REGI - Earnings call transcript Q3 2019 | Renewable Energy Group, Inc.

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Operator

Greetings and welcome to the Renewable Energy Group Incorporated Q3 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note that this conference is being recorded.

the Renewable to Energy turn Robinson, host, now of Treasurer Group. will conference your over Todd I Please go ahead, sir.

Todd Robinson

is call. Thank you, third me Executive conference our Stone. Warner; Officer, and welcome and and our today Officer, With Chief CJ Gary. Good quarter afternoon XXXX everyone, our Chief President Chad Financial to earnings

Let me to items, housekeeping CJ. turn I cover before a few over the call

afternoon. webcast of to will being you. with the this the would later like manually to on remind website accompanying beginning automatically section reference. you but webcast Investor slides is The I prompt this need available is everyone A slide your First, deck we call regi.com. at for webcast, and available Relations appear be replay advance an our at that will will This the website, our includes as

dialing deck the Relations For the website. earnings those release, be with section in press in, of the Investor downloaded our along you slide of can

update of other expectations. on undertakes Quarterly information of differences. in only no Annual the are based Reports we to predict advise on and involve guarantee risks, Slide revised this are results company are new forward-looking statements this performance. XX-Q, These to information The everyone statements. call forward-looking risk any sections on our and Form contained will file like These the which assumptions statements on a the differ are factors statements of and X, statements actual Form cause date speak difficult uncertainties those of These described that discussed detail Several and company’s on forward-looking in to SEC. obligation such materially in from to Report statements. factors factors with those not XX-K subsequent could such The publicly Turning could or call. some contain of that contribute would to as forward-looking or the

these press measure. check metrics for accompanying will measures will GAAP the measures. most appendix of Please the We the investors a also or assess performance non-GAAP includes believe operating of the help – release the comparable provide deck, reconciliation to business. the non-GAAP discussion Today’s financial slide to investors core our

the Warner. With to me CJ? over call CJ turn that, let

CJ Warner

good Thanks, provide the our our and third will and on afternoon Chad Then to Todd, Today, more then the discuss I details will on I’ll operating call. environment those our quarter and financial discuss outlook. back regulatory to come results. highlights

gallons on-plan, quarter Results our with EBITDA for and the with adjusted line sold expectations. were in

adjusted retroactive including our $XX benefit our our from $XX When million. would adjusted net have X, Slide was EBITDA on been million. shown estimated a As BTC reinstatement, EBITDA

underlying quarter. to quality during high uncertainties regulatory improvements the products continue efficient safe to are performance and dependence and the to serving Regardless, pull that suppressed Continued reduce our through operations, to maintained ongoing margins customers, our upon delivered we BTC.

expectations, XXXX. XXX sold met third up we million gallons, volumes as Sales versus X% quarter

into these We with sold focus continue which programs. our into incentivized most our those markets, placement markets. local generally are XX% the total volume of incentive gallons sold the of profitable best to was

these this that Beneath were gallons quarter is third $XXX gallons Total markets enhanced more total Through sold an year, year. produced million. the million XX mixed. last to period into same we compared

gallons X% up. driven by up Specifically at year-to-date. also initiative were with are Geismar, Petroleum our XX% production quarter blended diesel which was increase sales, in the biodiesel, and to

BTC small market the related the and around production the ongoing improved we biodiesel further domestic debate diesel volumes, response lapse refinery uncertainty, increased created marginal conditions, the both This was of to reducing slate challenging in we our to policy by by caused renewable by the While volumes. product exemptions. of the

the BTC. beyond promise, eventual has contribution the Along least or After of now at is uncertainty volume reinstatement the stretched has plants, the outright in for taking running long margins, have new are Many BTC cut, been the of shut negative and a far gallons toll producers plant of Hundreds too industry the retroactive substantially. biodiesel been At U.S. significant anticipation increased years waiting been lines, nearly Boston their have now these through dozen turndowns. our down. limits. of shutdowns of biodiesel refinery, including production own have millions two

not BTC biodiesel the to Congress real jobs lose is inaction real closures is The abstract, very causing the never Americans regulatory industry. and to is only the some a the return not and solid harming uncertainty tragedy. And market. gallons plant by the manufacturing-based are may just This of unnecessary

