Stock Rising for Biodiesel Giant REG

REG logoThings are looking up for Renewable Energy Group. According to this article on, Piper Jaffray has increased the Iowa-based biodiesel maker’s stock price target from $9.00 to $13.00 in a research note released on Friday morning:

“We are lifting our estimates and raising our price target due to strengthening industry fundamentals where biodiesel RINs continue to improve and feedstock costs are declining. Biodiesel RINs are currently trading at ~$0.80 up from approximately $0.50 at the beginning of the quarter due to the unique ability for biodiesel RINs to qualify for both the advanced biofuel market and the ethanol market and REGI is well positioned to benefit from this opportunity. In addition to higher RINs values, feedstock costs, including soybean oil and low cost feedstocks, have been falling since February. We are adjusting our model where 1Q13 adjusted EBITDA is modestly above management’s previously guided range of $5-$15 mil and our 2Q13 adjusted EBITDA is at the high end of management’s $15-$25 mil range.,” Piper Jaffray’s analyst commented.

The article goes on to say that several other analysts have issued buy ratings for REG’s stock.

Biodiesel Giant REG Inks Deal for Fuel Tax Software

reg-logoThe nation’s largest biodiesel maker, Ames, Iowa-based Renewable Energy Group (REG), signed a multi-year deal with energy industry software and services company FuelQuest Inc. Biodiesel Magazine reports the deal will give REG a more accurate, transparent and agile way to calculate fuel taxes on invoices:

“Our business is growing quickly across North America,” said Jonathon Schwebach, senior manager of tax at REG. “With Zytax Determination integrated into our JD Edwards back office, we expect to achieve efficient automation of tax calculations for all of our fuel transaction invoices, which will also reduce tax accounting and support costs within the organization. Zytax Determination will allow us to scale with confidence, meeting the expectations of our customers as a reliable supplier providing accurate invoices and a seamless customer experience.”

FuelQuest Zytax Determination automates the identification and calculation of taxes for fuel, including petroleum products, natural gas, biodiesel and other products. A leading cause of inaccurate fuel invoices is incorrect tax calculations, which leads to higher internal processing and support costs as well as increased levels of customer dissatisfaction.

Phil Fraher, COO and CFO of FuelQuest [says,] “Fuel taxes are highly complex and continuously evolving. Automating tax calculations with Zytax Determination software that tracks and applies rates and rules for all major jurisdictions is the only way to achieve operational scale and reduce risk.”

The article goes on to say that Zytax Determination will give biodiesel makers more financial control, more reliable and trusted invoicing, and streamlines complex and changing tax rates and rules.

More B For Me Please

More B For MeMore biodiesel please. If you were on the look out for biodiesel it could definitely be seen during the 10th Annual National Biodiesel Conference in Las Vegas. Last year was a roller coaster year for the industry but some good things happened, one of which was the $1 per gallon tax credit coming back. Another – increasing the volume of biodiesel as part of the Renewable Fuel Standard (RFS).

Biodiesel can be a good tool in a farm business but Alicia Clancy, Manager of Corporate Affairs for the Renewable Energy Group (REG) said that biodiesel can play a bigger role than it currently is. What does she mean? Biodiesel can be used in farm equipment such as tractors and trucks and many use B2 blends. But, said Clancy, equipment and many trucks are approved to use up to B20.

Choose BiodieselIt is this fact that spurred the biodiesel promotion, More B for Me. Clancy said the goal of the promotion is to increase awareness of biodiesel use in farming equipment. As part of the campaign, farmers (or consumers) are encouraged go to their local co-op or gas station and ask them to offer higher blends of biodiesel and then use blends up to B20.

Here is how it works. Go to to register. You must be a farmer in Iowa (although everyone should ask for more biodiesel). REG, along with all the sponsors of the program including the Iowa Soybean Association and the soybean checkoff, Iowa Biodiesel Board and the Iowa Renewable Fuels Association, is giving away 10 – $1,000 dollar certificates at the end of March, just in time for planting season.

