Forward-Looking Information

 

Forward-looking statements deal with our current plans, intentions, beliefs, and expectations, and statements of future economic performance. Statements containing such terms as “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate,” and other phrases of similar meaning are considered to contain uncertainty and are forward-looking statements. In addition, from time to time we or our representatives have made or will make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in various filings that we make with the U.S. Securities and Exchange Commission (the “SEC”), or in press releases, or in oral statements made by or with the approval of one of our authorized executive officers.

 

These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, those set forth under the headings “Risk Factors” beginning at page 15 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning at page 33 and in our other filings made with the SEC. You should not place undue reliance on any forward-looking statements contained in this report which reflect our management’s opinions only as of their respective dates. Except as required by law, we undertake no obligation to revise or publicly release the results of any revisions to forward-looking statements. The risks and uncertainties described in this report and in subsequent filings with the SEC are not the only ones we face. New factors emerge from time to time, and it is not possible for us to predict which will arise. There may be additional risks not presently known to us or that we currently believe are immaterial to our business. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. If any such risks occur, our business, operating results, liquidity, and financial condition could be materially affected in an adverse manner. You should consult any additional disclosures we have made or will make in our reports to the SEC on Forms 10-K, 10-Q, and 8-K, and any amendments thereto. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report.

 

 

PART I

 

Item 1.

Business

 

General

 

FutureFuel Corp. (sometimes referred to as the “Company,” “we,” “us,” or “our,” and includes our wholly-owned subsidiaries) is a Delaware corporation, and, through its wholly-owned subsidiary, FutureFuel Chemical Company, manufactures diversified chemical products, bio-based fuel products, and bio-based specialty chemical products. Unless otherwise stated, all dollar amounts other than per share amounts are in thousands.

 

We are headquartered in St. Louis, Missouri, and our manufacturing operations are conducted at our facility in Batesville, Arkansas. Trading of our common stock on the New York Stock Exchange (“NYSE”) commenced on March 23, 2011, under the symbol “FF”.

 

During 2024, we distributed normal quarterly cash dividends of $0.06 per share. We have declared normal quarterly cash dividends of $0.06 per share on our common stock for the calendar year 2025.  Additionally, we paid a special cash dividend of $2.50 per share on our common stock on April 9, 2024, to the holders of record of all the issued and outstanding shares of common stock as of the close of business on March 26, 2024.

 

Our business is managed in two segments: chemicals and biofuels. The chemicals segment manufactures a diversified listing of chemical products that are sold to third party customers. The majority of the revenues from the chemicals segment are derived from the custom manufacturing of specialty chemicals for specific customers. We have actively worked to develop our chemicals business with new customers in more diversified growth markets. As part of that focus on growth, we have introduced procedural updates to our operation to allow our re-entry to the pharma intermediates market. This capability has been confirmed by third party audits. Our chemicals business is based on a solid reputation as a technology-driven, highly reliable, and globally competitive chemicals producer. We retain a strong emphasis on operational excellence, cost control, and efficiency improvements to enable us to compete in the worldwide chemical industry.

 

With respect to our biofuels segment, our plant's demonstrated capacity is approximately 59 million gallons (“MMgy”).  We produced 45 and 59 million gallons during 2024 and 2023, respectively. This scale and the design of our plant in Batesville allows us to process a wide variety of feedstocks and continuously achieve high biodiesel yields. Combined with the synergies of running a shared chemical manufacturing facility, this has allowed us to be consistently successful in a highly competitive market.

 

 

Narrative Description of Our Business

 

Principal Executive Offices

 

Our principal executive offices are located at 8235 Forsyth Blvd., 9th Floor, Clayton, Missouri 63105. Our telephone number is (314) 854-8352. FutureFuel Chemical Company’s principal executive offices are located at 2800 Gap Road, Highway 394 South, Batesville, Arkansas 72501-9680. FutureFuel Chemical Company's telephone number is (870) 698-3000.

 

Plant Location

 

We own approximately 2,200 acres of land six miles southeast of Batesville in north central Arkansas. Approximately 500 acres of the site are occupied with our manufacturing facilities, laboratories, and associated infrastructure, including on-site liquid hazardous and non-hazardous waste treatment. Land and infrastructure are available to support expansion and business growth.

 

Operations

 

For the year ended December 31, 2024, approximately 67% of our revenue was derived from biofuels, 29% from manufacturing specialty chemicals for specific customers (“custom manufacturing”), and 4% of revenues from multi-customer specialty chemicals (“performance chemicals”).

 

Our biofuels business segment primarily involves the production and sale of biodiesel and petrodiesel blends.  Our custom chemicals manufacturing involves producing unique products for strategic customers, generally under long-term contracts. The custom chemicals manufacturing portfolio includes biocides intermediates, specialty polymers, dyes, stabilizers, oil and gas, and chemicals intermediates. Our performance chemicals product portfolio includes polymer modifiers that enhance stain resistance and dye-ability of nylon and polyester fibers, in addition to several small-volume specialty chemicals and solvents for diverse applications.

 

We are committed to growing and adapting our biofuels and chemicals businesses. For the biofuels business segment, we will continue to leverage our technical capabilities and quality certifications, secure local and regional markets, and expand marketing efforts to fleets and regional/national customers. For our chemicals segment, we intend to pursue development and commercialization of new products, including building block chemicals and intermediate chemicals requiring Good Manufacturing Practices (“GMP”). GMP is a recognized and auditable system ensuring products are produced consistently and controlled according to strict quality standards. It covers all aspects of manufacturing, facilities, equipment, and training utilizing detailed written procedures affecting the quality and consistency of the finished product. GMP complements the Company’s current and active quality registrations, including ISO 9001 and BQ9000, and will benefit our custom chemicals business. GMP will open growth opportunities for the Company to serve customers active in the pharmaceutical intermediates, food ingredients, and other fine chemicals segment. While pursuing this strategy, we will continue our efforts to establish a name identity for both segments.

 

Biofuels Business Segment

 

Biofuel Products

 

Our biofuels business segment began in 2005 and primarily includes the production and sale of biodiesel. In addition, we sell petrodiesel in blends with our biodiesel and, from time to time, with no biodiesel added.

 

Biodiesel is a renewable energy product consisting of mono-alkyl esters of fatty acids. These esters are typically produced from vegetable oil, fat, or grease feedstocks. Biodiesel is used primarily as a blend with petrodiesel (usually 5%, commonly referenced as “B5,” to 20%, commonly referenced as “B20,” by volume). A major advantage of biodiesel is that it can be used in most existing diesel engines and fuel injection equipment in blends up to B20 with no material impact to engine performance. Biodiesel also benefits from favorable properties compared to petrodiesel (e.g., negligible sulfur content, lower particulate matter, lower greenhouse gas emissions, and a higher cetane number leading to better engine performance and lubrication). See https://afdc.energy.gov/files/pdfs/30882.pdf.

 

 

Our technical and operational competency developed as a supplier of specialty chemicals, inclusive of research and development and analytical laboratory testing, enabled the expansion of a flexible manufacturing process. Our process can use a broad range of feedstock oils, including, but not limited to, soy oil, cottonseed oil, pork lard, poultry fat, inedible corn oil, yellow grease, inedible tallow, choice white grease, used cooking oil, and beef tallow. Our Batesville plant produces biodiesel, which is sometimes referenced as “B100.” We offer B100 and biodiesel blended with petrodiesel (B2, B5, B10, B20, B50, and B99 blends) at our Batesville facility and at a short-term leased storage facility in Little Rock, Arkansas. In addition, we deliver blended product to customers within our region.

 

Biodiesel Production/Capacity

 

While biodiesel can be made from various renewable sources, the choice of feedstock to be used at any particular facility is determined primarily by the price and availability of each feedstock variety; the yield of biodiesel achieved from that feedstock; and the capabilities of the producer’s biodiesel production facility. In addition, the chemical properties of the biodiesel (e.g., cloud point, pour point, and cetane number) depend on the type of feedstock.

 

In the United States, the majority of biodiesel historically has been made from domestically produced crude soybean oil due to its widespread availability and ease of processing. However, it is also one of the more costly feedstocks on the market. As a result, the biodiesel feedstock market in the United States transitioned from this expensive first-generation soy feedstock to incorporate alternative second-generation lower-cost, non-food feedstocks, such as waste vegetable oil, tallow, and inedible corn oil. Our ability to efficiently manage the co-products and waste products associated with these more challenging feedstocks and still achieve excellent yields and processing rates has allowed us to remain competitive.  Demand for second-generation feedstocks has increased substantially as they are also used to produce renewable diesel which has lower marginal costs than conventional biodiesel production and can also be used as a direct substitute for petrodiesel. Our continuous production line can produce biodiesel from this wide range of feedstocks, allowing for maximum flexibility in feedstock selection.  Our plant has a demonstrated production capacity of 59 MMgy.

 

Legislative Incentives

 

Biodiesel production and use in the United States continues to be heavily influenced in large part by legislative initiatives at both the federal and state levels.

 

Federal Renewable Fuels Mandate

 

The largest incentive program at this time is the federal mandate enacted by Congress as part of the Energy Policy Act of 2005 (the “2005 Act”). The 2005 Act included several provisions intended to spur the production and use of biodiesel. In particular, the 2005 Act’s provisions included biodiesel as part of the minimum volume (i.e., a mandate) of renewable fuels (the “renewable fuels standard” or “RFS”) to be included in the nationwide gasoline and diesel pool. The volume, which is intended to increase each year, began at four billion gallons per year in 2006. The 2005 Act required the Environmental Protection Agency (the “USEPA”) to publish “renewable fuel obligations” applicable to refiners, blenders, and importers in the contiguous 48 states. The renewable fuel obligations are expressed in terms of a volume percentage of gasoline sold or introduced into commerce and consist of a single applicable percentage that applies to all categories of refiners, blenders, and importers. The renewable fuel obligations are based on estimates that the Energy Information Association provides to the USEPA on the volumes of transportation fuels it expects will be sold or introduced into commerce. The USEPA released the final rules to implement the RFS on April 10, 2007. Under those rules, the RFS compliance period began on September 1, 2007. No differentiation was made among the various types of renewable fuels (e.g., biodiesel or ethanol).

 

 

On December 19, 2007, the Energy Independence and Security Act of 2007 (the “2007 Act”) was enacted which, among other things, expanded the RFS (“RFS2”). Prior to the enactment of the 2007 Act, the RFS requirement was mostly filled by ethanol. In contrast to the 2005 Act, the 2007 Act provided a renewable fuel standard carve-out specifically applicable to biodiesel. On July 1, 2010, RFS2’s biodiesel requirement became effective, thus requiring that a certain percentage of the diesel fuel consumed in the United States be made from renewable sources. The biomass-based diesel mandate rose annually and reached 2.43 billion gallons per year in 2021. On June 21, 2023, USEPA finalized a package of actions setting biofuel volumes for the Renewable Fuel Standard (RFS) program for the years 2023, 2024, and 2025.

 

The following table shows the finalized volume requirements by the USEPA with a steady growth rate in biomass-based diesel.

 

		Renewable Fuel Volumes (billion Renewable Identification Number ("RINs")*
		2024				2025				2026**
Cellulosic biofuel			1.09				1.38				-
Biomass-based diesel			3.04				3.35				-
Advanced biofuel			6.54				7.33				-
Renewable fuel			21.54				22.33				-

 

	*	Units for all volumes are ethanol-equivalent, except for biomass-based diesel volumes, which are expressed as physical gallons.
		See https://www.epa.gov/renewable-fuel-standard-program/final-renewable-fuels-standards-rule-2023-2024-and-2025.
	**	EPA has not yet set the volume requirements for 2026 which were due by statute on or prior to October 31,2024.

 

 

Federal Blenders’ and Producers’ Credits

 

Biodiesel tax incentives have been provided through various federal statutes, including the 2005 Act and the American Jobs Creation Act, and later, the Emergency Economic Stabilization Act of 2008. The most important of these is the one dollar per gallon Blenders' Tax Credit (“BTC”) applicable to all biodiesel. The Inflation Reduction Act of 2022 extended this credit through December 31, 2024. In August 2022, a new Clean Fuel Production Credit (“CFPC”) was made effective January 1, 2025. The CFPC consolidated and replaced several fuel related credits that were scheduled to expire at the end of 2024, including credits for the production of biodiesel, agri-biodiesel, renewable diesel, second-generation biofuel, sustainable aviation fuel, alternative fuels, and alternative fuels mixtures. In contrast to these expiring provisions, which subsidize specific types of low-greenhouse gas (“GHG”) emission fuels, the CFPC is technology neutral and is intended to subsidize the production of any transportation fuel with zero or low GHG emissions. The CFPC is structured on a sliding scale so that producers become eligible for larger credits as the GHG emissions of the fuels they produce approach zero. For producers meeting prevailing wage and registered apprenticeship requirements, the maximum credit is $1.00 per gallon of nonaviation fuel and $1.75 per gallon of aviation fuel. For producers not meeting prevailing wage and registered apprenticeship requirements, the maximum credit is 20 cents per gallon of nonaviation fuel and 35 cents per gallon of aviation fuel. FutureFuel was approved for the CFPC in December 2024. There has yet to be definitive guidance on how the CFPC will be interpreted and how it may impact the other market variables that ultimately determine operating margin.

 

On January 10, 2025, the IRS issued Notice 2025-10 with the purpose of providing initial guidance and solicited comment from the public with a deadline of April 10, 2025, and was to serve as an announcement of forthcoming proposed regulations. It did not include any reliance language and did not constitute final or binding guidance. On January 15, 2025, the IRS issued Notice 2025-11 which provided emission rate guidance in support of Notice 2025-10. We commented on both Notices seeking immediate clarity.

 

Like the BTC, the small agri-biodiesel credit which provides for an annual tax incentive in the amount of $0.10 per gallon on the first 15 million gallons of qualified agri-biodiesel produced was also extended to December 31, 2024, by the Inflation Reduction Act of 2022 and was not reinstated with the CFPC.

 

State Incentives

 

Our review of state statutes reveals that virtually all states provide user or producer incentives for biodiesel, several states provide both types of incentives, and more than 35 states provide incentives to biodiesel producers to build facilities in their states, typically offering tax credits, grants, and other financial incentives. Arkansas does not offer any producer incentives, but does offer investment incentives. We are registered in fuel programs in the states of California and Oregon, which incentivize the use of low carbon fuels specific to biomass-based diesel. We will continue to assess these and other state incentives and determine if we qualify. We will also stay abreast of regulations and update registrations if eligible.

 

Summary

 

We will continue to identify and pursue other legislative incentives to support our business. However, no assurances can be given that we will qualify for any such incentives or, if we do qualify, what the amount of such incentives will be or whether such incentives will continue to be available.

 

 

Quality

 

For quality specification purposes, and to qualify for the federal mandate, biodiesel must meet the requirements of American Society for Testing and Materials (“ASTM”) D6751. This specification ensures that blends up to B20 are compatible with diesel engines and associated fuel system hardware. See Status and Issues for Biodiesel in the United States, National Renewable Energy Laboratory, Theresa Alleman, Margo Melendez, and Wendy Dafoe et. al., Feb. 2015. All biodiesel manufactured at our Batesville plant is tested in on-site quality control laboratories and confirmed to meet, and typically exceed, the ASTM D6751 standard.

 

Commercially available biodiesels can contain small amounts of unreacted or partially reacted oils and fats as well as other minor impurities. The unreacted or partially reacted oils and fats are called glycerides. In rare instances, the glycerides and other minor components and impurities can clog engine filters. To address this issue, ASTM D6751 was amended in February 2012 to create two new grades of biodiesel. Grade No. 2 is essentially the specifications in effect before the amendment. Grade No. 1 provides for a maximum total monoglyceride content and a maximum cold soak filterability time and, in theory, would be used where the cloud point of Grade No. 2 biodiesel does not provide adequate assurance of quality. Both grades of biodiesel qualify as “biodiesel” for purposes of the RFS2 mandate. The Company continues to operate under the most recently published version of ASTM D6751, Standard Specifications for Biodiesel Fuel Blend Stock (B100) for Middle Distillate Fuels. All biodiesel made in our continuous process meets the more stringent specifications for Grade No. 1 biodiesel.

 

The U.S. biodiesel industry created the BQ-9000 program to address quality issues that arose during the early years of the industry. This program is run by the National Biodiesel Accreditation Committee, which is a cooperative and voluntary program for the accreditation of biodiesel producers and marketers. The program is a quality system-oriented program that includes standards for storage, sampling, testing, blending, shipping, distribution, and fuel management practices. Since the creation and adoption of the BQ-9000 program, the quality of biodiesel in the U.S. market has markedly improved. Our plant has operated as a BQ-9000 accredited production facility since 2006.

 

The ISO 9000 family of standards represents an international consensus on good quality management practices. It consists of standards and guidelines relating to quality management systems and related supporting standards. ISO 9001 provides a set of standardized requirements for a quality management system, regardless of what the user organization does, its size, or whether it is in the private or public sector. It is the only international standard against which organizations can be certified, although certification is not a compulsory requirement of the standard. Our plant is an ISO 9001 accredited production facility for both chemicals and biofuels.

 

Renewable Identification Numbers

 

As noted above, the RFS2 mandates levels of various types of renewable fuels that are to be blended with U.S. gasoline and diesel fuel by U.S. refiners, blenders, and importers. RINs are the mechanism for ensuring that the prescribed levels of blending are reached. As ethanol and biodiesel is produced or imported, the producer or importer has the responsibility to report the activity in the USEPA’s Moderated Transaction System (“EMTS”) where a series of numbers (i.e., a RIN) is assigned to their product. Assignment is made according to guidelines established by the USEPA. Currently, 1.5 RINs are assigned for each gallon of biodiesel produced. When biofuels change ownership to the refiners, importers, and blenders of the fuel, the RINs are also transferred. The RINs ultimately are separated from the renewable fuel generally at the time the renewable fuel is blended. The refiners, importers, and blenders generally use the RINs to establish that they have blended their applicable percentage of renewable fuels during the applicable reporting period. However, once the RINs are separated from the underlying biofuels (e.g., by blending the underlying biodiesel with petrodiesel), they can also be sold separate and apart from the underlying biofuels.

 

We generate RINs with our biodiesel. At times, we sell biodiesel with the RIN attached to the fuel. If we blend the biodiesel with petrodiesel in blends of B80 or less (e.g., B5 or B20), we can either sell the RINs with our blended biodiesel or we can sell them as a separate, free-standing instrument removed from the biodiesel. The decision of whether or not to separate the RINs from the blended biodiesel depends on the desires of the customer and market conditions for separated RINs, particularly, market prices. While biodiesel RINs continue to be traded through market makers, no assurances can be given that a separate market for RINs will be sustained or what value will be realized upon the sale of biodiesel RINs.

 

 

Byproducts

 

Glycerin

 

A byproduct of the biodiesel process is crude glycerin, which is produced at the rate of approximately 10% by mass of the quantity of biodiesel produced. Our business produces both crude glycerin and refined glycerin for commercial sales. Crude glycerin is sold into commercially viable uses for the crude product such as construction materials, agricultural and animal feed, and other applications not requiring high purity. The price of crude glycerin is impacted by supply and demand balance, energy prices, and prices for other commodities such as corn and soy.

 

We also refine a large portion of our crude glycerin into a purer form which is used in higher value markets such as specialty chemical production, agricultural formulations, food, pharmaceutical, and/or cosmetic applications. Our business strives to maximize availability of the higher value refined glycerin based on refining capacity, product specifications, prices, and other market conditions.

 

Biodiesel Residue

 

An additional byproduct of the biodiesel production process is biodiesel distillation residue.  This is a relatively low-priced commodity that we aggregate and sell to multiple customers, primarily for use in Bunker C #6 Oil and as an asphalt release agent.

 

Biodiesel Production Capacity

 

According to the U.S. Energy Information Administration (“EIA”), biodiesel production capacity decreased to 1,995 million gallons per year from 2,083 million gallons and renewable diesel and other biofuels increased to 4,580 million gallons from 3,897 million gallons in November 2024 as compared to November 2023, respectively.  With the capacity growth of renewable diesel and other biofuels, the biodiesel industry has continued to show resilience.  (Source: https://www.eia.gov/biofuels/update/)

 

Both biodiesel and renewable diesel have been impacted by the lack of clarity from the U.S. Treasury Department with respect to the CPFC on the delay of the Renewable Fuel Obligation (“RVO”) for 2026.  The USEPA reports that actual production in January 2025 was significantly lower as compared to January 2024 for both biodiesel (68.7 million gallons versus 160.6 million gallons, respectively) and renewable diesel (175.9 million gallons versus 200.9 million gallons, respectively).  However, sustainable aviation fuel (“SAF”) production increased during the same time frame (16.4 million gallons versus 9.7 million gallons, respectively). (Source: https://www.epa.gov/fuels-registration-reporting-and-compliance-help/spreadsheet-rin-generation-and-renewable-fuel-0)

 

                                                                      

Customers and Markets

 

Biodiesel and biodiesel blends are currently used in nearly all of the end markets where petrodiesel is used. Most biodiesel in the United States is consumed in the on-road diesel fuel market, although some is used for off-road purposes such as farming, residential/commercial heating oil, and power generation.

 

We currently market our biodiesel products by truck and rail directly to customers in the United States. We also have the capability to load through barge from a terminal in Little Rock, Arkansas. Through the utilization of liquid bulk storage facilities and barge loading capabilities, we are positioned to market biodiesel throughout the United States predominately for transportation.

 

For the years ended December 31, 2024, 2023, and 2022, two customers represented approximately 37% of biofuel revenue (25% of total revenue), 44% of biofuel revenue (35% of total revenue), and 34% of biofuel revenue (27% of total revenue), respectively.  Significant customers for the years ended December 31, 2024, 2023, and 2022 varied from year to year, and were comprised of five customers. We do not have long-term contracts with any biofuels customer, but rather sell on the basis of monthly or short-term, multi-month purchase orders at prices based upon then-prevailing market rates. We do not believe that the loss of any of these customers would have a material adverse effect on our biofuels segment or on us as a whole in that: (i) biofuels are a commodity with a large potential customer base; (ii) we believe that we could readily sell biofuels to other customers; (iii) the prices we receive from these customers are based upon then-market rates; and (iv) our sales to the customers are not under fixed terms, and the customers have no obligation to purchase any minimum quantities except as stipulated by short term purchase orders.

 

 

Competition

 

Renewable diesel continues to be a rapidly growing biofuel competing with biodiesel. The Company uses a conventional process of transesterification of feedstocks fats, vegetable oils, or waste cooking oils to make biodiesel. Renewable diesel is produced via hydro-processing of the same feedstocks. Renewable diesel, unlike conventional biodiesel, meets the fuel specification requirements of ASTM D975 (petrodiesel fuel) and ASTM D396 (home heating oil) and can be used as a direct substitute without requiring the need for petrodiesel blending. As a result, renewable diesel trades at a premium price to conventional biodiesel based on fungibility with petrodiesel, better cold weather performance and generation of a higher number of RINS on a per gallon basis.

 

Renewable diesel operational capacity in the US has grown significantly since 2018 and at the end of 2024 was at approximately 4,580 million gallons per year with that figure expected to continue to rise over the next five years. In 2023, renewable diesel capacity and production surpassed that of conventional biodiesel.  The increases forecasted for renewable diesel capacity will require an increase in the supply chain to meet that demand. This was also the case in 2018, and new capacity was constructed to meet demand.  As well as being driven by the benefits of the RFS and those of the Californian Low Carbon Fuel Standard (“LCFS”), renewable diesel production is also attractive to U.S. oil companies as it allows them to repurpose refinery hydro-processing equipment close to existing hydrogen supply facilities that would otherwise be redundant or uneconomical. In addition to renewable diesel, SAF in the US has grown to a capacity of 16.4 million gallons. The future of biodiesel will be driven by feedstock availability; its market price compared to renewable diesel; and State and Federal regulations and incentives.

 

We also compete with other producers of biodiesel regionally, nationally, and with foreign imports. The principal methods of competition in the biodiesel industry are price, supply reliability, biodiesel quality, and RIN integrity, i.e., the degree of confidence the market maintains in the validity of a biodiesel producer’s RINs. The number of operational biodiesel plants has dropped significantly in the past three years, but these have tended to be smaller, simpler plants with limited access to feedstock. Additionally, we compete with numerous other smaller producers and emerging renewable diesel and cellulosic based biodiesel technologies.

 

We cannot give any assurances that renewable diesel fuel, green diesel, natural gas or some other product produced by these or similar competing technologies will not supplant biodiesel as an alternative to conventional petrodiesel. The manufacturing processes for biodiesel and renewable diesel are inherently different and it would not be economically feasible to retrofit the Company’s operation to produce renewable diesel.

 

The biodiesel industry also is in competition with the petroleum-based diesel fuel industry. The biodiesel industry is small relative to the size of the petroleum-based diesel fuel industry, and large petroleum companies have greater resources than we do. Without government incentives and requirements, it is uncertain how the market would react and what the consequent impact on processing economics would be.

