Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Accounting Policies [Abstract] | ' |
Basis of Consolidation | ' |
Basis of Consolidation |
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and entities which it controls. All significant intercompany balances and transactions have been eliminated for consolidated reporting purposes. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
Cash and cash equivalents consists of money market funds and demand deposits with financial institutions. The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. |
Accounts Receivable | ' |
Accounts Receivable |
Accounts receivable are carried at invoiced amount less allowance for doubtful accounts. Management estimates the allowance for doubtful accounts based on existing economic conditions, the financial conditions of customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for doubtful accounts only after reasonable collection attempts have been exhausted. Activity regarding the allowance for doubtful accounts was as follows: |
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Balance, January 1, 2011 | $ | 316 | | | | | | | | | |
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Amount charged to selling, general and administrative expenses | 1,389 | | | | | | | | | |
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Charge-offs, net of recovery | (270 | ) | | | | | | | | |
Balance, December 31, 2011 | 1,435 | | | | | | | | | |
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Amount charged to selling, general and administrative expenses | 563 | | | | | | | | | |
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Charge-offs, net of recovery | (26 | ) | | | | | | | | |
Balance, December 31, 2012 | 1,972 | | | | | | | | | |
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Amount charged to selling, general and administrative expenses | 309 | | | | | | | | | |
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Charge-offs, net of recovery | (157 | ) | | | | | | | | |
Balance, December 31, 2013 | $ | 2,124 | | | | | | | | | |
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Inventories | ' |
Inventories |
Inventories are valued at the lower of cost or market. There were no lower of cost or market adjustments made to the inventory values reported as of December 31, 2013 and 2012. Cost is determined based on the first-in, first-out method. |
Renewable Identification Numbers (RINs) | ' |
Renewable Identification Numbers (RINs) |
When the Company produces and sells a gallon of biodiesel, 1.5 RINs per gallon are generated. RINs are used to track compliance with Renewable Fuel Standards (RFS2). RFS2 allows the Company to attach between zero and 2.5 RINs to any gallon of biodiesel. When the Company sells a gallon of biodiesel, 1.5 RINs are generally attached. As a result, a portion of the selling price for a gallon of biodiesel is generally attributable to RFS2 compliance. However, RINs that the Company generates are a form of government incentive and not a result of the physical attributes of the biodiesel production. Therefore, no cost is allocated to the RIN when it is generated, regardless of whether the RIN is transferred with the biodiesel produced or held by the Company pending attachment to other biodiesel production sales. In addition, the Company also obtains RINs from third parties who have separated the RINs from gallons of biomass-based diesel. From time to time, the Company holds varying amounts of these separated RINs for resale. RINs obtained from third parties are initially recorded at their cost and are subsequently revalued at the lower of cost or market as of the last day of each accounting period and the resulting adjustments are reflected in costs of goods sold for the period. The value of RINs obtained from third parties is reflected in “Prepaid expenses and other assets” on the consolidated balance sheet. The cost of goods sold related to the sale of these RINs is determined using the average cost method, while market prices are determined by RIN values, as reported by the Oil Price Information Service (OPIS). |
Derivative Instruments and Hedging Activities | ' |
Derivative Instruments |
Derivatives are recorded on the balance sheet at fair value with changes in fair value recognized in current period earnings. |
Valuation of Series A Preferred Stock Conversion Feature Embedded Derivatives | ' |
Valuation of Series A Preferred Stock Conversion Feature Embedded Derivatives |
The conversion feature of the Series A Preferred Stock was accounted for as an embedded derivative prior to the conversion of Series A Preferred Stock in January 2012. This embedded derivative was a liability representing the estimated fair value of Series A Preferred Stock holders right to receive the fair market value of the Common Stock issuable upon conversion of the Series A Preferred Stock on the redemption date. The value of this derivative was adjusted each quarter based on changes in the estimated fair value, and a corresponding income or expense was recorded in change in fair value of the Preferred Stock conversion feature embedded derivatives in the Company’s statements of operations. The Company used the Black-Scholes options pricing model to estimate the fair value and assumptions included the expected volatility of the value of the Company’s equity, the expected conversion date, an appropriate risk-free interest rate and the estimated fair value of the Company’s equity. |
