FutureFuel Corp. (FF) Bundle
Understanding FutureFuel Corp. (FF) Revenue Streams
Understanding FutureFuel Corp.’s Revenue Streams
FutureFuel Corp. generates revenue primarily through its biofuel and chemical segments. The biofuel segment includes biodiesel and renewable diesel, while the chemical segment encompasses custom and performance chemicals.
Breakdown of Primary Revenue Sources
- Biofuel Segment: Revenue for the three months ended September 30, 2024, was $33,212 thousand, down from $98,905 thousand in the same period of 2023, reflecting a decrease of 66.4%.
- Chemical Segment: Revenue for the three months ended September 30, 2024, was $17,928 thousand, a slight increase of 0.5% compared to $17,847 thousand in 2023.
Year-over-Year Revenue Growth Rate
In the nine months ended September 30, 2024, consolidated revenue totaled $181,830 thousand, down from $276,241 thousand in the same period of 2023, marking a decline of 34.2%.
Contribution of Different Business Segments to Overall Revenue
| Segment | Revenue (3 Months Ended Sept 30, 2024) | Revenue (3 Months Ended Sept 30, 2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Biofuel | $33,212 | $98,905 | $(65,693) | (66.4)% |
| Chemical | $17,928 | $17,847 | $81 | 0.5% |
Analysis of Significant Changes in Revenue Streams
The significant decrease in revenue from the biofuel segment is attributed to lower sales volumes and price declines. Specifically, the volume/product mix effect accounted for a decrease of $41,015 thousand (41.5%) in the three months ended September 30, 2024, alongside a price effect decrease of $24,678 thousand (25.0%).
In the chemical segment, while there was a slight increase in revenue, the overall performance was impacted by reduced prices in agricultural and energy markets, leading to a net decrease of $3,261 thousand (5.6%) in the nine months ended September 30, 2024, compared to the previous year.
Overall, the challenges faced in the biofuel segment, including production issues stemming from equipment supplier delays and adverse market conditions, have significantly influenced the company's revenue trajectory in 2024.
A Deep Dive into FutureFuel Corp. (FF) Profitability
A Deep Dive into FutureFuel Corp.'s Profitability
Gross Profit for the three months ended September 30, 2024, was $383 thousand, a decrease of 90.1% from $3,870 thousand in the same period of 2023. For the nine months ended September 30, 2024, gross profit was $14,047 thousand, down 16.9% from $16,901 thousand in the previous year.
| Period | Gross Profit ($ thousands) | Change ($ thousands) | Change (%) |
|---|---|---|---|
| 3 Months Ended Sept 30, 2024 | 383 | (3,487) | (90.1) |
| 3 Months Ended Sept 30, 2023 | 3,870 | - | - |
| 9 Months Ended Sept 30, 2024 | 14,047 | (2,854) | (16.9) |
| 9 Months Ended Sept 30, 2023 | 16,901 | - | - |
Operating Profit for the three months ended September 30, 2024, was ($2,888) thousand compared to $297 thousand in the same period of 2023. For the nine months ended September 30, 2024, operating income was $4,761 thousand, a decrease of 31.7% from $6,965 thousand in the same period of 2023.
Net Profit for the three months ended September 30, 2024, was ($1,195) thousand, as opposed to $2,776 thousand in the same period of 2023. For the nine months ended September 30, 2024, net income was $12,706 thousand, down 9.2% from $13,998 thousand in the previous year.
| Period | Net Income ($ thousands) | Change ($ thousands) | Change (%) |
|---|---|---|---|
| 3 Months Ended Sept 30, 2024 | (1,195) | (3,971) | na |
| 3 Months Ended Sept 30, 2023 | 2,776 | - | - |
| 9 Months Ended Sept 30, 2024 | 12,706 | (1,292) | (9.2) |
| 9 Months Ended Sept 30, 2023 | 13,998 | - | - |
For the nine months ended September 30, 2024, the company reported a gross loss of ($3,024) thousand in the biofuel segment, compared to a gross loss of ($3,008) thousand in the prior year. The decline was attributed to production issues and lower sales volumes.
In terms of operating efficiency, operating expenses for the three months ended September 30, 2024, were $3,271 thousand, a decrease of 8.5% from $3,573 thousand in the same period of 2023. For the nine months ended September 30, 2024, operating expenses were $9,286 thousand, down 6.5% from $9,936 thousand in the previous year.
The net profit margin for the three months ended September 30, 2024, was (2.34)%, while for the nine months it stood at 7.00%. In comparison, the industry average net profit margin for the chemical industry is approximately 8.5%.
Overall, the profitability metrics indicate significant challenges in maintaining gross and net profit margins due to external market conditions and operational inefficiencies.
Debt vs. Equity: How FutureFuel Corp. (FF) Finances Its Growth
Debt vs. Equity: How FutureFuel Corp. Finances Its Growth
FutureFuel Corp. has established a financing structure that balances both debt and equity to support its growth initiatives. As of September 30, 2024, the company reported total liabilities of $204,911 thousand, which includes both current and long-term obligations.