August, announced and early exemptions actual for of been the has industries equating for was the gallons. RFS are fuels there to exemptions XX approximately X.X% year, XXXX exemptions to to the believed The These for continues compliance to EPA volume. the waiving from waived XXXX month, for the required account the the on EPA XXXX when of There addition progress year. loss volumes. exemptions that President In XX pushback given the required the refinery year, in the X.X% the small agricultural of and compliance last properly be directed industry considerable a renewable

estimated waivers EPA the the Department not by recommendations, granted. Energy a that actual would future the proposed establish SRES issuing based However, compliance rule of using backpedaled obligations, on

actual a we and exemptions, to half is would push goal proposal X. requires only active small the process result EPA RVOs. of for Slide and lack use all will on can the volumes waived that the BTC of end This to to promise. this, The of year. this suffered. a decision that matter in finalize remains the President’s all on reinstatement this work the waived on to movement has you the as setting between their EPA Debate see not volumes, the the about the continue around did by industry That of out adhere future of stated has refinery actual

that under the is has caught of benefit the of the government of poor BTC this reinstatement having volumes, of of industry and BTC very promise without but based created in or The and belief operating all uncertainty. margin pricing. market the created This RIN most have the the RVO a environment. been middle, The difficult part real-time in

Now I beginning in we pleased an to am conditions, a are response. as that all shift industry having market that, see said

As on I on starting animal highs, drop volumes are we the seen for marginal as mentioned has earlier, reduction oil prices the from corn to prices, spot off to resulting and demand fats pressure August Slide distillers, come have and feedstock in X. The put shown market. begun feedstock

a RIN Additionally, biodiesel drop domestic the resulting slowdown industry production. in in is

high. plants, with which other factors, RIN the XX-month have prior were based Combined and shown This on recovery XXXX Slide how we August increase. RIN demonstrates as the shows U.S. further over off X. correlation seen for X see year. from on the Slide HOBO between prices have September room generation significantly price, an correlation. RIN below $X.XX RIN prices RIN, RIN been is based And we Friday slide DX spread market suppressed trading per on prices DX biodiesel RIN to from DX historical

We forthcoming. and retroactive pass prices, continue the reinstatement believe we assurances will our a the to and however, the margins. fostering also off rationalization further gallons to their encouraged come time strong is market, Should of continue. BTC, improving BTC support bipartisan nascent will Marginal and of for legislators’ feedstock the adjustment industry RIN retroactive without continue market continue reinstatement that a by to be

focused excited downstream oil progress the heating been as more we’ve for cleaner the and we about strategy to-date, fuel Meanwhile, our importantly, accelerating. is demand on and transportation both future but believe are burning

directly more that shareholders. to us meet value enables strategy downstream Our our for and create demand

variety increased across expansion The for of biodiesel, realization objectives; downstream via and higher biodiesel to increase value strategy believe margin diesel consumers. value. of is focused enable renewable on sources manage our us to through margin these and to sales of values blends end a the profitability, BXXX into diesel, We market through conditions and three of position us biodiesel and important petroleum shareholder diversified to of initiatives expand demand wide chain,

chain across in fleet expand our An is participation demand sales margin businesses. to to capture for get our through increase the customers to distribution whole to and value and way closer important biodiesel,