 

Supply and Distribution

 

As a result of our feedstock-flexible process, we can source feedstock from a broad supplier base, which includes degummed soy oil, distilled corn oil producers, reclaimed used cooking oil, and pork, chicken, and beef rendering facilities from both national and regional suppliers. Crude corn oil has been sourced from several national and regional producers. All feedstocks are currently supplied by either rail or truck. As discussed in the previous section, sourcing supplies of economically attractive feedstocks is becoming increasingly competitive.

 

We sell biodiesel from our plant site as well as ship it to liquid bulk storage facilities for further distribution. Sales from our plant site are made by railcar and tank truck. Biodiesel is being delivered by Company-owned tank trucks and common carriers to a liquid bulk storage facility leased by us for distribution there and for further transportation by barge or tank truck.

 

 

Cyclicality and Seasonality

 

Biodiesel producers have historically experienced seasonal fluctuations in demand for biodiesel. Biodiesel demand has tended to be lower during the winter in northern and Midwestern states due to historical concerns about biodiesel’s ability to operate optimally in cold weather as compared to petrodiesel. This seasonal fluctuation has been strongest for biodiesel made from animal fats and used cooking oils. Biodiesel made from such feedstocks has a higher cloud point (which is the point at which a fuel begins to gel) than biodiesel produced from vegetable oils, such as soybean, canola, or crude corn oil.

 

The mandate for biodiesel usage as established by RFS2 may interject an additional seasonal fluctuation in our biodiesel business. Once the mandate for a calendar year is met, or is anticipated to be met, demand for biodiesel may decrease.

 

Outlook for the Biodiesel Industry/Our Future Strategy

 

The passage of the Inflation Reduction Act in August of 2022 extended the BTC through December 31, 2024 and introduced the CFPC effective January 1, 2025.  There has yet to be definitive guidance on how the CFPC will be interpreted and how it may impact the other market variables that ultimately determine operating margin. Large scale investment in large scale renewable diesel plants competing for the same feedstock pool has put significant pressure on small scale conventional biodiesel producers. We believe that producers who are proactive in responding to these changes can remain competitive and benefit in this emerging market. These responses include: new and improved technologies; alternative feedstocks with higher yields; production scalability and flexibility options; supply chain, distribution and co-location strategies; the sale of RINs separate from the underlying biodiesel; and innovative risk management strategies.

 

Our future strategy for our biofuels segment is geared towards these responses. Notwithstanding our future strategy, our continued production of biodiesel may be limited, in part, by our ability to source feedstock given competitive growing renewable diesel markets, or, in a worst-case scenario, eliminated entirely, in the event Congress eliminates the federal mandate of the RFS2. See “Risk Factors” beginning at page 15 below.

 

Chemicals Business Segment

 

Overview of the Segment

 

Our chemicals segment manufactures diversified chemical products that are sold to third party customers. This segment comprises two components: “custom manufacturing” (manufacturing specialty chemicals for specific customers) and “performance chemicals” (multi-customer specialty chemicals).

 

Chemical Products

 

Custom manufacturing involves producing unique products for strategic customers, generally under multi-year or long-term contracts. Most of these products are produced under confidentiality agreements in order to protect each company’s intellectual property. This is a service-based business where customers value dependability, regulatory compliance, technical capabilities, responsiveness, quality assurance and control, process improvement, operational safety, and environmental protection. Our custom manufacturing products are manufactured by continuous production, dedicated batch or general-purpose batch mode depending on the specific product and the volumes required. Management believes that we are a full-service strategic partner to our key and potential customers in this segment. Our commercial, engineering and technology teams work collaboratively with our customers to further drive continuous process improvements and with potential customers to deliver new business.

 

Our plant’s custom manufacturing product portfolio includes products that are used in the coatings, chemical intermediates, industrial and consumer cleaning, oil and gas, dyes, and specialty polymers industries. Historically, but ending in 2021, our custom manufacturing product portfolio was highly concentrated on two significant legacy products, namely a laundry detergent additive for a leading consumer products company and a proprietary row crop herbicide. Our current custom manufacturing product portfolio is more diversified into multiple markets including agrochemicals, oilfield chemicals, industrial intermediates, and fabric care markets.

 

Performance chemicals comprise products which are generally available to the open market and sold to multiple customers.  These products are sold based upon specification and are intended for specific performance in specialty end-use applications determined by the customer. This portfolio includes a family of polymer (nylon and polyester) modifiers, glycerin products, consumer cleaning products, surfactants, and several small-volume specialty chemicals and solvents for diverse applications.

 

 

Future Strategy

 

We believe we have built a solid reputation as a safe, reliable, cost competitive, and technology-driven chemical producer. To further build on this reputation, we must continuously increase our focus on maintaining and adding customer relationship development, cost control, operational efficiency, capacity utilization, operational safety, and environmental protection to maximize earnings. We also believe that the ability to use large-scale batch and continuous production processes and a constant focus on process improvements allows us to compete effectively in the global custom manufacturing market and to remain cost competitive with, and for some products cost-advantaged over, our competitors. Furthermore, our site’s fully integrated infrastructure facilities, including utilities and waste treatment, provide us with an advantage over many of our competitors, and allow us to provide a complete package of custom manufacturing services. With GMP capabilities and ISO/BQ certifications, we strengthen our capabilities to grow our business further. We intend to improve margins in this area of our business by expansion of the customer base in additional market segments, careful management of product mix with regard to size of opportunity, timing to market, capital efficiency and matching of opportunities to assets and capabilities. We possess a core competency in chemical processing of bio-based feedstocks and expertise in specialty chemical synthesis and process development. We believe that this positions us favorably as a preferred manufacturer of custom chemicals and sustainable products in growing markets.

 

Customers and Markets

 

Our chemical products are used in a variety of markets and end uses, including detergent, agrochemical, automotive, oil and gas, coatings, nutrition, and polymer additives. Some of the chemical products can be cyclically driven by changes in general demand factors. In the case of our custom manufacturing business, the customers are typically the brand owners and, therefore, they control factors related to production demand, such as market development, patent expirations and their external manufacturing strategy. In such cases, we may be unable to increase or maintain our level of sales revenue for these products.

 

No chemical customer represented greater than 10% of total sales revenue in 2024 or 2023.

 

Competition

 

Historically, there have been significant barriers to entry for competitors with respect to specialty chemicals, primarily due to the fact that the relevant technology and manufacturing capability has been held by a small number of companies. As technology and investment have increasingly moved outside of North America, competition from international multi-national chemical manufacturers has intensified, primarily from manufacturers in India and China. We compete with these and other producers primarily based on price, customer service, technology, quality, and reliability. Our major competitors in this segment include large multi-national companies with internal specialty chemical manufacturing divisions and smaller independent producers. The international multi-national competitors are often disadvantaged by poor responsiveness and customer service, while the small producers often have limited technology and financial resources. We believe that we are well positioned for growth due to the combination of our scale of operations, technical capabilities, on-site utilities and wastewater treatment, reputation, and financial strength.

 

Supply and Distribution

 

Specialty chemicals are generally high unit value products sold in bulk, or low-volume packaged form, and for which distribution is a relatively minor component of cost. Most products are sold free on board (“FOB”) from the Batesville site for distribution globally. Similarly, raw materials for these products are comparatively higher-value components that are sourced globally. An exception is the biofuels co-products, which are recovered from local processing.

 

 

Cyclicality and Seasonality

 

Some of the chemical products can be cyclical, driven by changes in energy prices and agricultural commodity prices. For example, demand for chemical products sold into energy exploration and transportation markets is influenced by oil prices. The use of chemical products in agricultural markets likewise is influenced by agricultural commodity prices. Supply and demand dynamics determine profitability at different stages of cycles and global economic conditions affect the length of each cycle. Despite sensitivity to cyclicality in these industries, many of the products in the chemical segment provide stable earnings.

 

Backlog

 

The majority of our chemical revenue is derived from custom manufacturing agreements with specific customers. These customers generally provide us with forecasts of demand on a monthly or quarterly basis. These forecasts are intended to enable us to optimize the efficiency of our production processes and generally are not firm sales orders. As such, we do not monitor or report backlog.

 

Intellectual Property

 

We consider our intellectual property portfolio to be a valuable corporate asset, which we intend to expand and protect globally through a combination of trade secrets, confidentiality and non-disclosure agreements, patents, trademarks, and copyrights. As a producer of a broad and diverse portfolio of chemicals, our intellectual property relates to a wide variety of products and processes acquired through the development and manufacture of over 300 specialty chemicals. Our primary strategy regarding our intellectual property portfolio is to appropriately protect all innovations and know-how in order to provide our business segments with a technology-based competitive advantage wherever possible. In the chemicals business segment, custom manufacturing projects are primarily conducted within the framework of confidentiality agreements with each customer to ensure that intellectual property rights are defined and protected. In the chemicals business segment, performance chemicals are protected utilizing patents, both United States patents and international patents, or maintained as Trade Secrets. In the biofuels business segment, innovations and process know-how are vigorously protected as appropriate.

 

As may be necessary, we will seek to license technologies from third parties that complement our strategic business objectives. Neither our business as a whole, nor any particular segment, is materially dependent upon any one particular patent, copyright, or trade secret. As the laws of many foreign countries do not protect intellectual property to the same extent as the laws of the United States, we can make no assurance that we will be able to adequately protect all of our intellectual property assets.

 

Research and Development

 

We devote considerable resources to our research and development programs, which are primarily targeted towards three objectives:

 

	●	innovating, developing, and improving biofuels processes, in particular biodiesel and other biofuels, including value-up technology and applications for co-products;
	●	developing and improving processes for custom manufacturing products; and
	●	innovating, developing, and improving performance chemical products and manufacturing processes.

 

Our research and development capabilities comprise analytical chemistry competencies to assay and characterize raw materials and products, organic chemistry expertise applied across a breadth of reaction chemistries and materials, design and process engineering capabilities for batch and continuous processing of both solid and liquid materials, and proficiency in process safety and scale-up necessary to design safe chemical manufacturing processes. We believe that these core competencies, established in support of the legacy chemical business, are applicable to building a technology-based position in biofuels and associated bio-based specialty products and expanding our chemical segment product lines.

 

Research and development expense incurred by us for the years ended December 31, 2024, 2023 and 2022 were $3,993,000, $4,398,000, and $3,415,000, respectively. Substantially all of such research and development expense are related to the development of new products, services, and processes or the improvement of existing products, services, and processes.

 

 

Environmental Matters

 

Various aspects of our operations are subject to regulation by state and federal agencies. Biofuel and chemical operations are subject to numerous, stringent and complex laws and regulations at the federal, state, and local levels governing the discharge of materials into the environment or otherwise relating to environmental protection. These laws and regulations may:

 

	●	require acquisition of permits regarding discharges into the air and discharge of waste waters;
	●	place restrictions on the handling and disposal of hazardous and other wastes; and
	●	require capital expenditures to implement pollution control equipment.

 

Compliance with such laws and regulations can be costly, and noncompliance can result in substantial civil and even criminal penalties. Some environmental laws impose strict liability for environmental contamination, rendering a person liable for environmental damages and cleanup costs without regard to negligence or fault. Moreover, there is strong public interest in the protection of the environment. Our operations could be adversely affected to the extent laws are enacted or other governmental action is taken that imposes environmental protection requirements that result in increased costs to the biofuels and/or chemical manufacturing industry in general. The following provides a general discussion of some of the significant environmental laws and regulations that impact our activities.

 

The federal Comprehensive Environmental Response, Compensation and Liability Act (or “CERCLA”), and analogous state laws, impose joint and several liability, without regard to fault or the legality of the original act, on certain classes of persons that contributed to the release of a hazardous substance into the environment. These persons include the owner and operator of the site where the release occurred, past owners and operators of the site, and companies that disposed of or arranged for the disposal of hazardous substances found at the site. Responsible parties under CERCLA may be liable for the costs of cleaning up hazardous substances that have been released into the environment and for damages to natural resources. Additionally, it is not uncommon for third parties to assert claims for personal injury and property damage allegedly caused by the release of hazardous substances or other pollutants into the environment.

 

The federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act (“RCRA”), is the principal federal statute governing the management of wastes, including the treatment, storage and disposal of hazardous wastes. RCRA imposes stringent operating requirements, and liability for failure to meet such requirements, on a person who is either a generator or transporter of hazardous waste or an owner or operator of a hazardous waste treatment, storage, or disposal facility. Many of the wastes generated in our manufacturing facility are governed by RCRA.

 

The federal Oil Pollution Act of 1990 (“OPA”) and regulations thereunder impose liability on responsible parties for damages resulting from oil spills into or upon navigable waters, adjoining shorelines, or in the exclusive economic zone of the United States. A responsible party may include, but is not limited to, the owner or operator of an onshore facility. Spill cleanup liability may not apply to the facility if a spill is caused by another party’s gross negligence or willful misconduct. Responsible parties may be subject to penalties if the spill resulted from violation of a federal safety, construction, or operating regulation, or if a party fails to report a spill or to cooperate fully in a clean-up. Failure to comply with OPA’s requirements may subject a responsible party to civil, criminal, or administrative enforcement actions via the Water Pollution Control Act.

 

The federal Water Pollution Control Act (the “Clean Water Act”) imposes restrictions and controls on the discharge of pollutants into navigable waters. These controls have become more stringent over the years, and it is possible that additional restrictions may be imposed in the future. Permits must be obtained to discharge pollutants into state and federal waters. The Clean Water Act provides for civil, criminal, and administrative penalties for discharges of oil and other pollutants and imposes liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release. Comparable state statutes impose liability and authorize penalties in the case of an unauthorized discharge of petroleum or its derivatives, or other pollutants, into state waters.

 

The federal Clean Air Act and associated state laws and regulations restrict the emission of air pollutants from many sources, including facilities involved in manufacturing chemicals and biofuels. New facilities are generally required to obtain permits before operations can commence, and new or existing facilities may be required to incur certain capital expenditures to install air pollution control equipment in connection with obtaining and maintaining operating permits and approvals. Federal and state regulatory agencies can impose administrative, civil, and criminal penalties for non-compliance with permits or other requirements of the Clean Air Act and associated state laws and regulations.

 

 

The federal Endangered Species Act, the federal Marine Mammal Protection Act, and similar federal and state wildlife protection laws prohibit or restrict activities that could adversely impact protected plant and animal species or habitats. Manufacturing activities could be prohibited or delayed in areas where such protected species or habitats may be located, or expensive mitigation may be required to accommodate such activities.

 

The Toxic Substances Control Act (“TSCA”) seeks to reduce risks of injury to health, or the environment associated with the manufacture, processing, distribution, use, or disposal of chemical substances. TSCA requires reporting, record-keeping and testing of certain chemicals and restricts use of some chemical substances and/or mixtures. Some substances are excluded from TSCA, including food, drugs, cosmetics and pesticides. Government agencies may initiate regulatory action to label, restrict, or ban a chemical, or to require the submission of additional data needed to determine the risk a chemical may pose. The statute contains enforcement provisions that include both criminal and civil penalties.

 

Our policy is to operate our plant and facilities in a manner that protects the environment and the health and safety of our employees and the public. We intend to continue to make expenditures for environmental protection and improvements in a timely manner consistent with our policies and with the technology available. In some cases, applicable environmental regulations such as those adopted under the Clean Air Act and RCRA, and related actions of regulatory agencies, determine the timing and amount of environmental costs incurred by us.

 

We establish reserves for closure/post-closure costs associated with the environmental and other assets we maintain. Environmental assets include waste management units, such as chemical waste destructors, storage tanks, and boilers. When these types of assets are constructed or installed, a reserve is established for the future costs anticipated to be associated with the closure of the site based on the expected life of the environmental assets, the applicable regulatory closure requirements, and our environmental policies and practices. These expenses are charged into earnings over the estimated useful life of the assets. Currently, we estimate the useful life of each individual asset up to 27 years.

 

In addition to our general environmental policies and policies for asset retirement obligations and environmental reserves, we accrue environmental costs when it is probable that we have incurred a liability and the amount can be reasonably estimated. In some instances, the amount cannot be reasonably estimated due to insufficient data, particularly in the nature and timing of the future performance. In these cases, the liability is monitored until such time that sufficient data exists. With respect to a contaminated site, the amount accrued reflects our assumptions about remedial requirements at the site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites, and the number and financial viability of other potentially responsible parties. Changes in the estimates on which the accruals are based, unanticipated government enforcement action, or changes in health, safety, environmental, chemical control regulations, and testing requirements could result in higher or lower costs.

 

Our cash expenditures related to environmental protection and improvement were approximately $11,991,000, $12,854,000, and $10,268,000 for the years ended December 31, 2024, 2023 and 2022, respectively, and are included in costs of goods sold in the consolidated statements of income for each period. These amounts pertain primarily to operating costs associated with environmental protection equipment and facilities but also include expenditures for construction and development. The USEPA recently updated the Miscellaneous Organic NESHAP (“MON”) regulation, 40 CFR Part 63 Subpart FFFF, which governs emissions from organic chemical manufacturing facilities. To comply with this regulation, we updated equipment monitoring systems, chemical leak detection programs, maintenance programs, vessel pressure relief systems, emission reporting protocols and related procedures. While we do not expect future environmental capital expenditures arising from requirements of environmental laws and regulations to materially increase our planned level of annual capital expenditures for environmental control facilities, we can give no assurances that such requirements will not materialize in the future.

 

We believe that we have obtained, in all material respects, the necessary environmental permits and licenses to carry on our operations as presently conducted. We have reviewed environmental investigations of the properties owned by us and believe, based on the results of the investigations carried out to date, that there are no material environmental issues that adversely impact us. In connection with our acquisition of our warehouse in Batesville, the seller agreed to remediate certain environmental conditions existing at the facility on the date that we acquired it and to indemnify us with respect to those environmental conditions. We continue to monitor the seller’s compliance with its remediation obligations.

 

The Company is a leading provider of renewable fuel and actively works to reduce its carbon footprint. The Company supports the global movement transitioning to a low-carbon economy and strives to control climate change related costs through process innovation, inventory control, and price indexing. Energy, transportation, and raw material costs have all been negatively impacted by climate change. 

 

 

The Company has the ability to treat hazardous and non-hazardous waste on-site. Over 99% of all generated waste is treated at the facility, eliminating most greenhouse gas emissions associated with transportation of waste, and significantly reducing liability associated with public exposure to waste.

 

Greenhouse gases may have an adverse impact on global weather patterns and crop production and, therefore, could impact the availability and pricing of raw materials used in biodiesel production. The Company has developed strategies for coping with seasonal, weather related, and market driven volatility. These strategies improve the Company’s ability to dampen the impact of climate driven challenges but may not successfully overcome poor market conditions. Profits may be negatively impacted if the Company is unable to pass along price increases to our customers.

 

The Company’s chemical segment uses many commodities derived from crude oil feedstock. These materials are affected by climate change driven policies that regulate petroleum and other energy production industries. Prices are subject to volatility caused in part by supply and demand, political movements, production difficulties, transportation disruptions, and other world events that may be linked to climate change.

 

The Company has on-site emergency response equipment, trained personnel, and preparedness plans in place detailing actions needed to cope with the occurrence of severe weather.  The Company’s production location is in an area generally unaffected by hurricanes or floods; however, changing weather patterns and the increased occurrence of severe weather has the potential to impede raw material supply lines, product distribution, and plant operations.  Key raw materials and spare production equipment are maintained on-site to mitigate the effects of such occurrences.

 

Management Team and Human Capital

 

Our executive management team at the Batesville plant consists of individuals with a combined 100 plus years of experience in the chemicals industry, comprising technical, operational, and business responsibilities. The members of the executive team also have international experience, including assignments in Europe and Asia. The operational and commercial management group at the Batesville site includes additional degreed professionals with an average experience of more than 30 years in the chemical industry.

 

Our Batesville workforce comprises approximately 537 full and part time non-union employees, and includes degreed professionals including chemists (some with PhDs) and engineers (including licensed professional electrical, mechanical, and chemical engineers). Operations personnel have received extensive training and are highly skilled. Additionally, all site manufacturing and infrastructure is fully automated and computer-controlled. Due to the lack of locally-available process industry infrastructure, the workforce is substantially self-sufficient in the range of required operational skills and experience. Voluntary attrition at the site has averaged 10% over the past five years. Our Batesville operation is also supported by a small commercial team based in our corporate office in Clayton, Missouri.

 

Available Information

 

We file annual, quarterly, and other reports, proxy statements, and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers such as us that file electronically with the SEC. You may access that site at https://www.sec.gov.

 

Our Internet website address is www.futurefuelcorporation.com. We make available free of charge, through the “Investors” section of our Internet website (https://futurefuel-corporation.ir.rdgfilings.com), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (or the Exchange Act), as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC.

 

We also make available free of charge, through the “Investors - Corporate Governance” section of our website (https://futurefuel-corporation.ir.rdgfilings.com/corporate-governance), the corporate governance guidelines of our board of directors, the charters of each of the committees of our board of directors, and the code of business conduct and ethics for our directors, officers, and employees. Such materials will be made available in print upon the written request of any shareholder to FutureFuel Corp., 8235 Forsyth Blvd., 9th Floor, Clayton, Missouri 63105, Attention: Investor Relations.

 

 

Item 1A.

Risk Factors.

 

An investment in us involves a high degree of risk and may result in the loss of all or part of your investment. You should consider carefully all of the information set out in this document and the risks attaching to an investment in us, including, in particular, the risks described below. The information below does not purport to be an exhaustive list and should be considered in conjunction with the contents of the rest of this document.

 

Risks Related to Economic Conditions, Governmental Action, and our Industry

 

Our industry is greatly influenced by the U.S. and overall global economy and as such adverse economic conditions have the potential to adversely affect our business, results of operations, or financial condition.

 

We are subject to various U.S. and global economic conditions, including our sourcing of certain raw materials for our chemicals segment internationally.  Accordingly, adverse changes in these conditions, including supply chain disruptions and price inflation for those raw materials, can adversely impact our business. The impacts include, but are not limited to:

 

●

a significant decline in demand for our products due to market disruptions, resulting in a decline in sales and prices;

●

limitations of feedstocks, price volatility, or disruptions to our suppliers’ operations;

●

the interruption of our distribution system, or temporary or long-term disruption in our supply chains, or delays in the delivery of our product;

●

suspension of renewable fuel and/or low carbon fuel policies;

●

limitations on our ability to operate our business as a result of federal, state or local regulations including taxes and tariffs; and

●

decreases in the demand for and price of RINs and LCFS credits as a result of reduced demand for petroleum-based gasoline and diesel fuel.

 

We operate within the biomass-based diesel industry, which is significantly influenced by governmental programs requiring or incentivizing the consumption of biofuels, including the BTC and CFPC. The expiration or loss of mandates or incentives would have a material adverse effect on our business.

 

The biomass-based diesel industry relies on governmental programs requiring or incentivizing the consumption of biofuels. Biomass-based diesel has historically been more expensive to produce than petroleum-based diesel fuel and these governmental programs support a market for biomass-based diesel that might not otherwise exist. The petroleum industry is opposed to many of these government incentives and can be expected to continue to challenge these incentives.

 

Historically, the most significant tax incentive program in the biomass-based diesel industry has been the BTC. Under the BTC, the first market participant to blend pure biomass-based diesel with petroleum-based diesel fuel receives a one dollar per gallon refundable tax credit. From time to time, the BTC has expired and been retroactively reinstated.  Most recently, the Inflation Reduction Act, adopted in August 2022, extended the BTC through December 31, 2024, but provided for its replacement by the CFPC on January 1, 2025.  The CFPC is structured on a sliding scale so that producers become eligible for larger credits as the GHG emissions of the fuels they produce approach zero.  For producers meeting prevailing wage and registered apprenticeship requirements, the maximum credit is $1.00 per gallon of biodiesel.  However, the maximum credit would require zero GHG emissions which is unrealistic for almost every biodiesel producer, including the Company.  Guidance surrounding this credit has yet to be finalized despite the effective date of the CFPC.  Given our relative position to other biodiesel producers and the importance of such incentives to our operations, a reduction or elimination of these governmental incentives could have a material adverse effect on us and on the biodiesel industry in general. Specifically, if biodiesel prices decrease as a result of the expiration or significant reduction in these governmental incentives and biodiesel feedstock costs do not decrease proportionately, we could realize a negative gross margin on biodiesel. As a result, we could be forced to cease production of biodiesel, which would have an adverse effect on our financial condition.

 

 

Our biofuels operations may be harmed if federal or state governments were to change current laws and regulations.

 

Alternative fuels businesses benefit from government subsidies and mandates. If any of the state or federal laws and regulations relating to the government subsidies and mandates change, our ability to benefit from our alternative fuels business could be harmed.