Listen to my interview with Alicia here: More B For Me

2013 National Biodiesel Conference Photo Album

REG Reduces Debt with Seneca Payoff

REG LogoThe country’s largest biodiesel producer, Renewable Energy Group (REG), has paid off its long-term debt obligations of its operating biorefinery subsidiary in Seneca, Illinois. REG Seneca, LLC retired its outstanding long-term debt obligation of $34.5 million on December 21 with cash generated from operations since April 2010. This amended and restated credit agreement went into effect April 2010 with Portigon AG (formerly WestLB AG).

“When we acquired Seneca, we believed the restrictive debt structure was appropriate because the plant was purchased out of bankruptcy. As REG Seneca came online and our state-of-the-art production technology was proven, the natural cash flow generated from this 60 million gallon refinery allowed us to pay off the debt,” said Daniel J. Oh, REG President and CEO.

Oh added, “This debt repayment makes it more likely that we will be able to grow our business, implement new refining technologies, and grow our employee base.”

Fiscal Cliff Aversion Benefits Biodiesel

The U.S. House of Representatives burned the midnight oil of the first day in the New Year and signed the Senate’s “fiscal cliff” bill. The package includes several tax extenders items, including the reinstatement of the 2013 biodiesel blenders tax credit as well as retroactive credit for 2012. Shortly after the vote, the biodiesel industry reacted including the Renewable Energy Group (REG), the country’s largest biodiesel producer.

us-capitol-fiscal-cliff-vote Photo: Bloomberg | ANDREW HARRAR“We are thankful that Congress and the President support the growth of the biodiesel industry through the reinstatement of the credit and for recognizing biodiesel’s important role in energy and food security and job creation. This tax credit provides certainty for our petroleum distributor customers and, in turn, market stability for commercial biodiesel producers like us.”

The National Biodiesel Board will have something good to celebrate during its 10th Annual Conference: Momentum next month. The $1-per-gallon biodiesel tax incentive was first implemented in 2005. Congress has allowed it to lapse twice, in 2010 and again in 2012. Under the legislation approved by the House on Tuesday and first passed by the Senate on Monday, the incentive will be reinstated retroactively to Jan. 1, 2012 and through the end of 2013. Each time the tax credit lapsed, thousands of jobs were lost and production dropped.

“It’s been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry. But we’re pleased that Congress has finally approved an extension so that we can get production back on track,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board (NBB). “This is not an abstract issue. In the coming months, because of this decision, we’ll begin to see real economic impacts with companies expanding production and hiring new employees.”

Randy Olson, executive director of the Iowa Biodiesel Board, added,  “The passage of the biodiesel tax incentive will mean tangible job creation in Iowa and beyond.  Encouraging production of American-made fuel brings economic development and energy security – two of our nation’s top priorities.  This is an investment in American energy that will pay dividends.  Although the federal Renewable Fuel Standard helped create market stability, one Iowa plant was forced to shut its doors temporarily. The reinstatement of the tax incentive will help Iowa biodiesel reach its full potential.  In 2013, we can expect a thriving industry that contributes even more to the state’s economy.”

It is expected that President Obama will sign the package quickly. The new Congress begins on January 3, 2013 and members have stated that they will continue to work through the country’s financial issues.

REG Newton Extends Loan Agreement

REG LogoRenewable Energy Group (REG) has announced that its REG Newton, LLC loan with AgStar Financial Service, PCA was extended for one additional year. The biodiesel facility entered into this debt agreement with AgStar in conjunction with the related March 2010 acquisition of the assets of Central Iowa Energy, LLC.

“We’re pleased that the lender syndicate saw fit to extend this note in a routine manner,” said REG Chief Financial Officer, Chad Stone.

The new maturity date is March 2014, and all material terms remain the same for the 30 million gallon per year biorefinery.

Biodiesel Maker REG to Go Into Four NY, NJ Terminals

The Big Apple (and the surrounding area) will be turning a little greener. Iowa-based biodiesel producer Renewable Energy Group (REG) announced its biodiesel will be available at new positions at four biodiesel terminals in the New York metropolitan area.

This company press release says the move will help augment the area’s heating oil and diesel supplies:

“Gaining access to the largest biodiesel terminal network in New York is part of Renewable Energy Group’s strategy to expand into the Northeast market as a reliable biodiesel supplier,” said Renewable Energy Group’s (REG) President and CEO, Daniel J. Oh.