We customers large of to burning, accelerate. keenly are Fleet they retail deliver. users, the desire continue and impact getting are that progress to logistics of buyers. national to closer cleaner and that regional renewable fleet Many aware continue end of sources, we their fleet the customers environmental companies such and our today as fuel make sales fuel

natural As are greenhouse equivalent year, a XXX,XXX metric produced reminder, realized X.X gas. slide REG was a putting savings just that XX would gas for road quarter. reflects million and displaced These be the level the third derived assuming on from of power carbon EVs the full tons to their the by in from reductions gallons gallons,

biodiesel, substitute and complement through Clean Sales XXX% a September. renewable Blending of criteria quarter REG and biodiesel due carbon are strong, its profile. up year-over-year Ultra the Ultra or of petroleum diesel attractive over to XXX% of Diesel, other are offers year-to-date diesel blend especially proprietary and a Clean are Sales unique third up in diesel. emissions renewable with to our

petroleum are Our biodiesel blends and accelerating. also

diesel months, of as quarter sold nearly blend, products from the Our both for and average XXXX. blend petroleum increases biodiesel for was BD-ULSD XX% nine into the a XX% in

coming sales, and the convenient in indications due truck we effective significant of notably, and was our as to at known sales cost normal Early location. our a showing July. continue plant, have opened otherwise location retail the cardlock, station, plant. lift course, This these which in to diesel fuel proximity a For unit we the sales. versus evaluate our to are wholesale pilot of the production traffic promising economics. Most out automated Seneca first chosen captive And margin

that more and As pilot we’re then this can out so through issues learn build important further and about while we volumes important, small, solving learning seamlessly. approach,

pure round. to novel technology promote sales trucks diesel ways year addition example to on working one new In to we a BXXX demand; that use is are enables channels,

and and Department improve round sustainability and results their way We through use. to retrofit. great and this deploying believe Public converted of BXXX our be our of for are and our relatively this technology running to trucks. own are it simple via technology, a sponsoring all the several fleet delivery Works early who include technology including The on Park implemented a Washington consumers test scores can Customers to year The inexpensive technology will We the District. this already promising. footprint Chicago D.C. pilots BXXX, carbon be have are customers

We also opportunities further and robust for XXXX set have beyond. a of up pipeline

enhance volume B-XX it’s XX% January mentioning in X, that regional of diesel state, the of It a storing significant going underground we increase generate lower that XX% XXXX. to As up LCFS to shown this will from forward. some has Slide the diesel higher we as believe initiatives biodiesel sell California and carbon today’s value intensity X%. in cleared there. we biodiesel blends out This consider municipal beginning believe value increase produced projections, pointing feedstocks biodiesel or is on demand to change with tanks will renewable feedstock. and We worth credit can worth similar future renewable demand California and also produced with blends storage is XX, way comparable biodiesel for for significantly

seen could materially based the biomass by prices transportation on We’ve based estimate fuels increase million by Program which a already blend similar XXXX, Oregon; California’s year. CFP, targeting in increase or carbon this XX% Fuels reduction a Oregon Oregon XXXX. in demand is We XX.X% is Oregon gallons and XXX Then LCFS, for this about diesel in Clean to intensity rate. by CFP

is Air city our Agency’s enacted transportation targeting people Sound a Seattle biodiesel about XX% Washington home annual draft XXXX. million is a clean will of In of of Puget a This cover XXXX X% nearly program just program at XX greenhouse by per of volume fuel in rate. gallons and gas million blend X gallon. Clean heating recently tax oil the Also fuels State, reduction by estimate $X.XX the

that biodiesel of significantly that is carbon tax, because profile. We from share lower are exempt pleased to its

reduction oil by zero In the emissions XXXX. calls XX% has demand net market carbon leading industries’ by Institute, association of XXXX. carbon New XXXX. reduction a COX to trade fuel for The England a Northeast, potential for the and resolved achieve emissions of biodiesel net by by zero the million NEFI projects emissions resolution gallons XXXX, dioxide region, XX% a in heating the XXX XXXX, by

greenhouse as addition also on cities these other pursuing to see In reductions. examples, are can many XX, Slide gas you

in where will we’re Internationally, Canada of optimistic. there. in mandate is sell national likely has are renewable elections we increased program month’s current seeking and Norway We the It a come, fuels years because for federal bullish its from at in many completion profitability we’re very ways accelerate of also biofuel XX% the facing groups reduction, for the carbon renewable diverse country this push issues clean last address will to already by of and to believe XX%. continued And we many diesel, to creative the that that diesel spite in demand biodiesel U.S. increase level and