 

With respect to our biofuels platform, the United States Congress could repeal, curtail or otherwise change the RFS2 program in a manner adverse to us. Similarly, the USEPA could curtail or otherwise change its administration of the RFS2 program in a manner adverse to us, including by not increasing or even decreasing the required renewable fuel volumes, by waiving compliance with the required renewable fuel volumes or otherwise. In addition, while Congress specified RFS2 renewable fuel volume requirements through 2022 (subject to adjustment in the rulemaking process), beginning in 2023 required volumes of renewable fuel will be largely at the discretion of the USEPA (in coordination with the Secretary of Energy and Secretary of Agriculture). We cannot predict what changes, if any, will be instituted or the impact of any changes on our business, although adverse changes could seriously harm our revenues, earnings and financial condition.

 

Further, our biofuels platform is subject to federal, state, and local laws and regulations governing the application and use of alternative energy products, including those related specifically to biodiesel. For instance, biodiesel benefits from successful completion of USEPA Tier I and Tier II health effects testing under Section 211(b) of the Clean Air Act.  This testing verified biodiesel does not pose a threat to human health and improves air quality as a replacement for petroleum diesel. Also, portions of our biofuels may, from time to time, be registered in states where we obtain benefits from state specific subsidies, mandates or programs. If federal or state agency determinations, laws, and regulations relating to the application and use of alternative energy are changed, the marketability and sales of biodiesel production could be materially adversely affected.

 

We have historically derived a significant portion of our revenues from sales of our biofuels in the State of California primarily as a result of California’s Low Carbon Fuel Standard (“LCFS”); adverse changes in this law or reductions in the value of LCFS credits would harm our revenues and profits.

 

The LCFS is designed to reduce GHG emissions associated with transportation fuels used in California by ensuring that the total amount of fuel consumed meets declining targets for such emissions. The regulation quantifies lifecycle GHG emissions by assigning a “carbon intensity” (“CI”) score to each transportation fuel based on that fuel’s lifecycle assessment. Each petroleum fuel provider, generally the fuel’s producer or importer is required to ensure that the overall CI score for its fuel pool meets the annual carbon intensity target for a given year. This obligation is tracked through credits and deficits and credits can be traded. We generate LCFS credits when we sell qualified fuels which are used in California. As a result of the trading price of LCFS credits, California has become a desirable market in which to sell our biodiesel. If the value of LCFS credits were to materially decrease as a result of over-supply, as a result of reduced demand for our fuels, if the fuel produced is deemed not to qualify for LCFS credits, or if the LCFS or the manner in which it is administered or applied were otherwise changed in a manner adverse to us, our revenues and profits could be seriously harmed.

 

 

The industries in which we compete are highly competitive.

 

The biodiesel and specialty chemical industries are highly competitive. There is competition within these industries and also with other industries in supplying the energy, fuel, and chemical needs of industry and individual customers. We compete with other firms in the sale or purchase of various goods or services in many national and international markets. We compete with large national and multi-national companies that have longer operating histories, greater financial, technical, and other resources, and greater name recognition than we do. In addition, we compete with several smaller companies capable of competing effectively on a regional or local basis. Our competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer requirements. As a result of competition, we may lose market share or be unable to maintain or increase prices for our products and/or services or to acquire additional business opportunities, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Although we will employ all methods of competition that are lawful and appropriate for such purposes, no assurances can be made that they will be successful. A key component of our competitive position, particularly given the commodity-based nature of many of our products, will be our ability to manage expenses successfully, which requires continuous management focus on reducing unit costs and improving efficiency. No assurances can be given that we will be able to successfully manage such expenses.

 

Our competitive position in the markets in which we participate is, in part, subject to external factors, in addition to those that we can impact. Natural disasters, changes in laws or regulations, trade disputes, war or other outbreak of hostilities, or other political factors in any of the countries or regions in which we operate or do business, or in countries or regions that are key suppliers of strategic raw materials, could negatively impact our competitive position and our ability to maintain market share.

 

As to our biofuels segment, biodiesel produced in Canada, South America, Europe, Eastern Asia, the Pacific Rim, or other regions may be imported into the United States to compete with U.S. -produced biodiesel. These regions may benefit from biodiesel production incentives or other financial incentives in their home countries that offset some of their biodiesel production costs and enable them to profitably sell biodiesel in the U.S. at lower prices than U.S.-based biodiesel producers. Under the RFS2, imported biodiesel may be eligible to satisfy an obligated party’s requirements and, therefore, may compete to meet the volumetric requirements of RFS2. This could make it more challenging for us to market or sell biodiesel in the United States, which would have a material adverse effect on our revenues.

 

The total current U.S. production capacity for biodiesel is in excess of the current RFS2 mandate for 2023 and 2024. Excess production capacity over the annual mandates could result in a decline in biodiesel prices and profitability, negatively impacting our ability to maintain the profitability of our biofuels segment and recover capital expenditures in this business segment.

 

Biodiesel is encountering increased competition from renewable diesel, which is produced via hydrotreating a biomass-based feedstock. Renewable diesel can be used interchangeably with conventional petroleum diesel, is not limited in blends, and can be transported via existing fuel pipeline infrastructure. A significant capital investment would be required for the Company to produce renewable diesel, and the current economics and business uncertainty do not support this level of investment.

 

 

Fluctuations in commodity prices may cause a reduction in the demand or profitability of the products or services we produce.

 

Prices for alternative fuels tend to fluctuate widely based on a variety of political and economic factors. These price fluctuations heavily influence the oil and gas industry. Lower energy prices for existing products tend to limit the demand for alternative forms of energy services and related products and infrastructure. Historically, the markets for alternative fuels have been volatile, and they are likely to continue to be volatile. Wide fluctuations in alternative fuel prices may result from relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty, and other factors that are beyond our control, including:

 

	●	worldwide and domestic supplies of oil and gas;
	●	the price and/or availability of biodiesel feedstocks;
	●	weather conditions;
	●	the level of consumer demand;
	●	the price and availability of alternative fuels;
	●	the availability of pipeline and refining capacity;
	●	the price and level of foreign imports;
	●	domestic and foreign governmental regulations and taxes and trade restrictions, including tariffs;
	●	the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) to agree to and maintain oil price and production controls;
	●	political instability or armed conflict in oil-producing regions;
	●	pandemics, epidemics, or disease outbreaks; and
	●	the overall economic environment.

 

These factors and the volatility of the commodity markets make it extremely difficult to predict future alternative fuel price movements with any certainty. There may be a decrease in the demand for our products or services and our profitability could be adversely affected.

 

We are reliant on certain strategic raw materials for our operations.

 

We are reliant on certain strategic raw materials (such as biodiesel feedstocks and methanol) for our operations. We have implemented certain risk management tools, such as multiple suppliers and hedging, to mitigate short-term market fluctuations in raw material supply and costs. There can be no assurance, however, that such measures will result in cost savings or supply stability or that all market fluctuation exposure will be eliminated. In addition, inflation, natural disasters, changes in laws or regulations, war or other outbreak of hostilities, or other political factors in any of the countries or regions in which we operate or do business, or in countries or regions that are key suppliers of strategic raw materials, could affect availability and costs of raw materials.

 

While temporary shortages of raw materials may occasionally occur, these items have historically been sufficiently available to cover current requirements. However, their continuous availability and price are impacted by natural disasters, plant interruptions occurring during periods of high demand, domestic and world market and political conditions, changes in government regulation, and war or other outbreak of hostilities. In addition, as we increase our biodiesel capacity, we will require larger supplies of raw materials, which have not yet been secured and may not be available for the foregoing reasons or may be available only at prices higher than current levels. Our operations or products may, at times, be adversely affected by these factors.

 

 

Market conditions or transportation impediments may hinder access to raw goods and distribution markets.

 

Market conditions, the unavailability of satisfactory transportation, or the location of our manufacturing complex from more lucrative markets may hinder our access to raw goods and/or distribution markets. The availability of a ready market for biodiesel depends on a number of factors, including the demand for and supply of biodiesel and the proximity of the plant to trucking and terminal facilities. The sale of large quantities of biodiesel necessitates that we transport our biodiesel to other markets, since the Batesville, Arkansas regional market is not expected to absorb all of our contemplated production. Common carrier pipelines do not transport biodiesel or biodiesel/ petrodiesel blends, which means trucks, barges, and rail cars are the potentially available means of distribution of our product from the plant to these storage terminals for further distribution. However, the availability of rail cars is limited and at times unavailable because of repairs or improvements, or as a result of priority transportation agreements with other shippers. Additionally, the current availability of barges is limited, particularly heated barges to transport biodiesel during winter months. If transportation is restricted or is unavailable, we may not be able to sell into more lucrative markets, and consequently our cash flow from sales of biodiesel could be restricted.

 

Concerns regarding the environmental impact of biodiesel production could affect public policy, which could impair our ability to operate at a profit and substantially harm our revenues and operating margins.

 

The environmental impacts associated with biodiesel production and use have not yet been fully analyzed. Under the 2007 Energy Independence and Security Act, the USEPA is required to produce a study every three years of the environmental impacts associated with current and future biofuel production and use, including effects on air and water quality, soil quality and conservation, water availability, energy recovery from secondary materials, ecosystem health and biodiversity, invasive species, and international impacts. The first such triennial report was published in January 2011. The second triennial report was published June 29, 2018. The 2018 report reaffirms the findings of the 2011 report and reflects the current understanding about biofuel production using data gathered through May 2017. The USEPA released its third triennial report to Congress on biofuels and the environment in 2023, which builds on the previous two reports and provides an update on the impacts to date of the RFS and RFS2 on the environment.

 

To the extent that state or federal laws are modified, or public perception turns against biodiesel, use requirements, such as RFS2, may not continue, which could materially harm our ability to operate profitably.

 

Climate change regulations may impact our ability to operate at a profit and harm our operating margins.

 

Future regulations may impose new operational burdens, require investment in additional emission control technology, or result in unfavorable market changes. The cost of compliance with stringent climate change regulations could adversely affect our ability to compete with companies in locations that are not subject to stringent climate change regulations.

 

Growth in the sale and distribution of biodiesel is dependent on the expansion of related infrastructure, which may not occur on a timely basis, if at all, and our operations could be adversely affected by infrastructure limitations or disruptions.

 

Growth in the biodiesel industry depends on substantial development of infrastructure for the distribution of biodiesel. Substantial investment required for these infrastructure changes and expansions may not be made on a timely basis or at all. The scope and timing of any infrastructure expansion are generally beyond our control. Also, we compete with other biofuel companies for access to some of the key infrastructure components, such as terminal capacity. As a result, increased production of biodiesel or other biofuels will increase the demand and competition for necessary infrastructure. Any delay or failure in expanding distribution infrastructure could hurt the demand for or prices of biodiesel, impede delivery of our biodiesel, and impose additional costs, each of which would have a material adverse effect on our results of operations and financial condition. Our business will be dependent on the continuing availability of infrastructure for the distribution of increasing volumes of biodiesel and any infrastructure disruptions could materially harm our business.

 

 

Nitrogen oxide emissions from biodiesel may harm its appeal as a renewable fuel and increase costs.

 

In some instances, biodiesel may increase emissions of nitrogen oxide as compared to petrodiesel, which could harm air quality. Nitrogen oxide is a contributor to ozone depletion and smog. These emissions may decrease the appeal of biodiesel to environmental groups and agencies who have been historic supporters of the biodiesel industry, potentially harming our ability to market our biodiesel.

 

In addition, several states have acted to regulate potential nitrogen oxide emissions from biodiesel. Texas currently requires biodiesel blends contain an additive to eliminate this perceived nitrogen oxide increase. California is in the process of formulating biodiesel regulations that may also require such an additive. The USEPA may also institute requirements for such an additive. In states where such an additive is required to sell biodiesel, the additional cost of the additive may make biodiesel less profitable or make biodiesel less cost competitive against petrodiesel or renewable diesel, which would negatively impact our ability to sell our products in such states and therefore have an adverse effect on our revenues and profitability.

 

Risks Related to our Business

 

We are exposed to operating risks.

 

As a manufacturer of diversified chemical products and biofuels, our business is subject to operating risks common to chemical manufacturing, storage, handling, and transportation. These risks include, but are not limited to, fires, explosions, inclement weather, natural disasters, mechanical failure, unscheduled downtime, transportation interruptions, remediation, chemical spills, discharges or releases of toxic or hazardous substances or gases. Significant limitation on our ability to manufacture products due to disruption of manufacturing operations or related infrastructure could have a material adverse effect on our sales revenue, costs, results of operations, and financial condition.

 

Disruptions could also occur due to internal factors such as computer or equipment malfunction (accidental or intentional), operator error, or process failures; or external factors such as computer or equipment malfunction at third-party service providers, natural disasters, pandemic illness, changes in laws or regulations, war or other outbreak of hostilities or terrorism, cyber-incidents, or breakdown or degradation of transportation infrastructure used for delivery of supplies to the Company or for delivery of products to customers. We have recently suffered increasingly frequent, unscheduled and extended service utility downtime as a result of supplier delays and quality issues beyond our control. No assurances can be provided that any future disruptions due to these, or other, circumstances will not have a material effect on operations. Such disruptions could result in an unplanned event that could be significant in scale and could negatively impact operations, neighbors, and the environment, and could have a negative impact on our results of operations.

 

We are reliant upon a relatively small number of customers.

 

Our chemical business is concentrated with four large customers covering multiple products representing greater than 84% of our chemicals segment product sales, or 28% of total revenues. Although this business is contracted in longer-term production agreements, the loss of any of these strategic customers could have a material adverse effect on our chemicals business.

 

Additionally, our biofuels segment has two large customers. We do not believe that the loss of these customers would have a material adverse effect on our biofuels segment or on us as a whole in that: (i) unlike our custom manufacturing products, biodiesel is a commodity with a large potential customer base; (ii) we believe that we could readily sell our biodiesel to other customers as potential demand from other customers for biodiesel exceeds our production capacity; (iii) our sales to these customers are not under fixed terms and the customers have no fixed obligation to purchase any minimum quantities except as stipulated by short term purchase orders; and (iv) the prices we receive from these customers are based upon then-market rates, as would be the case with sales of this commodity to other customers.

 

Sales to these biodiesel customers totaled approximately 25% of total revenue (or $59,867,000) in 2024. Sales in 2023 to our two largest customers represented 35% of total revenues (or $127,763,000). Sales to our two largest biodiesel customers totaled 27% of total revenues in 2022 (or $107,898,000). We do not have a contract with these customers but rather sell based on monthly or short-term, multi-month purchase orders placed with us by the customers at prices based upon then-prevailing market rates.

 

 

Changes in technology may render our products or services obsolete.

 

The alternative fuel and chemical industries may be substantially affected by rapid and significant changes in technology. Examples include competitive product technologies, such as green gasoline, renewable diesel produced from catalytic hydrotreating of renewable feedstock oils, and competitive process technologies, such as advanced biodiesel continuous reactor and washing designs that increase throughput. Additionally, new supplies of natural gas in the U.S., primarily as a result of shale gas development, have lowered natural gas prices. Lower natural gas prices may lead to increased use of natural gas as a transportation fuel. Increased usage of natural gas in the transportation market, or other markets that have traditionally used petrodiesel or biodiesel, may lead to declines in the demand for petrodiesel and biodiesel. Lastly, new and more active compounds may be discovered that require less volume or different manufacturing methods, or the end products may become obsolete and be replaced with differing materials.

 

These changes may render obsolete certain existing products, energy sources, services, and technologies currently used by us. We cannot provide assurances that the technologies used by or relied upon by us will not be subject to such obsolescence. While we may attempt to adapt and apply the services provided by us to newer technologies, we cannot provide assurances that we will have sufficient resources to fund these changes or that these changes will ultimately prove successful.

 

Failure to comply with governmental regulations could result in the imposition of penalties, fines or restrictions on operations and remedial liabilities.

 

The biofuel and chemical industries are subject to extensive federal, state, local, and foreign laws and regulations related to the general population’s health and safety and those associated with compliance and permitting obligations (including those related to the use, storage, handling, discharge, emission, and disposal of municipal solid waste and other waste, pollutants or hazardous substances or waste, or discharges and air and other emissions) as well as land use and development. Existing laws also impose obligations to clean up contaminated properties, or to pay for the cost of such remediation, often upon parties that did not cause the contamination. Compliance with these laws, regulations, and obligations could require substantial capital expenditures. Failure to comply could result in the imposition of penalties, fines, or restrictions on operations and remedial liabilities. These costs and liabilities could adversely affect our operations.

 

 

Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly waste handling, storage, transport, disposal, or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our business segments in general and on our results of operations, competitive position, or financial condition. We are unable to predict the effect of additional environmental laws and regulations that may be adopted in the future, including whether any such laws or regulations would materially increase our cost of doing business or adversely affect our operations in any area.

 

Under certain environmental laws and regulations, we could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether we were responsible for the release or contamination, or if current or prior operations were conducted consistent with accepted standards of practice. Such liabilities can be significant and, if imposed, could have a material adverse effect on our financial condition or results of operations.

 

Our insurance may not protect us against our business and operating risks.

 

We maintain insurance for some, but not all, of the potential risks and liabilities associated with our business. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance policies may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Although we will maintain insurance at levels we believe are appropriate for our business and consistent with industry practice, we will not be fully insured against all risks that cannot be sourced on economic terms. In addition, pollution and environmental risks generally are not fully insurable. Losses and liabilities from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition and results of operations.

 

If a significant accident or other event resulting in damage to our operations (including severe weather, terrorist acts, war, civil disturbances, pollution, or environmental damage) occurs and is not fully covered by insurance or a recoverable indemnity from a customer, it could adversely affect our financial condition and results of operations.

 

We depend on key personnel, the loss of any of whom could materially adversely affect our future operations.

 

Our success depends to a significant extent upon the efforts and abilities of our executive officers and lead management team. The loss of the services of one or more of these key employees could have a material adverse effect on us. Our business is also dependent upon our ability to attract and retain qualified personnel. Acquiring or retaining these personnel could prove more difficult to hire or cost substantially more than estimated. This could cause us to incur greater costs.

 

 

If we are unable to effectively manage the commodity price risk of our raw materials or finished goods, we may have unexpected losses.

 

We hedge our raw materials and/or finished products for our biofuels segment to some degree to manage the commodity price risk of such items. This requires the purchase or sale of commodity futures contracts and/or options on those contracts or similar financial instruments. We may be forced to make cash deposits available to counterparties as they mark-to-market these financial hedges. This funding requirement may limit the level of commodity price risk management that we are prudently able to complete. If we do not manage or are not capable of managing the commodity price risk of our raw materials and/or finished products for our biofuels segment, we may incur losses as a result of price fluctuations with respect to these raw materials and/or finished products.

 

In most cases, we are not capable of hedging raw material and/or finished products for our chemicals segment. Certain of our products are produced under manufacturing agreements with our customers, which provide us the contractual ability to pass along raw material price increases. However, we do not have this protection for all product lines within the chemicals segment. If we do not manage or are not capable of managing escalating raw material prices and/or passing these increases along to our customers via increased prices for our finished products, we may incur losses.

 

If we are unable to acquire or renew permits and approvals required for our operations, we may be forced to suspend or cease operations altogether.

 

The operation of our manufacturing plant requires numerous permits and approvals from governmental agencies. We may not be able to obtain or renew all necessary permits (or modifications thereto) and approvals and, as a result, our operations may be adversely affected. In addition, obtaining all necessary renewal permits (or modifications to existing permits) and approvals for future expansions may necessitate substantial expenditures and may create a significant risk of expensive delays or loss of value if a project is unable to function as planned due to changing requirements.

 

Our indebtedness may limit our ability to borrow additional funds or capitalize on acquisition or other business opportunities.

 

We hold a $75 million revolving credit facility with a commercial bank. This credit facility expires in February 2030. Although as of the date of this report we have no outstanding borrowings under the existing facility, if and when we do borrow, the restrictions governing this type of indebtedness (such as total debt to EBITDA limitations) could reduce our ability to incur additional indebtedness, engage in certain transactions, or capitalize on acquisition or other business opportunities. 

 

We expect to have capital expenditure requirements, and we may be unable to obtain needed financing on satisfactory terms due to inflation and increased interest rates.

 

We expect to make capital expenditures for the expansion of our biofuels and chemicals production capacity and complementary infrastructure. We intend to finance these capital expenditures primarily through cash flow from our operations, borrowings under our credit facility, and existing cash. However, if our capital requirements vary materially from those provided for in our current projections, we may require additional financing sooner than anticipated. A decrease in expected revenues, in addition to high rates of inflation and high interest rates currently being experienced and expected to persist in the near-term could make obtaining this financing economically unattractive or impossible. As a result, we may lack the capital necessary to complete the projected expansions or capitalize on other business opportunities.

 

 

We may be unable to successfully integrate future acquisitions with our operations or realize all of the anticipated benefits of such acquisitions.

 

Failure to successfully integrate future acquisitions, if any, in a timely manner may have a material adverse effect on our business, financial condition, results of operations, and cash flows. The difficulties of combining acquired operations include, among other things:

 

	●	operating a significantly larger combined organization;
	●	consolidating corporate technological and administrative functions;
	●	integrating internal controls and other corporate governance matters; and
	●	diverting management’s attention from other business concerns.

 

In addition, we may not realize all of the anticipated benefits from future acquisitions, such as increased earnings, cost savings, and revenue enhancements, for various reasons, including difficulties integrating operations and personnel, higher and unexpected acquisition and operating costs, unknown liabilities, and fluctuations in markets. If benefits from future acquisitions do not meet the expectations of financial or industry analysts, the market price of our shares of common stock may decline.

 

If we are unable to respond to changes in ASTM or customer standards, our ability to sell biodiesel may be harmed.

 

We currently produce biodiesel to conform to or exceed standards established by ASTM. ASTM standards for biodiesel and biodiesel blends may be modified in response to new observations from the industries involved with diesel fuel. New tests or more stringent standards may require us to make additional capital investments in, or modify, plant operations to meet these standards. In addition, some biodiesel customers have developed their own biodiesel standards that are stricter than the ASTM standards. If we are unable to meet new ASTM standards or our biodiesel customers’ standards cost effectively or at all, our production technology may become obsolete, and our ability to sell biodiesel may be harmed, negatively impacting our revenues and profitability.

 

If we fail to maintain effective internal control over financial reporting, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the value of our stock.

 

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. The process of maintaining our internal controls may be expensive, and time consuming, and may require significant attention from management. We previously identified a material weakness in our internal control over financial reporting related to review controls of our cash flow statement. We remediated this material weakness and have concluded as of December 31, 2024, that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  However, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm discover a material weakness, the disclosure of that fact could harm the value of our stock and our business.

 

The risk of loss of the Company’s intellectual property, trade secrets or other sensitive business information or disruption of operations could negatively impact the Company’s financial results. 

 

The Company has information and information processing assets, including intellectual property, trade secrets, and other sensitive, business critical information as well as on-premises and cloud-based business applications critical to conducting business. In addition, our chemical manufacturing facilities are highly automated using modern computer systems.  Cyber-incidents affecting the Company, its supply chain or customers could compromise confidential, business critical information, cause a disruption in the Company’s operations, harm the Company's reputation, or endanger the environment if the Company, its suppliers or customers do not effectively prevent, detect and recover from these or other security breaches. The Company, like many companies today, is the target of industrial espionage, including cyber-attacks. The Company has determined that these cyber-attacks have resulted, and could result in the future, in unauthorized parties gaining access to certain confidential business information.  When unauthorized access is discovered, the Company reports such situations to governmental authorities for investigation, as appropriate, and takes measures to mitigate any potential impact.

 

 

Although management does not believe that the Company has experienced any material losses to date related to these cyber security incidents, there can be no assurance that such losses will not be suffered in the future. The Company seeks to actively manage the risks within its control that could lead to business disruptions and cyber security incidents through a comprehensive cyber security program that is continuously reviewed (through internal and third-party auditing), maintained, and upgraded. As these threats continue to evolve, particularly around cybersecurity, the Company may be required to expend significant resources to enhance its control environment, processes, practices, and other protective measures. Despite these efforts, such events could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.  

 

Confidentiality agreements with customers, employees, and others may not adequately prevent disclosures of confidential information, trade secrets, and other proprietary information.

 

We rely in part on trade secret protection to protect our confidential and proprietary information and processes. However, trade secrets are difficult to protect. We have taken measures to protect our trade secrets and proprietary information, but these measures may not be effective. For example, we require new custom manufacturing chemical customers to execute confidentiality agreements before we begin manufacturing custom chemicals for them. We also require employees and consultants to execute confidentiality agreements upon the commencement of their employment or consulting arrangement with us. These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. These agreements also generally provide that know-how and inventions conceived by the individual in the course of rendering services to us are our exclusive property. Nevertheless, these agreements may be breached, or may not be enforceable, and our proprietary information may be disclosed. Further, despite the existence of these agreements, third parties may independently develop substantially equivalent proprietary information and techniques. Accordingly, it may be difficult for us to protect our trade secrets. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

 

Moreover, we cannot assure that our technology does not infringe upon any valid claims of patents that other parties own. In the future, if we were found to be infringing on a patent owned by a third party, we might have to seek a license from such third party to use the patented technology. We cannot assure that, if required, we would be able to obtain such a license on terms acceptable to us, if at all. If a third party brought a legal action against us or our licensors, we could incur substantial costs in defending ourselves, and we cannot assure that such an action would be resolved in our favor. If such a dispute were to be resolved against us, we could be subject to significant damages.

