppliers, and our ability to operate our manufacturing facility.~~demand.

Customer Demand – Several of our major chemical customers sell the products we produce for them in markets that have been significantly impacted by COVID-19. The energy and automotive markets in particular have drastically been impacted starting in April which we anticipate will reduce chemicals segment revenue the remainder of the year based on current estimates. Low diesel prices and a Renewable Identification Number (RIN) market that has stagnated on uncertainty of required mandates has similarly reduced the value of our finished product. The duration of this impact of COVID-19 is ~~clearly~~ difficult to forecast. We currently expect these markets to recover over time. However, the speed at which these market sectors rebound is highly uncertain and will be determined by reopening of economies and restoration of consumer confidence.

~~Supply Chain Impact~~ – Supplier shutdowns may result in raw material or input shortages and negatively impact our ability to manufacture products and meet our customers’ demand. In our biofuels segment, we are seeing significant contraction among many of our feedstock suppliers. Closures and idling of restaurants (used cooking oil source), ethanol plants (corn oil source), rendering and poultry plants (tallow and grease source) have impacted our traditional supply chain. In addition, supply shortages may impact the timing of when customer facilities reopen and/or increase production and the speed at which customers ramp up production, negatively impacting demand for our products. Lower demand increases the risk that certain suppliers may face financial issues, potentially impacting their ability to supply.

~~Operations Impact~~ - Our manufacturing is generally considered critical services and our plant remains open to meet customer demand. In an effort to contain the spread of COVID-19, maintain the well-being of our employees, ensure compliance with governmental requirements or respond to declines in demand from customers, we have had, where possible, employees work from home and temporarily closed portions of our offices. We continue to take actions to help prevent the spread of COVID-19 at work including social distancing, expanding cleaning and sanitization, adjusting work hours and temperature checks. To date we have had no negative impact on our ability to operate the plant safely and in a way that meets our customers’ demands.

Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts on our financial condition and results of operations. For more information on the risks associated with COVID-19, refer to Part II, Item 1A, "Risk Factors" herein.

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

We use adjusted EBITDA as a key operating metric to measure both performance and liquidity. Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is not a substitute for operating income, net income, or cash flow from operating activities (each as determined in accordance with GAAP) as a measure of performance or liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP. We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization expenses, excluding, when applicable, non-cash stock-based compensation expenses, public offering expenses, acquisition-related transaction costs, purchase accounting adjustments, losses on disposal of property and equipment, gains or losses on derivative instruments, and other non-operating income or expenses. Information relating to adjusted EBITDA is provided so that investors have the same data that we employ in assessing the overall operation and liquidity of our business. Our calculation of adjusted EBITDA may be different from similarly titled measures used by other companies; therefore, the results of our calculation are not necessarily comparable to the results of other companies.

Adjusted EBITDA allows our chief operating decision makers to assess the performance and liquidity of our business on a consolidated basis to assess the ability of our operating segments to produce operating cash flow to fund working capital needs, to fund capital expenditures, and to pay dividends. In particular, our management believes that adjusted EBITDA permits a comparative assessment of our operating performance and liquidity, relative to a performance and liquidity based on GAAP results. This measure isolates the effects of certain items, including depreciation and amortization (which may vary among our operating segments without any correlation to their underlying operating performance), non-cash stock-based compensation expense (which is a non-cash expense that varies widely among similar companies), and gains and losses on derivative instruments (which can cause net income to appear volatile from period to period relative to the sale of the underlying physical product).

We utilize commodity derivative instruments primarily to protect our operations from downward movements in commodity prices, and to provide greater certainty of cash flows associated with sales of our commodities. We enter into hedges, and we utilize mark-to-market accounting to account for these instruments. Thus, our results in any given period can be impacted, and sometimes significantly, by changes in market prices relative to our contract price along with the timing of the valuation change in the derivative instruments relative to the sale of biofuel. We include this item as an adjustment as we believe it provides a relevant indicator of the underlying performance of our business in a given period.

Additionally, we invest in marketable securities of certain debt securities (trust preferred stock and exchange-traded debt instruments) and in preferred stock and other equity instruments. The realized and unrealized gains and losses on these marketable securities can fluctuate significantly from period to period. We include this item as an adjustment as we believe it provides a relevant indicator of the underlying performance of our business in a given period.

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

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

Consolidated revenue in the three and ~~six~~nine months ended ~~June~~September 30, 2020, decreased ~~$23,442~~$11,546 and ~~$18,861,~~$30,407, compared to the three and ~~six~~nine months ended ~~June~~September 30, 2019. ~~The~~This decrease ~~in the three months ended June 30, 2020~~ primarily resulted from lower sales volumes in the chemicals segment and lower biofuel selling prices indriven by the ~~biofuel segment~~COVID-19 pandemic along with the absence of ~~$19,473 which was negatively impacted by supply demand imbalance and lower sales volume in the chemical segment of $6,032 from~~ an agrochemical product we no longer make. ~~The decrease in the six months ended June 30, 2020 primarily resulted from lower prices in the biofuel segment of $27,116 and lower sales volume in the chemical segment of $5,153.~~ Partially offsetting this ~~decrease~~decline in the ~~six-month comparison~~three and nine-month period was ~~higher~~increased biofuels sales ~~volumes in the biofuels segment of $10,935 given the favorable market conditions with the reinstatement of the blenders' tax credit ("BTC").~~volumes.