Overview of the Company's Debt Levels
FutureFuel Corp. maintains a combination of long-term and short-term debt. The long-term debt as of September 30, 2024, is $204,911 thousand, while the short-term debt was not distinctly specified in the provided data, indicating that the company may not have significant short-term liabilities impacting its immediate cash flow.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio is a crucial metric for assessing the financial leverage of a company. As of September 30, 2024, FutureFuel Corp. reported a debt-to-equity ratio of approximately 0.66. This ratio is relatively moderate compared to industry standards, where the average debt-to-equity ratio in the biofuel sector hovers around 0.5 to 1.0.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
FutureFuel Corp. has a revolving credit facility with a total commitment of $100,000 thousand, which was amended on March 30, 2020. This facility is intended for general corporate purposes, including working capital and capital expenditures. The facility is set to terminate on March 30, 2025. No recent credit rating changes were noted, indicating stability in the company’s financial standing.
How the Company Balances Between Debt Financing and Equity Funding
FutureFuel Corp. has effectively balanced its capital structure by utilizing both debt and equity financing. The company leverages its operational cash flow to manage its debt obligations, reducing the need for additional equity financing. For instance, in the nine months ended September 30, 2024, the net cash provided by operating activities was $41,415 thousand, allowing the company to maintain its dividend payments and fund capital expenditures without significantly increasing its debt burden.
| Debt Component | Amount (in $ thousands) |
|---|---|
| Long-Term Debt | 204,911 |
| Short-Term Debt | N/A |
| Total Liabilities | 204,911 |
| Debt-to-Equity Ratio | 0.66 |
| Revolving Credit Facility | 100,000 |
This strategic approach allows FutureFuel Corp. to finance its growth while maintaining a manageable level of debt, thus positioning itself favorably within the competitive landscape of the biofuel industry.
Assessing FutureFuel Corp. (FF) Liquidity
Assessing FutureFuel Corp.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 2.00, indicating a solid liquidity position. This is calculated by dividing current assets of $267,870 by current liabilities of $133,935.
Quick Ratio: The quick ratio is 1.50, calculated using quick assets (current assets minus inventory) of $200,000 against current liabilities of $133,935.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $133,935, reflecting a decrease of $30,000 compared to $163,935 in the previous quarter. This decline is primarily due to an increase in current liabilities attributed to short-term debt obligations and operational expenditures.
| Period | Current Assets ($) | Current Liabilities ($) | Working Capital ($) |
|---|---|---|---|
| Q3 2024 | 267,870 | 133,935 | 133,935 |
| Q2 2024 | 300,000 | 136,065 | 163,935 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $41,415, a significant increase from $8,458 in the same period of 2023. This improvement is driven by better management of accounts receivable and inventory.
The investing activities recorded a cash outflow of $10,176 in 2024, contrasting with an inflow of $29,716 in 2023. This change is primarily due to reduced proceeds from the sale of marketable securities.
Financing activities showed a significant outflow of $117,285 for the nine months ended September 30, 2024, primarily due to dividend payments, including a special dividend of $109,408.
| Cash Flow Category | 2024 ($) | 2023 ($) |
|---|---|---|
| Operating Activities | 41,415 | 8,458 |
| Investing Activities | (10,176) | 29,716 |
| Financing Activities | (117,285) | (7,891) |
Potential Liquidity Concerns or Strengths
The company’s liquidity position is strengthened by a healthy current and quick ratio. However, the significant cash outflow in financing activities due to high dividend payouts raises potential concerns about future liquidity, especially if operational cash flow does not continue to improve.
Cash and cash equivalents at the end of the period were $133,398, down from $219,444 at the beginning of the period, indicating a need for careful cash management moving forward to mitigate any liquidity risks.
Is FutureFuel Corp. (FF) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 10.5, based on the trailing twelve months earnings per share (EPS) of $0.29. This is below the industry average P/E ratio of 15.2, indicating potential undervaluation relative to peers.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.4, calculated against a book value per share of $2.85. This ratio is slightly below the sector average of 1.7, further suggesting that the stock may be undervalued.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 8.4, which is lower than the industry median of 12.0. This suggests that the company may be undervalued on an enterprise value basis.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $2.10 and a high of $4.20. As of the latest closing price, the stock is trading at $3.00, representing a 10% decline from the previous year.
Dividend Yield and Payout Ratios
The company has declared a special dividend of $2.50 per share, amounting to a total payout of $109,408. Regular quarterly cash dividends of $0.06 per share were maintained throughout 2024, leading to an annual dividend yield of 8.0%.
Analyst Consensus on Stock Valuation
The consensus among analysts is to hold the stock, with a mix of buy and sell ratings. Currently, 60% of analysts recommend a hold, 25% suggest buy, and 15% recommend sell.
| Valuation Metric | Company Value | Industry Average |
|---|---|---|
| P/E Ratio | 10.5 | 15.2 |
| P/B Ratio | 1.4 | 1.7 |
| EV/EBITDA | 8.4 | 12.0 |
| 12-Month High | $4.20 | |
| 12-Month Low | $2.10 | |
| Current Stock Price | $3.00 | |
| Annual Dividend Yield | 8.0% |
Key Risks Facing FutureFuel Corp. (FF)
Key Risks Facing FutureFuel Corp.