has Throughout flowed, segment. thrived and has our leaders. REG yet and in of expanding and diesel the opportunities of in history, Demand regulatory our world. its grown U.S We especially see ebbed support is exceptional around renewable as has industry ahead the the one us,

allocating are are diesel We Canada The Nordics growing, supports which sales we to diesel the our for margin direction, spending plans. market between and a our of optimize renewable believe California, capital for opportunities. renewable

track for engineering remains FELX proposed of on Phillips Completion with our XX. venture joint

we potential enable plans to direct parties who diesel with lastly, space. expansion access on expanding renewable water to for opportunities want the interested And explore working to us in other with a also and our Geismar at continue there. are reduce cost logistics significant participate We

terms we of improvement including that and our planned creating $XX have a combination capital prudence, to a of margin spend greater At growth and will we includes Seneca environment our to once on a this fulsome recovery. of given accompanying This value options. lack opportunities, by XX%, or launch pending, of We margin ready shareholder of we reinitiate expansion XXXX million reinstatement RD uncertainty. be In profit back also clarity have enhancing suite additional robust point, to BTC as date, more reinstatement fiscal project. cut BTC plan halting matter the approximately

to that want reinforce making actions the self-help taken we are progress. have I Finally,

accelerate being All the on moving dependence as intended. of road and of service growth use are on the them beyond and the BTC instead, in expand to BTC, to infrastructure

Chad? now over to call to return turn outlook. discuss the me guidance Let and our financial then Chad for I’ll and the update,

Chad Stone

I’ll and financial through for outlook. you, Thank balance the the and afternoon it everyone. performance our good CJ, run turn on and CJ details to then sheet, back

XX, decrease increase partially revenues in from an biodiesel as As price, X% shown sold. resulting Slide renewable average lower price X% million, a from on offset down $X.XX, selling a per by prices, was prices of by primarily selling international result gallon a of diesel were higher lower sales. average partially gallons $XXX offset The realized

or RIN biodiesel. U.S. biodiesel average average from XXXX, lower was $X.XX price approximately gallon third down $X.XX Our was weighted price XX% per realized quarter and of lower our

renewable These CJ volume due to decline prices. to nearly revenue included element carbon which almost from sold offset international states to the biodiesel, which diesel programs, and U.S. Oregon, revenue One RD internationally. Gallons higher reflected X well that uncertainties sales million in purposeful the is higher volumes ago. of in sold other gallons our response fuel due noted. market the worth regulatory year California This a doubled as noting is incentivize as to like mix credit from challenging low

program call, and increased $X.X earnings in clean this doubled of to year. Revenue fuel more million credit from value we although the $X year quarter. credits, we million this from QX Oregon’s recognized credits from our have LCFS quarter last year than Oregon million last XX% has California third noted As $XX smaller,

P&L, a the gross profit year. significant $XX the and down second is had of quarters from million, Going which a of first improvement this we

if our prices economics the not our before, BTC were too when the likely financial the in As assumption of RIN elevated without reflect margins has reinstated. BTC past high, not was volumes to statements credit, because for production BTC. business. Under the prices market years, the generally, the too distorted reinstatement feedstock be Accordingly, regarding not of two keeping case tax effect, environment the are real this operating and low, been do the while as are the of

soybean saw prices higher were year, lower can soybean prices, lower third XX% oil. and continued basis, Slide was oil, were we flat. a pressured to oil oil than traditionally the feedstock compression cost corn canola that, Having was up bit cooking distiller spread which to weighted due a margins said XX, yield and on you see higher quarter, also experience while used a animal for to average In last from adjusted we feedstocks fats, X%. On

perspective, From the in spot seeing a lower feedstock mentioned, are timing we CJ prices quarter.

