REGI - Earnings call transcript Q2 2020 | Renewable Energy Group, Inc.

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Operator

Greetings and welcome to the Renewable Energy Group Inc Second Quarter Earnings Conference Call Webcast. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Todd Robinson, Treasurer. Please go ahead, sir.

Todd Robinson

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

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

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

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

and slide our detail based Turning most our press are in help SEC. metrics the to actual or We involve measures. would X. the file statements. to publicly the guarantee discussed to on that contain not discussion are you the uncertainties conference the risks, performance the these the the to deck of such the appendix XX-K We see release comparable company These performance. the and These on for information contained includes a quarterly from forward-looking advise no a accompanying difficult factors forward-looking those those could GAAP of Please statements. date The some to non-GAAP operating described subsequent contribute Several business. differ annual factors reconciliation call are report non-GAAP will measures in materially investors predict on are core company’s that results assess information call. or cause revised also will These Factors differences. and statements any of of this financial believe forward-looking reports of statements measure. this statements to undertakes could Slide Risk or speak like update The new Today’s other and on such sections XX-Q, to Form in as statements Form of with forward-looking expectations. only of which on assumptions obligation

remind on the The XXXX. for our benefit adjusted operations, credit financial the sold. Excise quarter to EBITDA of through credit Because reflected to end or and both XXXX our and the our for near this that detail to the reflect in CJ? provide XXXX their XXXX. of were in items XXXX With the line let XXXX gallons turn me of more which the XXXX allocation net results. also results President reinstatement Biodiesel to reflected our he was and CEO, me related XXXX. XXXX also Warner. net place in will years the and period you reviews Chad benefit that, Mixture retroactive retroactively the fourth associated when by an call year, over BTC, Tax put of GAAP financial CJ the was other quarter last for of Let and Credit, It was in that statements our reinstated

CJ Warner

you, Thank afternoon and Todd good everyone.

accomplished. through especially I’m what and year backdrop incredibly halfway volatile We’re proud team that and a given REG quite of has challenging

at of operating from thus far We’re our within identified infection place practices have business resulting sanctioned the and COVID safely illnesses in workplace. and cases government CDC janitor zero

by products. feedstock and and maintaining operations diesel delivery rates to maintain essential our company crisis Our Most high We’ve supply customers biodiesel people employment, from throughout us plans we renewable and the the operate. our our in reliable supported consistently to communities uptick and enabling which fuel run noticeably suppliers.

that believe illness, additional all than an family deal any time any when the remove this for off to with and of work provided both self-quarantine flexible come to try thing to alike. to two doubt. incentive weeks have to employees issues rather is people our do We We right and in

Finally, net This close and we’ve adjusted $XXX the would generating of in of conscientious first million effort XXX been one half. of $XX without sustained every income dedicated EBITDA nearly to million not profitability possible of employees. our have and our the

narrow earned the at impacts. places. diesel price our more major demand in million COVID remote and for much overall significant and second in the over sales Q and first while war second March, despite adjusted in stepped EBITDA was in our of sustained volatile practically Nonetheless, production late first the internal X. with the in quarter of US to up work and Having COVID struck the was quarter. need Looking as We work quarter quarters, crisis Please so May. really half, such the one practices obviously reductions The oil adjustments our to all extremely due was strong full and the were first that, challenging best highly reporting hygiene margins of pandemic. levels second we refer period said Slide $X

that quarterly adjusted factors with our some of would, in resulted other closed were price than together some Other This favorable We’re estimated. changes performance. smaller they coupled exceeded guidance. factors EBITDA estimated more earlier than revised pleased we transactions than elements several that result these we have better was had the estimated

fuel Focusing with shutdowns the Jet fuel approximately on as for economy down business X. you and XX% for second can gasoline demand by was major XX% quarter, on of the seriously impacted decreased nearly macro year-over-year see dynamic significantly. sectors, down effective the Slide

