Northern, WI  10/8/2012 (BasicsMedia)  —  Renewable Energy (NASDAQ:REGI): Pre-Announces Weaker #’s off 20% and is currently the largest producer of biodiesel in the United States. Utilizing an integrated value chain model, Renewable Energy Group is focused on converting natural fats, oils and greases into advanced biofuels. With more than 210 million gallons of owned/operated annual production capacity at biorefineries across the country, REG is a proven biodiesel partner in the distillate marketplace.  In a pre-release fashion the company said…

For the third quarter, REG now expects to report Adjusted EBITDA* ranging from a loss of $2 million to a loss of $7 million. The company’s prior guidance for Adjusted EBITDA was a gain of $10 million to $15 million. The company expects to report gallons of biodiesel sold in a range of 60 to 63 million, compared to prior guidance of 55 to 60 million. The change in guidance is directly related to movements in commodity prices, a steep depreciation in the price of RINs and tighter margins than expected.

REDI has had a rough 2012 starting the year at $10 p/s and is trading down into Hat sizes in the $5 p/s range.  Many stocks never bounce back above $10 once trading under $5 historically.  The company came out and talkied about the decline in pricing.

Mr. Daniel Oh, President and Chief Executive Officer stated, “Despite these fluctuations in our markets, we remain optimistic about the long-term prospects for REG and the biodiesel industry. The recent finalization of the 2013 RVO provides growing demand for the next year. Our flexible feedstock technology gives us a long term advantage as a low cost producer, since we can adjust to fluctuations in feedstock prices. Furthermore, REG continues to have a strong balance sheet with cash to sustain our growth strategy.”

“Our risk management positions serve the economic purpose of reducing the effect of changing commodity prices and protecting the margin and profitability of contracted biodiesel sales. Volatile commodity fuel prices late in the quarter affected the market value of financial contracts, causing most of the reduction in Adjusted EBITDA; however, the cash margin earned from biodiesel sales is protected by utilizing these financial contracts,” continued Oh. “From an accounting perspective, we must recognize such risk management losses in the third quarter, although the biodiesel sale that a position is protecting may occur in the fourth quarter.”

Oh continued, “A secondary driver of our results was the decline in biodiesel RIN prices of approximately 35% during the quarter, which negatively impacted our revenue and resulted in tighter margin per gallon sold than expected. RINs can and do trade separately from energy and fluctuate in value based on supply and demand.”

 

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