these generally fourth XX forward, However, feedstock days booked prices since realized quarter. the we won’t until lower are be

model between higher the feedstock in more oil, flexible the period. on taking feedstocks, to price feedstock during yielding and cost us allowed traditionally oil Our compression resulting optimize relative canola and the to price to yield, soybean relative lower due

reinstated, $X.XX XX-month per And and XX blue return revenues, The light our SG&A and net on earnings business see on long-term and the Slides total than less being and remained we EBITDA trailing you on invested believe a of are results XX, charts adjusted gallon. can reflects our capital. the of X% benefit of seasonal, BTC trailing our reflection is XX-month bar the and power. better

highlight, One of our New closure to non-cash, important charge the a did note recognize related we Boston to in nonrecurring, impairment quarter. plant $XX million

Overall, that adjusted in we're as we the BTC we was we terms estimate on positive to total the of the and additional range middle is this EBITDA of in even for difficult estimated produce benefit that environment the before, reinstated a estimated $XX that the guided. If the same would of BTC cumulative is Through $XXX year net our XXXX ended XXXX nine XXXX EBITDA $XXX September adjusted million. net million. is reinstatement months benefit In a be million. the pleased

Slide $XX XX, of to the had the million balance Turning end quarter. as the cash of on we sheet of

Accounts of the million nearly by $X $X cash nearly million accounts decreased decreased payable receivable During in million, activities. the have and $XX by $X million quarter. operating our inventory quarter, up we in were

on quarter, tight the the are spending in CapEx until rein BTC keeping is We invested $XX but million CapEx reinstated. in a

earlier we our paused we year. project million at $XX As Seneca plant the started CJ this mentioned, that

$XX million. $XX to Through have million full XXXX CapEx September, a we million initial year held investment our was to $XX of $XX budget Our projection however, million. with approximately for

As to suite this have Board CJ invest of we $XX growth in exciting buyback, a our we to available. opportunities million mind. remember authorized have also Within closely context, it's creating also mentioned, in intend value that we funds to helpful become on remaining keep a once opportunity

we During $XX of from million at drew line $XX quarter end. the line remained under million while my the available quarter, credit,

availability in collected since October shipment. international a Our we better large got actually on renewable

is stock maturities This the bonds to reclassified below that notice end current convertible price for our trigger the $XX the at from you'll the Finally, being debt. share our million result long-term of quarter. is of

tax to expected XXXX effective forward Our going the we rate X% to is for expect than foreseeable our less is tax And blended average to continue than less future. And our be X%. less rate X%. for interest be than rate

should close, I they're our items also sheet because we important position. very understanding current balance some financial Before off touch to on

million Our cumulatively, estimated is to up reinstated I contingent benefit credit BTC as the $XXX being mentioned net on now before.

$XX that have million in and but also our RINs generated have not credits We of been statements. recognized financial worth LCFS yet

to Now discuss outlet. CJ? CJ the I'll back the to turn call

CJ Warner

Chad. all refer Thanks for our XX Slide guidance. Please to

end expect For reinstated we BTC sold that margins if quarter the fourth $XX account adjusted adjusted XXXX In higher trend for on on to to $XX of $XX level margins, This EBITDA million to XXX end a credit fourth the million and or years. estimate will the could gallons fulfilled on experienced estimate approximately keeping terms through of Any based expected the that to we're million million. through into BTC projecting quarter prices, affect and have existing volatility the results. changes similar in the the of actual in takes forward EBITDA is of LCFS were be actual market week contracts range through with gallons be sharing, gallons. we of we mind, in the quarter, to or ULSD last spot be RINs, fourth values quarter of existing performance range the the With XXX to past million quarter.

risk included of curve. guidance, as the management on ULSD our estimate million XX, our quarter losses the in $X.X based of which We've October for reflects forward

gallons recently in improving range sold guidance to Our be difficult, of now will XXX in environment. produced gallons the million to from XXX to These XXXX million. reflects We year the efforts be although the market estimate full the and the been as range million and our marginal guidance on reduced our optimize gallons. of prior XXX most we gallons profitable product trim have focus mix, XXX million

forward issued and the I BTC resolution exemption and soon so can that closing, all look to small demand we more become In think, supply of refinery market-based.