by in fuels. renewable of an responded April resiliency demonstrating intensity for Within that relatively production societies defining historic and ongoing average drops only price. shutdown, effectively. the corn plants were stable fuel flex carbon low commercial and fourth a a the remains us enabled demand XX%. of the about stay been the biodiesel play. a charged context supported Despite trending feedstock it For goods is crude demand as transportation up petroleum the this oil, used gallon. supply XXXX during the prices continue and fully that markets then Since contracted distillers’ remained feed nearly restricted large feedstock’s well it ULSD of diesel, to ethanol enabled held and packing of oil notable, and of gallon which in closures diesel upward restaurants, and and situation, desire quarter, renewable fat ability cooking a $X.XX our below dropping US price fuel per strong to vital combination optimize demand drop demand has more animal $X simultaneous feed in lower and of primarily and the ULSD disarray relationships our to spite in with although to Similarly, fuel

more For shifted oil the environment. attractively example, of supply the used X, price to corn soybean feedstock on distillers’ The oil. demonstrates how adapted Slide majority a then chart we we to our successfully

mix our XX% XXXX to XXXX oil while QX, as compared distillers’ respectively. and of of significantly used usage changed feedstock QX, XX% cooking oil to soybean in usage doubled and dropped Our corn oil

to to a average in feedstock per the we gallon result, held margins. us the shift with This As relatively cost helped our even market. our reduce flat this feedstock hit significantly year-over-year huge

to margins steadily seen increasingly on the these sources can HOBO the through have dramatically online and first with back X late feedstock Spread the swing then downward end the been The Slide with second our reopens, be margin since As to bringing quarter back subsequent April XXXX levels. of economy coming improvement quarter.

are While price levels. recovery margin to is far fourth back in war quarter not continuing pre-crude we yet The XXXX thus trend XQ.

underlying our aspects first by the what execution with potential second of results for business that our This of operational performance. important in the quarter solid were to environment especially high volatility distraction Our our in external call control in the workforce. or like extremely was driven half the are within strong the and I’d

with injury X.XX infection. January Our and strong outstanding performance. performance. time, operations and We’ve injury reportable is had mark planned or on leader around, at industry injury remained We rate guide zero successfully within without total the is XXXX budget on our which conducted safety turn since currently

soybean earlier, attractively gallons a price our basis. mentioned more therefore of heavily use adjusted on shifted plentiful we yield and more key I which increase we was diesel, to As sold of feedstock REG supply Canada in US and markets. our renewable profitable directed XX% quarter to to in XX% product gallons oil to Norway. most Coast, the million sales the West second sold XX% by around and to [ph] With We four the

We to in of margins downstream is continue one demand in which channel. also our and to develop initiatives business our boost regions attractive key

Ultra year-over-year we and important cleaner REG can continue grew gallon channel. and by fuel XX% of proprietary carbon cleaning, increased to customers liquid XXX% sold burning, Slides XX, Clean, transportation to sales see As fleet our as this you in XX expand we low

us the more downturn along lines occur, to the sustainable a the to prolonged in Importantly, foundation improve balance us a our Chad sheet. creates detail gives half first just should our enabled This provide moment. in will profitability growth. economic survive one also for these sustained strength

we’re in of confidence is remain forward, around our our by long-term future [indiscernible] situation. while My of strategy in factors. Looking we XQ mindful optimistic performance evolving and and confident external supported number the

ongoing half, of solutions. and agreements driven public through certainty Growth and in late for view support the continues execution brought relative stability are to energy an constructive work XXXX operational great Our about commercial and up. regulatory the strategy plant our the plan in for by the for diesel Engineering by increasing $XXX progressing element and desire of strength strategy. within an remains important renewable renewable diesel first selection million our start site finally and clean associated

downstream and margin customers directly you our the of know, expanding a also As our to and element strategy. key products growth into delivering is

Sons, selling Sons with allocation, are to products networks, initiatives. more act [ph]. Even a deal repurchase & pursuing margins both as shortly. Slide provide supply week, an drive renewable and approach branded with sell to Hunt demand on by and board shown hardlocks Last with This XX, our a leading we our details deal products progress to REG to distributor to Chad announced we we California users. and will as authorization end on our new select continue & is on strategy this our Hunt biodiesel make of our petroleum disciplined Clean support. diesel and Ultra we keeping capital expand based strong for In with example current

expanded by and encouraged related to diesel. renewable the are initiatives We biodiesel regulatory

biodiesel. XXXX. the to extended British For their also Order Programs carbon XX% a to instance, sales strengthen Executive benefitting reduction Columbia State and extended tax differential program XXXX to recent And Iowa carbon by agencies XXXX increases in of XX%. to Fuels reduction has to the direct Clean their Oregon, State a through increase

decisions. details can We website. our access welcome to highlight will investment production support continue our transparent to to first and in million XXX reporting Chad the our carbon financial of our ESG as Slide which issued provides report, momentum gallons be another section shown resulted on of the tons our on X ESG I on Also investing of in reduction we investor that Before order results. quarter. you in XX, metric million want for the around

turn to Chad? Chad the I’ll review and the call second performance quarter Now half. over for the our first to financial

Chad Stone

afternoon, good and CJ you, everyone. Thank

my to on Before I quarter, get into comments the align everyone want comparison. on I

the gallons due you extended to Slides mentioned, quarter down allow prices. XXXX XXXX comparison change XX of Todd half was product results analysis numbers ongoing to of Accordingly, and in fewer one-time change selling million LCFS for December. higher the in economic were will third first both the due on contain real partially was and for of to and and BTC in apples-to-apples As average the guidance quarter retroactively the This our second offset impacted the elements that year. by Revenue second This for of for recalled performance. XXXX. exceeded our provide quarter of the the sold Average higher reduced last adjusted by reinstated into the underlying XXXX administrative and reflects significantly was lower BTC Gallons prices. selling better gallons enacted the second sold LCFS understand XX were reduction the in will credit allocation substantially the pushed was non-GAAP XXXX. of toward drop mix XXXX, our quarter improving $XX second a emphasis credits This in prices of revenue from quarter ULSD entirely in our sold and we portfolio. margin petroleum our from gallons. third-party

safe We with had COVID. quarter owned renewable in produced Production diesel production XX%. boost sold more optimize and renewable X% diesel more our diesel the gallons sales the year, impact reflects profitability. pandemic to despite our But notably year of order meaningfully. We diesel REG production did mix the second on team of quarter increased and midst by incentivized in increased Most were of renewable strength years. our this still to up ability We catalyst was we our XX%. operations this core and both Renewable think up value directing act lower. solid year-on-year. the of operations. to our than and to in benefits We was of surprisingly last due substantially expense. up produced professional meeting and wages Sales markets. legal gallons the the service SG&A continue and higher and $X.X third-party of of were million an the turnaround both primarily Not more second expenses to in increase travel

of percentage X%. a revenue SG&A around As remained

the adjusted mentioned reported challenging have CJ we second in As environment. EBITDA positive for quarter a are such pleased to

first volatility full quite of half far in results best first prices. our half ongoing XXXX. represent so Considering think progress together, our were results We operational good, underlying the strong energy the reflecting Taken performance.

which in the we $XX management economic risk reflected gallons. main is XX we coverage XXXX XX around at and quarter applied and have second in BTC shows At This also strong is such trailing volatility, million in As end, recognized to The some IRS are XXXX results true half beyond in gains we risk net our shown the XX remaining environment emphasizing sustain future the of April excess for booked a we better of the call, all management mentioned notably over return capital we out quarterly XXXX that making invested performance. are equivalents QX earnings for and to operations of EBITDA sense of quarter is risk of a Off and Slide XX. Part that for of sheet. quarter We in sales time ability XX a and collected reason first Slide to our months our QX an XX% second over full $XXX cash XX%. months gain on move trailing our tracked of quarter. profitable of adjusted This figures. first $XXX shows challenging most tax customers. on that current cash million. had million highlights the our the amounts payments Slide been from sharing assets balance

plenty addition, were receivable sharing we’re from still collecting around second in A as entered a of At due administrative major in the environment presented end net $XX amounts government challenges BTC current securities. BTC despite topic cash quarter, In we market by liquidity. customers. we the the COVID. Furthermore, expected is of tax liquid We receivables the quarter with position of the million. XXXX and

of of With and half, substantially we securities $XX our million. of million an reduced as cash of in million, $XXX and we’re debt the first cash Over course excess $XXX marketable well. position over the debt

April. addition, as In have we down credit that our on paid nothing backed in line drawn asset of fully we

$XX each that safety, integrity million we three budgeted following existing of $XX continue We $XX our to year, follow through framework. of budget. to first, our CapEx categories; million the spent asset the roughly allocation reliability out fleet. and we’ve the capital million for Midway Recalled

in return, our payback to high two Next, approved and than projects tend rapid projects. recoup less third; we that board years growth investments

progressing well budget on tracking current in We’re and even environment. the

with compete reminder These on an our a projects rate return of repurchases to invested capitals. is XX% and lX% debt projects growth capital and return. As overall maximize in return internal target retirement

have to includes and repurchase of remaining authorization $XXX use million repurchases. authorization. quarter convertible capital repurchase allocate return in our for second to We $XX bonds million also bond shareholders We convertible which through we

CJ? to CJ I’ll discuss Now the back turn outlook. to call the

CJ Warner

Thanks Chad.

guidance. quarter to Turning third

and formulate are COVID impacts market are certain. new again With positive a intense both no potential look account from into being forward we still mind, felt far outlook negative news, the in that the our is to forces. longer Although crisis taking and once

As Slide you the on see XX, side. can positive on

carbon carbon with corn grease. pricing renewable Our availability broadening recover robust. continue distiller’s to fuel support remain and biodiesel improved margins cleaner that oil continue. feedstock, and low white intensity for There for Overall demand outlook solutions is diesel low be will choice and and will the will will public intensity

With inventories the fuel depressed on currently resulting crude push cost demand diesel Used of lighter continue availability million expect prices will will likely third downside, refineries million. that Low very will prices. used oil Now to Slide keep XX the in a to And as $XXX and for diesel in diesel remain mind fuel resurgence. into continue lower finally, significant potential to range we normally than resulting said, likely for COVID diesel high ongoing will jet typical drive low shown supply. ongoing to gallons over quarter jet cooking of due as must restaurant we being sold closures. all in for $XXX on

expect in We adjusted EBITDA million of $XX $XX million. to range the

demand renewable diesel been stability of revised even COVID, and outlook full face our biodiesel in year Given the has the for slightly upward. XXXX

XXX to those and to to expect produce We million gallons from XXX XXX intend to million XXX sell gallons. off million million

to track call. level optimization, changes the risk million At $X focus to values the and and Hector? on we’ll our Of performance, affect year record, continue loss. segment RINs, a over of optimistic results in strategy. to shareholder question-and-answer the market the quarter first LCSF could end margins, our the quarter time, prices, the call underlying implementation that course management remain like this about actual and ahead I’d for value half of to includes operator we note our turn through of ULSD or any of this credit guidance third Building volatility of

Operator

first your ROTH Craig Please the Partners. Capital Irwin with question. [Operator with comes line Instructions] your question of proceed from

Craig Irwin

for stronger for, congratulations was a few than looking quarter what say just everybody ago. should first So guess weeks I I

pretty different clear. that soybean what this the maybe of quarter? this into in if switch oil dislocation to is does your look your oil on indicate discuss Can to of to And your was the time, has feedstock that in to versus opportunity arbitrage you the flexibility feedstock continued switching the happen feedstocks? if most seems XX accelerated third third profitable at to collapse later It opportunity the quarter, would and maybe other feedstock we soybean XX to the quarter. sort guidance As and your

CJ Warner

Thanks for congratulations, And question. appreciate for Craig. that. your we Hi, really

is script, particularly the as up we industry. rendering starting in we’re a change production open respect a as rebound the said as market to the to actually So ethanol and well seeing because with

isn’t Newco was be [ph] half at where to quite restaurants back while it So with least to only before continuing open.

getting We’re as well planned corn grease for white oil and third a in choice rebound have distiller’s purchased the already as mix primarily that. that quarter reflects and we

Chad Stone

just was that I Craig, add going to Chad. to it’s

look the deck. our you at slide feedstock in If

you use You’ll see intensity quite later because of ethanol which the the can downtime we a may low that ethyl in designed of have see carbon that for justify that carbon of is local premium oil why shut-ins, intensity they plants incentivized is soybean, to distiller benefit oil destined traditionally the inverted distiller and and switch intensifies Midwest of we price California. getting it same oil the is north more not and yet corn to because the and it corn where had whereas lots market don’t and markets, for soybean of converted effect went slide the a that shows oil so in soybean of in June correcting really

just I wanted slide said. to highlight what that CJ So to support just one

Craig Irwin

you color? is potentially abbreviated EBITDA the out termination that as second million or your you. out in gain other income back that give a same you on your non-operating it elsewhere. lease reported backed us little question in in the maybe is right. you $X.X Is disclosures thank the that results, My Can Excellent,

Chad Stone

income Chad. other is exactly interest because income large is. That we’ve and clicked it’s in it in accounts. Yes, also what There down April there infusion that interest-bearing of some the is some cash

Craig Irwin

us? then in that. you interest excluding share the gain Is for can quarter? would What it, in this So just interest a be the follow-up an expense adjusted one-time

Chad Stone

think, no [indiscernible] mean securities, AX it’s safe. [ph] Yes, I in just really I really,

$X.X number. But the million, but cats low that. big interest. gain the and was the other there a dogs than There’s you it’s lease pretty rest dollar know was So largely in like little

Craig Irwin

Okay, the you. Thank understood. I’ll jump queue. back in

Operator

Joshi line the with Your comes next question Wainwright. question. Sameer of Please your H.C. with from proceed

Sameer Joshi

for think The first to What is buybacks you’ve authorized mentioned remaining buybacks. that what planned? the question I And that? $XXX cadence and the and you relates is timeline million

Chad Stone

not have or does limitation a it requirement. Sameer, a

governed boards just it’s by they to management. provide So will the that authorization and

have doesn’t an it So expiration.

Sameer Joshi

mean allocation? or I next that Okay use and bunch mentioned you then. to that you’re a few you of now How Are the But the on cash. plan for there sitting I do spend any plans, know quarters? capital

CJ Warner

nicely strategy arrangements Thanks big advantage be Sameer, well The so in really the highlighting to this of I was is cash in now on and in progressing much is able at [indiscernible] those short pretty the that, working we’re that we’re CJ. our that items order we’re to very take bank. positioned that the

So progress us our that robustly. helps strategy

Sameer Joshi

what Okay, Is can last and being is downstream any there give made on me. progress elaborate you front? one some that strategy more understood. the us - on One - the from

CJ Warner

come rather lower fuel of blending A pleasure. robustly, job closer direct now We’ve does carbon downstream a strategy business is getting to channels. excellent that quality of of the levels some in great experienced that customer those once distribution we the whole it through of the of the the the as that that as and we’re well experience we’ve own, selling understand value really confidence now helping with to idea got up customer. The

rapidly, element there’s able whole being products more value being well the So to to sell to a customers. across able dual chain increase the of by as uptick full value capturing of the direct as our

is course channels we defining of is essence the can where strategy in the sell. and of purpose that So about the the progress

uptick to manifestation renewable uptick. a will XXX% & has Sons blends us of good of of Hunt in and very seen deal we’ve that increase the into biodiesel The help with that So continue diesel. that sort

Sameer Joshi

congratulations and quarter. a on again thanks good Understood,

CJ Warner

Thank appreciated. you so Sameer, much

Operator

of comes Greg next the Your line Wasikowski, Webber Research question from

Greg Wasikowski

EBIT the to [indiscernible] start with versus guidance. to wanted your I

prices prepared dig I favorable remarks. timing could if your you and Give us more some a drove changes was on what wondering some just deeper. a color bit maybe little in mentioned little that. You

CJ Warner

some getting really we’ve what too cases, so make opportunities were able seen, some being more in without more much granular there than because changes of identified to we’re that Well sales. some we favorable good select price

good pricing from a example standpoint. really a have We

for normally Our with is much receive same course which pricing extremely that’s hand sanitizer up for sanitizer. etc. our and really had normal of would the not gone demand co-product quarter of attention into the had that backing doesn’t glycerin into go although, versus favorable COVID, the because this hand glycerin grade glycerin glycerin going hand sanitizer. into was It was that and

our overall, we us it to market So able were did and nice on into that give a uptick supply need co-product.

Greg Wasikowski

and That’s potential us it. jumping just partners or update financially extent going to or color how announcement. new the And that facility. you remaining renewable down what you the can diesel conversations then get are beat an to on some you and say hurdle hurdles potential is got biggest Okay, getting the operationally us any would to then Can any And making that? versus those helpful.

CJ Warner

an to closely actually very ahead want have few We together things that all do converged we’re not announcement to progressing that. that and of monitoring a nicely of we and kind plan, make

you site to arrangement related access have to and as So certain we things. imagine, commercial the

that working commercially And quite help There will selection. that selection that contribute with final finalize are for to well we’re the to are us want finalize don’t a also. and but make nailed that’s Those to to the nicely progressing until value site also we down. we’re working get some the need on, overall the varying we we site of to venture. related partners incentives speaking So

Greg Wasikowski

time. Thanks your awesome. for Okay,

CJ Warner

for your you Thank questions. thanks and

Operator

of Financial. Hamed BWS with proceed question. Your next the Please with question your from line comes Khorsand

Hamed Khorsand

my is all So any sourcing at kind changing pressures as your the of strategy as was, concerned? far first are you feedstock competitive question and seeing

CJ Warner

that question. for thanks Hamed, great

really with excellent stay first we’re giving of expanding we’re because to that desired changing what of circumstances with to the that REG into under which feedstock we full suppliers is and us not for the market half but horizon greater definitely developing we’ve is bring to optionality history us and meanwhile places the of volatile speaking, our expanding feed, can and great we go continue we we we’re that to our over It that continue our We’re strategy, need horizons a that bear. we’re have expand experience and off optionality. down we’re relationships enjoy [ph] we enables types to whom what like to our can get doubling then

Hamed Khorsand

the then and much and can referring do was, the have my how to blend? other the you and blend on of blend. I’m question consume your Okay capacity much how industry biodiesel renewable you’re

CJ Warner

or Well there XXX% is is [ph] RDBD the to occasionally [ph] a view expressed market, an California, which diesel in and go demand RD large could by blend. CARB very a

now. actually new or that’s low are in because carbon of incentivizing good reduction California a there’s available it’s I any fairly renewable more phase, markets bit substitutes carbon that alone California. a that’s infrastructure And that’s development. for is market technology of So a thirst It’s but quite intensity very the waiting like and hand, new in biodiesel significant for not and volume and have two don’t actually significant have because a not that

and uptick in So steady been very a those it’s markets. robust

Chad Stone

at with I numbers which Yes, data X.X have the those last is, was is year market. happen to blend and like been looking diesel about it at recent growing diesel high XX% point, particularly CJ’s each higher almost go into way renewable concentration and California the has up to X-billion-gallon quarter now biodiesel includes the to and and over renewable rates. all weekend and can it’s billion It California been

Hamed Khorsand

you. Okay, thank

Operator

Todd Energy. line with Simmons with the question question. next Ryan Please of Your from comes your proceed

Ryan Todd

on some quick of the follow-up ones, couple questions. a just Maybe the of earlier

the see is you see traditional Is capital do significant the risk as renewable How here market? in end How landscape competitive strength for think seeing and more changing? I thoughts partnerships? guess at put yourselves testimony guys growth interest more is competition diesel a which now Just as I quite the players the bit well. refiners of in years? that any the being US come and in. into on work, more opportunity amongst coming how you a In to versus that an You’re greater Europe you it? evolving right find that in of increased you is for do How much clear see market

CJ Warner

isn’t Right the the and which in the they properly. picture, I schedule demand of not to way, dynamic lot of refiners operate dynamic but produced a earlier general that for being it? challenging because with of believe are a about now. challenging I extremely fuels uniform talked quite things of done makes Definitely it

We’re of seeing to closures is And a announcement are of at wanting and all refinery it renewable that the higher customers diesel as over switching time. now is levels so attractive diesel because the result time. pull obvious distressing renewable a very of attractiveness the becoming is it, whole

seeing more procurement feedstock course those to that we’re for to require need announcements in So we as order them be recognize exceptions actually well of permitting viable. as

will could for So and It’s likely go us. probably some partnerships some through some to of that them and them very excellent of won’t constitute your point.

way it at an have depend always as can opportunities create So create or we and look change open can we wind risk it. on the