“REG has biodiesel on-site in New Hyde Park today to allow area distributors and heating oil retailers to increase supply as the New York City biodiesel blend (B2) requirement goes back into effect December 1,” added Gary Haer, Vice President, Sales and Marketing for REG. The requirement first went into effect October 1, but was waived as a result of tight fuel supply issues due to superstorm Sandy.

No timetable was given as to when these additional positions will be ready to go.

REG Buys Georgia Biorefinery

Renewable Energy Group (REG) today announced the purchase of a 15 million gallon-per-year biodiesel production plant near Atlanta, Georgia.

The multi-feedstock facility, which will operate as REG Atlanta, LLC, is located in Ellenwood, Georgia, 11 miles southeast of Atlanta with easy access to major Southeast transportation routes. REG acquired the former BullDog Biodiesel operation for cash and in-kind consideration of approximately $2.6 million. No stock was issued related to the deal.

“Renewable Energy Group is focused on strategically expanding our footprint of biodiesel production facilities,” said REG President and CEO, Daniel J. Oh. “Once repaired, upgraded and restarted the REG Atlanta facility will offer us additional long-term capacity to meet high-demand diesel markets across the Southeast.”

The company has not yet set a production date for the re-start of the former BullDog Biodiesel facility, which has run intermittently since January 2008.

REG tolled the facility from April 2011 through April 2012 to support REG’s biodiesel sales in the Southeast. BullDog ceased operations in April 2012 due to a combination of poor market conditions and upgrades needed to make the facility more efficient.

“Our team has demonstrated a successful model for integrating new technologies into our network and upgrading facilities to utilize lower cost raw materials,” said REG Vice President, Manufacturing, Brad Albin. This refinery was designed to produce biodiesel from a variety of feedstocks, including used cooking oil.

Since 2008, Renewable Energy Group has acquired ten biodiesel-related firms or production facilities. Last month, REG acquired a 15 million gallon-per-year biodiesel facility in New Boston, Texas slated to begin production in the first quarter of 2013.

REG Reports 3rd Quarter Financial Results

The Renewable Energy Group (REG) has reported its third quarter financial results. Revenues were $322.9 million, an increase of 26 percent compared to revenues of $256.5 million for the same period in 2011. Third quarter 2012 adjusted EBITDA was a loss of $2.3 million, a decrease of 105 percent compared to $46.7 million for the same period in 2011. A few other third quarter highlights:
  • 2 million gallons sold, up 40 percent year-over-year
  • Cash flow from operations of $6.2 million
  • Adjusted EBITDA loss of $2.3 million due to risk management transactions and RIN price declines
  • Distribution expanded with new terminal locations in New Mexico and California
  • Acquired a 15 million gallon-per-year multi-feedstock plant in New Boston, Texas, after the close of the quarter

“REG achieved meaningful success in the quarter, even with the adjusted EBITDA loss that was caused by accounting for risk management positions and RIN price declines,” said Daniel J. Oh, President and Chief Executive Officer of REG. “Our revenues continued to increase, our gallons sold were up 40 percent compared to third quarter 2011, we acquired additional production capacity at an attractive price, and we expanded distribution.”

Oh continued, “We remain optimistic about the growing biodiesel industry and are especially pleased with EPA’s formalized 2013 Renewable Volume Obligation (RVO). With an RVO that is 28 percent above this year’s, the industry demand outlook is solid. Our acquisition of the New Boston, Texas facility is evidence of our long-term confidence and our commitment to remain a leader in the industry.”

REG Acquires Texas Biorefinery

Renewable Energy Group (REG) has announced the acquisition of a biorefinery in Texas to expand its biodiesel production output.

With the acquisition of a 15 million gallon per year biorefinery located in New Boston, Texas, REG’s nameplate biodiesel production capacity is expected to increase to more than 225 million gallons annually. REG paid $300,000 in cash and issued 900,000 shares of its common stock to North Texas Bio Energy for the multi-feedstock biorefinery located about 22 miles west of Texarkana. It is REG’s second Texas biodiesel production facility, following its 2008 acquisition of its Houston-area plant.