we're on however, less continuing on As BTC. I the mentioned becoming progress earlier, our dependent

are to gallons. diesel downstream this high focusing efforts renewable quality through on on We and focusing expand growth doing our margins,

also contribution maintaining running we're our one volumes only discipline. firm are And allocation margin positive the We or without on produced with capital BTC.

our economic Meanwhile, continue there to on play to increasing indicating us REG. products work as giving values for avenues demand are and time, we multiple creating social over for at much both

Q&A this turn our over I'd call like call. of Operator? segment time, to the operator to At the the for

Operator

Thank you. go Craig from [Operator sir. Instructions] The Irwin, first ahead question Please Partners. Capital ROTH is

Craig Irwin

questions. taking for my Thanks

CJ Warner

Hi, Craig.

Craig Irwin

the So, year-to-date; an up million quarter, range? still higher we Are about talking or hey X%, million it in possible little CJ, a year-to-date. gallon quarter-over-quarter, run is the bit a X% gallon year XX it something GuySmart, XX said maybe rate Chad, that to XX% everyone. you right, XX%

we as in are us economic you plan? talking at we in a Are economics then right maybe as And something for $X.XX, plus can far now? of looking this range? performance $X What the the GuySmart confirm $X.XX

CJ Warner

actually throughput terms regular innovative at something demonstrated That enables to we are So look up. always our basis. does. that we envelope. on Craig, REG consistently operators bring of forth to are That's And bring a capacity, in projects welcome us the pushing

our because we've of been is also contributing some what partly the is is which year-on-year doing to our downtime lower. catalysts increasing And improvements life,

little operating think smaller continue it GuySmart that at increases are your declare looked higher I we've that one early lately. smaller to those to. we been we expansion the has us for So XX that And higher. at the That's by what right bring at look and a larger nameplate investment. been the because versus to us was to without up it's gain capital up enabled we've instincts what gone at to I much think bit But significant something able original a way, is

Craig Irwin

good That which XX. bridges to to about second That's is nicely my hear. actually question, Phillips

economics it the some the an between XX to oil when they this partner? for at given significant that plant us were conflict refinery lobbying original about and give up a Phillips is right significant for maybe to reason bring XX was the you And company? Why being diesel exemptions and a how time we And that the can intentions refinery did any want disclosed they describe as application Can said industry would industry permits back want only now? you we were we’re any? us So they really for to for did small receive partner, why would as the clarify Phillips disclosed, renewable apply public. fit

CJ Warner

Yes, good there’s a lot questions of there.

applied and speak know, So in needs XX to we and SREs. for project know talk just our PXX. with for and matter, you actually I'll about our themselves that’s that received who say, start let's Phillips reason with don't But

an location. synergies region. by permitting, is refinery. get progress for We close We to most is great about it's making are in It in it, locating that on excited which challenging significant the the advantaged

with bring we the on realizing projects to synergies the as experienced different table, are we capital And that being each major at building between time skill-sets and on them budget. partners

pre-treatment. with allocation procurement, feedstock marketed of, aware feedstock the as of or well With the things kinds as we're

for create lot So give and about synergies by other, for us partnering, don't fifty-fifty of we're value really that. partnership a play and up that to so a things it's and value there excited together, to each creating we we're is

to getting partner a to that's this us terms willing I value. it’s and to exciting in work diesel economic in find type able of or of on and social industries, interested renewable say that along would not, be creating with

Craig Irwin

three Okay. were diesel the he there, was was company for the sites last that Oh discussed potential facilities, multiple he sites Day, discussed under it Daniel – last consideration. Analyst presented, and And the when where then separate time renewable

XX a So XXX plant, sounds is were the could maybe gallon can And you site, Geismar, to third which obviously, Phillips you us now is then site? another one, like update a it expansion. do be it million fourfold if on the third

potentially big from that patch? Does significant comment could maybe REGI, cash about could over the you Phillips prioritize where a of this owned site this economics? the the other given outside in And be benefit probably Phillips for versus economics site Is XXX% up someone next the What months? could oil can your potentially shareholders to sites? see giving that XX% include fully the a potentially, two Geismar, looking site you of not do intake XX, of you handful XX, by