Valuation of Seneca Holdco Liability | ' |
Valuation of Seneca Holdco Liability |
The Company recorded a liability (Seneca Holdco Liability) at fair value, with changes in value recognized currently in earnings, for its obligation under a Put/Call Agreement with Seneca Holdco, LLC (Seneca Holdco) to purchase Seneca Landlord, LLC (Seneca Landlord) whose assets consisted primarily of a 60 mmgy biodiesel production facility in Seneca, Illinois (Seneca Facility) until the Company exercised its option and acquired the Seneca Facility in January 2012. Seneca Landlord was indirectly owned by three significant stockholders of the Company or their affiliates: Bunge North America, Inc. USRG Holdco IX, LLC, and West Central Cooperative. |
The fair value of the Seneca Holdco Liability was determined by probability weighting the present value of gains or losses realized under each option in the Put/Call Agreement. The Put/Call Agreement had a term of seven years and was exercisable by either party at a price based on a pre-defined formula. The valuation required the development and use of highly subjective assumptions including (i) the value of the Landlord’s equity, (ii) expectations regarding future changes in the value of the Landlord’s equity, (iii) expectations about the probability of either option being exercised, including the Company’s ability to list its securities on an exchange or complete a public offering and (iv) an appropriate risk-free rate. Company management considered current public equity markets, relevant regulatory issues, industry conditions and the Company’s position within the industry when estimating the probability that the Company would raise additional capital. |
Preferred Stock Accretion | ' |
Preferred Stock Accretion |
The Company accreted the carrying value of the Series A Preferred Stock to its redemption value until January 2012 when it was converted in connection with the Initial Public Offering (IPO). Accretion of $1,808 and $25,343 for the years ended December 31, 2012 and 2011, respectively, was recognized as a reduction to income available to common stockholders in accordance with paragraph 15 of ASC Topic 480-10-S99. |
The Company recorded the Series B Preferred Stock at fair value, which was a premium over its redemption value; therefore no accretion is recorded for the Series B Preferred Stock. |
Non-monetary Exchanges | ' |
Non-monetary Exchanges |
The Company records assets acquired and liabilities assumed through the exchange of non-monetary assets based on the fair value of the assets and liabilities acquired or the fair value of the consideration exchanged, whichever is more readily determinable. |
Property, Plant and Equipment | ' |
Property, Plant and Equipment |
Property, plant and equipment is recorded at cost less accumulated depreciation. Maintenance and repairs are expensed as incurred. Depreciation expense is computed on a straight-line method based upon estimated useful lives of the assets. Estimated useful lives are as follows: |
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Automobiles and trucks | 5 years | | | | | | | | | | |
Computers and office equipment | 5 years | | | | | | | | | | |
Office furniture and fixtures | 7 years | | | | | | | | | | |
Machinery and equipment | 5-30 years | | | | | | | | | | |
Leasehold improvements | the lesser of the lease term or 30 years | | | | | | | | | | |
Buildings and improvements | 30-40 years | | | | | | | | | | |
As of December 31, 2013, 2012 and 2011, the Company capitalized interest incurred on debt during the construction of assets of $335, $33 and $0, respectively. |
Goodwill | ' |
Goodwill |
Goodwill is tested for impairment annually on July 31 or when impairment indicators exist. Goodwill is allocated and tested for impairment by reporting units. The Company’s reporting units consist of its two operating segments, the biodiesel operating segment and services operating segment. The analysis is based on a comparison of the carrying value of the reporting unit to its fair value, determined utilizing both a discounted cash flow methodology and a market comparable methodology. The determination of whether or not the asset has become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the Company’s reporting units. Changes in estimates of future cash flows caused by items such as unforeseen events or sustained unfavorable changes in market conditions could negatively affect the fair value of the reporting unit’s goodwill asset and result in an impairment charge. The annual impairment test determined that the fair value of the biodiesel operating segment exceeded its carrying value by approximately 43% and the services operating segment exceeded its carrying value by approximately 20%. There was no impairment of goodwill recorded in any of the periods presented. |
The following table summarizes goodwill for the Company’s business segments: |
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| Biodiesel | | Services | | Total |
Beginning balance - January 1, 2012 | $ | 68,784 | | | $ | 16,080 | | | $ | 84,864 | |
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Acquisitions | — | | | — | | | — | |
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Ending balance - December 31, 2012 | 68,784 | | | 16,080 | | | 84,864 | |
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Acquisitions | — | | | — | | | — | |
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Ending balance - December 31, 2013 | $ | 68,784 | | | $ | 16,080 | | | $ | 84,864 | |