 

We depend on our ability to maintain relationships with industry participants, including our strategic partners.

 

Our ability to maintain commercial arrangements with chemical and biodiesel customers, raw material and feedstock suppliers, and transportation and logistics services providers may depend on maintaining close working relationships with industry participants. There can be no assurance that we will be able to maintain or establish additional necessary strategic relationships, in which case the opportunity to grow our business may be negatively affected.

 

 

There is disruption in supply in the renewable fuel market currently without clarity on the CFPT credit.  However, under normal conditions there is excess renewable fuel production capacity and low utilization in the industry and if non-operational and underused facilities commence or increase operations, our results of operations may be negatively affected.

 

Many biodiesel plants in the United States are currently shutdown without clarity on the CFPT credit.  Most biodiesel plants, when running, do not operate at full capacity. Further, a number of renewable diesel plants are under construction in the United States as of December 2024, and if completed, would add additional renewable fuel production capacity. The annual production capacity of existing plants and plants under construction far exceeds both historic consumption of renewable fuels in the United States and required consumption under RFS2. If this excess production capacity was used, it would increase competition for our feedstocks, increase the volume of renewable fuels on the market, and may reduce our biodiesel gross margins, harming our revenues and profitability.

 

Several biofuel companies throughout the United States have filed for bankruptcy over the last several years due to industry and economic conditions.

 

Unfavorable worldwide economic conditions, lack of financing, and volatile biofuel prices and feedstock costs have likely contributed to the necessity of bankruptcy filings by biofuel producers. Our business may be negatively impacted by the industry conditions that influenced the bankruptcy proceedings of other biofuel producers, or we may encounter new competition from buyers of distressed biodiesel properties who enter the industry at a lower cost than original plant investors.

 

We are exposed to government credit risk and fluctuations in market values of our cash and cash equivalent portfolio.

 

We have deposits with certain U.S. banks in excess of the maximum amounts insured by the U.S. Federal Deposit Insurance Corporation (the “FDIC”) and holdings in certain United States Government Select Funds.  As of December 31, 2024, we maintained with such banks cash balances of approximately $18.8 million in excess of the amounts insured by the FDIC.

 

 

Risks Associated With Owning Our Shares

 

We may issue substantial amounts of additional shares without stockholder approval.

 

Our certificate of incorporation authorizes the issuance of 75,000,000 shares of common stock and 5,000,000 shares of preferred stock. As of the date of this report, 43,803,243 shares of our common stock currently are outstanding. The issuance of any additional shares of our common stock or preferred stock would dilute the percentage ownership of our company held by existing stockholders.

 

The market price of our common stock is highly volatile and may increase or decrease dramatically at any time.

 

The market price of our common stock is highly volatile, and our shares are thinly traded. Our stock price may change dramatically as the result of: (i) announcements of new products or innovations by us or our competitors; (ii) uncertainty regarding the viability of any of our product initiatives; (iii) significant customer contracts; (iv) significant litigation; (v) uncertainty with respect to changing laws and regulations that impact our business and our ability to take advantage of tax credits such as the BTC and CFPC; or (vi) unscheduled and extended downtime at our facility; or (vii) events that would be expected to affect our business, financial condition, results of operations, and future prospects.

 

The market price for our common stock may also be affected by various factors not directly related to our business or future prospects, including the following:

 

	●	a reaction by investors to trends in our stock rather than the fundamentals of our business;
	●	a single acquisition or disposition, or several related acquisitions or dispositions, of a large number of our shares, including by short sellers covering their position;
	●	the interest of the market in our business sector, without regard to our financial condition, results of operations, or business prospects;
	●	positive or negative statements or projections about us or our industry by analysts and other persons;
	●	the adoption of governmental regulations or government grant programs and similar developments in the United States or abroad that may enhance or detract from our ability to offer our products and services or affect our cost structure; and
	●	economic and other external market factors, such as a general decline in market price due to poor economic conditions, investor distrust, or a financial crisis.

 

If securities or industry analysts issue an adverse or misleading opinion regarding our stock or do not publish research or reports about our business, our stock price and trading volume could decline.

 

The trading market for shares of our common stock will rely in part on the research and reports that equity research analysts publish about us and our business. The price of our common stock could decline if one or more equity research analysts downgrade our common stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

 

If Mr. P.A. Novelly, II or his designees exercises his registration rights, such exercise may have an adverse effect on the market price of our shares of common stock.

 

St. Albans Global Management, LLC (“St. Albans”), an entity affiliated with Mr. P. A. Novelly II, a member of the board, is entitled to demand that the Company register under the Securities Act of 1933, as amended (the “Securities Act”), the resale of all shares of the Company’s common stock beneficially owned by it. If St. Albans exercises its registration rights with respect to all 17,085,100 shares of the Company’s common stock currently owned by it, there will be an additional 6,637,600 registered shares of common stock available for trading in the public market, which may have an adverse effect on the market price of our common stock.

 

We may be suspended or delisted from the New York Stock Exchange if we do not satisfy their continued listing requirements.

 

Our common stock trades on the NYSE under the symbol “FF”. Securities admitted to the NYSE may be suspended from dealing or delisted at any time the listed company fails to satisfy certain continued listing criteria. These criteria could be triggered if, among other things, the number of our publicly-held shares fall below 600,000, the average closing price of our common stock is less than $1.00 per share over a consecutive 30 trading-day period, or we fail to file certain reports with the SEC. As a matter of practice, the NYSE generally gives a listed company notice if any of these criteria are triggered, and generally provides the listed company with certain cure periods. If we suffer such an event, but do not cure it, or if such event cannot be cured, trading of our common stock on the NYSE may be suspended from dealing or our stock may be delisted. Any such suspension or delisting may have an adverse effect on the market price of our common stock.

 

 

Item 1B.

Unresolved Staff Comments.

 

None.

 

Item 1C.

Cybersecurity.

 

Risk Management and Strategy

 

The Company understands the importance of managing risks from cybersecurity incidents and utilizes a multilayered strategy guided by the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework for assessing, identifying, detecting and responding to threats and other potential incidents. Key aspects of our strategy for managing risks of cybersecurity threats include:

 

●

Timely security patching of endpoints;

●

Network and endpoint-based monitoring with autonomous protection capabilities;

●

Backups which are regularly tested for recovery with key backups hardened against malicious access;

●

Third-party security services for audit, benchmarking, and improvement of our cyber security program;

●

Ongoing monitoring and evaluation of our cybersecurity posture and performance through regular vulnerability scans, simulated phishing tests, and penetration tests;

●

Oversight of third-party service providers by conducting vendor due diligence upon onboarding and ongoing monitoring;

●

An incident response plan designed to coordinate the activities that we and our third-party security service providers take to prepare to respond and recover from cybersecurity incidents, which include processes to triage, assess severity, investigate, escalate, contain, and remediate incidents, as well as to comply with applicable legal obligations and mitigate any reputational damage;

●

Structured management of change process to ensure material changes to our systems or operations have an updated assessment of their potential impact associated with internal and external threats to the security, confidentiality, integrity, and availability of our data and systems, along with other material risks to our operations;

●

Ongoing, annual employee security awareness training; and

●

Cybersecurity insurance coverage to help mitigate the risk of loss from cybersecurity incidents.

 

To date, the Company does not believe that cybersecurity incidents have materially affected the Company, its business strategy, results of operations, or financial condition. The Company cannot provide assurance that it will not be materially affected by any future material cybersecurity incidents. For more information about the cybersecurity risks the Company faces, see Item 1A, Risk Factors, above.

 

Governance

 

The Company’s Information Technology (“IT”) Director is responsible for developing and implementing our cybersecurity program and has over 20 years of cybersecurity experience in various roles involving information security, developing cybersecurity strategies, and implementing cybersecurity programs. Our program includes that all employees complete annual cybersecurity awareness training. The IT Director is responsible for reporting audit findings and risk information to the Company’s Chief Financial Officer (“CFO”).

 

Our board of directors is responsible for overseeing our enterprise risk management activities in general, and each of the committees of our board of directors assists the board of directors in the role of risk oversight. The Audit Committee of the board of directors oversees our cybersecurity risk and receives reports from time to time from our CFO on cybersecurity risk management. Promptly after becoming aware of a material cybersecurity incident affecting our IT systems or data, the IT Director would work with management to formulate a mitigation plan and review compliance with such plan, as well as to ensure compliance with any external regulatory or disclosure requirements, including any disclosures of material cybersecurity incidents. 

 

 

 

Item 2.

Properties.

 

Our principal asset is a manufacturing plant situated on approximately 2,200 acres of land six miles southeast of Batesville in north central Arkansas fronting the White River. Approximately 500 acres of the site are occupied with batch and continuous manufacturing facilities, laboratories, and infrastructure, including on-site liquid waste treatment. Our subsidiary, FutureFuel Chemical Company, is the fee owner of this plant and the land upon which it is situated (which plant and land are not subject to any major encumbrances) and manufactures both biofuels and chemicals at the plant. Use of these facilities may vary with product mix and economic, seasonal, and other business conditions, but the plant is substantially used with the exception of facilities designated for capacity expansion of biodiesel. The plant, including approved expansions, has sufficient capacity for existing needs and expected near-term growth. We believe that the plant is well maintained, in good operating condition, and suitable and adequate for its uses.

 

Item 3.

Legal Proceedings.

 

We are not a party to, nor is any of our property subject to, any material pending legal proceedings, other than ordinary routine litigation incidental to our business. From time to time, we may be parties to, or targets of, lawsuits, claims, investigations, and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which we expect to be handled and defended in the ordinary course of business. While we are unable to predict the outcome of any matters currently pending, we do not believe that the ultimate resolution of any such pending matters will have a material adverse effect on our overall financial condition, results of operations, or cash flows.

 

Item 4.

Mine Safety Disclosures.

 

Not applicable.

 

 

PART II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Market Information

 

The shares of our common stock are traded on the NYSE under the trading symbol “FF”. As of March 31, 2025, there are 43,803,243 shares of our common stock outstanding.

 

Holders

 

The shares of our common stock were held by approximately 308 holders of record on March 31, 2025, as recorded on our transfer agents’ register. We believe that the number of beneficial owners of our common stock is substantially greater than the number of holders of record.

 

Dividends

 

The payment of cash dividends by us is dependent upon our existing cash and cash equivalents, future earnings, capital requirements, and overall financial condition. We declared and paid regular cash dividends for 2024 and 2023, and we have also declared dividends for 2025. While we anticipate similar regular cash dividends after 2025, no assurances can be given that we will declare or pay dividends for years after 2025.  Additionally, we paid a special cash dividend of $2.50 per share on our common stock on April 9, 2024, to the holders of record of all the issued and outstanding shares of common stock as of the close of business on March 26, 2024.

 

Securities Authorized for Issuance Under Equity Compensation Plan

 

Our board of directors adopted an omnibus incentive plan, which was approved by our shareholders at our 2017 annual shareholder meeting (the “Incentive Plan”). We do not maintain any other equity compensation plan or individual equity compensation arrangement. Under the Incentive Plan, awards are limited to 10% of the issued and outstanding shares of our common stock in the aggregate. The shares to be issued under the Incentive Plan were registered with the SEC on a Form S-8 filed on November 9, 2017. Through December 31, 2024, we have issued or awarded 84,000 options to purchase shares of our common stock, 750,000 restricted stock units (“RSUs”), and 40,000 shares of stock, in each case under the Incentive Plan. 

 

 

Following is additional information regarding the incentive plans as of December 31, 2024.

 

Number of securities

Weighted-average

Number of securities

to be issued upon

exercise price of

remaining available for future

exercise of

outstanding options,

issuance under equity

outstanding units, options,

warrants and rights

compensation plans (excluding

warrants and rights

(excluding RSUs

securities reflected in column (a))

Plan Category

(a)

reflected in column (a))

Equity compensation plans approved by security holders

794,000

$

7.33

3,526,324

 

Performance Graph

 

The graph below compares the cumulative 5-Year total return to holders of the Company's common stock relative to the cumulative total returns of the Russell 2000 index and 24 companies, listed in footnote 1 below. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in each index and in each of the peer groups on December 31, 2019 and its relative performance is tracked through December 31,2024.

(1.)  The 24 companies included in the company's peer group are:  Archer-Daniels-Midland Co, Arkema S.A., Albemarle Corp, Alto Ingredients Inc, Aemetis Inc, Bunge Global S.A., Cabot Corp, Chemours Co, Celanese Corp, Darling Ingredients Inc, Dow Inc, Eastman Chemical Co, Gevo Inc, Green Plains Inc, Hudson Technologies Inc, Huntsman Corp, Kronos Worldwide Inc, Lanxess A.G., Lyondellbasell Industries N.V., Olin Corp, Rex American Resources Corp, Stepan Co, Solvay S.A., and Westlake Corp.

 

 

 

Unregistered Sales of Equity Securities

 

We did not sell any of our securities within the period covered by this report in transactions that were not registered under the Securities Act.

 

Purchase of Securities by Us

 

During 2024, neither we, nor anyone acting on our behalf, purchased any shares of our common stock, which is the only class of our equity securities that is registered pursuant to Section 12 of the Exchange Act.  On March 12, 2024, the Company’s board of directors authorized the repurchase of up to $25.0 million of Company common stock through a stock repurchase program expiring March 12, 2026. The program could be suspended or discontinued at any time, based on market, economic, or business conditions. The timing and amount of repurchase transactions will be determined by management based on its evaluation of market conditions, share price, and other factors.

---

 

 

 

 

 

Item 6.

[Reserved].

 

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with our consolidated financial statements, including the Notes thereto, set forth herein.

 

This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements. See “Forward-Looking Information” below for additional discussion regarding risks associated with forward-looking statements.

 

Unless otherwise stated, all dollar amounts are in thousands.

 

Overview 

 

In General

 

Our company is managed and reported in two reporting segments: chemicals segment and biofuels segment. Within the chemicals segment are two product groups: custom chemicals and performance chemicals. The custom chemicals group is comprised of chemicals manufactured for a single customer, whereas the performance chemicals product group is comprised of chemicals manufactured for multiple customers. The biofuels segment is comprised of one product group. Management believes that the diversity of each segment strengthens the Company by better using resources and is committed to growing each segment.

 

Major products in the custom chemicals group include: (i) consumer products (cosmetics and personal care products, specialty polymers, and specialty products used in the fuels industry); (ii) chlorinated polyolefin adhesion promoters and antioxidant precursors for a customer; and (iii) a biocide intermediate.

 

Pricing for the other custom manufacturing products is negotiated directly with the customer. Some, but not all, of these products have pricing mechanisms and/or protections against raw material, energy, or conversion cost changes.

 

Performance chemicals consist of specialty chemicals that are manufactured to general market-determined specifications and are sold to a broad customer base. A major product line in the performance chemicals group is SSIPA/LiSIPA, a polymer modifier that aids the properties of nylon and polyesters. This group of products also includes other sulfonated monomers and hydrotropes, specialty solvents, polymer additives, and chemical intermediates, such as glycerin.

 

SSIPA/LiSIPA revenues are generated from a diverse customer base of nylon and polyester fiber manufacturers and other customers that produce condensation polymers. Contract sales are, in certain instances, indexed to key raw materials for inflation; otherwise, there is no pricing mechanism or specific protection against raw material or conversion cost changes.

 

Pricing for the other performance chemical products is established based upon competitive market conditions. Some, but not all, of these products have pricing mechanisms and/or specific protections against raw material or conversion cost changes.

 

 

For our biofuels segment, we procure all of our own feedstock and only sell biodiesel for our own account. We have the capability to process multiple types of feedstocks including vegetable oils, animal fats, and separated food waste oils. We can receive feedstock by rail or truck, and we have substantial storage capacity to acquire feedstock at advantaged prices when market conditions permit. Our annual biodiesel production capacity is 59 million gallons per year.

 

There currently is uncertainty as to our production of biodiesel in the future. This uncertainty results from changes in feedstock prices relative to biodiesel prices and the lack of permanency of government mandates including the BTC, the small producer’s tax credit, the CFPC (effective January 1, 2025), the renewable fuels program, and the California low carbon fuel program credits. See “Risk Factors” above as well as Note 3 to our consolidated financial statements. This uncertainty also results from government mandates that strengthen markets that we compete against including renewable diesel and electric vehicles.

 

While biodiesel is the principal component of the biofuels segment, we also generate revenue from the sale of petrodiesel both in blends with our biodiesel and, from time to time, with no biodiesel added. Petrodiesel and biodiesel blends are available to customers at our leased storage facility in North Little Rock, Arkansas and at our Batesville plant. In addition, we deliver blended product to a small group of customers within our region. We also sell D4 and D6 RINs from time to time. At December 31, 2024 we held 3.1 million RINs with a market value of $1,831 and at December 31, 2023, we held 4.3 million RINs in inventory with a market value of $6,567.

 

Most of our sales are FOB the Batesville plant, although some transfer points are in other states or foreign ports. Many of our chemicals are used to manufacture products that are shipped, further processed, and/or consumed throughout the world, and we are not always aware of the exact quantities of our products that are moved into foreign markets by our customers. We do track the addresses of our customers for invoicing purposes and use this address to determine whether a particular sale is within or outside the United States. Our revenue for the last three fiscal years attributable to the United States and foreign countries (based upon the billing addresses of our customers) is set forth in the following table.

 

						All Foreign
Period		United States				Countries				Total
Year ended December 31, 2024		$	242,685			$	654			$	243,339
Year ended December 31, 2023		$	367,368			$	882			$	368,250
Year ended December 31, 2022		$	394,671			$	1,343			$	396,014

 

The majority of our expenses are cost of goods sold. Cost of goods sold includes raw material costs as well as both fixed and variable conversion costs, such conversion costs being those expenses that are directly or indirectly related to the operation of our plant. Significant conversion costs include labor, benefits, energy, supplies, depreciation, and maintenance and repair. In addition to raw material and conversion costs, cost of goods sold includes environmental reserves and costs related to idle capacity. Finally, cost of goods sold includes hedging gains and losses recognized by us related to our biofuels segment. Cost of goods sold is allocated to the chemicals and biofuels business segments based on equipment and resource usage for most conversion costs and based on revenue for most other costs.

 

Operating costs include selling, general and administrative, and research and development expenses.

 

The discussion of results of operations that follows is based on revenue and expenses in total and for individual product lines and does not differentiate related party transactions.

 

 

Fiscal Year Ended December 31, 2024 Compared to Fiscal Year Ended December 31, 2023

 

Set forth below is a summary of certain financial information for the periods indicated.

 

(Dollars in thousands other than per share amounts)

 

		Year				Year
		Ended				Ended
		December 31,				December 31,				Dollar				%
		2024				2023				Change				Change
Revenue		$	243,339			$	368,250			$	(124,911	)			(34	)%
Income from operations		$	6,372			$	27,368			$	(20,996	)			(77	)%
Net income		$	15,503			$	37,382			$	(21,879	)			(59	)%
Earnings per common share:
Basic		$	0.35			$	0.85			$	(0.50	)			(59	)%
Diluted		$	0.35			$	0.85			$	(0.50	)			(59	)%
Adjusted EBITDA		$	17,594			$	34,983			$	(17,389	)			(50	)%

 

We use adjusted EBITDA as a key operating metric to measure both performance and liquidity. Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is not a substitute for operating income, net income, or cash flow from operating activities (each as determined in accordance with GAAP) as a measure of performance or liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP. We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization expenses, excluding, when applicable, non-cash stock-based compensation expenses, public offering expenses, acquisition-related transaction costs, purchase accounting adjustments, losses on disposal of property and equipment, unrealized gains or losses on derivative instruments, and other non-operating income or expenses. Information relating to adjusted EBITDA is provided so that investors have the same data that we employ in assessing the overall operation and liquidity of our business. Our calculation of adjusted EBITDA may be different from similarly titled measures used by other companies; therefore, the results of our calculation are not necessarily comparable to the results of other companies.

 

Adjusted EBITDA allows our chief operating decision maker to assess the performance and liquidity of our business on a consolidated basis to assess the ability of our operating segments to produce operating cash flow to fund working capital needs, to fund capital expenditures and to pay dividends. In particular, our management believes that adjusted EBITDA permits a comparative assessment of our operating performance and liquidity, relative to a performance and liquidity based on GAAP results, while isolating the effects of depreciation and amortization, which may vary among our operating segments without any correlation to their underlying operating performance, and of non-cash stock-based compensation expense, which is a non-cash expense that varies widely among similar companies, and unrealized gains and losses on derivative instruments, which can cause net income to appear volatile from period to period relative to the sale of the underlying physical product.

 

We enter into commodity derivative instruments to protect our operations from downward movements in commodity prices and to provide greater certainty of cash flows associated with sales of our commodities. We enter into hedges, and we use mark-to-market accounting to account for these instruments. Thus, our results in any given period can be impacted, and sometimes significantly, by changes in market prices relative to our contract price along with the timing of the valuation change in the derivative instruments relative to the sale of biofuel. We include the unrealized gains and losses on the derivative instruments as an adjustment as we believe it provides a relevant indicator of the underlying performance of our business in a given period.

 

 

The following table reconciles adjusted EBITDA with net income, the most directly comparable GAAP financial measure. 

 

(Dollars in thousands)

 

		Years ended December 31:
		2024				2023
Net income		$	15,503			$	37,382
Depreciation			9,208				10,348
Non-cash stock-based compensation			359				-
Interest and dividend income			(7,656	)			(9,577	)
Non-cash interest expense and amortization of deferred financing costs			138				135
Loss on disposal of property and equipment			30				29
Unrealized loss (gain) on derivative instruments			1,971				(1,878	)
Gain on marketable securities			-				(575	)
Other income			(2,751	)			(882	)
Income tax provision			792				1
Adjusted EBITDA		$	17,594			$	34,983

 

The following table reconciles adjusted EBITDA with cash flows from operations, the most directly comparable GAAP liquidity financial measure:

 

(Dollars in thousands)

 

		Years ended December 31:
		2024				2023
Net cash provided by operating activities		$	24,802			$	21,299
Provision for deferred income taxes			(773	)			-
Interest and dividend income			(7,656	)			(9,577	)
Income tax provision			792				1
Changes in operating assets and liabilities, net			3,180				24,143
Other non-operating income			(2,751	)			(883	)
Adjusted EBITDA		$	17,594			$	34,983

 

 

Results of Operations

 

Consolidated

 

		2024 Compared to 2023:																2023 Compared to 2022:
										Change																Change
(Dollars in thousands)		2024				2023				$				%				2023				2022				$				%
Sales		$	243,339			$	368,250			$	(124,911	)			(34	%)		$	368,250			$	396,014			$	(27,764	)			(7	%)
Volume/product mix effect										$	(59,546	)			(16	%)										$	45,350				11	%
Price effect										$	(65,365	)			(18	%)										$	(73,114	)			(18	%)
Gross profit		$	19,644			$	40,979			$	(21,335	)			(52	%)		$	40,979			$	28,993			$	11,986				41	%
Operating expense		$	13,272			$	13,611			$	(339	)			(2	%)		$	13,611			$	11,447			$	2,164				19	%
Other (income) expense		$	(9,923	)		$	(10,015	)		$	92				1	%		$	(10,015	)		$	3,808			$	(13,823	)			NA
Pretax income		$	16,295			$	37,383			$	(21,088	)			(56	%)		$	37,383			$	13,738			$	23,645				172	%
Income tax provision (benefit)		$	792			$	1			$	791				79100	%		$	1			$	(1,473	)		$	1,474				NA
Net income		$	15,503			$	37,382			$	(21,879	)			(59	%)		$	37,382			$	15,211			$	22,171				146	%

 

2024 Compared to 2023

 

Consolidated sales revenue decreased 34% or $124,911 in 2024 compared to 2023 from lower sales volumes ($60,574) and lower prices ($65,011) in the biofuel segment. Partially offsetting this decline was an increase in chemical segment volumes and an increase of $5,492 in amortization of deferred revenue from the expiration of a long-term contract which is now a short-term contract.  

 

Gross profit decreased 52% or $21,335 in 2024 compared to 2023. This comparative decrease was ($14,031) in the biofuel segment and ($7,304) in the chemical segment.  This reduction was inclusive of (i) reduced sales volumes of biodiesel and glycerin from extreme weather conditions in the first three months of the year, ii) downtime of both biodiesel and chemical production equipment during the last half of 2024 from delays by equipment suppliers, and iii) in the biofuel segment, the change in the unrealized activity of derivative instruments in comparison to the prior year with a loss of $1,971 in the current year and a gain of $1,878 in the prior year.  Also contributing to this reduced margin was the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting which increased gross profit $3,028 in 2024 as compared to $10,334 in 2023.  Partially offsetting this decrease was the benefit of the amortization of deferred revenue in the chemical segment of $5,492.