CJ Warner

additional So comments we lots at did to And of continue all sites. good questions I embedded that. my look in again, signal in that

it’s strong our our that. picked want do to us you, you a in that on So But up strategy and It's nicely. little more specific than assure strategic early for to thinking. be I any

number optimal working feedstock and evaluates We things to feedstock location, are of and that optimal optimal a business models. on proximity

at could So ways different look there of are business we lot a models.

it as of things, alone, other partnerships, all you're and evaluating look those are ways going Some of them are But direct including that at can we we things. envisioning. there's

any anything market the game other your products location preferred producing The though, name in other of with is, RD the to some when to to compete production. advantage you're energy have you or or want a

never our view, at for and definitely have advantaged you're our marginal high RD. production looking we're gallon. you options that an And as in profile, the So that's

Craig Irwin

bridge a to then last again great marginal and question. gallons my Great are

you gallon. SREs a Do sort give to guys the feedstock both the change? in for from with industries sudden a have you that, and profitability Obviously, thing biodiesel is Wheeler any expect RIN out strip that $X.XX probably the the like lost remediation of the right traditional $X.XX off, that you on come expect all timing for to the side see a something side? items the a like refinery take. you headwind Wheeler's or like of something does What looks we barring, gift specific the dime would if it quarter, of to So, on Geismar side, a pinching the you gallon

CJ Warner

imagine BTC, in that So, we margin going see already we're as less and longer the intimated I to comments, you're it to see starting the more goes, my the recovery.

watch are see this can some that the kind of albeit significant. serve still say you a also in margins, going we and of would things are we the was in terms volumes, in thing, these at on describing downstream we're but that and space active a that, smaller those all well we're fairly uptake improved that's of speak. seeing I through, also doing that somewhat So even is to I us in come capacity, it, ideas as of as

will So that to starts that gap of as well. kick close as some that in,

might And that? you to to Chad, add want

Chad Stone

Yes, for going have reporting renewable don't to just segment I was diesel. out, our we separate point

on the of first side, the approach make where a So as the with and the call year, BTC throughout right we we'll solidly you the transparency that the marginal cycle. some to producers, see market biodiesel of companies what But there. has as renewable profitable there's other couple to half I might they a the didn't whole. much point, production, left needed would changed out not to say, there, see you're indicators reflecting your diesel been it

and network you when of profitable our BTC got point. upside. to course CJ's just then and going plants or We're look we've portfolio run that Of positioned competitively some are the through very plants, for not throughout, our to

with our that said, So BTC are reinstatement. plants all of the profitable being

without even that very – because competitive. profitable markets in and even it, are advantaged are they're Some locations

Craig Irwin

hopefully it’s easy What $XXX the one do together probably queue. benefit your if pretty cash million for? your Phillips point? the from million. in more And any the this at cash when I the the if just coming get million jump expect could there and in of for IRS, to preset use use check REGI around see investment XX in buyback just use, at cash sort before Priorities so we in $XXX squeeze April, plant, remaining you for to Are I we Great. priorities $XXX approximate in back

CJ Warner

have of I've we list the and strategic of they describing. a that along items So do list the robust run been priorities very

customer the produced and expansion and downstream our definitely, improving into Definitely getting definitely, all to So margins RD the with closer of gallons. expansion. our

Craig Irwin

questions. and on thanks for my Great. quarter again Congratulations the taking

CJ Warner

Craig. Thanks

Chad Stone

Craig. Thanks

Operator

[Operator Khorsand, sir. question Instructions] a ahead Hamed We have BWS Please Financial. go from

Hamed Khorsand

Hi.

out how first was had the the is in now? you much So inventory think market question right excess I

CJ Warner

In terms material? produced of

Hamed Khorsand

Yes.