“Bringing New Boston into the REG family grows our solid, proven business model of using lower cost feedstock and providing cleaner energy solutions for American consumers,” said REG President and CEO, Daniel J. Oh. “Our customers across the southern U.S. demand more REG-9000® biodiesel, and this is a long-term plan to respond to our customers’ needs. We remain focused on strategic growth by increasing the availability of biodiesel in high distillate demand regions throughout North America,” Oh added.

The New Boston facility began production in June 2008 and has been idled for approximately four years. Brad Albin, REG Vice President of Manufacturing, said the plant will undergo some construction and minor upgrades prior to the facility’s start-up, which is expected in the first quarter of 2013. REG plans to utilize animal fats and other high free fatty acid feedstocks to produce biodiesel at the refinery. The company has initiated RFS2 registration through the EPA.

“The REG technology team will soon be on-site in New Boston to re-start the biodiesel process with a plan to have high quality, REG-9000® biodiesel available in the market upon the completion of the EPA registration process,” said Albin. The company expects to hire nearly 20 full-time, green-collar employees at the REG New Boston site.

REG Breaks Ground on Plant Expansion

The country’s largest biodiesel producer, Renewable Energy Group (REG), has broken ground on the expansion to its biodiesel plant in Glenville, Minnesota. A groundbreaking ceremony was held and many biofuel supporters from across the state and the local community were on hand for the event. The upgrade is estimated to cost $20 million.

“No matter who we’ve talked to, the state or local level, they’re just absolutely thrilled,” Brad Albin, Vice President of Manufacturing at REG was quoted in an article published by KAAL TV. “The plant had been shut down for about a year and we brought it back up, last year. It’s a biodiesel plant that turns feedstock, or things like natural oils and greases, into renewable fuel.”

One of the things the plant expansion and upgrade will do is allow more difficult feedstocks to be processed into high quality biodiesel. The plant will also, said Albin, create additional jobs in the local community.

Area Representative Rich Murray was on hand for the groundbreaking. “It’s just an exciting day,”  he said. “We’ve got 20 some good paying jobs here that people are able to support their families with and now a $20 million commitment to construction here. It’s going to create construction jobs and just every bit of this is good news.”

The upgrade is expected to be complete by June of 2013 and the plant will then have the capacity to produce 30 million gallons of biodiesel each year.

REG Opens Biodiesel Terminal in Long Beach

A new biodiesel terminal is off and running in Long Beach, California compliments of the Renewable Energy Group (REG). The first truckload of biodiesel was picked up by Whole Energy, a fuel distributor and retailer operating in Washington, Oregon and California.

“Whole Energy is committed to biodiesel, helping Californians meet their carbon reduction goals, and offering supply for Oregon and Washington blending requirements,” said Gary Haer, VP Sales and Marketing at Renewable Energy Group. “REG’s terminal agreement with Maxum Petroleum expands the opportunity for West Coast distributors like Whole Energy to blend biodiesel for public and private diesel fleets.”

Atul Deshmane, CEO and President of Whole Energy said that biodiesel has demonstrated both great performance and low carbon characteristics and is an important part of meeting California’s Low Carbon Fuel Standard. REG recently registered its REG-9000 biodiesel produced at its biodiesel facility in Seneca, Illinois with a carbon intensity as low as 4.0 gCO2e/MJ.

“We are excited about the opportunity to offer biodiesel from the nation’s largest biodiesel producer and marketer in California,” added Deshmane. “Whole Energy is committed to a multi-region approach for offering biodiesel blends for fleets and consumers who are looking to go green, enhance performance and protect the earth with a sustainable fuel.”

REG to Offer Biodiesel at California Terminal

Renewable Energy Group will be offering wholesale biodiesel under a new agreement with Maxum Petroleum at its Rancho Dominguez (California) terminal location outside of Long Beach.

Under the supply agreement, the terminal is expected to offer REG-9000® biodiesel to petroleum jobbers or large fleets beginning mid-August. Maxum Petroleum is one of the largest independent energy logistics companies in North America and will operate the terminal. Renewable Energy Group (REG) also recently announced biodiesel availability at a terminal near Lebanon, Ohio and at its own terminal in Clovis, New Mexico.