Gross profit in the three and nine months ended ~~June~~September 30, 2020 ~~decreased $2,359~~increased $984 and $11,762 compared to the three and nine months ended ~~June~~September 30, 2019. This ~~decrease~~increase was ~~driven by lower prices~~primarily from: i) the blenders’ tax credit (“BTC”) being in effect for the current period and not in effect in the ~~biofuels segment~~prior year periods; ii) increased sales volumes of biofuels; and lower volumes in both the chemicals and biofuels segments resulting from reduced demand from the weakened global fuel market and the impact of the COVID-19 pandemic as well as an agrochemical product we no longer make. Gross profit was also reduced byiii) the change in the unrealized and realized activity in derivative ~~instruments with~~instruments. The change in derivatives was a ~~loss~~gain of ~~$935~~$867 and $322 in the three months ended ~~June~~September 30, 2020 and 2019, respectively. The change in derivatives had a ~~gain of $443~~greater impact in the ~~three months ended June 30, 2019.~~

Gross profit in the six months ended June 30, 2020 increased $10,778 compared to the six months ended June 30, 2019. This increase primarily resulted from: i) the BTC being in effect for the currentnine-month comparison period ~~versus not being in effect in the prior six-month period; and ii) the change in the unrealized and realized activity in derivative instruments~~ with a gain of ~~$5,922~~$6,789 in the ~~six~~nine months ended ~~June~~September 30, 2020 and a loss of ~~$1,033~~$711 in the ~~six~~nine months ended ~~June~~September 30, 2019. Mostly reducing this profit was the reduction in chemical sales volumes as described above.

Also ~~benefiting~~impacting gross profit in both the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 was the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. In the three months ended ~~June~~September 30, 2020 this adjustment decreased gross profit $628 and increased gross profit $557 in the three months ended September 30, 2019. In the nine months ended September 30, 2020 and 2019, this adjustment increased gross profit ~~$1,575~~$2,266 and ~~$287,~~$2,480, respectively. ~~In the six months ended June 30, 2020 and 2019, this adjustment increased gross profit $2,893 and $1,924, respectively.~~

Operating expenses ~~decreased nominally~~increased $455 and $789 in the three and nine months ended ~~June~~September 30, 2020, as compared to the three months ended ~~June~~September 30, ~~2019. In the six months ended June 30, 2020 operating expenses increased $334 as compared to the same period in the prior year. This increase was primarily~~2019 from ~~increased~~higher compensation ~~expenses.~~expense and various external services.

During the ~~three~~nine months ended ~~June~~September 30, 2020, the Company reached a legal resolution of a prior year contractual matter for which an accrual of $8,350 was relieved as other income.

The effective tax rate for the three months ended ~~June~~September 30, 2020 reflects the positive effect of the reinstatement of certain tax credits and incentives for 2020, the most significant of which were the BTC and Small Agri-biodiesel Producer Tax Credit. The BTC and Small Producer Agri-biodiesel Producer Credit were retroactively extended for 2018 and 2019 on December 20, 2019 and further extended through December 31, 2022. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) (“CARES Act”). The CARES Act provides that Net Operating Losses (“NOLs”) arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 shall be treated as a carryback to each of the 5 preceding taxable years unless the taxpayer elects to forego the carryback. This enacted NOL provision had a positive effect on the effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2020 as FutureFuel will be able to carryback its 2019 and 2020 federal ~~NOL~~NOLs to ~~a year~~years with a higher tax rate rather than forward to ~~a year~~years with a lower tax rate.

The effective tax rate for the three months ended ~~June~~September 30, 2019 reflects the unfavorable effect of the BTC and Small Producer Agri-biodiesel Producer Credit not being in the law for the first ~~half~~nine months of 2019. The rate was also favorably impacted from a retroactive research and development credit for a prior year in a state where FutureFuel does significant business.

There were no unrecognized tax benefits at ~~June~~September 30, 2020 or December 31, 2019.

FutureFuel recorded interest and penalties, net, as a component of income tax provision and had accrued balances of $13 and ($557) at ~~June~~September 30, 2020 and December 31, 2019, respectively.

Net income for the three and ~~six~~nine months ended ~~June~~September 30, 2020 increased ~~$11,472~~$268 and ~~$25,016,~~$25,284, respectively, as compared to the same periods in 2019. This increase resulted primarily from biodiesel tax credits and incentives that were in effect in the three and ~~six~~nine months ended ~~June~~September 30, 2020 that were not in effect ~~for~~until the end of 2019 (see Note 2) and tax ~~benefits in effect~~law changes in the first ~~half~~nine months of 2020 not in effect for ~~the same period in~~ 2019 (see the income tax provision discussion above). In the three and ~~six~~nine months ended ~~June~~September 30, 2020, income was also benefited by other income from the resolution of a prior year contractual matter. Partially offsetting this increase in the ~~six month~~nine-month period was ~~the~~net unrealized ~~loss~~losses on equity securities.