 

Operating expenses decreased $339 in 2024 compared to 2023. This decrease was primarily the result of decreased research and development and legal expenses.

 

Other income decreased $92 in 2024 as compared to 2023. This net decrease was due to (i) the reduction of interest income of $1,921, (ii) the prior year gain of $575 on the sale of marketable securities with no such gain in the current year, and (iii) separations payments made in the current year.  These reductions were mostly offset by the receipt of a $2,750 settlement in 2024 (see Note 22 of our consolidated financial statements for further details).

 

Income tax provision (benefit) 

 

The income tax provision was $792 in 2024 or an effective tax rate of 4.9% as compared to a provision in 2023 of $1 or an effective tax rate of 0.0%. 

 

The Company’s effective tax rates for the years 2024 and 2023 reflect the positive effect of certain tax credits and incentives, the most significant of which are the BTC and the Small Agri-biodiesel Producer Tax Credit. Based on technical guidance from the Internal Revenue Service, the Company excludes the portion of the BTC not used to satisfy excise tax liabilities from income. See Note 3 to our consolidated financial statements for a discussion of the pretax earnings impact of the BTC.

 

The Company’s effective tax rate for 2024 and 2023 includes an expense of $8,169 or 50.1% and $6,821 or 18.2%, respectively, from the recording of a valuation allowance against its deferred tax assets. The Company evaluates its deferred tax assets and records a valuation allowance to reduce these assets to the amount that is more likely than not to be realized. As of December 31, 2024, based on all available and allowable evidence, the Company determined that its deferred tax assets of $41,076 are more likely than not realizable only to the extent of $18,691, resulting in a net deferred tax liability of $773.  As of December 31, 2023, based on all available and allowable evidence, the Company determined that its deferred tax assets were more likely than not realizable only to the extent of its deferred tax liabilities and recorded the resulting valuation allowance.

 

The Company’s unrecognized tax benefit totaled $0 at December 31, 2024 and 2023.

 

 

2023 Compared to 2022

 

Consolidated sales revenue decreased 7.0% or $27,764 in 2023 compared to 2022 primarily from lower average sales prices in the biofuel segment ($71,198) and, to a lesser extent, in the chemical segment ($1,916). This decrease was partially offset by higher biodiesel sales volumes in the biofuel segment ($44,994).

 

Gross profit increased 41.3% or $11,986 in 2023 compared to 2022. This comparative increase was primarily attributable to improved margins in both the biofuel and chemical segments inclusive of (i) the change in the realized activity of derivative instruments in comparison to the prior year with a gain of $694 as compared to a loss of $24,703 in the prior year; the prior year loss included an unfavorable impact of volatility in the NYMEX heating oil futures market of $10,500 and (ii) the change in the unrealized activity of derivative instruments in comparison to the prior year with a gain of $1,878 in the current year and a gain of $343 in the prior year.  Also contributing to this improved margin was the benefit from the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting which increased gross profit $10,334 in 2023 and decreased gross profit $3,944 in 2022 (net of a liquidation of $1,850 from exiting the pipeline business).

 

Operating expenses increased $2,164 in 2023 compared to 2022. This increase was primarily the result of increased compensation expense.

 

Other income was $10,015 in 2023 as compared to other expenses of $3,808.  During 2023, we exited our position in marketable securities and transferred the funds to interest earning deposits.  As a result, interest and dividend income increased $4,707 in 2023 as compared to 2022. The net realized gain on the sale of marketable securities was $575 in 2023 as compared to an unrealized loss of $8,546 in 2022 (see Note 7 of our consolidated financial statements for further details).

 

Income tax provision (benefit) 

 

The income tax provision was $1 in 2023 or an effective tax rate of 0.0% as compared to a benefit in 2022 of ($1,473) or an effective tax rate of (10.7%). 

 

The Company’s effective tax rates for the years 2023 and 2022 reflect the positive effect of certain tax credits and incentives, the most significant of which are the BTC and the Small Agri-biodiesel Producer Tax Credit. Based on technical guidance from the Internal Revenue Service, the Company excludes the portion of the BTC not used to satisfy excise tax liabilities from income. See Note 3 to our consolidated financial statements for a discussion of the pretax earnings impact of the BTC.

 

The Company’s effective tax rate for 2023 and 2022 includes an expense of $6,821 or 18.2% and $7,392 or 53.8%, respectively, from the recording of a valuation allowance against its deferred tax assets. The Company evaluates its deferred tax assets and records a valuation allowance to reduce these assets to the amount that is more likely than not to be realized. As of December 31, 2023, based on all available and allowable evidence, the Company determined that its deferred tax assets are more likely than not realizable only to the extent of its deferred tax liabilities and recorded the resulting valuation allowance.

 

The Company’s unrecognized tax benefit totaled $0 at December 31, 2023 and 2022.

 

 

Chemicals Segment

 

		2024 Compared to 2023:																2023 Compared to 2022:
										Change																Change
(Dollars in thousands)		2024				2023				$				%				2023				2022				$				%
Sales		$	80,007			$	79,333			$	674				0.8	%		$	79,333			$	80,893			$	(1,560	)			(1.9	%)
Volume/product mix effect											1,028				1.3	%											356				0.4	%
Price effect											(354	)			(0.4	%)											(1,916	)			(2.4	%)
Gross profit		$	22,632			$	29,936			$	(7,304	)			(24.4	%)		$	29,936			$	25,645			$	4,291				16.7	%

 

2024 Compared to 2023

 

Chemical sales revenue increased 1% or $674 in 2024 compared with 2023. Sales revenue for our custom chemical product line (chemicals produced for specific customers) totaled $69,473, an increase of 8% or $5,187 from 2023. Included in this net increase were higher sales volumes of chemicals sold into the automotive coatings market, sales of one new product into the coatings market, and an increase of $5,492 from the amortization of deferred revenue of a long-term contract which expired. We are working with this customer on a new long-term agreement while we continue to do business. Mostly offsetting these increases were reduced sales prices and volumes of chemicals sold in the agricultural and energy markets. Performance chemicals revenue (comprised of multi-customer products which are sold based on specification) was $10,534 in 2024, a decrease of 30% or $4,513 from 2023. This decrease resulted from lower sales volumes and prices of glycerin products.  Sales volumes were negatively impacted by the downtime of production equipment during the last half of 2024 from delays by equipment suppliers.

 

Gross profit for the chemicals segment decreased 24% or $7,304 in 2024 compared with 2023. This decrease was primarily from: (i) reduced chemical sales prices in the agricultural and energy markets, and (ii) reduced sales volumes as described above.  Partially offsetting these decreases were: (i) the benefit of the amortization of deferred revenue in the chemical segment of $5,492, and (ii) the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. This adjustment increased gross profit $658 in 2024 as compared to $1,920 in 2023.

 

2023 Compared to 2022

 

Chemical sales revenue decreased 1.9% or $1,560 in 2023 compared with 2022. Sales revenue for our custom chemical product line (chemicals produced for specific customers) totaled $64,286, an increase of 9.4% or $5,549 from 2022. Included in this net increase was higher sales volumes of chemical intermediates in the oil and gas industry and contractual price increases partially offset by reduced amortization of deferred revenue of $3,081 (see Note 4 of our consolidated financial statements for further details). Performance chemicals revenue (comprised of multi-customer products which are sold based on specification) was $15,047 in 2023, a decrease of 32.1% or $7,109 from 2022. This decrease resulted from lower selling prices of our glycerin products partially offset by higher volumes.

 

Gross profit for the chemicals segment increased 16.7% or $4,291 in 2023 compared with 2022. This improvement was primarily from the change in adjustments in the carrying value of our inventory as determined utilizing the last-in, first-out (“LIFO”) method of inventory accounting which increased gross profit $1,920 in 2023 and decreased gross profit $1,093 in 2022. Also contributing to this increase was stronger margins and higher sales volumes in products sold into the oil and gas industry.  Partially reducing these improvements was the change in the timing of deferred revenue amortization of $3,081 and lower margins from glycerin products on reduced selling price from increased imports.

 

 

Biofuel Segment

 

		2024 Compared to 2023:																2023 Compared to 2022:
										Change																Change
(Dollars in thousands)		2024				2023				$				%				2023				2022				$				%
Sales		$	163,332			$	288,917			$	(125,585	)			(43.5	%)		$	288,917			$	315,121			$	(26,204	)			(8.3	%)
Volume/product mix effect											(60,574	)			(21.0	%)											44,994				14.3	%
Price effect											(65,011	)			(22.5	%)											(71,198	)			(22.6	%)
Gross (loss) profit		$	(2,988	)		$	11,043			$	(14,031	)			NA			$	11,043			$	3,348			$	7,695				229.8	%

 

2024 Compared to 2023

 

Biofuels sales revenue decreased 43% in 2024 compared to 2023, primarily from a 21% reduction in sales volume and a 23% reduction in the average price of fuel sold inclusive of D4 RIN prices. Production and sales volumes in 2024 were impacted by the extreme winter weather experienced in the first quarter as well as production issues, stemming from delays by equipment suppliers that created an extended service utility downtime, which impacted the third and fourth quarter.

 

A portion of our biodiesel sold was to two major refiners in the United States in 2024 and 2023. No assurances can be given that we will continue to sell to such major refiners, or, if we do sell, the volume we will sell or the profit margin we will realize. We do not believe that the loss of this customer would have a material adverse effect on our biofuels segment or on us as a whole in that: (i) unlike our custom manufacturing products, biodiesel is a commodity with a large potential customer base; (ii) we believe that we could readily sell our biodiesel to other customers as potential demand from other customers for biodiesel exceeds our production capacity; (iii) our sales to this customer are not under fixed terms and the customer has no fixed obligation to purchase any minimum quantities except as stipulated by short term purchase orders; and (iv) the prices we receive from this customer are based upon then-market rates, as would be the case with sales of this commodity to other customers.

 

Biofuels gross profit decreased $14,031 in 2024 compared to 2023. This decrease primarily resulted from reduced sales volumes, primarily stemming from:  (i) extreme winter weather in the first quarter of 2024, (ii) delays by equipment suppliers that created an extended service utility downtime, which prevented us from building the biodiesel inventories we would typically have available to sell in the last half of 2024, and (iii) the change in the unrealized activity of derivative instruments in comparison to the prior year with a loss of $1,971 in the current year and a gain of $1,878 in the prior year. Also reducing gross profit was the change in the adjustment in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting. This adjustment increased gross profit $2,370 in 2024 as compared to an increase in gross profit of $8,414 in 2023.

 

2023 Compared to 2022

 

Biofuels sales revenue decreased 8.3% or $26,204 in 2023 compared to 2022, primarily from decreased selling prices of biodiesel and biodiesel blends, inclusive of a decline in separated RIN sale prices. RIN prices declined during 2023 as production levels exceeded the renewable volume obligations set by the EPA.

 

A portion of our biodiesel sold was to two major refiners in the United States in 2023 and 2022. No assurances can be given that we will continue to sell to such major refiners, or, if we do sell, the volume we will sell or the profit margin we will realize. We do not believe that the loss of this customer would have a material adverse effect on our biofuels segment or on us as a whole in that: (i) unlike our custom manufacturing products, biodiesel is a commodity with a large potential customer base; (ii) we believe that we could readily sell our biodiesel to other customers as potential demand from other customers for biodiesel exceeds our production capacity; (iii) our sales to this customer are not under fixed terms and the customer has no fixed obligation to purchase any minimum quantities except as stipulated by short term purchase orders; and (iv) the prices we receive from this customer are based upon then-market rates, as would be the case with sales of this commodity to other customers.

 

Biofuels gross profit increased $7,695 in 2023 compared to 2022. Gross profit primarily increased from the prior year from: (i) the change in the realized activity of derivative instruments in comparison to the prior year with a gain of $694 as compared to a loss of $24,360 in the prior year; the prior year was unfavorably impacted by the volatility in the NYMEX heating oil futures market which generated realized losses of $10,500 and (ii) the change in the unrealized activity of derivative instruments in comparison to the prior year with a gain of $1,878 in the current year and a gain of $343 in the prior year. Also improving gross profit was the change in adjustments in the carrying value of our inventory as determined utilizing the LIFO method of inventory accounting increased gross profit $8,414 in 2023 as compared to a decrease in gross profit of $5,794 in 2022. In 2022, the liquidation effect of exiting the pipeline business increased gross profit $1,851 in 2022; no such liquidation occurred in 2023.

 

Critical Accounting Policies and Estimates

 

Useful Lives of Property, Plant, and Equipment

 

We primarily base our estimate of an asset’s useful life on our experience with other similar assets. The actual useful life of an asset may differ significantly from our estimate for such reasons as the asset’s build quality, the manner in which the asset is used, or changes in the business climate. We monitor the estimated useful lives of our assets. Depreciation is provided for using the straight-line method over the associated asset’s estimated useful lives.

 

 

Revenue Recognition

 

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, when performance obligations of the customer contract are satisfied. We sell to customers through master sales agreements or standalone purchase orders. The majority of our revenue is from short-term contracts with revenue recognized when a single performance obligation to transfer product under the terms of a contract with a customer is satisfied. Accordingly, we recognize revenue when control is transferred to the customer, which is when products are considered to meet customer specification per the customer contract and title and risk of loss are transferred. This typically occurs at the time of shipment or delivery; or for certain contracts, this occurs upon delivery of the material to one of our storage locations, ready for customer pickup and separated from our other inventory. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products and is generally based upon a negotiated price. We sell products directly to customers generally under agreements with payment terms of 30 to 75 days for chemical segment customers and 5 to 10 days for biofuels segment customers.

 

Certain long-term contracts have an upfront non-refundable payment considered a material right. The Company applies the renewal option approach in allocating the transaction price to the material right. For each of these contracts, the Company estimated the expected contractual term and expected volumes to be sold at the most likely expected sales price as a basis for allocating the transaction price to the material right. Each estimate is updated quarterly on a prospective basis. These custom chemical contracts have payment terms of 30 days. See Notes 2 and 4 of our consolidated financial statements for additional discussion.

 

For most product sales, revenue is recognized when product is shipped from our facilities and when control has transferred to the customer, which is in accordance with our customer contracts and the stated shipping terms. Nearly all custom manufactured products are manufactured under written master service agreements. Performance chemicals and biodiesel are generally sold pursuant to the terms of written purchase orders. In general, customers do not have any rights of return, except for quality disputes. All of our products are tested for quality before shipment, and historically returns have been inconsequential. We do not offer rebates, except those related to the BTC when transactions are occurring when the BTC is not in effect.  See Note 3 of our consolidated financial statements for additional discussion on the BTC.

 

Biodiesel selling prices can at times fluctuate based on the timing of unsold, internally generated RINs. From time to time, sales of biodiesel are on a “RINs-free” basis. Such method of selling results in applicable RINs being held. The value of RINs is not reflected in revenue until such time as the RINs sale has been completed with the transfer of the RINs.

 

Revenue from bill-and-hold transactions in which a performance obligation exists is recognized when the total performance obligation has been met and control of the product has transferred. Bill-and-hold transactions for 2024 and 2023 were related to custom chemicals customers whereby revenue was recognized in accordance with contractual agreements based upon product being produced and ready for use by the customer. These sales were subject to written monthly purchase orders with agreement that production was reasonable. The product was custom manufactured and stored at the customer’s request and could not be sold to another buyer. Credit and payment terms for bill-and-hold customers are similar to other custom chemicals customers. Sales revenue under bill-and-hold arrangements were $43,959, $43,766, and $36,805 for the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024 and 2023, $7,301 and $4,317, respectively, was included in revenue for products that had not shipped. The latter amounts do not include Contract Assets of $29 and $734 that have not been billed nor shipped at December 31, 2024 and 2023, respectively.

 

Taxes collected from customers and remitted to governmental authorities are recorded on a net basis within cost of goods sold. Shipping and handling fees related to sales transactions were billed to customers and recorded as sales revenue.

 

Income Taxes

 

The provision for (benefit from) income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for (benefit from) income taxes represent income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax bases of the Company's assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. 

 

A tax valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the recoverability of its deferred tax assets, the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of the existing deferred tax assets in each taxing jurisdiction. In making this determination, the Company considers positive evidence in the form of projections of future taxable income, reversing temporary differences, and tax planning strategies. In years in which the Company has experienced objective negative evidence in the form of three cumulative years of tax losses, the Company no longer uses taxable income projections to overcome the presumption of losses and deferred tax asset valuations are computed taking into account tax planning strategies and the reversing net deferred tax liability from temporary differences as sources of income. 

 

The Company recognizes income tax positions that meet the more likely than not threshold and accrues interest related to unrecognized income tax positions which is recorded as a component of the income tax provision.

 

Liquidity and Capital Resources

 

Our net cash provided by (used in) operating activities, investing activities, and financing activities for the years ended December 31, 2024, 2023 and 2022 are set forth in the following table.

 

(Dollars in thousands) 

 

		2024				2023				2022
Net cash provided by operating activities		$	24,802			$	21,299			$	52,451
Net cash (used in) provided by investing activities		$	(14,794	)		$	33,022			$	(3,829	)
Net cash used in financing activities		$	(119,911	)		$	(10,517	)		$	(10,503	)

 

 

Operating Activities

 

Cash provided by operating activities increased in 2024 to $24,802 from $21,299 in 2023, a net increase of $3,503. This increase was attributed to the change in (i) inventory of $9,815, (ii) accounts receivable, including accounts receivable – related parties, of $8,714, (iii) accrued expenses and other current liabilities of $7,043, (iv) change in fair value of derivative instruments of $3,849, (v) change in fair value of equity securities of $3,117, and (vi) accounts payable, including accounts payable - related parties, of $2,249. Partially offsetting the increase in cash from operations was the decrease of $21,879 in net income in 2024 compared to 2023 and the change in deferred revenue of $6,787 and other non-current liabilities of $3,317.

 

Cash provided by operating activities decreased in 2023 to $21,299 from $52,451 in 2022, a net decrease of $31,152. This decrease was attributed to the change in (i) accounts payable, including accounts payable - related parties, of $27,928, (ii) fair value of equity securities of $11,414 with the sale of marketable securities, (iii) income taxes receivable of $7,782, and (iv) inventory of $5,550. Partially offsetting the decrease in cash from operations was the increase of $22,171 in net income in 2023 compared to 2022.

 

Investing Activities

 

Cash used in investing activities was $14,794 in 2024 compared to cash provided by investing activities of $33,022 in 2023 for a net decrease in cash of $47,816. This decrease was primarily attributable to the sale of marketable securities in 2023 of $37,701. In addition, increased capital expenditures decreased cash from investing activities by $8,646.

 

Cash provided by investing activities was $33,022 in 2023 compared to cash used by investing activities of $3,829 in 2022 for a net increase in cash of $36,851. This increase was primarily attributable to the sale of marketable securities in 2023 of $37,701 compared to sales of marketable securities in 2022 of $1,292. Increased capital expenditures decreased cash from investing activities by $1,244.

 

Financing Activities

 

Cash used in financing activities increased to $119,911 in 2024 from $10,517 in 2023, a net increase of $109,394 primarily from the payment of a special cash dividend of $109,408.

 

Cash used in financing activities was $10,517 in 2023, primarily from the payment of dividends of $10,503.

 

Capital Expenditure Commitments

 

We had $1,460 of new chemical production equipment and infrastructure capital repair projects that generated commitments as of December 31, 2024.  We plan to continue to invest in capital infrastructure to increase the reliability of plant operations. 

 

Historically, we finance capital requirements for our business with cash flows from operations and have not had the need to incur bank indebtedness to finance any of our operations during the periods discussed herein.

 

 

Credit Facility 

 

On February 21, 2025, the Company, with FutureFuel Chemical Company as the borrower and certain of the Company’s other subsidiaries as guarantors, amended and restated its credit agreement (the “Credit Agreement”) originally entered into on April 16, 2015 with the lenders party thereto, Regions Bank as administrative agent and collateral agent, and PNC Bank, N.A., as syndication agent and further amended on March 30, 2020 (as amended, the “Prior Credit Agreement”). The Credit Agreement consists of a five-year revolving credit facility in a dollar amount of up to $75,000, which includes a sublimit of $30,000 for letters of credit and $15,000 for swingline loans (collectively, the “Credit Facility”). The Credit Facility expires on February 21, 2030. The primary amendment from the Prior Credit Agreement was a reduction in the facility’s credit limit by $25,000.

 

We will be permitted to use net proceeds of any borrowings under the Credit Facility for working capital and other general corporate purposes. No borrowings were made under the Prior Credit Agreement as of December 31, 2024 and 2023. See Note 13 of the consolidated financial statements for additional information regarding our Credit Agreement.

 

The Credit Facility contains certain affirmative and negative covenants, including negative covenants that limit or restrict, among other things, indebtedness, liens and encumbrances, dividends, burdensome agreements, mergers and fundamental changes, assets sales, investments, transactions with affiliates, changes in fiscal years, and other matters customarily restricted in such agreements.

 

The interest rate floats at the following margins over SOFR or base rate based upon our leverage ratio.

 

		Adjusted SOFR
		Rate Loans
Consolidated Leverage Ratio		and Letter of Credit Fee				Base Rate Loans				Commitment Fee
< 1.00:1.0			1.00	%			0.00	%			0.15	%
≥ 1.00:1.0 And < 1.50:1.0			1.25	%			0.25	%			0.15	%
≥ 1.50:1.0 And < 2.00:1.0			1.50	%			0.50	%			0.20	%
≥ 2.00:1.0 And < 2.50:1.0			1.75	%			0.75	%			0.20	%
≥ 2.50:1.0			2.00	%			1.00	%			0.25	%

 

Certain of our subsidiaries have entered into guarantees of payment on behalf of the Company for amounts outstanding under the Credit Facility. In addition, we and certain subsidiaries have entered into a pledge and security agreement with the lender parties to secure the obligations under the Credit Facility. Pursuant to the pledge and security agreement, we and certain of our subsidiaries have pledged certain collateral, including but not limited to, interests in intellectual property rights and certain equity interests in our subsidiaries.

 

We intend to fund future capital requirements for our businesses from cash flow generated by us as well as from existing cash, cash investments, and, if the need should arise, borrowings under our credit facility. We do not believe there will be a need to issue any securities to fund such capital requirements.

 

Dividends

 

In 2024, we paid regular cash dividends aggregating $0.24 per share on our common stock with record dates and payment dates as previously discussed. The regular cash dividends declared in 2024 totaled $10,513 to be paid in 2025. On March 12, 2024, we also declared a special cash dividend of $2.50 per share on our common stock.  This special dividend paid on April 9, 2024 amounted to $109,408.  Total cash dividends paid in 2024 were $119,911.

 

In 2023, we paid regular cash dividends aggregating $0.24 per share on our common stock with record dates and payment dates as previously discussed. The regular cash dividends declared in 2023 totaled $10,503 to be paid in 2024.

 

In 2022, we paid regular cash dividends aggregating $0.24 per share on our common stock with record dates and payment dates as previously discussed. The regular cash dividends declared in 2022 totaled $21,006; $10,503 paid in 2022 and $10,503 paid in 2023.

 

 

 

Capital Management

 

As a result of positive operating results, we accumulated excess working capital. We intend to retain the remaining cash to fund infrastructure and capacity expansion at our Batesville plant or to otherwise fund our future growth. Third parties have not placed significant restrictions on our working capital management decisions.

 

We maintain depository accounts such as checking accounts, money market accounts, and other similar accounts at selected financial institutions. As of December 31, 2024, approximately 83% of these deposits were insured by the Federal Deposit Insurance Corporation.

 

Off-Balance Sheet Arrangements

 

We engage in two types of hedging transactions. First, we hedge our biofuels sales through the purchase and sale of futures contracts and options on futures contracts of energy commodities. This activity was captured on our consolidated balance sheets at December 31, 2024 and 2023. Second, we hedge our biofuels feedstock through the execution of purchase contracts and supply agreements with certain vendors which meet the normal purchase and normal sales exception of ASC 815 Derivatives and Hedging. These hedging transactions are recognized in earnings and do not qualify as a hedge accounting treatment on our consolidated balance sheets at December 31, 2024 or 2023, as they do not meet the definition of a hedge instrument as defined under GAAP. The purchase of biofuels feedstock generally involves two components: basis and price. Basis covers any refining or processing required as well as transportation. Price covers the purchases of the actual agricultural commodity. Both basis and price fluctuate over time. A supply agreement with a vendor constitutes a hedge when we have committed to a certain volume of feedstock in a future period and have fixed the basis for that volume.