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Impairment of Assets | ' |
Impairment of Assets |
The Company tests its long-lived assets for recoverability when events or circumstances indicate that its carrying amount may not be recoverable. Significant assumptions used in the undiscounted cash flow analysis include the projected demand for biodiesel based on annual renewable fuel volume obligations under the Renewable Fuel Standards (RFS2), the Company's capacity to meet that demand, the market price of biodiesel and the cost of feedstock used in the manufacturing process. For facilities under construction, estimates also include the capital expenditures necessary to complete construction of the plant. The Company’s facilities under construction are expected to have substantially similar operating capabilities and results as the current operating facilities. Such operating capabilities would include similar feedstock capabilities, similar access to low cost feedstocks, proximity to shipping from our vendors and to our customers and our ability to transfer best practices among the Company's various operating facilities to maximize production volumes and reduce operating costs. There were no asset impairment charges for the years ended December 31, 2013, 2012 and 2011. |
Investments | ' |
Investments |
The Company has made investments in several biofuels businesses. These investments are recorded at cost and assessed for impairment at each reporting period. There were no impairment charges for the years ended December 31, 2013, 2012 and 2011. |
Unfavorable Lease Obligation | ' |
Unfavorable Lease Obligation |
The Company assumed a ground lease of a terminal facility in Houston, Texas as part of an acquisition which required the Company to pay above market rentals through the remainder of the lease term expiring in 2021. The unfavorable lease obligation is amortized over the contractual period the Company is required to make rental payments under the lease. The amount expected to be amortized each year for the remainder of the contract is $1,129. |
Revenue Recognition | ' |
Revenue Recognition |
The Company recognizes revenues from the following sources: |
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• | the sale of biodiesel and its co-products, as well as Renewable Identification Numbers (RINs) and raw material feedstocks, purchased or produced by the Company at owned manufacturing facilities and manufacturing facilities with which the Company has tolling arrangements; | | | | | | | | | | |
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• | the resale of biodiesel, RINs and raw material feedstocks acquired from third parties; | | | | | | | | | | |
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• | fees received under toll manufacturing agreements with third parties; | | | | | | | | | | |
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• | incentives received from federal and state programs for renewable fuels; and | | | | | | | | | | |
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• | fees received for the marketing and sales of biodiesel produced by third parties and from managing operations of third party facilities. | | | | | | | | | | |
Biodiesel, including RINs, and raw material feedstock revenues are recognized where there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable and collectability can be reasonably assured. |
Fees received under toll manufacturing agreements with third parties are generally established as an agreed upon amount per gallon of biodiesel produced. The fees are recognized where there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable and collectability can be reasonably assured. |
Revenues associated with the governmental incentive programs are recognized when the amount to be received is determinable, collectability is reasonably assured and the sale of product giving rise to the incentive has been recognized. The Company received funds from the United States Department of Agriculture (USDA) in the amount of $2,813, $1,161 and $9,913 for the years ended December 31, 2013, 2012 and 2011, respectively. The Company records amounts when it has received notification of a payment from the USDA or is in receipt of the funds and records the awards under the Program in "Biodiesel government incentives" as they are closely associated with the Company's biodiesel production activities. |
While in general the Company has not historically offered sales incentives to customers, the uncertainty around the reinstatement of the federal blenders tax credit led to the introduction of such an incentive during 2012. Specifically, during 2012 the Company negotiated contracts with certain customers to allow such customers to share in the value of federal blenders tax payments if the law were to be reinstated. The federal blenders tax credit was reinstated on January 2, 2013 and the Company recognized $69,534 of cash payments owed to customers as a reduction of Biodiesel sales revenue. The Company did not have similar contracts before 2012. |
Freight | ' |
Freight |
Amounts billed to customers for freight are included in biodiesel sales. Costs incurred for freight are included in costs of goods sold. |
Advertising Costs | ' |
Advertising Costs |
Advertising costs are charged to expense as they are incurred. Advertising and promotional expenses were $648, $485 and $251 for the years ended December 31, 2013, 2012 and 2011, respectively. |