Chemical revenue in the three and ~~six~~nine months ended ~~June~~September 30, 2020 decreased ~~$3,021~~$15,909 and ~~$2,680~~$18,589 as compared to the three and ~~six~~nine months ended ~~June~~September 30, 2019. Revenue for our custom chemicals (unique chemicals produced for specific customers) for the three and ~~six~~nine months ended ~~June~~September 30, 2020 totaled ~~$18,041~~$10,328 and ~~$41,801,~~$52,129, a decrease of ~~$3,924~~$14,942 and ~~$3,864~~$18,806 from the same period in 2019. Decreased revenue in the three and ~~six~~nine months ended ~~June~~September 30 as compared to the prior three and ~~six-month~~nine-month period were mostly driven by: i) an agrochemical product we no longer manufacture; ii) a slowdown in near-term business in both automotive and energy related applications resulting from COVID-19; and iii) the phase out of a laundry detergent additive. Partially offsetting the decrease of other custom chemical revenue in the three and six months ended June 30, 2020 and 2019 was the change in accelerated amortization of deferred revenue from customer contracts of $1,722 and $1,698, respectively. This acceleration was primarily from fulfillment of the performance obligation on an herbicide intermediate product we will no longer make. Performance chemicals (composed of multi-customer products which are sold based on specification) revenue was ~~$4,797~~$2,409 and ~~$8,730~~$11,139 in the three and ~~six~~nine months ended ~~June~~September 30, 2020, a decrease of $967 from the same three months in 2019 and an increase of ~~$903 and $1,184~~$217 from the ~~three and six~~same nine months ended ~~June 30,~~in 2019. ~~This increase~~The decrease in the three-month comparison period was primarily from ~~product mix on~~reduced sales volume from COVID-19. In the nine-month comparison period, revenue was benefited from higher glycerin prices ~~of glycerin~~ based on athe reduced supply of imported material ~~and increased demand given~~as a result of COVID-19.

Gross profit for the chemicals segment for the three and ~~six~~nine months ended ~~June~~September 30, 2020, ~~increased $396~~decreased $3,734 and ~~$1,101,~~$2,633, respectively, when compared to the same periods of 2019. This ~~increase~~decrease was driven primarily from volume effects resulting from COVID-19 and the ~~acceleration~~absence of ~~amortization of deferred revenue from~~ an herbicide intermediate product we ~~will~~ no longer make. In the three and six months ended June 30, 2020 and 2019, the change in amortization of the deferred revenue from customer contracts increased gross profit of $1,722 and $1,698, respectively. Partially offsetting this benefit was the unfavorable product mix variance without the production of the agrochemical product and the volume effects of COVID-19 on our business.

Biofuels revenue in the three and ~~six~~nine months ended ~~June~~September 30, 2020 increased $4,363 and decreased ~~$20,421 and $16,181~~$11,818 as compared to the same periods of 2019, respectively. ~~The biodiesel and biodiesel blend prices decreased as compared to the prior year periods primarily from industry wide challenges~~Sales volumes improved in the ~~fuel market. Global fuel markets~~three and nine-month periods but were ~~impacted~~reduced by ~~reduced demand for oil caused by the economic~~lower selling prices from continued impact of the COVID-19 pandemic and the decision by foreign oil producing nations not to cut supply. These factors resulted in significant declines in petroleum and biodiesel oil prices. For the three months ended June 30, 2020 sales volume declined given the weakened market, however, for the six-month comparison period, sales volume improved $10,935.

Biofuels revenue from common carrier pipelines varies as its revenue recognition depends upon whether a transaction is bought from and sold to the same party. Purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another (including buy/sell agreements) are combined and recorded on a net basis. Additionally, revenue from common carrier pipelines fluctuates with market conditions. Revenue from net transactions did not change in the three-month comparison period. In the six-month comparison period, revenue increased $169.COVID-19.

One major refiner/blender customer within our biofuels segment was greater than 10% of revenue in 2020 and 2019. No assurances can be given that we will continue to sell to such major refiners, 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 this customer would have a material adverse effect on our biofuels segment or on us as a whole because: (i) we believe that we could readily sell our biodiesel to other customers as potential demand from other customers for biodiesel exceeds our production capacity; (ii) our sales to ~~these customers~~this customer are not under fixed terms and the ~~customers have~~customer has no fixed obligation to purchase any minimum quantities except as stipulated by short-term purchase orders; and (iii) the prices we receive from ~~these customers~~this customer are based upon then-market rates, as would be the case with sales of this commodity to other customers.

Biofuels gross ~~loss~~profit was ~~$6,666~~$1,692 in the three months ended ~~June~~September 30, 2020, as compared to a gross loss of ~~$3,911~~$3,026 in the same period of ~~2019,~~2019. This increase was primarily from ~~reduced~~stronger sales volumes ~~and lower~~with improved margins given ~~global market conditions as well as a lower of cost or market adjustment of $530 at June 30, 2020~~the blenders tax credit in effect in the current year and ~~none for the same period~~not in effect in 2019. ~~Partially reducing this gross loss was the change~~Gross profit also improved from higher gains in ~~the activity in derivative instruments with a loss of $935~~derivatives: $867 in the three months ended ~~June~~September 30, 2020 as compared to a gain of ~~$443~~$322 in the ~~same period of~~three months ended September 30, 2019. In addition, gross profit was benefited in both three-month periods ended June 30, 2020 and 2019 by the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. This adjustment increased gross profit $1,317 and $70, respectively.

Biofuels gross profit was ~~$1,719~~$3,411 in the ~~six~~nine months ended ~~June~~September 30, 2020, as compared to a gross loss of ~~$7,958~~$10,984 in the same period of ~~2019,~~2019. This increase was primarily from the change in the activity in derivative instruments with a gain of ~~$5,922~~$6,789 in the ~~six~~nine months ended ~~June~~September 30, 2020 as compared to a loss of ~~$1,033~~$711 in the same period of 2019. Also benefiting gross profit in both three-month periods ended June 30, 2020 and 2019 was the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. This adjustment increased gross profit $2,134 and $1,180, respectively.

We recognize all derivative instruments as either assets or liabilities at fair value in our consolidated balance sheets. Our derivative instruments do not qualify for hedge accounting under the specific guidelines of Topic 815, Derivatives and Hedging. None of the derivative instruments are designated and accounted for as hedges primarily due to the extensive record keeping requirements.

*All derivative instruments are entered into with the standard contract terms and conditions in accordance with major trading authorities of the New York Mercantile Exchange.

The Company recognizes revenue under Topic 606~~Revenue from Contracts with Customers.~~. Certain long-term contracts had upfront non-cancellable payments considered material rights. The Company applied the renewal option approach in allocating the transaction price to the material rights. For each of these contracts, the Company estimated the expected contractual volumes to be sold at the most likely expected sales price as a basis for allocating the transaction price to the material right. Estimates are updated quarterly on a prospective basis. These custom chemical contracts have payment terms of 30 days. See Note 3 to our consolidated financial statements.

For most product sales, revenue is recognized when product is shipped from our facilities and risk of loss and title have passed to the customer, which is in accordance with our customer contracts and the stated shipping terms. Nearly all custom manufactured products are manufactured under written master service agreements. Performance chemicals and biodiesel are generally sold pursuant to the terms of written purchase orders. In general, customers do not have any rights of return, except for quality disputes. All of our products are tested for quality before shipment, and historically returns have been inconsequential. We do not offer rebates, except those related to the BTC.

Biodiesel selling prices can at times fluctuate based on the timing of unsold, internally generated RINs. From time to time, sales of biodiesel are on a “RINs-free” basis. Such method of selling results in applicable RINs being held. The value of the RINs is not reflected in revenue until such time as the RIN sale has been completed.

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 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 with agreement that production was reasonable. The product was custom manufactured and stored at the customer’s request and could not be sold to another buyer. Credit and payment terms for bill-and-hold customers are similar to other custom chemicals customers. Revenue under bill-and-hold arrangements were ~~$7,335~~$7,400 and ~~$12,006~~$14,417 for the three months ended ~~June~~September 30, 2020 and 2019, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 ~~bill and hold~~bill-and-hold sales revenue was ~~$17,488~~$24,888 and ~~$23,762,~~$38,179, respectively. As of ~~June~~September 30,2020, ~~$4,105~~$2,653 of the three- and ~~six-month bill and hold~~nine-month bill-and-hold revenue had not shipped.

Our net cash from operating activities, investing activities, and financing activities for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 are set forth in the following table.

We believe that existing cash balances and cash flow to be generated from operating activities and borrowing capacity under the amended and restated credit agreement will be sufficient to fund operations, product development, cash dividends, and capital requirements for the foreseeable future. However, as the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, ability to meet debt covenants, access to sources of liquidity and financial condition.

Cash provided by operating activities increased from ~~$13,527~~$24,358 in the first ~~six~~nine months of 2019 to ~~$84,201~~$76,576 of cash provided in the first ~~six~~nine months of 2020, for a net increase of ~~$70,674.~~$52,218. This increase was primarily attributable to the decrease in accounts receivable ~~including accounts receivable - related parties,~~ of ~~$86,376.~~$77,567. The provision of this cash resulted from the ~~receipt~~change of ~~$81,029~~$73,041 in accounts receivable for the first ~~half~~nine months of 2020 primarily from BTC ~~payments,~~receivables, as compared to a ~~$5,347~~$4,526 decrease in accounts receivable for the same period in 2019. Offsetting these net cash inflows was a ~~$30,660~~$57,662 net decrease in the accounts payable, calculated from the decrease of ~~$29,702~~$51,711 in the first ~~half~~nine months of 2020 as compared to an increase in the same period in 2019 of ~~$958.~~$5,951. This cash outflow from accounts payable was also primarily related to BTC rebates due to customers and paid in 2020.

The increase in net income also provided $25,284 in the first nine months of 2020 as compared to the same period in 2019.

Cash ~~used in~~provided by investing activities ~~increased~~decreased from ~~$379~~$4,488 of cash ~~used~~provided in the first ~~six~~nine months of 2019 to ~~$2,753~~$156 of cash used in investing activities in the first ~~six~~nine months of 2020. The primary source of the increase in cash used was the result of ~~a $3,785 increase~~the decrease in the ~~collateralization~~net sales of ~~derivative instruments~~marketable securities of $7,106. Those net sales amounted to $2,656 in the ~~first six~~nine months ~~of 2020 compared to the first six months of 2019.~~ending September 30, 2020. Offsetting this change was a decrease in capital expenditures of ~~$1,900.~~$2,422. Our capital expenditures and customer reimbursements for capital expenditures for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 are summarized in the following table:

Cash used in financing activities was ~~$136,956~~$139,580 and ~~$5,249,~~$7,873, in the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively. This $131,707 ~~difference~~increase in cash used was primarily ~~resulting from~~ the payment of ~~the~~a special dividend ~~of $131,230~~ on our common stock in the first ~~six~~nine months of ~~2020.~~2020 of $131,230. The remaining increase of $477 related to debt origination costs in the ~~six~~nine months of 2020 from the amendment of our existing credit facility.

Effective March 30, 2020, we entered into an amended and restated credit agreement with a syndicated group of commercial banks for $100,000. The loan is a revolving facility, the proceeds of which may be used for our working capital, capital expenditures, and general corporate purposes. The facility terminates on March 30, 2025. See Note 10 to our consolidated financial statements for additional information regarding our Credit Agreement.

During the three months ended ~~June~~September 30, 2020, we applied for and received loan proceeds under the Paycheck Protection Program. On May 5, 2020, we repaid the loan in full.

We intend to fund future capital requirements for our businesses from cash flow as well as from existing cash, cash investments, and, if the need should arise, borrowings under our credit facility. We do not believe there will be a need to issue any securities to fund such capital requirements.

In the three and ~~six~~nine months ofended September 30, 2020 and 2019, we paid regular quarterly cash dividends in the amount of $0.06 per share on our common stock. The regular quarterly cash dividend amounted to $2,624 in each ~~period.~~of the first three quarters. On March 23, 2020 we also declared a special cash dividend of $3.00 per share in the amount of $131,230 that was paid on April 17, 2020.

As a result of our initial equity offering, our subsequent positive operating results, the exercise of warrants, and the issuance of shares in our at-the-market offering, we accumulated excess working capital. Some of this excess working capital has been paid out as special and regular cash dividends. Additionally, regular cash dividends will be paid in 2020, as previously reported. Third parties have not placed significant restrictions on our working capital management decisions.

A significant portion of these funds was held in cash or cash equivalents at multiple financial institutions. At ~~June~~September 30, 2020 and December 31, 2019, we also had investments in certain preferred stock, trust preferred securities, exchange-traded debt instruments, and other equity instruments. We classify these investments as current assets in the accompanying consolidated balance sheets and designate the debt securities as being “available-for-sale.” Accordingly, the debt securities are recorded at fair value, with the unrealized gains and losses, net of taxes, reported as a component of stockholders’ equity. We also held equity securities with readily available market values. These equity instruments are recorded at fair value, with the unrealized gains and losses reported as a component of net income. The fair value of the debt securities and equity instruments totaled ~~$62,095~~$63,476 and $73,620 at ~~June~~September 30, 2020 and December 31, 2019, respectively.

Lastly, we maintain depositary accounts such as checking accounts, money market accounts, and other similar accounts at selected financial institutions.

We engage in two types of hedging transactions. First, we hedge our biofuels sales through 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 ~~June~~September 30, 2020 and December 31, 2019. Second, we hedge our biofuels feedstock through the execution of purchase contracts and supply agreements with certain vendors or they meet the normal purchase and normal sales exception of ASC 815 Derivatives and Hedging. These hedging transactions are recognized in earnings and were not recorded in our consolidated balance sheets at ~~June~~September 30, 2020 or December 31, 2019 because they do not meet the definition of a hedge instrument as defined under GAAP. The purchase of biofuels feedstock generally involves two risk components: basis and price. Basis covers any refining or processing required as well as transportation. Price covers the purchases of the actual agricultural commodity. Both basis and price fluctuate over time. A supply agreement with a vendor constitutes a hedge when we have committed to a certain volume of feedstock in a future period and have fixed the basis for that volume.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

All dollar amounts expressed as numbers in these Market Risk Disclosures are in thousands (except per share amounts).

In recent years, general economic inflation has not had a material adverse impact on our costs and, as described elsewhere herein, we have passed some price increases along to our customers. However, we are subject to certain market risks as described below.

Market risk represents the potential loss arising from adverse changes in market rates and prices. Commodity price risk is inherent in the chemicals and biofuels business both with respect to inputs (electricity, coal, raw materials, biofuels feedstock, etc.) and outputs (manufactured chemicals and biofuels).

We seek to mitigate our market risks associated with the manufacturing and sale of chemicals by entering into long-term sale contracts that include contractual market price adjustment protections to allow changes in market prices of key raw materials to be passed on to the customer. Such price protections are not always obtained, however, and some raw material price risk remains significant.

In order to manage price risk caused by market fluctuations in biofuels prices, we may enter into exchange-traded commodity futures and options contracts. We account for these derivative instruments in accordance with Topic 815, Derivatives and Hedging. Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship. To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained. We had no derivative instruments that qualified under these rules as designated accounting hedges in the first ~~six~~nine months of 2020 or 2019. Changes in the fair value of our derivative instruments are recognized at the end of each accounting period and recorded in the consolidated statement of operations as a component of cost of goods sold within the biofuels segment.

Our immediate recognition of derivative instrument gains and losses can cause net income to be volatile from period to period due to the timing of the change in value of the derivative instruments relative to the volume of biofuel being sold. At ~~June~~September 30, 2020 and December 31, 2019, the fair values of our derivative instruments were a net asset of $490 and net liability of ~~$465 and~~ $267, respectively.

Our gross profit will be impacted by the prices we pay for raw materials and conversion costs (costs incurred in the production of chemicals and biofuels) for which we do not possess contractual market price adjustment protection. These items are principally composed of crude corn oil and yellow grease and petrodiesel. The availability and price of these items are subject to fluctuations due to unpredictable factors such as weather conditions, overall economic conditions, governmental policies, commodity markets, and global supply and demand.

We prepared a sensitivity analysis of our exposure to market risk with respect to key raw materials and conversion costs for which we do not possess contractual market price adjustment protections, based on average prices for the first ~~six~~nine months of 2020. We included only those raw materials and conversion costs for which a hypothetical adverse change in price would result in a 1% or greater decrease in gross profit. Assuming that the prices of the associated finished goods could not be increased and assuming no change in quantities sold, a hypothetical 10% change in the average price of the commodity listed below would result in the following change in gross profit.

We had no borrowings at ~~June~~September 30, 2020 or December 31, 2019 and, as such, we were not exposed to interest rate risk for those periods. Due to the relative insignificance of transactions denominated in foreign currency, we consider our foreign currency risk to be immaterial.

Under the supervision and with the participation of our chief executive officer and our principal financial officer and other senior management personnel, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, our chief executive officer and our principal financial officer have concluded that these disclosure controls and procedures at ~~June~~September 30, 2020 were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in our internal control over financial reporting during our last fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

We are not a party to, nor is any of our property subject to, any material pending legal proceedings, other than ordinary routine litigation incidental to our business. However, from time to time, we may be a party to, or a target of, lawsuits, claims, investigations, and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which we expect to be handled and defended in the ordinary course of business. While we are unable to predict the outcome of any matters currently pending, we do not believe that the ultimate resolution of any such pending matters will have a material adverse effect on our overall financial condition, results of operations, or cash flows. However, adverse developments could negatively impact earnings or cash flows in future periods.

There have been no material changes to the risk factors we previously disclosed in Item 1A of our Form 10-K, Annual Report for the year ended December 31, 2019 filed with the SEC on March 13, 2020, except for the addition of the Risk Factor below:

We are subject to risks associated with public health threats and epidemics, including the novel coronavirus disease ("COVID-19").

We are subject to risks associated with public health threats and epidemics, including the global health concerns relating to the COVID-19 pandemic. The global pandemic has adversely impacted and is likely to further adversely impact our business and markets, including our workforce and operations and the operations of our customers and suppliers. In particular, we may experience material financial or operational impacts, including:

The extent to which the COVID-19 global pandemic and measures taken in response thereto impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict; these developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or address its impact, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts on our financial condition and our results of operations and many of our known risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019 may be heightened.

Special Note Regarding ~~Forward-Looking~~Forward-Looking Information

This report, and the documents incorporated by reference into this report contain forward-looking statements. Forward-looking statements deal with our current plans, intentions, beliefs, and expectations, and statements of future economic performance. Statements containing such terms as “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate,” and other phrases of similar meaning are considered to contain uncertainty and are forward-looking statements. In addition, from time to time we or our representatives have made or will make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in various filings that we make with the SEC, or in press releases, or in oral statements made by or with the approval of one of our authorized executive officers.

These forward-looking statements are subject to certain known and unknown risks and uncertainties, including but not limited to the COVID-19 pandemic and the response thereto, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, those set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in FutureFuel’s Form 10-K Annual Report for the year ended December 31, 2019 and in our future filings made with the SEC. You should not place undue reliance on any forward-looking statements contained in this report which reflect our management’s opinions only as of their respective dates. Except as required by law, we undertake no obligation to revise or publicly release the results of any revisions to forward-looking statements. The risks and uncertainties described in this report and in subsequent filings with the SEC are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity, and financial condition could be materially affected in an adverse manner. You should consult any additional disclosures we have made or will make in our reports to the SEC on Forms 10-K, 10-Q, and 8-K, and any amendments thereto. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	For the Six Months Ended June 30, 2020															For the Nine Months Ended September 30, 2020
					Accumulated															Accumulated
					Other			Additional					Total							Other			Additional					Total
	Common Stock				Comprehensive			Paid-in		Retained			Stockholders’			Common Stock				Comprehensive			paid-in		Retained			Stockholders’
	Shares		Amount		Income (Loss)			Capital		Earnings			Equity			Shares		Amount		Income (Loss)			Capital		Earnings			Equity
Balance - December 31, 2019		43,743,243	$	4	$	296		$	282,166	$	184,632		$	467,098			43,743,243	$	4	$	296		$	282,166	$	184,632		$	467,098
Prior period adjustment: change in accounting principle		-		-		-			-		(12	)		(12	)		-		0		0			0		(12	)		(12	)
Balance – January 1, 2020, As adjusted		43,743,243	$	4	$	296		$	282,166	$	184,620		$	467,086
Cash dividends declared, $3.00 per share		-		-		-			-		(131,230	)		(131,230	)
Balance - December 31, 2019																	43,743,243	$	4	$	296		$	282,166	$	184,620		$	467,086
Cash dividends declared, $3.00 per share																	-		0		0			0		(131,230	)		(131,230	)
Stock based compensation		-		-		-			49		-			49			-		0		0			49		0			49
Other comprehensive loss		-		-		(313	)		-		-			(313	)		-		0		(313	)		0		0			(313	)
Net income		-		-		-			-		19,043			19,043			-		0		0			0		19,043			19,043
Balance - March 31, 2020		43,743,243	$	4	$	(17	)	$	282,215	$	72,433		$	354,635			43,743,243	$	4	$	(17	)	$	282,215	$	72,433		$	354,635
Other comprehensive income		-		-		150			-		-			150			-		0		150			0		0			150
Net income		-		-		-			-		15,159			15,159			-		0		0			0		15,159			15,159
Balance - June 30, 2020		43,743,243	$	4	$	133		$	282,215	$	87,592		$	369,944			43,743,243	$	4	$	133		$	282,215	$	87,592		$	369,944
Other comprehensive loss																	-		0		(7	)		0		0			(7	)
Net income																	-		0		0			0		6,890			6,890
Balance - September 30, 2020																	43,743,243	$	4	$	126		$	282,215	$	94,482		$	376,827

	For the Six Months Ended June 30, 2019													For the Nine Months Ended September 30, 2019
					Accumulated													Accumulated
					Other			Additional				Total						Other			Additional				Total
	Common Stock				Comprehensive			Paid-in		Retained		Stockholders’		Common Stock				Comprehensive			paid-in		Retained		Stockholders’
	Shares		Amount		Income (Loss)			Capital		Earnings		Equity		Shares		Amount		Income (Loss)			Capital		Earnings		Equity
Balance - December 31, 2018		43,743,243	$	4	$	(20	)	$	282,145	$	106,949	$	389,078		43,743,243	$	4	$	(20	)	$	282,145	$	106,949	$	389,078
Other comprehensive income		-		-		202			-		-		202		-		0		202			0		0		202
Net income		-		-		-			-		5,499		5,499		-		0		0			0		5,499		5,499
Balance - March 31, 2019		43,743,243	$	4	$	182		$	282,145	$	112,448	$	394,779		43,743,243	$	4	$	182		$	282,145	$	112,448	$	394,779
Other comprehensive income		-		-		17			-		-		17		-		0		17			0		0		17
Net income		-		-		-			-		3,687		3,687		-		0		0			0		3,687		3,687
Balance - June 30, 2019		43,743,243	$	4	$	199		$	282,145	$	116,135	$	398,483		43,743,243	$	4	$	199		$	282,145	$	116,135	$	398,483
Stock based compensation, net of tax															-		0		0			21		0		21
Other comprehensive income															-		0		1			0		0		1
Net income															-		0		0			0		6,622		6,622
Balance - September 30, 2019															43,743,243	$	4	$	200		$	282,166	$	122,757	$	405,127

Contract Assets and Liabilities	June 30, 2020		December 31, 2019
Trade receivables, included in accounts receivable*	$	11,738	$	11,902
Contract assets included in accounts receivable		1,104		1,067
Contract liabilities, included in Deferred revenue - short-term		3,220		5,030
Contract liabilities, included in Deferred revenue - long-term		18,414		17,151

Contract Assets and Liability Balances	September 30, 2020		December 31, 2019
Trade receivables, included in accounts receivable*	$	11,051	$	11,902
Contract assets, included in accounts receivable	$	907	$	1,067
Contract liabilities, included in deferred revenue - short-term	$	3,390	$	5,030
Contract liabilities, included in deferred revenue - long-term	$	18,165	$	17,151

	Three months ended June 30,				Six months ended June 30,					Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020			2019		2020		2019		2020			2019
Contract revenue from customers with > 1 year arrangements	$	4,909	$	11,721	$	14,523		$	27,139	$	4,995	$	16,331	$	19,518		$	43,470
Contract revenue from customer with < 1 year arrangement		42,458		59,088		87,887			92,116
Contract revenue from customer with < 1 year arrangements											49,088		49,298		136,975			141,413
Revenue from non-contractual arrangements		55		55		111			110		55		55		166			166
BTC rebate (customer rebates per Note 2)		-		-		(2,017	)		-
BTC rebate											0		0		(2,017	)		0
Total revenue	$	47,422	$	70,864	$	100,504		$	119,365	$	54,138	$	65,684	$	154,642		$	185,049

	June 30, 2020			December 31, 2019
At average cost (approximates current cost)
Finished goods	$	22,844		$	22,564
Work in process		2,133			2,768
Raw materials and supplies		22,193			20,121
		47,170			45,453
LIFO reserve		(4,987	)		(7,880	)
Total inventory	$	42,183		$	37,573

	Asset (Liability)
	September 30, 2020				December 31, 2019
	Contract Quantity Short		Fair Value		Contract Quantity Short		Fair Value
Regulated fixed price future commitments		250	$	490		140	$	(267	)

	June 30, 2020								September 30, 2020
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value
Trust preferred stock	$	3,676	$	84	$	-	$	3,760	$	3,676	$	160	$	0	$	3,836
Exchange-traded debt		1,428		86		-		1,514
Total debt securities	$	5,104	$	170	$	-	$	5,274	$	3,676	$	160	$	0	$	3,836

	Asset (Liability)										Asset (Liability)
				Fair Value Measurements Using									Fair Value Measurements Using
	Fair Value at			Inputs Considered as:							Fair Value at		Inputs Considered as:
Description	June 30, 2020			Level 1			Level 2		Level 3		September 30, 2020		Level 1		Level 2		Level 3
Derivative instruments	$	(465	)	$	(465	)	$	-	$	-	$	490	$	490	$	0	$	0
Preferred stock and other equity instruments	$	56,821		$	56,821		$	-	$	-	$	59,640	$	59,640	$	0	$	0
Trust preferred stock and exchange-traded debt instruments	$	5,274		$	5,274		$	-	$	-	$	3,836	$	3,836	$	0	$	0

	June 30, 2020		December 31, 2019
Accrued employee liabilities	$	4,256	$	2,534
Accrued property, franchise, motor fuel and other taxes		2,037		1,226
Lease liability, current		392		537
Other		297		113
Total	$	6,982	$	4,410

Consolidated Leverage Ratio			Adjusted LIBOR Rate Loans and Letter of Credit Fee	Base Rate Loans	Commitment Fee
< 1.00:1.0			1.00%	0.00%	0.15%
≥ 1.00:1.0	And	< 1.50:1.0	1.25%	0.25%	0.15%
≥ 1.50:1.0	And	< 2.00:1.0	1.50%	0.50%	0.20%
≥ 2.00:1.0	And	< 2.50:1.0	1.75%	0.75%	0.20%
≥ 2.50:1.0			2.00%	1.00%	0.25%

	2020			2019
Balance at July 1	$	133		$	199
Other comprehensive income before reclassifications		60			1
Amounts reclassified from accumulated other comprehensive income		(67	)		0
Net current-period other comprehensive (loss) income		(7	)		1
Balance at September 30	$	126		$	200