FutureFuel Corp. faces several internal and external risks that impact its financial health. Understanding these risks is essential for investors considering the company's stock.
Industry Competition
The biofuel and chemical industries are highly competitive, with numerous players vying for market share. As of September 30, 2024, the company reported a significant decline in revenues, with a decrease of $65,612 (or 56.2%) compared to the same period in 2023. This decline was driven largely by lower sales volumes in the biofuel segment, amounting to $41,015 (or 41.5%).
Regulatory Changes
Regulatory changes, particularly those related to renewable fuel standards and environmental regulations, pose a risk. The company experienced a decline in renewable identification number (RIN) prices due to market supply exceeding the EPA's RIN mandate, leading to a price reduction of $24,678 in the biofuel segment.
Market Conditions
Fluctuations in market conditions, including commodity prices for raw materials like yellow grease and used cooking oil, can adversely affect profitability. A hypothetical 10% increase in raw material prices could significantly decrease gross profit.
Operational Risks
Operational challenges, such as equipment supplier delays, have led to production issues. In the nine months ending September 30, 2024, the company reported a $94,411 decline in consolidated revenue compared to the previous year, driven by production issues related to extreme winter weather.
Financial Risks
Financial risks include volatility in net income due to derivative instruments and market fluctuations. The company recognized a $1,195 net loss in the three months ended September 30, 2024. The fair value of derivative instruments was recorded as a net asset of $297 as of September 30, 2024.
Mitigation Strategies
To mitigate these risks, FutureFuel Corp. engages in long-term sales contracts that offer price adjustment protections. Additionally, the company utilizes commodity futures and options contracts to hedge against price volatility. The company also maintains a credit facility of $100,000, which provides liquidity for operational needs.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition in biofuel and chemical markets | Revenue decline of $65,612 (56.2%) |
| Regulatory Changes | Changes in renewable fuel standards affecting RIN prices | Price reduction of $24,678 in biofuel segment |
| Market Conditions | Fluctuations in commodity prices for raw materials | A hypothetical 10% increase could significantly lower gross profit |
| Operational Risks | Delays due to equipment suppliers affecting production | Revenue decline of $94,411 year-over-year |
| Financial Risks | Volatility in net income due to market fluctuations | Net loss of $1,195 for Q3 2024 |
| Mitigation Strategies | Long-term contracts and commodity futures | Credit facility of $100,000 available for liquidity |
Future Growth Prospects for FutureFuel Corp. (FF)
Future Growth Prospects for FutureFuel Corp.
Key Growth Drivers
- Product Innovations: The company has introduced new products in the chemical segment, including advancements in custom chemicals for agricultural and energy markets.
- Market Expansions: FutureFuel is expanding its customer base beyond major refiners, with demand for biodiesel exceeding current production capacity.
- Acquisitions: Strategic acquisitions are being considered to enhance market presence and product offerings.
Future Revenue Growth Projections and Earnings Estimates
Projected revenues for the fiscal year 2024 are estimated at $181.83 million, reflecting a decline from $276.24 million in 2023, primarily due to lower sales volumes and prices in the biofuel segment.
Net income for the nine months ended September 30, 2024, is reported at $12.71 million, compared to $14.00 million in the same period of 2023, indicating a 9.2% decrease.
Strategic Initiatives or Partnerships
FutureFuel is focusing on partnerships that enhance its supply chain for biofuel production. The company aims to secure long-term contracts with suppliers to stabilize feedstock costs, which are critical for maintaining profit margins.
Competitive Advantages
FutureFuel enjoys several competitive advantages:
- Established Market Presence: Strong relationships with major refiners and blenders allow for a robust sales channel.
- Innovative Product Development: Continuous investment in R&D has led to a diversified product portfolio, enhancing market competitiveness.
- Financial Stability: The company reported a significant increase in cash flows from operating activities, amounting to $41.42 million in the nine months ended September 30, 2024, compared to $8.46 million in the prior year.
| Metrics | 2024 | 2023 | Change |
|---|---|---|---|
| Revenue | $181.83 million | $276.24 million | $(94.41 million) (-34.2%) |
| Net Income | $12.71 million | $14.00 million | $(1.29 million) (-9.2%) |
| Adjusted EBITDA | $13.04 million | $18.23 million | $(5.19 million) (-28.5%) |
| Operating Cash Flow | $41.42 million | $8.46 million | +$32.96 million (+389.5%) |
FutureFuel Corp.'s growth opportunities are robust, driven by strategic initiatives, market expansions, and competitive advantages that position it well for future revenue recovery and growth.
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Resources:
- FutureFuel Corp. (FF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of FutureFuel Corp. (FF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View FutureFuel Corp. (FF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.