CJ Warner

estimate this scenario try an that. for year. our typical inventory to Well But for the let is start building Chad the at make I might industry to of of time

Chad Stone

year, Yes, range have is I you think the in that XXX offline second reports. U.S. in of the CJ, plants to million the come gallon association we've to about Hamed, million the what some seen if trade referred biodiesel I the a look in of dozen production XXX – at think half

that's overall biodiesel. reflecting a So lower production domestic of

renewable coming operating Now, and strong we continued domestic the strong attractive have to plant never to is that on economics rates be front. diesel, really for imports really, can well. and in diesel you continue run continue international producers above renewable before. And see They see, to do our

biodiesel prices to margin leads response some in So domestic RIN into the in to reduced that's beginning to of stronger, get And margin appreciate, And the and just CJ kind production. the indicators. would and referred general reflect. indicators that main that meeting terms of of I thing

CJ Warner

also Yes, I might add.

because received about are a I available those them changes pricing enable bit be. that they the will some calls the predict it's of because right products But we will RINs RINs being now and parties when obligated whether to want volumes them available to from the come see be somewhat meet off. say I that think starting and to hard to we've concerned

sign that's forward. bit I a to things different going So a going that think be are

Hamed Khorsand

to I'm off those of be consumed, would go their that if so implication to guess, up, a get especially kicking channels inventory months? IMO with productions excess eventually come couple just in I eventually prices gallons, of will all and one trying the their this what XXXX is, in

Chad Stone

Yes, I particularly, would offline. inventory the historically, of of actually coming have the find third you better time production that coming this out the think domestic and year, quarter you'll been levels saw

excess that are out there. So inventory to is all there accustomed to going people not be

to So industry. I encourage think to to the need improve on prices throughout continue the generation for enough RIN and right you're margins

Hamed Khorsand

Are prices you true that to just hold rule? different going right the XX-day still to you with given to that more doing declining, now, feedstock anything the capture upside, margin are environment

CJ Warner

have to and do to some sort we is procure also, option what of required build of some you in there's inventory, because ship. of cases built time amount the into Well, opportunistic the procured, already if And pricing. we've

that. do particular we to a we plant as our that upside other of well, because around things as there opportunities and large if And of from the do, is noticed. some integrated, some have can So we fleet being sometimes we one move

At in wouldn't of wholesale simply term. opportunistic. short the could because described be will timing, be I term, near in So we say comments. it his least in the Chad as the But,

Hamed Khorsand

Thank you. Great. Okay.

Chad Stone

Thank you.

Operator

ROTH ahead We have from Please question Craig follow-on Irwin, sir. a Partners. Capital go

Craig Irwin

Thank you.

remaining remarks Europe. on significant the Just your on a renewable the I think, Chad, us, it facilities, talked large approximate cash $XX what housekeeping diesel for collection prepared in Can intake was about, collection? liquidity of but so your in million was you out that you question,

Chad Stone

was it of north Yes, million. $XX

Craig Irwin

Okay.

of So liquidity, is we're now north in $XX looking million at that fair?

Chad Stone

had Yes, two. positive quarter EBITDA and we also a

Craig Irwin

Yes, obviously. again. Great, thanks

Chad Stone

you. Thank

CJ Warner

Craig. Thanks

Operator

session. like the turn I over question-and-answer Todd end of remarks. reached closing would call back for Robinson the We've now the to to

Todd Robinson

turn you. Slide XX Please some to conferences. for upcoming Thank

your We will if in with X schedule conference Chicago or so present Conference meetings week. invitation-only, you is XXXX one-on-one the sales Industrial please Attendance this on Baird November at attend want this representative, contact at us. to Baird

November New this We the invitation-only. will Industries at attending also is be Technology Attendance Conference XX. ROTH and conference on

attend want you with please if us. or representative, one-on-one contact your to sales schedule So meetings

call. for you joining. may now you And concludes the Thank This disconnect.

Renewable Energy (REGI) 5 Nov 192019 Q3 Earnings call transcript