	2020			2019
Balance at January 1	$	296		$	(20	)
Other comprehensive income before reclassifications		(71	)		220
Amounts reclassified from accumulated other comprehensive income		(99	)		0
Net current-period other comprehensive (loss) income		(170	)		220
Balance at September 30	$	126		$	200

	Three Months Ended June 30,											Three Months Ended September 30,
						Dollar			%							Dollar			%
	2020			2019*		Change			Change			2020		2019		Change			Change
Revenue	$	47,422		$	70,864	$	(23,442	)		(33.1	%)	$	54,138	$	65,684	$	(11,546	)		(17.6	%)
(Loss) income from operations	$	(1,139	)	$	1,185	$	(2,324	)		(196.2	%)
Income from operations												$	3,804	$	3,275	$	529			16.2	%
Net income	$	15,159		$	3,687	$	11,472			311.1	%	$	6,890	$	6,622	$	268			4.0	%
Earnings per common share:
Basic	$	0.35		$	0.08	$	0.27			337.5	%	$	0.16	$	0.15	$	0.01			6.7	%
Diluted	$	0.35		$	0.08	$	0.27			337.5	%	$	0.16	$	0.15	$	0.01			6.7	%
Capital expenditures (net of customer reimbursements)	$	563		$	451	$	112			24.8	%	$	758	$	572	$	186			32.5	%
Adjusted EBITDA	$	2,652		$	3,514	$	(862	)		(24.5	%)	$	5,575	$	6,834	$	(1,259	)		(18.4	%)

	Six Months Ended June 30,
	2020			2019*
Net cash provided by operating activities	$	84,201		$	13,527
Benefit for deferred income taxes		(699	)		445
Interest and dividend income		(3,486	)		(5,112	)
Income tax (benefit) provision		(18,101	)		1,875
(Gain) loss on derivative instruments		(5,922	)		1,033
Change in fair value of derivative instruments		(198	)		297
Change in operating assets and liabilities, net		(34,617	)		(3,137	)
Other income		(8,350	)		-
Other		1			1
Adjusted EBITDA	$	12,829		$	8,929

	Three Months Ended September 30,										Nine Months Ended September 30,
					Change										Change
	2020		2019		Amount			%			2020		2019		Amount			%
Revenues	$	54,138	$	65,684	$	(11,546	)		(17.6	%)	$	154,642	$	185,049	$	(30,407	)		(16.4	%)
Volume/product mix effect					$	5,369			8.2	%					$	11,151			6.0	%
Price effect					$	(16,915	)		(25.8	%)					$	(41,558	)		(22.5	%)

Gross profit	$	6,446	$	5,462	$	984			18.0	%	$	23,756	$	11,994	$	11,762			98.1	%

	Nine Months Ended September 30,
	2020			2019
Net cash provided by operating activities	$	76,576		$	24,358
Net cash (used in) provided by investing activities	$	(156	)	$	4,488
Net cash used in financing activities	$	(139,580	)	$	(7,873	)

	Six Months Ended June 30,
	2020			2019			2020			2019
Cash paid for capital expenditures	$	2,759		$	4,659		$	3,717		$	6,139
Cash received from customers as reimbursement of capital expenditures	$	(1,626	)	$	(3,785	)	$	(1,826	)	$	(4,693	)
Cash paid for capital expenditures, net of reimbursements	$	1,133		$	874		$	1,891		$	1,446

Item	Volume Requirements (a)		Units	Hypothetical Adverse Change in Price	Decrease in Gross Profit		Percentage Decrease in Gross Profit	Volume Requirements in thousands(a)		Units	Hypothetical Adverse Change in Price			Decrease in Gross Profit		Percentage Decrease in Gross Profit
Biodiesel feedstocks		215,852	LB	10%	$	5,871	33.9%		336,217	LB		10	%	$	8,977		37.8	%
Methanol		35,908	LB	10%	$	524	3.0%		57,481	LB		10	%	$	753		3.2	%
Electricity		53	MWH	10%	$	319	1.8%		78	MWH		10	%	$	414		1.7	%
Sodium Methylate		5,978	MCF	10%	$	200	1.2%		9,428	LB		10	%	$	307		1.3	%

	•	Significant volatility or reductions in demand for our products;
	•	Delays in obtaining regulatory clearances and approvals to market our products;
	•	The failure of third parties on which we rely to meet their obligations to the Company to supply the Company with methanol, which the Company requires for several manufacturing processes;
	•	The failure of third parties on which we rely to meet their other obligations to the Company, or significant disruptions in their ability to do so; or
	•	The inability to meet our customers’ needs due to disruptions to our operations or the operations of our third-party suppliers, contractors, logistics partners or customers including disruptions to production, development, manufacturing, administrative and supply operations and arrangements.

Exhibit	Description
11.	Statement re Computation of per Share Earnings
31(a).	Rule 13a-15(e)/15d-15(e) Certification of chief executive officer
31(b).	Rule 13a-15(e)/15d-15(e) Certification of chief principal officer
32.	Section 1350 Certification of chief executive officer and principal financial officer
101	Interactive Data Files**
101.INS	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension ~~Labels~~Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
**	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

FUTUREFUEL CORP.

By:	/s/ Paul A. Novelly

Paul A. Novelly, Chairman and Chief
Executive Officer

Date: ~~August 7,~~November 9, 2020


By:	/s/ Rose M. Sparks

Rose M. Sparks, Chief Financial Officer
and Principal Financial Officer

Date: ~~August 7,~~November 9, 2020