 

Contractual Obligations

 

Purchase obligations include the purchase of biodiesel feedstock and various other infrastructure and capital repairs as follows:

 

Less than 1 year		$	9,420
1-3 years			418
4-5 years			137
Total		$	9,975

 

A component of other noncurrent liabilities is a reserve for asset retirement obligations and environmental contingencies of $1,466 at December 31, 2024. We are liable for these asset retirement obligations and environmental contingencies only in certain events, primarily the closure of our Batesville, Arkansas facility. As such, we do not expect a payment related to these liabilities in the foreseeable future and therefore we have excluded this amount from the table above.

 

 

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

 

In recent years, general economic inflation has not had a material adverse impact on our costs and, as described elsewhere herein, we have passed some contractual inflationary price increases along to our customers. However, we are subject to certain market risks as described below.

 

Market risk represents the potential loss arising from adverse changes in market rates and prices. Commodity price risk is inherent in the chemical and biofuels business both with respect to input (electricity, coal, raw materials, biofuel feedstocks, etc.) and output (manufactured chemicals and biofuels).

 

We seek to mitigate our market risks associated with the manufacturing and sale of chemicals by entering into term sale contracts that include contractual market price adjustment protections to allow changes in market prices of key raw materials to be passed on to the customer. Such price protections are not always obtained, however, so raw material price risk remains a significant risk.

 

In order to manage price risk caused by market fluctuations in biofuel prices, we may enter into exchange traded commodity futures and options contracts. We account for these derivative instruments in accordance with Topic 815, Derivatives and Hedging. Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship. To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained. We had no derivative instruments that qualified under these rules as designated accounting hedges in 2024 or 2023. Changes in the fair value of our derivative instruments are recognized at the end of each accounting period and recorded in the consolidated statement of operations as a component of cost of goods sold.

 

Our immediate recognition of derivative instrument gains and losses can cause net income to be volatile from period to period due to the timing of the change in value of the derivative instruments relative to the sale of biofuel being sold. As of December 31, 2024 and 2023, the fair values of our derivative instruments were in a liability position in the amount of $235 and an asset position of $1,736, respectively.

 

Our gross profit will be impacted by the prices we pay for raw materials and conversion costs (costs incurred in the production of chemicals and biofuels) for which we do not possess contractual market price adjustment protection. These items are principally comprised of crude corn oil and yellow grease and petrodiesel. The availability and price of these items are subject to wide fluctuations due to unpredictable factors such as weather conditions, overall economic conditions, governmental policies, commodity markets, and global supply and demand.

 

We prepared a sensitivity analysis of our exposure to market risk with respect to key raw materials and conversion costs for which we do not possess contractual market price adjustment protections based on average prices in 2024. We included only those raw materials and conversion costs for which a hypothetical adverse change in price would result in a 1% or greater decrease in gross profit. Assuming that the prices of the associated finished goods could not be increased and assuming no change in quantities sold, a hypothetical 10% change in the average price of the commodities listed below would result in the following change in annual gross profit.

 

(Dollars in thousands)

 

							Hypothetical								Percentage
							Adverse								Decrease
		Volume					Change in				Decrease in				in Gross
Item		Requirements(a)			Units		Price				Gross Profit				Profit
Biodiesel feedstocks			42.4		MGAL			10	%		$	13,403				69.4	%
Methanol			7.6		MGAL			10	%		$	810				4.2	%
Electricity			104,738		MWH			10	%		$	548				2.8	%
Sodium Methylate			10.8		MLB			10	%		$	531				2.7	%
Coal			32,454		TON			10	%		$	349				1.8	%
Natural Gas			1,165,645		MCF			10	%		$	301				1.6	%

 

(a) Volume requirements and average price information are based upon volumes used and prices obtained for the year ended December 31, 2024.  Volume requirements may differ materially from these quantities in future years as our business evolves.

 

We had no borrowings as of December 31, 2024 or 2023, and, as such, we were not exposed to interest rate risk for those years. Due to the relative insignificance of transactions denominated in a foreign currency, we consider our foreign currency risk to be immaterial.

 

FutureFuel Corp.

Consolidated Balance Sheets

As of December 31, 2024 and 2023

(Dollars in thousands)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

FutureFuel Corp.

Consolidated Statements of Income and Comprehensive Income

For the Years Ended December 31, 2024, 2023 and 2022

(Dollars in thousands, except per share amounts)

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

FutureFuel Corp.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2024, 2023 and 2022

(Dollars in thousands)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

FutureFuel Corp.

Consolidated Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2024, 2023 and 2022

(Dollars in thousands)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

Notes to Consolidated Financial Statements of FutureFuel Corp.

(Dollars in thousands, except per share amounts)

 

1.	DESCRIPTION OF BUSINESS AND OPERATIONS

 

FutureFuel Corp. (the “Company”) is a Delaware corporation with its wholly owned subsidiaries, FutureFuel Chemical Company; FutureFuel Warehouse Company, L.L.C.; and Legacy Regional Transport, L.L.C.

 

The Company’s sole operating facility is FutureFuel Chemical Company located in Batesville, Arkansas, a manufacturer of specialty and performance chemicals and biofuels.

   

2.	SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

 

Financial Presentation

 

The consolidated financial statements of FutureFuel Corp. and subsidiaries are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and include amounts that are based upon management estimates and judgments which could differ from actual future results.  Intercompany transactions and balances are eliminated in consolidation. Certain reclassifications were made to prior year amounts to conform to the 2024 presentation.

 

Change in Accounting Principle

 

As of December 31, 2024, we changed the accounting principle related to the presentation for supplies and parts held in support of maintenance and repair of plant equipment from Inventory to Other current assets.  As the investment in these supplies and parts has increased given our focus on plant reliability and efficiency as well as the fact that these parts are not revenue generating assets similar to the Company’s raw materials, work in process, and finished goods inventories but are instead held to support the maintenance and repair of the Company’s plant equipment, we determined it preferable to present these supplies and parts held within other current assets rather than inventory, which is composed of assets that may be sold or turned into assets to be sold as part of the Company’s primary business activities.  The change in accounting principle was a reduction in inventory and an increase in other current assets of $7,733 and $7,595 at December 31, 2024 and 2023, respectively.  There was no impact on any financial statement totals or key benchmarks (working capital, total assets, equity, gross profit, net income, or operating cash flows).

 

Cash and cash equivalents

 

Cash equivalents consist of highly liquid investments with original maturities of three months or less and are carried at cost, which approximates fair value. The Company places its temporary cash investments with high credit quality financial institutions. At times, bank deposits may be in excess of the Federal Deposit Insurance Corporation insurance limit, however, no loss has occurred. 

 

Accounts receivable and allowance for credit losses

 

Accounts receivable are recorded at the invoiced amount and only bear interest if outstanding beyond the agreed upon payment terms. The Company has established procedures to monitor credit risk and has not experienced significant credit losses in prior years. Accounts receivable have been reduced by an allowance for amounts that may be uncollectible in the future. This estimated allowance is based upon management’s evaluation of historical collection experience, current and future economic and market conditions, and a review of the status of individual accounts receivable. Write-offs are recorded at the time a customer receivable is deemed uncollectible.

 

Customer concentrations 

 

For the years ended December 31, 2024, 2023 and 2022, significant portions of the Company’s sales were made to a relatively small number of customers. Sales to two biodiesel customers totaled 25%, 35%, and 27% of revenue in 2024, 2023, and 2022, respectively. Receivables for the significant customers at December 31, 2024 and 2023, were 13% and 0.2% of total receivables, respectively.

 

For the years ended December 31, 2024, 2023, and 2022, no chemical customer represented a greater than 10% of total sales revenue. However, one chemical customer had a receivable that was 20% of total receivables as of  December 31, 2024.    

  

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Inventory

 

Inventories are valued at the lower of cost or market or net realizable value. The Company determines the cost of raw materials, work in process, and finished goods inventories by the last-in, first-out (“LIFO”) method. The cost of all other inventories is determined by the average cost method, which approximates the first-in, first-out ("FIFO") method. The Company writes-down its inventories for estimated obsolescence or unmarketable inventory equal to the difference between the carrying value of inventory and the estimated market value based upon assumptions about future demand and market conditions.

 

Derivative instruments

 

The Company records all derivative instruments at fair value. Fair value is determined by using the closing prices of the derivative instruments on the New York Mercantile Exchange at the end of an accounting period. Changes in the fair value of derivative instruments are recognized at the end of each accounting period and recorded in the consolidated statements of income and comprehensive income as a component of cost of goods sold.

 

In order to manage commodity price risk caused by market fluctuations in biofuel prices, future purchases of feedstock used in biodiesel production, physical feedstock, finished product inventories attributed to the process, and other petroleum products purchased or sold, the Company may enter into exchange-traded commodity futures and options contracts. The Company accounts for these derivative instruments in accordance with Accounting Standards Codification (“ASC”) 815-20-25, Derivatives and Hedging. Under this standard, the accounting for changes in the fair value of a derivative instrument depends upon whether it has been designated as an accounting hedging relationship and, further, on the type of hedging relationship. To qualify for designation as an accounting hedging relationship, specific criteria must be met and appropriate documentation maintained. The Company had no derivative instruments that qualified under these rules as designated accounting hedges in 2024, 2023, or 2022. See Note 6 - Derivative Instruments. The Company has elected the normal purchase and normal sales exception for certain feedstock purchase contracts and supply agreements and for certain biodiesel sales contracts.

 

Marketable securities

 

Investments consist of marketable equity and debt securities stated at fair value. The debt securities are designated as available-for-sale securities at the time of purchase based upon the intended holding period. Gains and losses from the sale of marketable securities and the changes in the fair value of equity securities are recognized as gain (loss) on marketable securities as a component of other income (expense) in the consolidated statements of income and comprehensive income. The cost basis used for all marketable securities is specific identification. Changes in the fair value of debt securities are recognized in accumulated other comprehensive income on the consolidated balance sheets, unless the Company determines that an unrealized loss will not be recovered before it is sold, in which case, the Company will recognize the loss as a component of other income (expense).

 

See Notes 7 and 8 for further information on marketable securities and fair value measurements.

 

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Fair value measurements

 

The Company records recurring and non-recurring financial assets and liabilities as well as all non-financial assets and liabilities subject to fair value measurement at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. These fair value principles prioritize valuation inputs across three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. An asset or liability's classification within the various levels is determined based on the lowest level input that is significant to the fair value measurement.

 

Supplies and parts

 

Supplies and parts are carried at cost in Other current assets and Other assets.  The Company writes-down its supplies and parts for estimated obsolescence and amounts determined to be in excess of expected needs.

 

Property, plant, and equipment, net

 

Property, plant, and equipment, net is carried at cost less accumulated depreciation. Maintenance and repairs are charged to earnings; replacements and betterments are capitalized. When the Company retires or otherwise disposes of an asset, it removes the cost of such asset and related accumulated depreciation from the accounts. The Company records any profit and loss on retirement or other disposition in earnings.

 

Depreciation expense is calculated based on historical cost and the estimated useful lives of the assets, generally using the straight-line method with the following useful lives:

 

Building & building equipment (years)			20 – 39
Machinery and equipment (years)			3 – 33
Transportation equipment (years)			5 – 33
Other (years)			5 – 33

 

Impairment of assets

 

The Company evaluates the carrying value of long-lived tangible assets when events or changes in circumstances indicate that the carrying value may not be recoverable. Such events and circumstances include, but are not limited to, significant decreases in the market value of the asset, adverse changes in the extent or manner in which the asset is being used, significant changes in business climate, or current or projected cash flow losses associated with the use of the assets. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such assets are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. For long-lived assets to be held for use in future operations, fair value is determined primarily using either the projected cash flows discounted at a rate commensurate with the risk involved or an appraisal. For long-lived assets to be disposed of by sale or other than sale, fair value is determined in a similar manner, except those fair values are reduced for disposal costs.

 

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Asset retirement obligations and environmental costs

 

The Company establishes reserves for closure/post-closure costs associated with the environmental and other assets it maintains, which include, but are not limited to, waste management units, such as a chemical waste destructor, storage tanks, and boilers. When these types of assets are constructed or installed, a liability is established with a corresponding asset for the future costs anticipated to be associated with the closure of the site based on an expected life of the environmental assets, the applicable regulatory closure requirements, and the Company’s environmental policies and practices. These expenses are charged into earnings over the estimated useful life of the assets. Currently, the Company estimates the useful life of each individual asset up to 27 years. Changes made in estimates of the asset retirement obligation costs or the estimate of the useful lives of these assets are reflected in earnings as an increase or decrease in the period such changes are made.

 

Environmental costs are capitalized if they extend the life of the related property, increase its capacity, and/or mitigate or prevent future contamination. The cost of operating and maintaining environmental control facilities is charged to expense.

 

Leases

 

Leases with an initial expected term of twelve months or less are considered short-term and are not recorded on our consolidated balance sheets.  The Company recognizes operating lease expense on a straight-line basis over the lease term.

 

Litigation 

 

The Company and its operations from time to time may be parties to or targets of lawsuits, claims, investigations, and proceedings including product liability, personal injury, patent and intellectual property, commercial, contract, environmental, health and safety, and environmental matters, which are handled and defended in the ordinary course of business. The Company accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When a single amount cannot be reasonably estimated but the cost can be estimated within a range, the Company accrues the minimum amount.

 

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Revenue recognition  

 

In accordance with ASC Topic 606, Revenue from Contracts with Customers, the Company recognizes revenue when performance obligations of the customer contract are satisfied. The Company sells to customers through master sales agreements or standalone purchase orders. The majority of the Company’s revenue is from short-term contracts with revenue recognized when a single performance obligation to transfer product under the terms of a contract with a customer is satisfied. Accordingly, the Company recognizes revenue when control is transferred to the customer, which is when products are considered to meet customer specification per the customer contract and title and risk of loss are transferred. This typically occurs at the time of shipment or delivery; or for certain contracts, this occurs upon delivery of the material to a Company storage location, ready for customer pickup and separated from other Company inventory. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated price. The Company sells its products directly to customers generally under agreements with payment terms of 30 to 75 days for chemical segment customers and 2 to 10 days for biofuels segment customers.

 

The Company applies the practical expedient and excludes the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less; and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

 

Revenue within the biofuel segment includes revenue from biodiesel RINs. RINs are renewable identification numbers under the Renewable Fuel Standard (“RFS2”) used to incent the use of renewable fuels domestically. RINs are generated at 1.5 RINs per gallon of biodiesel produced and sold. Revenue is recognized from RINs when transferred to the buyer in the government provided tracking system. No cost is incurred in the generation of a RIN.

 

Taxes collected from customers remitted to governmental authorities are excluded from revenue. Shipping and handling fees related to sales transactions are billed to customers and recorded as sales revenue.

 

Cost of goods sold and distribution

 

Cost of goods sold consists of raw and packaging materials, direct manufacturing costs, depreciation, analytical lab costs, inbound freight, purchasing, and other indirect costs necessary to manufacture products. Biodiesel cost of goods sold also includes a credit for the one dollar per gallon Blenders’ Tax Credit (“BTC”) for blending biodiesel with petroleum diesel when in law. The BTC was in effect during 2024, 2023, and 2022. See Note 3 for further discussion.

 

Distribution expense includes outbound freight costs, depreciation of distribution equipment, and other indirect costs necessary to distribute product.

 

Selling, general, and administrative expenses

 

Selling, general, and administrative expenses include personnel costs associated with sales, marketing, and administration; legal and related costs; consulting and professional service fees; advertising expenses; and other similar costs.

 

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Research and development expenses

 

Research and development expenses include direct salaries, depreciation of equipment, material expenditures, contractor fees, and other indirect costs. All costs identified as research and development costs are charged to expense when incurred.

 

Comprehensive income

 

Comprehensive income is comprised of net income and other comprehensive income (loss) (“OCI”). Comprehensive income comprises all changes in stockholders’ equity from transactions and other events and circumstances from non-owner sources. The Company’s OCI comprises unrealized gains and losses resulting from its investments in marketable debt securities classified as available-for-sale (see Note 7).

 

Unrealized gains and losses were determined using the specific identification method and are classified in OCI.

 

Income taxes

 

The income tax (benefit) provision is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for (benefit from) income taxes represent income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. 

 

A tax valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the recoverability of its deferred tax assets, the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of the existing deferred tax assets in each taxpaying jurisdiction. In making this determination, the Company considers positive evidence in the form of projections of future taxable income, reversing temporary differences, and tax planning strategies.  In years in which the Company has experienced objective negative evidence in the form of three cumulative years of tax losses, the Company no longer uses taxable income projections to overcome the presumption of losses and deferred tax asset valuations are computed using only the reversing net deferred tax liability from temporary differences as a source of income.

 

Issued accounting standards not yet adopted 

 

Accounting Standards Update (“ASU”) No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures:  The Financial Accounting Standards Board (“FASB”) issued this update in December 2023 which aims to address requests for improved income tax disclosures from investors that use the financial statements to make capital allocation decisions. The amendments in this ASU address the investor requests for more transparency of income tax information and apply to all entities that are subject to income taxes. The ASU is effective for years beginning after December 15, 2024, but early adoption is permitted.  This ASU should be applied on a prospective basis, although retrospective application is permitted. The Company will adopt the new standard effective for the year ended December 31, 2025, and does not expect the adoption to have a material impact on its financial statements and disclosures.

 

ASU No. 2024-03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses: The FASB issued this update in November 2024 which aims to provide investors with more useful information about an entity’s expenses by improving disclosures on income statement expenses. The amendments in this ASU require all public business entities to disclose disaggregated information about specific categories underlying certain income statement expense line items. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating this accounting standard and does not expect the adoption to have a material impact on its financial statements and disclosures.

 

 

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Recently adopted accounting standards 

 

ASU No. 2023-07, Segment Reporting (Topic 280):  Improvements to Reportable Segment Disclosures: The FASB issued this update in November 2023 which aims to improve disclosures about a public entity’s reportable segments.  These changes affect the Company’s segment reporting beginning with the Annual Report for the year ended December 31, 2024, and are applied retrospectively to all prior periods presented. The amendments in this ASU require public business entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and are included within each reported measure of segment profit or loss. This update does not change how an entity identifies or aggregates its reportable segments or how it applies the quantitative thresholds to determine them. The adoption of this ASU had a minimal impact on the Company’s financial statements and related disclosures.

  

3.	GOVERNMENT TAX CREDITS

 

The Company received the BTC which provided a one dollar per gallon tax credit to the blender of biomass-based diesel with at least 0.1% petroleum-based diesel fuel.  The Company recorded this credit as a reduction to cost of goods sold as applicable sales were made.

 

The Further Consolidated Appropriations Act of 2020 was passed by Congress and signed into law on December 20, 2019, retroactively reinstating the BTC for 2018 and 2019 and extending it through December 31, 2022.  With the passage of the Inflation Reduction Act (“IRA”) in August 2022, the BTC was extended through December 31, 2024.

 

As part of each law from which the BTC mentioned above was reinstated, small agri-biodiesel producers with production capacity not in excess of 60 million gallons were eligible for an additional income tax credit of $0.10 per gallon on the first 15 million gallons of agri-biodiesel sold (the “Small Agri-biodiesel Producer Tax Credit”). The Company was eligible for this credit and recognized $1,500 for 2024, 2023, and 2022 in the same accounting period as the benefit from the BTC as described above.  The benefit of this credit is recognized as a component of income tax provision (benefit).

 

The IRA created the clean fuel production credit (“CFPC”) for qualifying transportation fuel produced after 2024 and sold on or before December 31, 2027. The CFPC consolidates and replaces several fuel related credits which expired December 31, 2024 including the BTC and the Small Agri-biodiesel Producer Tax Credit. 

 

The CFPC is an income tax credit structured on a sliding scale so that producers become eligible for larger credits as the GHG emissions of the fuels they produce approach zero.  For producers meeting the prevailing wage and registered apprenticeship requirements, the maximum credit is $1.00 per gallon of nonaviation fuel.  For producers not meeting the prevailing wage and registered apprenticeship requirements, the maximum credit is 20 cents per nonaviation fuel gallon. The Company registered for the program in June 2024 when the registration rules were issued and received approval in December 2024 as a clean fuel producer under the program.

 

On January 10, 2025, the IRS issued Notice 2025-10 with the purpose of providing initial guidance and solicited comment from the public with a deadline of April 10, 2025, and was to serve as an announcement of forthcoming proposed regulations and solicited public input by April 10, 2025. It did not include any reliance language and did not constitute final or binding guidance.

 

On January 15, 2025, the IRS issued Notice 2025-11 which provided emission rate guidance in support of Notice 2025-10. 

 

CARES ACT – EMPLOYEE RETENTION TAX CREDIT

 

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), was enacted on  March 27, 2020, to encourage eligible employers to retain employees on their payroll.  The Consolidated Appropriations Act, effective  January 1, 2021, broadened the eligibility of the credit.  The Company applied for this credit and will recognize the benefit of the credit once reasonable assurance can be made as to the retention of the credit. 

 

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4.	REVENUE RECOGNITION

 

The majority of revenue is from contracts with less than one-year arrangements with revenue recognized when a single performance obligation to transfer product under the terms of a contract with a customer is satisfied.

 

Certain of the Company’s custom chemical contracts within the chemical segment contain a material right, as defined by ASC Topic 606, from the provision of a customer option to purchase future goods or services at a discounted price as a result of upfront payments provided by customers. Each contract also has a performance obligation to transfer products with 30-day payment terms. The Company recognizes revenue when the customer takes control of the inventory, either upon shipment or when the material is made available for pick up. If the customer is deemed to take control of the inventory prior to pick up, the Company recognizes the revenue as a bill-and-hold transaction in accordance with ASC Topic 606. The Company applies the renewal option approach in allocating the transaction price to these material rights and transfer of product. As a basis for allocating the transaction price to the material right and transfer of product, the Company estimates the expected life of the contract, the expected contractual volumes to be sold over that life, and the most likely expected sales price. Each estimate is updated quarterly on a prospective basis.

 

The Company leases warehouse space under a short-term lease agreement with a term of twelve months. Lease revenue recognized under this agreement was $669 for the year ended December 31, 2024.

 

Contract Assets and Liabilities:

 

Contract assets consist of unbilled amounts resulting from revenue recognized through bill-and-hold arrangements. The contract assets for 2024 and 2023 consist of unbilled revenue from one customer and unbilled capital reimbursements from another customer and are recorded as accounts receivable in the consolidated balance sheets. Contract liabilities consist of advance payments related to material rights recorded as deferred revenue in the consolidated balance sheets. Increases to contract liabilities from cash received or due for a performance obligation of chemical segment plant expansions were $0 and $538 in 2024 and 2023, respectively. Contract liabilities are reduced as the Company transfers product to the customer under the renewal option approach. Revenue recognized in the chemical segment from the contract liability reductions were $8,984 and $2,734 in 2024 and 2023, respectively. One contract liability ended in 2024 with additional revenue recognition of $5,492 in 2024.  This contract was expected to be negotiated before the end of the year based on a letter of intent and was not renewed.  The customer continues to purchase material from the Company on a short-term purchased order basis. Contract asset and liability balances are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.

 

The following table provides the opening and closing balances of receivables, contract assets, and contract liabilities from contracts with customers.

 

Contract balances

 

Contract Assets and Liabilities

 

		December 31,
		2024				2023				2022
Trade receivables, included in accounts receivable*		$	14,991			$	15,897			$	16,459
Contract assets, included in accounts receivable			222				1,128				775
Contract liabilities, included in Deferred revenue - short-term			697				3,656				3,565
Contract liabilities, included in Deferred revenue - long-term			3,293				9,318				11,605

 

*Exclusive of the BTC of $6,683, $11,381, and $8,970, respectively, and net of allowances for bad debt of $29, $55, and $48, respectively, as of the dates noted.

 

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Transaction price allocated to the remaining performance obligations

 

As of December 31, 2024, approximately $3,990 of revenue is expected to be recognized in the future from remaining performance obligations. The Company expects to recognize this revenue ratably based upon the expected sales over the expected term of its long-term contracts which range from two to six years. Approximately 17% of this revenue is expected to be recognized over the next 12 months, and 83% is expected to be recognized between one and five years. These amounts are subject to change based upon changes in the estimated contract life, estimated quantities, and most-likely expected sales price over the contract life. See Note 2 for further information.

