What FutureFuel (FF) Said on Its Q3 Earnings Call

Key Points

• Revenue surged to $104.7 million from $22.7 million as biofuel sales climbed, and the net loss narrowed to $8.4 million. But higher feedstock and operating costs, plus $8.7 million in derivative losses, weighed on results; the biofuel segment’s gross loss widened.
• Biofuel utilization rose to 83%, and the company had booked more than 90% of fourth-quarter production capacity. Chemical production was disrupted by customer maintenance and delayed shipments, but both turnarounds are complete; a new customer and a glycerin-refining expansion could add material contributions starting in 2027.
• Cash fell to $21.3 million, and operating cash use increased to $10.3 million. FutureFuel aims to rebuild cash to $50 million over the next year, so it plans to be measured on share repurchases and dividend increases.

FutureFuel NYSE: FF reported a narrower third-quarter loss as a sharp increase in biofuel sales drove revenue higher, but elevated feedstock costs, derivative losses and maintenance at chemical production units weighed on profitability.

Revenue rose to $104.7 million from $22.7 million a year earlier, while the net loss narrowed to $8.4 million from $9.2 million, Chief Financial Officer Rose Sparks said. Adjusted EBITDA was a loss of $4.9 million, compared with a loss of $5.3 million in the prior-year quarter.

Chairman and CEO Roeland Polet said biofuel utilization reached its highest level in more than two years. However, he said extended maintenance at units serving two chemical customers reduced throughput and contributed to an approximately $4.3 million drag on adjusted EBITDA.

Biofuel Demand Rises, but Costs Pressure Results

Biofuel revenue increased to $87.8 million from $7.1 million a year earlier, as regulatory clarity and higher renewable fuel obligations supported demand. Segment capacity utilization reached 83%, up from 56% in the second quarter.

Despite higher sales volumes and pricing, the segment’s gross loss widened to $9.8 million from $2.4 million. Sparks said elevated input costs and higher operating and manufacturing expenses more than offset the sales gains.

Through early November, FutureFuel had booked orders for more than 90% of its fourth-quarter biodiesel production capacity, Polet said. He expects demand to remain strong into 2027, although Sparks cautioned that elevated soybean oil and other raw-material costs would continue to affect gross profit per gallon in the near term.

Polet said some input prices had begun to moderate, including soybean oil and certain animal fats. Sparks also said a change effective in January 2027 would narrow an equivalency-factor advantage held by renewable diesel competitors.

The company reported $8.7 million in net derivative losses in the quarter. Of that amount, $2.3 million was associated with physical inventory not yet sold and is expected to be recovered when the related inventory is sold. FutureFuel also held approximately 0.7 million internally generated renewable identification numbers, or RINs, valued at $1.5 million at September 30; Sparks said their sales benefit would be recognized upon fourth-quarter delivery.

Chemical Maintenance Disrupts Production

Chemical segment revenue rose 8.6% to $16.9 million, and the segment posted gross profit of $4.4 million, compared with a $4.1 million gross loss a year earlier. Performance chemical revenue increased to $3.6 million from $1.1 million, helped by volumes from a new customer and higher glycerin sales.

Custom chemical revenue fell 8% to $13.3 million, primarily because of delayed shipments as one large customer rebalanced inventory and downtime during a second customer’s extended scheduled turnaround. Chemical capacity utilization fell to 32% from 55% a year earlier.

Polet said both turnarounds were complete and no major plant maintenance was scheduled through the first quarter of 2027. The first customer had indicated it intended to resume its normal order cadence in November, he said, and had committed $41 million in customer-funded growth investment at the Batesville site between 2026 and 2028.

New Customer and Glycerin Plans

FutureFuel established a relationship with a large European chemical company shifting production to the United States. Polet said initial batch production is expected in the first quarter of 2027, with full production rates anticipated by midyear. He described the expected bottom-line contribution as material but did not provide a dollar estimate.

The company also plans to expand its ability to refine glycerin from biodiesel production. Polet said refined glycerin can sell for roughly three times the per-gallon value of unrefined material, presenting a potential $5 million to $10 million opportunity beginning in 2027. He said the project would require less than $1 million in capital spending and should be running by the end of the fourth quarter.

Cash and Capital Allocation

FutureFuel ended September with $21.3 million in cash and equivalents, down from $34.3 million at June 30, and had no outstanding borrowings under its $35 million revolving credit facility. Third-quarter operating cash use was $10.3 million, compared with $1.1 million a year earlier.

Polet said the company is focused on rebuilding cash to $50 million over the next year. With feedstock purchases keeping working capital needs elevated, he said FutureFuel intends to take a measured approach to share repurchases and dividend increases until it strengthens its balance sheet.

About FutureFuel (NYSE:FF)

FutureFuel Corp. is a chemical and biofuels manufacturer headquartered in Missouri. Through its subsidiary, FutureFuel Chemical Company, the business operates a manufacturing facility in Batesville, Arkansas, where it produces specialty chemicals and renewable fuels. The company's chemical operations manufacture custom and specialty organic chemicals for industrial and commercial customers. Its product capabilities include chemicals used in areas such as coatings, solvents, polymers, agricultural applications and other specialty markets.

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