Research and Development | ' |
Research and Development |
The Company expenses research and development costs as incurred. Research and development costs totaled $258, $14 and $22 for the years ended December 31, 2013, 2012 and 2011, respectively. |
Employee Benefits Plan | ' |
Employee Benefits Plan |
The Company sponsors an employee savings plan under Section 401(k) of the Internal Revenue Code. The Company makes matching contributions equal to 50% of the participant’s pre-tax contribution up to a maximum of 6% of the participant’s eligible earnings. Total expense related to the Company’s defined contribution plan was approximately $533, $456 and $323 for the years ended December 31, 2013, 2012 and 2011, respectively. |
Stock-Based Compensation | ' |
Stock-Based Compensation |
Stock-based compensation expense is measured at the grant-date fair value of the award and recognized as compensation expense over the vesting period. |
Income Taxes | ' |
Income Taxes |
Deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which differences are expected to reverse. Consideration is given to positive and negative evidence related to the realization of the deferred tax assets and valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized. Significant judgment is required in making this assessment. |
Recapitalization | ' |
Recapitalization |
In connection with the Company's IPO on January 24, 2012, the Company gave effect to the one-time conversion of Series A Preferred Stock and certain common stock warrants into 7,660,612 shares of newly-issued Common Stock and 2,999,493 shares of $74,987 aggregate liquidation preference Series B Preferred Stock with cumulative dividends of 4.5% per annum. All Series A Preferred Stock was converted and no Series A Preferred Stock remains outstanding. The Company recorded the effects from the exchange of Series A Preferred Stock for Series B Preferred Stock and Common Stock as an extinguishment in accordance with ASC Topic 260-10-S99-2. |
Accordingly, the Company recognized an addition to the income available to common shareholders in the amount of $39,107. This amount was determined by comparing the fair value of the Series B Preferred Stock and Common Stock issued of $152,327 to the carrying amount of the Series A preferred shares that were redeemed of $191,434. The excess of the carrying amount of Series A Preferred Stock that were redeemed over the fair value of the Series B Preferred Stock and Common Stock that were issued was recorded as an increase to additional paid-in capital and was added to net earnings available to common shareholders of $39,107. The Series B Preferred Stock fair value was determined using Monte Carlo simulation methodology with the assistance of external third-party experts to calculate the fair-value using the Company's common stock at time of conversion. The significant assumptions included the volatility rate and risk-free rate based upon the yield of the U.S. Industrials B curve. |
Variable Interest Entities | ' |
Variable Interest Entities |
The Company uses both quantitative and qualitative analysis when evaluating its variable interest entities (VIE’s) and determining the primary beneficiary (PB) of a VIE. The Company consolidates a VIE if it has both (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. |
Concentrations | ' |
Concentrations |
Certain customers represented greater than 10% of the total consolidated revenues of the Company for the three years ended December 31, 2013, 2012 and 2011. All customer amounts disclosed in the table are related to biodiesel sales: |
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| 2013 | | 2012 | | 2011 |
Customer A | $ | 243,258 | | | $ | 363,372 | | | $ | 189,773 | |
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The Company maintains cash balances at financial institutions, which may at times exceed the $250 coverage by the U.S. Federal Deposit Insurance Company. |
Use of Estimates | ' |
Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of revenues and expenses during the reporting periods. These estimates are based on information that is currently available to management and on various assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. |
New Accounting Pronouncements | ' |
New Accounting Pronouncements |
In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (Topic 740). The amendments to ASU 2013-11 provide guidance on the financial statement presentation of unrecognized tax benefit when a net operating loss carryforward, a similar loss, or a tax credit carryforward exists. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company will reflect the impact of these amendments beginning with the Company's Quarterly Report on Form 10-Q for the period ending March 31, 2014. The Company does not anticipate a material impact to the Company's financial position, results of operations or cash flows as a result of this change. |
Fair Value Measurement | ' |
The fair value hierarchy prioritizes the inputs used in measuring fair value as follows: |
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• | Level 1—Quoted prices for identical instruments in active markets. | | | | | | | | | | |
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• | Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets. | | | | | | | | | | |
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• | Level 3—Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | | | | | | | | | | |