REG revises down Q3 guidance, gives Geismar update

By REG | October 15, 2015

Renewable Energy Group Inc. announced Oct. 14 that the company is revising its earnings guidance for third quarter 2015.

REG now expects to report a net loss of $9 million to $15 million and nonGAAP adjusted EBITDA in the range of negative $7 million to negative $13 million, which is below the company's prior guidance of adjusted EBITDA in the range of $0 to $10 million.

“Throughout the quarter, we experienced a volatile commodity environment coupled with a significant decline in RIN prices,” said REG President and CEO Daniel J. Oh. “Feedstock prices did not decline as significantly as energy prices and RINs during the quarter, mainly due to continued high industry production levels in anticipation of a retroactive reinstatement of the federal biodiesel mixture excise tax credit.”

If the tax credit is retroactively reinstated as anticipated, the net benefit to REG for the quarter would be between $35 million and $40 million.

The company also gave a time range for resumption of production at its Geismar, Louisiana, renewable diesel biorefinery following the Sept. 3 fire at the plant.

“Our first priority at Geismar remains the recovery of our employee and the three contractors who were injured,” said Oh. “Our thoughts and prayers remain with them and their families.”

“The structural damage from the September fire was far less than the April incident. We continue to have great confidence in the technology and facility. Our current estimate is that our team will have the plant back online by the end of January.”

Note regarding use of nonGAAP financial measures
In this press release, the company presents adjusted EBITDA, a nonGAAP measure. A reconciliation of adjusted EBITDA to net income determined in accordance with GAAP is included in the table below. REG included adjusted EBITDA in this press release in order to assist investors in analyzing performance across reporting periods on a consistent basis by excluding items that are not believed to be indicative of core operating performance. Adjusted EBITDA is used by the company to evaluate, assess and benchmark financial performance on a consistent and comparable basis and as a factor in determining incentive compensation for company executives. Accordingly, REG believes that adjusted EBITDA provides useful information to investors and analysts in understanding and evaluating its operating results in the same manner as its management and board of directors. Use of adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. In particular, many of the adjustments to REG’s GAAP financial measures reflect the exclusion of items, specifically interest, tax and depreciation and amortization expenses, equity-based compensation expense and certain other nonoperating expenses, that are recurring and will be reflected in its financial results for the foreseeable future. In addition, these measures may be calculated differently from similarly titled nonGAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

The following table sets forth a reconciliation of the preliminary range of adjusted EBITDA for the third quarter to net loss computed in accordance with GAAP:



(in millions)


Three months ended


September 30, 2015



Adjusted EBITDA





Net loss





Depreciation and amortization





Stock based compensation





Interest expense










Adjusted EBITDA