 

Disaggregation of revenue - contractual and non-contractual

 

		Year ended December 31,
		2024				2023				2022
Contract revenue from customers with > 1-year arrangements		$	21,887			$	37,055			$	33,686
Contract revenue from customer with < 1-year arrangements			221,230				330,973				362,106
Revenue from non-contractual arrangements			222				222				222
Total revenue		$	243,339			$	368,250			$	396,014

 

Timing of revenue

 

		Year ended December 31,
		2024				2023				2022
Bill-and-hold revenue		$	43,959			$	43,766			$	36,805
Non-bill-and-hold revenue			199,380				324,484				359,209
Total revenue		$	243,339			$	368,250			$	396,014

 

Bill-and-hold transactions consisted of five specialty chemical customers in 2024 and 2023, and four in 2022, whereby revenue was recognized in accordance with contractual agreements based on product produced, readied for use and loaded into customer provided containers. These sales were subject to written monthly purchase orders with revenue recognized upon production and loading into customer provided containers. The inventory was segregated from other Company inventory as it was custom manufactured and stored at the customer’s request and could not be sold to another buyer. Credit and payment terms for bill-and-hold transactions are similar to other specialty chemical customers. Sales revenue under bill-and-hold arrangements totaled $43,959, $43,766, and $36,805, for the years ended December 31, 2024, 2023, and 2022, respectively. Of the bill-and-hold sales revenue recognized, $7,301, $4,317, and $4,473 had not been shipped for the years ended December 31, 2024, 2023, and 2022, respectively. These balances do not include contract assets that have not been billed or shipped as described above.

 

The Company’s revenues for the years ended December 31, 2024, 2023 and 2022 attributable to the United States and foreign countries (based upon the billing addresses of its customers) were as follows.

 

		Year ended December 31,
		2024				2023				2022
United States		$	242,685			$	367,368			$	394,671
All Foreign Countries			654				882				1,343
Total		$	243,339			$	368,250			$	396,014

 

For the years ended December 31, 2024, 2023 and 2022, no revenues from a single foreign country were greater than 1% of total revenues.

 

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5.

INVENTORY

 

The carrying values of inventory were as follows as of December 31:

 

		2024				2023
At average cost (approximates current cost)
Finished goods		$	10,809			$	16,235
Work in process			872				611
Raw materials			15,335				17,937
			27,016				34,783
LIFO reserve			(6,373	)			(9,400	)
Total inventory		$	20,643			$	25,383

 

A LIFO liquidation of $435 and $2,124 occurred in the years ended December 31, 2024 and 2022, respectively. There was no liquidation in the year ended December 31, 2023.

   

6.	DERIVATIVE INSTRUMENTS

 

Realized and unrealized gains and losses on derivative instruments and changes in fair value of the derivative instruments are recorded in the consolidated statements of income and comprehensive income as a component of cost of goods sold and amounted to a net loss of $499 for the year ended December 31, 2024, a net gain of $2,571 for the year ended December 31, 2023, and a net loss of $24,360 for the year ended December 31, 2022.

 

The volumes and carrying values of the Company’s derivative instruments were as follows at December 31:

 

		Asset/ (Liability)
		2024								2023
		Contract				Fair				Contract				Fair
		Quantity				Value				Quantity				Value
Regulated fixed price future commitments, included in other current assets (in thousand barrels)			100			$	(235	)			354			$	1,736

 

The margin account maintained with a broker to collateralize these derivative instruments carried an account balance of $877 and $745 at December 31, 2024 and 2023, respectively, and is classified as other current assets in the consolidated balance sheets. 

 

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7.	MARKETABLE SECURITIES

 

At December 31, 2024 and 2023, the Company held no marketable equity or trust preferred (debt) securities.  The previous sale of these securities was recorded as a component of net income with a gain of $575 in the year ended December 31, 2023.

 

For the year ended December 31, 2022, in accordance with ASC 321, the change in the fair value of equity securities (preferred and other equity instruments) was reported as a loss on marketable securities as a component of net income in the amount of $8,297. 

 

In 2023 and 2022, the Company had no recategorized net gain or loss to report from accumulated other comprehensive income.

  

8.	FAIR VALUE MEASUREMENTS

 

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants as of the measurement date. Fair value accounting pronouncements also include a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. 

 

Derivative instruments were fair value measurements using inputs considered as Level 1 holdings in the year ended December 31, 2024, as disclosed in Note 6. The Company had no Level 2 or Level 3 securities. 

 

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9.	PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant, and equipment consisted of the following at December 31:

 

		2024				2023
Land and land improvements		$	5,967			$	6,044
Buildings and building equipment			29,031				27,182
Machinery and equipment			191,868				188,794
Construction in progress			9,625				1,809
Accumulated depreciation			(157,953	)			(151,118	)
Total		$	78,538			$	72,711

 

Depreciation expense totaled $9,208, $10,348, and $10,454 for the years ended December 31, 2024, 2023 and 2022, respectively. 

  

10.	OTHER ASSETS

 

Other current assets primarily comprise supplies and parts which are held in support of maintenance and repair of plant equipment. The balance related to these items totaled $7,733 and $7,595 at December 31, 2024 and 2023, respectively.

 

Other assets primarily comprise supplies and parts which are not expected to be used in the twelve-month period subsequent to the consolidated balance sheet date. The balance related to these items totaled $4,376 and $3,409 at December 31, 2024 and 2023, respectively.

  

11.	ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accrued expenses and other current liabilities consisted of the following at December 31:

 

		2024				2023
Refundable deposit		$	6,500			$	-
Employment tax credit			1,856				-
Accrued employee liabilities			1,743				2,179
Accrued property, franchise, motor fuel and other taxes			881				1,346
Lease liability, current			-				389
Other current liabilities			102				844
Total		$	11,082			$	4,758

 

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12.	BORROWINGS

 

On February 21, 2025, the Company, with FutureFuel Chemical Company as the borrower and certain of the Company’s other subsidiaries as guarantors, amended and restated its credit agreement (the “Credit Agreement”) originally entered into on April 16, 2015 and amended March 30, 2020 (as amended, the “Prior Credit Agreement”) and further amended on February 21, 2025 with the lender party thereto, Regions Bank as administrative agent, collateral agent, and syndication agent. The Credit Agreement consists of a five-year revolving credit facility in a dollar amount of up to $75,000, which includes a sublimit of $30,000 for letters of credit and $15,000 for swingline loans (collectively, the “Credit Facility”). The Credit Facility expires on February 21, 2030. The primary amendment from the Prior Credit Agreement was a reduction in the facility’s credit limit by $25,000 and the removal of PNC Bank, N.A., as the syndication agent.

 

 

The interest rate floats at the following margins over SOFR or base rate based upon our leverage ratio.

 

		Adjusted SOFR
		Rate Loans
Consolidated Leverage Ratio		and Letter of Credit Fee				Base Rate Loans				Commitment Fee
< 1.00:1.0			1.00	%			0.00	%			0.15	%
≥ 1.00:1.0 And < 1.50:1.0			1.25	%			0.25	%			0.15	%
≥ 1.50:1.0 And < 2.00:1.0			1.50	%			0.50	%			0.20	%
≥ 2.00:1.0 And < 2.50:1.0			1.75	%			0.75	%			0.20	%
≥ 2.50:1.0			2.00	%			1.00	%			0.25	%

 

The terms of the Credit Facility contain certain negative covenants and conditions including a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio.    

 

There were no borrowings under the Prior Credit Agreement at December 31, 2024 or 2023.

 

At December 31, 2023, the Company had $7 outstanding with a domestic financing company for computer technology under a three-year financing agreement. No balance remained at December 31, 2024.

  

13.	ASSET RETIREMENT OBLIGATIONS AND ENVIRONMENTAL RESERVES

 

The Batesville plant generates hazardous and non-hazardous wastes, the treatment, storage, transportation, and disposal of which are regulated by various governmental agencies. In addition, the Batesville plant may be required to incur costs for environmental and closure and post-closure costs under the Resource Conservation and Recovery Act. The Company’s liability for asset retirement obligations and environmental contingencies was $1,466 and $1,431 as of December 31, 2024 and 2023, respectively. These amounts are recorded in other noncurrent liabilities in the accompanying consolidated balance sheets. The accretion expense for 2024, 2023, and 2022 was $35, $35, and $32, respectively. The periodic review of the asset retirement obligation calculations resulted in an addition to the reserve of $0 in 2024, 2023, and 2022.

 

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14.	LEASE COMMITMENTS AND PURCHASE OBLIGATIONS

 

The Company leased railcars under multi-year arrangements primarily for delivery of feedstock and biodiesel within its biofuels segment. The lease fees were fixed with no option to purchase and no upfront fees or residual value guarantees. All railcar leases were direct, and no subleases existed. The Company determined lease existence and classification at inception when an agreement conveyed the right to control the identified property for a period of time in exchange for consideration. These leases expired December 31, 2024. As operating leases do not provide a readily determinable implicit interest rate, the Company used an incremental borrowing rate based on information available at the commencement date in determining present value of the lease payments.

 

Following are supplemental income statement and cash flow information related to leases.

 

		Year ended December 31,
		2024				2023				2022
Operating lease expense		$	534			$	881			$	862
Short-term lease expense		$	6			$	8			$	31
Cash paid for operating leases		$	534			$	881			$	862
Right of use assets obtained in exchange for lease obligations		$	-			$	-			$	707
Weighted average discount rate, per annum			n/a				5.5	%			5.2	%

 

On December 31, 2024 and 2023, a right of use asset was reported as other noncurrent assets of $0 and $389, other current liabilities of $0 and $389, and other noncurrent liabilities of $0 and $0, respectively.

 

Purchase obligations

 

The Company has entered into contracts for the purchase of goods and services including contracts for feedstocks for biodiesel, expansion of the Company’s specialty chemicals segment, and related infrastructure with less than one-year terms.

 

The Company holds two non-cancelable obligations for enterprise resource planning and software maintenance with payment obligations as of December 31, 2024 presented as follows.

 

Less than 1 year		$	869
1-3 years			418
4-5 years			137
Total		$	1,424

 

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15.	INCOME TAX PROVISION

 

The following table summarizes the income tax provision (benefit) for the years ended:

 

		2024				2023				2022
Income before taxes - U.S.		$	16,295			$	37,383			$	13,738
Income tax provision:
Federal
Current			-				-				290
Deferred			477				-				(1,998	)
State and other
Current			19				1				60
Deferred			296				-				175
Total		$	792			$	1			$	(1,473	)

 

Differences between the income tax provision (benefit) computed using the U.S. federal statutory income tax rate were as follows:

 

		2024				2023				2022
Amount computed using the statutory rate of 21% for 2024, 2023, and 2022			21.0	%			21.0	%			21.0	%
Agri-biodiesel production credit			(7.3	)			(3.2	)			(8.6	)
Federal BTC benefit			(58.2	)			(32.3	)			(76.2	)
State BTC benefit			(8.2	)			(4.4	)			(7.0	)
Credit for increasing research activities			(1.3	)			(0.5	)			(1.0	)
Dividends received deduction			-				(0.1	)			(1.6	)
Capital loss carryforward expirations			1.9				-				-
State income taxes, net			2.4				2.3				5.1
State rate change and other deferred adjustments			1.2				(1.0	)			3.6
State loss carryforward expirations			2.6				-				-
Valuation allowance for deferred tax assets			50.1				18.2				53.8
Other			0.7				-				0.2
Income tax provision (benefit)			4.9	%			0.0	%			(10.7	)%

 

The income tax provision in 2024 was $792 or an effective tax rate of 4.9% as compared to an income tax provision of $1 or an effective tax rate of 0.0% in 2023 and an income tax benefit of $1,473 or an effective tax rate of (10.7%) in 2022.

 

The Company’s effective tax rates for the years 2024, 2023, and 2022 reflect the positive effect of the BTC and Small Agri-biodiesel Producer Tax Credit. Based on technical guidance from the Internal Revenue Service, the Company excludes the portion of the BTC not used to satisfy excise tax liabilities from income. Both incentives expired in December 2024.

 

The Company’s 2022 effective tax rate reflects the negative impact to the Company’s overall state income tax position of its 2021 decision to phase out its shipments on the petroleum products common carrier pipelines and the termination of these operations in 2022. This operational change shifts the Company’s business among various states such that its net deferred tax liabilities will be realized at higher rates. Additionally, the Company’s 2024 and 2023 state deferred tax provision reflects one-time benefits from state legislation enacted during these years which apply lower tax rates to future reversals of deferred tax liabilities.

 

In 2024, the Company determined that its future reversing net deferred tax liabilities would not support full realization of its existing net deferred tax asset and recorded a net deferred tax liability of $773. In 2023 and 2022, the Company determined that its deferred tax assets are realizable only to the extent of its deferred tax liabilities and recorded a valuation allowance that reduces its net deferred tax asset to $0.

 

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The significant components of deferred tax assets and liabilities were as follows as of December 31:

 

		2024				2023
Deferred tax assets
Compensation		$	50			$	43
Inventory reserves			607				618
Self-insurance			78				65
Asset retirement obligation			331				316
Deferred revenue			1,631				3,693
Federal net operating loss carryforwards			21,099				15,240
State net operating loss carryforwards			3,359				2,765
Accrued expenses			767				742
Stock based compensation			129				24
Federal credit carryforwards			8,581				6,915
State credit carryforwards			676				676
Research & development costs			2,000				1,451
Derivative instruments			56				-
Capital loss and charitable contribution carryforwards			1,703				1,975
Other			9				12
Subtotal deferred tax assets			41,076				34,535
Valuation Allowance			(22,385	)			(14,216	)
Total deferred tax assets			18,691				20,319
Deferred tax liabilities
Derivative instruments			-				(403	)
LIFO inventory			(4,185	)			(3,957	)
Depreciation			(14,377	)			(14,978	)
Prepaid expenses			(902	)			(981	)
Total deferred tax liabilities			(19,464	)			(20,319	)
Net deferred tax liabilities		$	(773	)		$	-

 

The Company’s federal net operating loss carryforwards at December 31, 2024 do not expire and can be carried forward indefinitely. Utilization of these carryforwards is limited to 80% of taxable income in any given year. State net operating loss carryforwards at December 31, 2024 reflect losses generated in 2020 through 2024 and, if unused, will expire in years 2028 through 2044. Federal and state tax losses are primarily a function of the nontaxable nature of the BTC.

 

Federal tax credit carryforwards at December 31, 2024 include the Small Agri-biodiesel Producer Credit and Credit for Increasing Research generated in years 2019 through 2024 and expiring in 2039 through 2044. State credit carryforwards comprise Arkansas In-house Research Credits generated in 2019 through 2020 and expiring in 2028 through 2029.

 

Capital loss and charitable contribution carryforwards were generated in 2020 through 2024 and will expire in 2025 through 2029. 

 

A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the recoverability of its deferred tax assets, the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of the existing deferred tax assets in each taxing jurisdiction. In making this determination, the Company considers positive evidence in the form of projections of future taxable income, reversing temporary differences, and tax planning strategies. In years in which the Company has experienced objective negative evidence in the form of three cumulative years of tax losses, the Company no longer uses taxable income projections to overcome the presumption of losses and deferred tax asset valuations are computed taking into account tax planning strategies and the reversing net deferred tax liability from temporary differences as sources of income.

 

As of December 31, 2024, the Company determined that its deferred tax liabilities would not be sufficient to support its deferred tax assets and recorded a valuation allowance of $22,385, resulting in a net deferred tax liability of $773. As of December 31, 2023 and 2022, the Company recorded valuation allowances of $14,216 and $7,392, respectively, after determining that its total deferred tax assets are more likely than not realizable only to the extent of its deferred tax liabilities.

 

There are no unrecognized tax positions as of December 31, 2024, 2023, or 2022, and the Company does not anticipate any change over the next twelve months.

 

The Company records interest expense (income) and penalties, net, as a component of income tax (benefit) provision and had accrued interest and penalties of $0, $0, and ($95) for December 31, 2024, 2023 and 2022, respectively. Liabilities for accrued interest and tax penalties on unrecognized tax benefits were $0 at  December 31, 2024 and 2023, respectively.

 

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and with various state jurisdictions. In general, the Company is subject to U.S., state, and local examinations by tax authorities from 2021 forward.

 

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16.	EARNINGS PER SHARE

 

In the years ended December 31, 2024, 2023 and 2022, the Company used the treasury method in computing earnings per share as all shares with participating security holders had vested.

 

There were 750,000 outstanding restricted stock units (“RSUs”) issued during the year ended December 31, 2024 per the employment agreement with Roeland Polet and the Company.  These RSUs, and related dividends, vest in five equal installments on each anniversary of the award date, September 3, 2024. There were no other outstanding RSUs for the year ended December 31, 2024, 2023 and 2022.

 

Basic and diluted earnings per common share were computed as follows:  

 

		Years ended December 31:
		2024				2023				2022
Numerator:
Net income		$	15,503			$	37,382			$	15,211
Denominator:
Weighted average shares outstanding – basic			43,765,757				43,763,243				43,763,243
Effect of dilutive securities:
Stock options			-				1,440				246
Weighted average shares outstanding – diluted			43,765,757				43,764,683				43,763,489
Basic earnings per share		$	0.35			$	0.85			$	0.35
Diluted earnings per share		$	0.35			$	0.85			$	0.35

 

Certain options to purchase the Company’s common stock were not included in the computation of diluted earnings per share for the years ended December 31, 2024, 2023, and 2022 because they were anti-dilutive in the period. The weighted number of options excluded on this basis was 44,000, 40,060, and 33,754, respectively.

 

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17.	STOCK-BASED COMPENSATION

 

The Board of Directors of the Company adopted an omnibus incentive plan which was approved by the shareholders of the Company at its 2017 annual shareholder meeting (the “Incentive Plan”). The purpose of the plan is to:

 

	●	Encourage ownership in the Company by key personnel whose long-term employment with or engagement by the Company or its subsidiaries is considered essential to its continued progress and, thereby, encourage recipients to act in the Company’s shareholders’ interests and share in its success;
	●	Encourage such persons to remain in the Company’s employ or in the employ of its subsidiaries; and
	●	Provide incentives to persons who are not the Company employees to promote the Company’s success.

 

The Incentive Plan authorizes the Company to issue stock options (including incentive stock options and nonqualified stock options), common stock awards, and stock appreciation rights. Eligible participants in the plan include: (i) members of the Company’s board of directors and its executive officers; (ii) regular, active employees of the Company and any of its subsidiaries; and (iii) persons engaged by the Company or any of its subsidiaries to render services to the Company or its subsidiaries as an advisor or consultant.

 

Awards under the Incentive Plan are limited to shares of the Company’s common stock, which may be shares acquired by the Company, including shares purchased in the open market, or authorized but un-issued shares. Awards are limited to 10% of the issued and outstanding shares of the Company’s common stock in the aggregate.

 

The Incentive Plan became effective upon its approval by the Company’s shareholders on September 7, 2017 and continues in effect for a term of ten years thereafter unless amended and extended by the Company or unless otherwise terminated.

 

The Company recognizes compensation expense in its financial statements for common stock-based options, stock units, and stock awards based upon the grant-date fair value over the requisite service period.

 

In 2024, the Company issued the following awards under the Incentive Plan:

 

●

750,000 restricted stock units (“RSUs”) were issued in September 2024 to Roeland Polet, the Company’s Chief Executive Officer, in connection with his employment agreement with the Company which vest in five equal installments on each anniversary of the award date, September 3, 2024. The RSUs were estimated at $4,519 and will be recognized as compensation expense over the vesting period.  The compensation expense recorded in 2024 was $392. The equivalent dividends earned on the RSUs are forfeitable and recorded as a reduction in retained earnings with an increase in additional paid in capital for the dividends paid and dividends payable for those declared.

●

5,000 shares of restricted stock were awarded in December 2024 to each of the eight members of the Board of Directors for a total of 40,000 shares.  The awards vested immediately and had a compensation expense of $206.

●

A total of 20,000 stock options were issued in March 2024 and August 2024 with 10,000 stock options issued to each of two new members of the Board of Directors.  The options awarded have an exercise price equal to the mean between the highest and lowest quoted sales prices for the Company’s common stock as of the grant date as reported by the New York Stock Exchange. All options awarded in 2024 vested immediately and expire in 2029. The Company has used the Black Scholes Merton option pricing model, which relies on certain assumptions, to estimate the fair value of the options it granted. The weighted average fair value of options granted was $6.64 per option in 2024.

 

In 2023, the Company did not make any grants under the Incentive Plan. 

 

In January 2022, the Company granted 24,000 stock options to the former Chief Executive Officer, the Chief Operating Officer at that time. In August 2022, the Company granted a total of 20,000 stock options, respectively, to two new members of the Board of Directors. The January options awarded vested immediately and expire in January 2025 per the separation agreement with the officer. Options awarded in August 2022 vested immediately and expire in August 2027. The options have an exercise price equal to the mean between the highest and lowest quoted sales prices for the Company’s common stock as of the grant date as reported by the New York Stock Exchange. The Company has used the Black Scholes Merton option pricing model, which relies on certain assumptions, to estimate the fair value of the options it granted. The weighted average fair value of options granted was $2.30 per option in 2022.

 

---

 

There were no stock options exercised in 2024, 2023 or 2022.

 

The assumptions used in the determination of the fair value of the options granted are provided in the following table: 

 

		2024				2023				2022
Assumptions		Options				Options				Options
Expected volatility rate		49.06		%		n/a				56.61		%
Expected dividend yield		3.69		%		n/a				3.34		%
Risk-free interest rate		4.25		%		n/a				3.20		%
Expected forfeiture rate		0.00		%		n/a				0.00		%
Expected term in years		2.3				n/a				2.3

 

The volatility rate for the options granted in 2024 and 2022 were derived from the historical stock price volatility of the Company’s common stock over the same time period as the expected term of each stock option award. The volatility rate is derived by a mathematical formula using the daily closing stock price data over the expected term.

 

The expected dividend yield is calculated using the Company’s expected dividend amount at the date of the option grant over the expected term divided by the fair market value of the Company’s common stock.

 

Forfeitures for RSU grants are recognized as they occur.

 

For the years ended December 31, 2024, 2023 and 2022, total share-based compensation totaled $636, $0, and $46, respectively. In the years ended December 31, 2024, and 2022, this balance was recorded as an element of selling, general, and administrative expenses.  For the year ended December 31, 2024, $277 was recorded as reduction to retained earnings for the forfeitable dividends of the RSUs. As of December 31, 2024 and 2023, there was no unrecognized compensation expense related to stock options. As of December 31, 2024 and 2023, there was unrecognized compensation expense related to restricted stock units of $4,218 and $0, respectively.

 

A summary of the activity of the Company’s stock options for the period beginning January 1, 2022, and ending December 31, 2024 is presented below.

 

						Weighted
						Average
		Options				Exercise Price
Outstanding at January 1, 2022			24,000			$	13.71
Granted			20,000				7.18
Exercised			-				-
Canceled, forfeited, or expired			-				-
Outstanding at December 31, 2022			44,000				10.74
Granted			-				-
Exercised			-				-
Canceled, forfeited, or expired			(10,000	)			16.21
Outstanding at December 31, 2023			34,000				9.13
Granted			20,000				6.64
Exercised			-				-
Canceled, forfeited, or expired			(10,000	)			12.07
Outstanding at December 31, 2024			44,000				7.33

 

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There were 3,506,324 stock units (options or awards) available for grant under the Incentive Plan. The following table provides the remaining contractual term and weighted average exercise prices of stock options outstanding and exercisable from the Incentive Plan at December 31, 2024.

 

				Options Outstanding												Options Exercisable
								Weighted
				Number				Average				Weighted				Number				Weighted
				Outstanding at				Remaining				Average				Exercisable at				Average
Exercise				December 31,				Contractual				Exercise				December 31,				Exercise
Price				2024				Life				Price				2024				Price
$	11.56				4,000				0.06			$	11.56				4,000			$	11.56
	7.18				20,000				2.61				7.18				20,000				7.18
	7.55				10,000				4.21				7.55				10,000				7.55
	5.73				10,000				4.62				5.73				10,000				5.73
					44,000				3.20				7.33				44,000				7.33

 

The aggregate intrinsic value of total options outstanding and exercisable was $0 at December 31, 2024 and 2023. Intrinsic value is the amount by which the last trade price of the common stock closest to December 31, 2024 and 2023 exceeded the exercise price of the options granted.

  

18.	STOCKHOLDERS’ EQUITY

 

St. Albans Global Management, LLC (“St. Albans”), an entity affiliated with Mr. P. A. Novelly II, a member of the board, is entitled to demand that the Company register under the Securities Act of 1933, as amended, the resale of all shares of the Company’s common stock beneficially owned by it. If St. Albans exercises its registration rights with respect to all 17,085,100 shares of the Company’s common stock currently owned by it, there will be an additional 6,637,600 registered shares of common stock available for trading in the public market. 

 

Dividends payable at December 31, 2024 was $0.06 per common share per quarter or $10,699.

 

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19.	EMPLOYEE BENEFIT PLANS

 

Defined contribution savings plan

 

The Company currently offers its employees a company 401(k) matching savings plan, which covers substantially all employees. Under this plan, the Company matches the amount of eligible employees’ contributions, subject to specified limits, up to 6% of earnings. Company contributions totaled $2,080, $1,923, and $1,719 for the years ended December 31, 2024, 2023 and 2022, respectively.

  

20.	RELATED PARTY TRANSACTIONS

 

The Company enters into transactions with companies affiliated with or controlled by a director or significant stockholder. Revenues, expenses, accounts receivable, prepaid amounts, and unpaid amounts related to these transactions are captured on the consolidated financial statements as related party line items. These related party transactions are summarized in the following table and further described below.