“This new terminal will help consumers in the Los Angeles region become more energy independent, meet carbon reduction goals and improve air quality with America’s Advanced Biofuel, biodiesel,” said REG’s Vice President, Sales & Marketing, Gary Haer. “Biodiesel is a sustainable, drop-in fuel for diesel applications and a lower carbon fuel for a state which consumed more than 3.5 billion gallons of distillate fuel in 2010, according to the EIA. Renewable Energy Group is proud to offer high quality biodiesel to help enhance energy security and lower greenhouse gas emissions across southern California.”

Haer noted the new relationship with Maxum Petroleum would benefit new California customers. “We have confidence in the team at Maxum to quickly and efficiently process orders and load trucks to make biodiesel blending an easy step for any diesel distributor in the area,” he added.

GROWMARK Picks Up 1st Truckload of Biodiesel at Ohio Terminal

GROWMARK’s network fuel supplier Trupointe Cooperative Inc. picked up the first truckload of biodiesel at the new New Lebanon Ohio Terminal owned by the Renewable Energy Group (REG). The facility is located outside of Cincinnati. The facility is producing REG-9000 branded biodiesel produced from natural oils, fats and greases and meets or exceeds ASTM quality specifications for biodiesel.

“GROWMARK and Trupointe Cooperative Inc. have been advocates for biodiesel utilization for many years,” said Gary Haer, VP of Sales and Marketing at. We look forward to growing our relationship with GROWMARK and its other cooperatives in the future. This Ohio terminal offers great opportunity for blenders like GROWMARK and Trupointe to expand their biodiesel offerings in preparation for harvest or to meet summer over-the-road diesel demand.”

Brigette Harlan, Renewable Fuels Product Manager for GROWMARK said they are pleased to take the first truckload of biodiesel from the new facility, and REG has been a valuable partner for many years. “REG is dedicated to quality and to the best possible customer experience which is very important to our customers like Trupointe Cooperative who are receiving this truckload. We appreciate and share that commitment as we all grow and help the marketplace understand the benefits of using biodiesel.”

Iowa Leads the Way in Renewable Fuel Growth

According to a new study by Cardo ENTRIX, the “renewable fuels industry has grown spectacularly over the past decade and Iowa has been a major participant and beneficiary.” This is no surprise as Iowa leads the way in biodiesel and ethanol production. To learn about some of the key highlights of the study, I spoke with Brad Albin, VP of Manufacturing for REG Services, LLC and the President of the Iowa Renewable Fuels Association (IRFA) who sponsored the study.

The study was released to help celebrate IRFA’s 10th Anniversary and also coincided with the declaration that June 15 is Iowa Ethanol Day.

A few key highlights:

  • During the past 12 years in Iowa, ethanol production has increased 741% and biodiesel production has increased 1,600%.
  • The portion of Iowa’s agricultural economic output attributable to the renewable fuels industry increased from 4.6% in 2002 to more than 37% in 2011.
  • By 2011, ethanol and biodiesel production accounted for nearly 7% of manufacturing sector output.
  • The total number of jobs in the entire Iowa economy supported by the renewable fuels industry has grown from around 3,500 in 2002 to 79,000 in 2011 an increase of more than 2,000%.

The first conclusion many will jump to is the industry is thriving due to subsidies. This is not the case. Today, neither biodiesel nor ethanol receive any subsidies. Albin explained, “The incentives that the fairly young biodiesel industry have received pale in comparison to what oil companies continue to receive after they have been in business for over 100 years and are making record profits.”

“The biodiesel industry has proven it has the capacity to produce over 1.5 billion gallons per year of renewable fuels from feedstocks grown and produced in America, while reducing hazardous tailpipe emissions, reducing our dependence on foreign oil, creating and needed good paying jobs and returning more value to the economy than any incentive the industry has ever received.”

Albin said he hoped but never anticipated how quickly the industry would grow, and he is looking forward to seeing the industry grow even more over the next decade.

You can learn more about the key highlights of the study by listening to my interview the Brad Albin here: Brad Albin Talks Iowa Economics