Ryan Todd

particular to trend a you to full the the that anything - of in on do or in follow-up is do shows you XX unique is just That’s volume as in big the efforts you downstream all fleet or in yourselves How opportunity uptick that fleet you great fleet continue is the was a terms you partnership how upper entered is grow pretty guys goes earlier that comments sustainable Is right? that to the making, quick quarter the market see - [indiscernible] that to And to Slide on Maybe on second the material your customers. that? quarter? hear. that there new side customers, second fleet see customers, is that the are the

CJ Warner

This is channel to of definitely very it’s an it. tapping customer focus the into our the in of consolidated team terms is early days result sales getting for of the and and us this important closer

opportunity the So we’re quite optimistic about there.

Ryan Todd

you. thank Great,

CJ Warner

to as and shift gate producing more much basically started we wholesale through of high the right then become product, we’re the and the the outside have if the plant we pretty more channel. where quality history able It’s a market about into and and think sell capable down company sophisticated right selling you

Ryan Todd

Great.

Operator

Instructions]. [Operator

the with your Partners. ROTH Your with proceed Irwin Craig from comes next Capital question line question. of Please

Craig Irwin

to The the maybe where if in you at wanted in in Geismar’s production time? a is, the is year third I sent to we indicated on had to to that us first the understand moving parts better things can? the of not update or of maybe earlier of planned had production you second gone ask series the quarter, [ph] majority I quarter? be expect questions to the this should Can stood that in much Norway And quarter Norway. the

CJ Warner

to Well is. where part some drive to Craig optimization shipping we’re its margin based open, keep of able of so switch what we’re that our on the

able we for and we’re as stability in see capture what’s And at California. going of And flex, Norway it see stronger fleet a because agreement we’ll signal happening you’re times those have margins so a move, some a customers. example increased we’re at we have particular to moved depending region. enables contractual times a strong margins some to what our on So at us underlying similar about talking we’ll then have other minute around to with that so to that in that ago signal do

Craig Irwin

quarter that’s bottom the are potentially have of market sales question, a the additional something this happening as any roughly Okay, California economics or guess into at you might I so in to want and third third I to looking did that my you year? gallons gone that that get backfill of your have going Norway - of, gallons in still and is the part the that into help to diesel is quarter the really renewable California that question might second to

CJ Warner

Well for would a say commercial about if to reasons third. where cutting think headed speculate we in exactly just are wouldn’t but continue I any you time, roughly given things

You’re far not to too going be off.

Craig Irwin

self-blending over Okay, an the has important excellent of last and then years. at been initiative couple REGI

fair fair of attraction is a run year Can of us of update the moving number? think over for is us what And gaining little forward? or you what quarterly been bit guys to either use growths full you obviously last you sort there. and number do sort on think rate the sort a year for You have

CJ Warner

XXXX, rest of be great you’d think I in through Slide the of XX that projected shape if you in slope. terms

Craig Irwin

and of above not fair product that unfavorable profitability given only it’s Grays California Harbor product that soybean for again is Grays probably oil one the California, your the Ralston, the the the treatment [indiscernible] to is has then, oil canola largest facilities industry does fair Iowa in it assume canola a also a And assumption? Harbor market in And then industry. that of that maybe Understood. and in us facility up end is that

CJ Warner

correct you’re way the find into observation CI feedstock to that in to market. CI from going incentivized low its low going is is a or feedstock your Well carbon find a way preferentially product its

it’s those the markets canola-based even lower product neither the will California closer to justify and the will CI Midwest for because unless a to wouldn’t it plants The not the be plants. carbon nearby. feeds that go to getting those requirement. justified low versus the [indiscernible] producing improvement incentivized netbacks logistics override logistics process markets incentivized in So But can due

Chad Stone

into corn almost would and I California with completely XX% is when twice so to carbon and There’s just eight that intensity enough to XX.X% oil you’ll XX%. it is soybean not corn and oil have said, three agree CJ the gets say I cooking reduction oil And distiller Yes, about relative call it then my and the half canola on and what for distiller view benefit. this view goes oil and to quarters and used my and out bit to be to less pay that it future their little in intensity view in way I programs oil achieve producers tax back that to and potentially if pulled the and Canadian will willingness into getting animal needed start freight canola local override a are they incentivized that those in market, or incentives with fats gets years the get canola want cooking to of other unless pulled and goals. benefit. stake But use incentivize carbon that the

Craig Irwin

that it’s California what sort a you like that stage that or of states potential regulators adopt facility these with low guess providence? be and broad look just to Understood. not or you states standard. Can the to Canada And REGI building then there’s other different diesel think their geographies? those low at might to mandates they want a of goals, their carbon going some that they’re the ways to Is slate in us would from conversations process having this to Is as has shooters of renewable share there something you in or with is process I cite discussion potential then maybe different meet local carbon from larger put a state you in something place? facing commitments XX

CJ Warner

first part of are expanding ongoing to and of lot does Craig. multiple your There interesting on in carbon very it their geographies the some footprint Focusing about conversations programs in flavor. improve come a different question, their

and requirement us looking states it municipalities. Some of opportunity isn’t that’s fuel oil. it seeking blending to BXXX today, There their that to attractive adopting does very so at that’s are service does option, And XXX% very BXXX to standpoint. for increasing because biodiesel readily looking fleets actually their necessarily when happen, collocate standards. are municipality to at didn’t heating We at There CI. it of an completely is least the from these about a carbon low regions low opportunity convert interesting talk gives but some available, create

stages for Washington as they of of having I the Canada. like finish would conversations as State as those while a work is to program it’s and fairly the entail. get think a Colorado details has well continues what that the that early close entire through line actually known is the debating well of to been that country

Europe. spoken [ph] exactly very some much is of promulgated by IED that now being currently of well. each has the will Europe lot are members different there what interesting So X and and is that for things, But which mean they’re about we really defining state opportunity them haven’t creating as

Chad Stone

the bio-heat. initiatives of Yes, an and to a is one the strong green of Northeast lot higher I’d costs area and heating highlight into has be very Northeast encourage a There momentum of both and is higher on region introduce also a there biodiesel attractive. that other could there’s blends oil desire market lot

Craig Irwin

I question, really if and clarification. Great may. It’s then last a

renewable facility? this top the you’re cost is facility we with XXX net XX that gallons, And additions. of announcing diesel share be XXX you about incremental or later us what on talking million can that year. So the hopefully would on the on talking then

CJ Warner

cost very purely at the we’re incremental looking and We did is competitive.

or range the probably up maybe gallon five lot on capital short end I anywhere of low-ish think and a cost is that. XXX of to of the know a you between $X we’re

Craig Irwin

Excellent, to third pretty well quarter great we’re congratulations going on and have a it sounds really strong quarter. and a quarter like

So Thank keep on doing you. doing. what you’re

CJ Warner

Thanks, Greg. [Indiscernible].

Chad Stone

Greg. Thanks

Operator

back [Operator remarks. session I Instructions] Ladies and gentlemen, end question-and-answer to would to for like CJ we’ve the reached CEO closing of turn Warner, call and the

CJ Warner

you, about Thank cautiously prospects. our long-term near highly outlook Hector. about To optimistic confident and conclude term we’re

of the in things to are mind. there year, the at keep key three Looking balance

and networks environmental create clean our fuel, national because essential goods fuel is significant and carbon need delivered. transportation burning produce a we we value. First, We relatively fuels low are Furthermore good. demand still be to

to With we’ve significant Second, despite our feedstock burning strategy our stabilized. multi-feedstock been adapt feedstock disruptions. markets able have keep and

again, margin going of price supply our back [indiscernible] producing continues As reducing oils carbon these forward. bodes an bringing on feedstock. sources various environment pressure well to the lower This recover, are economy improving and for

well of Finally on business elements we’re we our control. performing the that

strong We’re utilization. robust safety maintaining operating a at record,

for announce our investor We’re And most ahead. more quarters and performance and directing is before all, in fuel of now upcoming in REGI. we this executing on team the Todd delivering market to to the very sales profitable the forward strategies. events success All close, I’m we’re proud Todd? will look outstanding

Todd Robinson

turn please to XX. Thanks Slide J.

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You disconnect. may now

Renewable Energy (REGI) 4 Aug 202020 Q2 Earnings call transcript