 

Related party balance sheet accounts

 

		2024				2023
Accounts receivable
Biodiesel, petrodiesel, blends and other petroleum products		$	-			$	1
Total accounts receivable		$	-			$	1
Prepaid expenses
Administrative services and other		$	-			$	12
Total prepaid expenses		$	-			$	12
Accounts payable
Fuel purchases		$	-			$	-
Travel and administrative services and other			139				42
Total accounts payable		$	139			$	42

 

Related party income statement accounts

 

		Years ended December 31:
		2024				2023				2022
Revenues
Biodiesel, petrodiesel, blends and other petroleum products		$	-			$	22			$	459
Total revenues		$	-			$	22			$	459
Cost of goods sold
Biodiesel, petrodiesel, blends, and other petroleum products		$	66			$	-			$	5,425
Natural gas purchases							(315	)			-
Total cost of goods sold		$	66			$	(315	)		$	5,425
Distribution
Distribution and related services		$	179			$	176			$	174
Total distribution		$	179			$	176			$	174
Selling, general and administrative expenses
Commodity trading advisory fees		$	316			$	308			$	307
Travel and administrative services			196				188				184
Income tax, consulting services and other			120				120				120
Total selling, general, and administrative expenses		$	632			$	616			$	611

 

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Biodiesel, petrodiesel, blends, and other petroleum products

 

The Company enters into agreements to buy and sell biofuels (biodiesel, petrodiesel, biodiesel/petrodiesel blends, RINs, and biodiesel production byproducts) with an affiliate from time to time. Such agreements are priced at the then-current market price of the product as determined from bids from other customers and/or market pricing services. Cost of goods sold related to these sales includes variable costs and allocated fixed costs. The revenue amounts presented in the table above result when the Company sells biodiesel, petrodiesel, blends, and other petroleum products to a related party regardless of who the material was purchased from.  Likewise, cost of goods sold amounts result when biodiesel, petrodiesel, blends, and other petroleum products are purchased from a related party regardless of who the material was sold to.  

 

Natural gas purchases

 

The Company uses natural gas to generate steam for its manufacturing process and to support certain of its air and waste treatment utilities. 

 

Distribution and related services

 

The Company leases oil storage capacity from an affiliate under a storage and throughput agreement. This agreement provides for the storage of biodiesel, diesel or biodiesel/petrodiesel blends, methanol, and biodiesel feedstocks in above-ground storage tankage at designated facilities of the affiliate. Expenses related to this agreement include monthly lease charges, generally on a per-barrel basis, and associated heating, throughput, and other customary terminalling charges.

 

Commodity trading advisory fees

 

The Company entered into a commodity trading advisory agreement with an affiliate. Pursuant to the terms of this agreement, the affiliate provides advice to the Company concerning the purchase, sale, exchange, conversion, and/or hedging of commodities as requested from time to time.

 

Travel and administrative services

 

The Company reimburses an affiliate for legal, trading, travel and other administrative services incurred on its behalf. Such reimbursement is performed at cost with the affiliate realizing no profit on the transaction.

 

Income tax and consulting services

 

An affiliate provides professional services to the Company, primarily in the area of income tax preparation and consulting. The Company also receives certain finance and accounting expertise from this affiliate as requested. Expenses related to these services comprise an agreed quarterly fee plus reimbursement of expense, at cost and are reported as selling, general, and administrative expenses.

 

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21.	SEGMENT INFORMATION

 

The Company has two reportable segments organized along similar product lines – chemicals and biofuels. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2. The chief operating decision maker (“CODM”) is Roeland Polet, the chief executive officer. The CODM reviews the significant components for each of our segments. The CODM evaluates the performance of each reportable segment and decides how to allocate resources based on segment gross profit (loss) which includes the revenue and expenses that are directly attributable to management of each segment. The CODM uses segment gross profit (loss) to assess the income generated by each reportable segment and to decide which reportable segment to reinvest profits or pay dividends. Segment gross profit (loss) is also used to analyze performance against the budget and the Company’s competitors.

  

Chemicals

 

The Company’s chemicals segment manufactures diversified chemical products that are sold to third party customers. This segment comprises two product groups: “custom manufacturing” (manufacturing chemicals for specific customers) and “performance chemicals” (multi-customer specialty chemicals). Included in this segment is warehouse lease rental revenue from a warehouse that was originally acquired for chemical storage.

 

Biofuels

 

The Company’s biofuels segment manufactures and markets biodiesel. Biodiesel revenues are generated through the sale of biodiesel to customers through the Company’s distribution network at the Batesville plant, through distribution facilities available at leased oil storage facilities, and through a network of remotely located tanks. Results of the biofuels business segment also reflect the sale of biodiesel blends with petrodiesel, petrodiesel with no biodiesel added, RINs, biodiesel production byproducts, and revenue and profits from Legacy Regional Transport.

 

Summary of business by segment 

 

		For the Year Ended December 31, 2024
		Chemical				Biofuel				Total
Revenue		$	80,007			$	163,332			$	243,339
Less:
Cost of goods sold			56,627				164,299				220,926
Distribution			748				2,021				2,769
Segment gross profit (loss)		$	22,632			$	(2,988	)		$	19,644
Reconciliation of Segment gross profit (loss) to Net Income before income taxes:
Selling, general, and administrative expenses										$	9,279
Research and development expenses											3,993
Other income, net											(9,923	)
Net income before income taxes										$	16,295

 

		For the Year Ended December 31, 2023
		Chemical				Biofuel				Total
Revenue		$	79,333			$	288,917			$	368,250
Less:
Cost of goods sold			48,650				275,346				323,996
Distribution			747				2,528				3,275
Segment gross profit		$	29,936			$	11,043			$	40,979
Reconciliation of Segment gross profit (loss) to Net Income before income taxes:
Selling, general, and administrative expenses										$	9,213
Research and development expenses											4,398
Other income, net											(10,015	)
Net income before income taxes										$	37,383

 

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		For the Year Ended December 31, 2022
		Chemical				Biofuel				Total
Revenue		$	80,893			$	315,121			$	396,014
Less:
Cost of goods sold			54,244				308,363				362,607
Distribution			1,004				3,410				4,414
Segment gross profit		$	25,645			$	3,348			$	28,993
Reconciliation of Segment gross profit (loss) to Net Income before income taxes:
Selling, general, and administrative expenses										$	8,032
Research and development expenses											3,415
Other expense, net											3,808
Net income before income taxes										$	13,738

 

Depreciation is allocated to segment cost of goods sold based on plant usage. Total assets and capital expenditures of the Company have not been allocated to individual segments as large portions of these assets are shared to varying degrees by each segment, causing such an allocation to be of little value.

 

22.	LEGAL PROCEEDINGS

 

The Company is not a party to, nor is any of its property subject to, any material pending legal proceedings, other than ordinary routine litigation incidental to its business. However, from time to time, the Company may be a party to, or a target of, lawsuits, claims, investigations, and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which the Company expects to be handled and defended in the ordinary course of business. While the Company is unable to predict the outcome of any matters currently pending, the Company does not believe that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows. However, adverse developments could negatively impact earnings or cash flows in future periods.

 

During the year ended December 31, 2024, the Company resolved a prior-year legal dispute which resulted in a cash payment of $2,750 to FutureFuel which is reflected in Other (expense) income in the Consolidated Statements of Income and Comprehensive Income in the twelve months ended December 31, 2024.

23.	SUBSEQUENT EVENT

 

The Company evaluated subsequent events that would require an adjustment to the Company’s consolidated financial statements or require disclosure in the notes to the consolidated financial statements through the date of issuance of the consolidated financial statements. Where applicable, the notes to these consolidated financial statements have been updated to discuss significant subsequent events which have occurred, except as disclosed below.

 

A vendor's late delivery of essential wastewater management infrastructure caused the Company in January 2025 to halt its biodiesel production to manage wastewater processing within our permit limits. Consequently, the Company decided to move up its planned turnaround, initially scheduled for later in the year, and began this process in early January 2025.  Subsequently, in late February, severe inclement weather impacted the Company's ability to complete the turnaround and restart the various production processes it operates in Batesville. Biodiesel production will likely not restart until the end of March 2025 at the earliest.

 

On February 21, 2025, the Company, amended and restated its credit agreement as detailed in Note 12.

 

 

  

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Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A.

Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our chief executive officer and our principal financial officer and other senior management personnel, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our chief executive officer and our principal financial officer have concluded that these disclosure controls and procedures as of December 31, 2024 were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, management has concluded that, as of December 31, 2024, our internal control over financial reporting is effective based on those criteria.

 

The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by Grant Thornton LLP, a registered public accounting firm, which expressed an unqualified opinion as stated in their report, a copy of which is included below.

 

Changes in Internal Control Over Financial Reporting

 

For the fiscal quarter ended December 31, 2024, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management believes that the consolidated financial statements included in this Annual Report on Form 10-K present fairly in all material respects our consolidated financial position, results of operations and cash flows for the period presented.

 

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors and Stockholders

FutureFuel Corp.

 

Opinion on the Internal Control Over Financial Reporting

We have audited the internal control over financial reporting of FutureFuel Corp. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated March 31, 2025 expressed an unqualified opinion on those financial statements.

 

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

/s/ GRANT THORNTON LLP

 

Tulsa, Oklahoma

March 31, 2025

 

 

Changes in Internal Control Over Financial Reporting

 

We did not make any changes in our internal control over financial reporting as a result of our evaluation that occurred during the fiscal quarter ended December 31, 2024.

Item 9B.

Other Information.

 

None.

 

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 

None.

 

 

PART III

 

Unless otherwise stated, all dollar amounts are in thousands.

 

Item 10.

Directors, Executive Officers, and Corporate Governance.

 

Identification of Directors

 

Our directors are as follows:

 

Name		Age				Director Since				Term Expires
Donald C. Bedell, Chairman			83				2008				2025
Paul M. Manheim			76				2011				2026
Dale E. Cole			76				2015				2027
Terrance C.Z. Egger			67				2015				2025
P. A. Novelly, II			57				2022				2026
Ron J. Kruszewski			66				2022				2025
G Bruce Greer			64				2024				2027
Richard P. Rowe			64				2024				2026

 

There is no arrangement or understanding between any of the above directors and any other person pursuant to which such person was or is to be selected as a director.

 

Identification of Executive Officers

 

Our executive officers are as follows: 

 

								Officer
Name		Position		Age				Since
Roeland Polet (a)		Chief Executive Officer			62				2024
Rose M. Sparks		Principal Financial Officer and Chief Financial Officer			58				2012
Charles W. Lyon (b)		Chief Commercial Officer			64				2021
Kyle Gaither		Chief Operations Officer			57				2023

 

(a)	Mr. Polet was appointed Chief Executive Officer on September 3, 2024.
(b)	Mr. Lyon and the Company agreed to terminate his employment as Chief Commercial Officer effective as of March 31, 2025.

 

There is no other arrangement or understanding between any of the above officers and any other person pursuant to which such person was or is to be selected as an officer.

 

 

Family Relationships

 

There are no family relationships between any of our executive officers and directors.

 

Business Experience

 

Donald C. Bedell has been a member of our board since 2008 and Vice Chairman of the board since December 2023. Mr. Bedell is chairman of the board of privately held Castle Partners and its affiliates, based in Sikeston, Missouri, which operate over 35 skilled nursing, health care, pharmaceutical, hospice, and therapy facilities throughout Missouri and other states. Mr. Bedell is a director of First Community Bank of Batesville, Arkansas and is a member of the executive committee of such bank and its holding company. He is also a director of World Point Terminals, Inc., a Delaware company based in Missouri that, through its operating subsidiaries, owns and operates petroleum storage facilities in the United States.

 

Our board believes that Mr. Bedell’s experience, knowledge, skills, and expertise acquired as the chairman at Castle Partners, including experience and understanding of business strategy formation and execution from both a board and management perspective, add significant value to our board. Additionally, Mr. Bedell’s service and experience as a director for other boards, including active involvement in strategic planning for those companies, strengthens the governance and functioning of our board.

 

 

Paul M. Manheim has served on our board since 2011. Mr. Manheim is currently a non-executive director of HAL Real Estate Inc., which develops and owns a portfolio of real estate in the Pacific Northwest consisting of multi-family, office, and mixed-use assets. He was the president and chief executive officer of HAL Real Estate Inc. until September 2005. HAL Real Estate Inc. is a subsidiary of HAL Holding N.V. Mr. Manheim joined Holland America Line, N.V., the predecessor of HAL Holding N.V., an international holding company traded on the Amsterdam Stock Exchange, in 1982 and filled various positions in the financial and corporate development areas. June 2005 to 2014, Mr. Manheim was the chairman of the board of Shanghai Red Star Optical Company, which owned a portfolio of optical retail outlets in China and was affiliated with Europe’s largest optical retailer. Mr. Manheim has served as a director and chairman of the audit committee of World Point Terminals, Inc. and its predecessor since 2009. He is also a director of World Point Terminals, Inc., a Delaware company based in Missouri that, through its operating subsidiaries, owns and operates petroleum storage facilities in the United States. Mr. Manheim received a bachelor of commerce degree with honors from the University of New South Wales, Australia, and qualified as a Chartered Accountant in 1976.

 

Our board believes that Mr. Manheim’s experience, knowledge, skills, and expertise acquired as the president and chief executive officer at HAL Real Estate Inc., including experience and understanding of business strategy formation and execution from both a board and management perspective, add significant value to our board. Additionally, Mr. Manheim’s service and experience as a director for other boards, strengthens the governance and functioning of our board. Finally, Mr. Manheim’s experience as the chairman of the audit committee of WPT GP, LLC and his experience as a chartered accountant add significant value to our board and the Company.

 

Dale E. Cole has served on our board since 2015 and is a graduate of the University of Texas at Austin with an undergraduate degree in business and finance and the Graduate School of Banking at Louisiana State University. Mr. Cole’s career in banking began in 1974 with Texas Bank and Trust Company in Dallas, TX. He then worked with First National Bank in Marshal, TX, and became President of Banc Texas McKinney in McKinney, TX in 1983. In 1988, Mr. Cole became Chairman and CEO of Worthen Banking Corporation, with two banks in Batesville and Newark, AR. Mr. Cole founded First Community Bank in 1997. He currently serves as Chairman and CEO of First Community Bank and its holding company. Mr. Cole previously served on the Board of Trustees of the Barret School of Banking in Memphis, TN, the Board of Visitors of the University of Arkansas Community College in Batesville, AR, the Board of the Chamber of Commerce, Economic Development Foundation in Batesville, AR, Lyon College Advisory Counsel, and the board of White River Medical Center in Batesville, AR. Mr. Cole previously served on the board of Lyon College in Batesville. As of December 31, 2024, First Community Bank had 33 branch locations in Northeast Arkansas and Southwest Missouri and maintained assets of over $2.9 billion.

 

Mr. Cole’s extensive career in banking built in him a strong foundation in business, regulatory environments, and corporate governance. Having served on numerous committees throughout his career, including compensation, trust, executive, asset/liability, investment, and many others, Mr. Cole’s well-rounded experience and exposure in banking and regulatory environments will strengthen the governance function of our board. Additionally, Mr. Cole’s service and experience as chairman for other boards, including active involvement in strategic planning for those companies, strengthens the governance and functioning of our board and the Company.

 

Terrance C.Z. (Terry) Egger has served on our board since 2015. He retired as the publisher and CEO of Philadelphia Media Network, parent company of the Philadelphia Inquirer, the Philadelphia Daily News and Philly.com, that region’s largest news company, in which capacity he oversaw all operations of the newspaper and its affiliates. Prior to August 2015, Mr. Egger served as president and CEO of the Cleveland 2016 Host Committee, Inc., where he led the successful effort for the City of Cleveland to host the 2016 Republican National Convention. In 2013, Mr. Egger had retired as chairman of The Plain Dealer Publishing Co. in Cleveland, parent company of The Plain Dealer, Ohio’s largest newspaper, where he had served in several executive capacities from 2006. From 1996 to 2006, Mr. Egger was the president and publisher of the St. Louis Post-Dispatch, where he supervised all operations, including its website STLtoday.com and Suburban Journals of Greater St. Louis. Terry started his newspaper career managing marketing and advertising for papers in Los Angeles, California and Tucson, Arizona. Mr. Egger is a member of the Board of Directors of Medical Mutual of Ohio and a member of the Board of Trustees of the Cleveland Clinic Foundation. He has a bachelor’s degree from Augustana College and a master’s degree in speech communication from San Diego State University.

 

Our board believes that Mr. Egger’s experience, knowledge, skills, and expertise, including experience and understanding of business strategy, development, supervision, operations and management add significant value to our board. Additionally, Mr. Egger’s service and experience on other boards, strengthens the governance and functioning of our board and the Company.

 

 

Paul A. Novelly II has served on our board since July 2022. He serves as the Chief Executive Officer of Apex Holding Co. and its subsidiary Apex Oil Company, Inc., a privately held company based in St. Louis, Missouri, which together with its affiliates is engaged in trading, storage, marketing, and transportation of petroleum products, including the operation of liquid terminal facilities in the Midwest and Eastern United States. He has been a registered broker at Stifel, Nicolaus & Co., Inc. since 2005. Mr. Novelly II is the chief executive officer of Apex Holding Co. and the sole manager of SAGM Holdings, LLC, which is the manager of St. Albans Global Management, LLC, a family investment company. He is also the owner and president of St. Albans Construction Company, which serves the needs of the luxury custom home buyers. He also serves as a director of Apex Oil Company Charitable Foundation, since 2020, and World Point Terminals, Inc., since 2022.

 

Our board believes that Mr. Novelly’s experience, knowledge, skills, and expertise, including experience acquired in management of various companies, and his knowledge of the Company and its business along with his extensive experience as a broker with national securities firms in evaluating public companies and their financial reports, add significant value to our board and the Company.

 

Ronald J. Kruszewski has served on our board since July 2022. He is Chairman of the Board and Chief Executive Officer of Stifel Financial Corp. and its principal subsidiary, Stifel, Nicolaus & Company, Incorporated. He joined the firm as Chief Executive Officer in 1997 and was named Chairman in 2001. Mr. Kruszewski is the current Chairman of the American Securities Association (ASA) and serves on the Board of Directors of the Securities Industry and Financial Markets Association (SIFMA). From 2014 through 2019, he served on the Federal Advisory Council of the St. Louis Federal Reserve Board of Directors. Additionally, he serves on the Board of Trustees for both Saint Louis University and the U.S. Ski and Snowboard Team Foundation.

 

Active in community affairs, Mr. Kruszewski serves as a member of the Chair’s Council for Greater St. Louis Inc. He is also the past Chairman of the Board of Directors of Downtown STL, Inc. and past non‐executive Chairman of the Board of Directors of Angelica Corporation. In addition, he is a member of the St. Louis Chapter of the World Presidents’ Organization, and under Mr. Kruszewski’s leadership, Stifel became a member of the World Economic Forum in 2023. In 2019, Mr. Kruszewski won the Horatio Alger Award and was selected for membership in the Horatio Alger Association of Distinguished Americans, which honors individuals who have overcome adversity to achieve success and who have demonstrated commitment to higher education and charitable endeavors.

 

Our board believes that Mr. Kruszewski’s extensive managerial and leadership experience in the financial services industry in addition to a comprehensive understanding and knowledge of public companies’ day-to-day operations and strategy add significant value to our board and the Company.

 

G. Bruce Greer has served on our board since March 2024. Mr. Greer has served as President of GBGJR Advisors, an advisory firm providing strategic advice to chemical companies, private equity firms and consulting firms, since April 2017. Mr. Greer served as Vice President of Strategic Planning and IT at Olin Corporation (“Olin”) for 12 years. Prior to joining Olin, Mr. Greer spent nine years as a Vice President of Solutia, a public company spin off of The Monsanto Company, heading R&D, Commercial and Corporate Development, Strategy, M&A and running several businesses and was President of Pharma Services, and four years as a Vice President of Gemini Consulting and Services in Europe and the US, a global consulting firm with a focus on chemicals. He was a Vice President/Senior Director of Monsanto, working for the Chairman and at G D Searle. Mr. Greer was Chairman of the Board of Directors of Flexsys America L.P. Mr. Greer spent a year as a Senior Associate at Arthur Andersen LLP where his work focused on cost accounting and chemicals. He was an Assistant Professor at Northwestern University from 1988 through 1991 and served in the U.S. Navy.

 

Our board believes that Mr. Greer's extensive managerial and leadership experience in the chemical industry add significant value to our board and the Company.

 

Richard P. Rowe has served on our board since August 2024. Mr. Rowe has served as President of RPR Global Solutions, LLC, an advisory firm that provides advisory services to companies in the specialty chemicals and materials industries, since February 2022. After serving in various leadership positions for over 20 years at Arkema, S.A., a multi-national manufacturer of specialty materials and chemicals, Mr. Rowe served as President and Chief Executive Officer of Arkema Inc., a North American subsidiary of Arkema S.A., from July 2015 through November 2021, and served on the boards of various subsidiaries of Arkema S.A., such as Arkema Mexico Arkema Canada, and Bostik Inc., and Arkema joint ventures such as Arkema-Yoshitomi (Japan), Nitta-Findley (Japan), and Seki-Arkema (Korea). Mr. Rowe chaired the Global Fluorochemical Producers Forum and served on the American Chemistry Council Board as well as its Responsible Care and Sustainability committees for more than six years. Mr. Rowe serves as Vice President of Pediatric Pharmaceuticals and also as Vice President of Club Longboat Beach & Tennis.

 

Our board believes that Mr. Rowe's extensive managerial and leadership experience in the chemical industry adds significant value to our board and the Company.

 

 

Roeland Polet joined the Company as our Chief Executive Officer September 2024.  Mr. Polet served as the Chief Executive Officer, DSM Materials Businesses, for Koninklijke DSM N.V., a Dutch multinational corporation headquartered in Heerlen, Netherlands and publicly traded company with ordinary shares listed on the NYSE Euronext stock exchange in Amsterdam ("DSM”). He served in such role from 2019 to 2023 and also served in other senior leadership roles for DSM from 2015 to 2022, including President and Chief Executive Officer, Protective Materials, and President and Chief Executive Officer, Engineering Materials. At DSM, Mr. Polet demonstrated broad product and end-market experience with respect to chemicals and other materials and implemented significant growth, talent, operational and commercial excellence initiatives. Prior to his service at DSM, Mr. Polet served in senior leadership roles at Valspar Corporation, Celanese Corporation and Carbolite Foods, Inc. Mr. Polet has extensive global business experience including in the United States, Asia and Europe. Mr. Polet received a bachelor of arts, economics, from State University of New York at Buffalo. 

 

Our board believes that Mr. Polet's extensive experience in the chemical industry, including his managerial and leadership experience, adds significant value to our company.

 

 

 

 

 

 

Rose M. Sparks served on our board from 2019 to July 2024. Mrs. Sparks has been our principal financial officer and treasurer and principal accounting officer since 2012 and our chief financial officer since 2013. Prior to 2013, Mrs. Sparks served as the controller of FutureFuel Chemical Company since its acquisition in 2006 and has 33 years of leadership, business, and accounting experience at the Batesville facility. Prior to our acquisition of FutureFuel Chemical Company, Mrs. Sparks worked for Eastman Chemical as controller at the Batesville plant. Mrs. Sparks graduated from Arkansas College with a BS in accounting and is a certified public accountant with inactive status.

 

Our board believes that Mrs. Sparks’ experience, knowledge, skills, and expertise acquired as controller of FutureFuel Chemical Company, and her knowledge of our operations and business strategies gained over her years of service in that role, as well as experience as a certified public accountant, add significant value to the Company.

 

Charles W. Lyon has served as our chief commercial officer since 2022, but Mr. Lyon and the Company agreed to terminate his employment as chief commercial officer effective as of March 31, 2025.  Mr. Lyon was previously hired as Senior Vice President of Strategy and Planning at FutureFuel Chemical Company, a wholly owned subsidiary of the Company, on September 7, 2021. Mr. Lyon leads the Company in sales, marketing, and technology and in implementing a business growth strategy for custom chemicals, specialty chemicals, and biodiesel products. Mr. Lyon is a global business executive with nearly 40 years of experience in the specialty chemicals industry and 30 years of international business experience in the industrial chemical and specialty chemical industries. He has extensive experience in establishing and growing specialty chemicals businesses, especially in the Americas and Asia Pacific regions. Mr. Lyon received a BS in Chemical Engineering (Magna Cum Laude) and a MS in Engineering Management, both from the University of Missouri in Rolla (now Missouri University of Science and Technology).

 

Prior to joining FutureFuel Chemical Company, Mr. Lyon was employed by Prefere Resins, where he was Business Director for the Americas and Asia. Prior to Prefere, and for fifteen years, he was Business Director, Americas and Asia, for INEOS Melamines, a unit of INEOS. Mr. Lyon also worked for UCB and Solutia, Inc. in various business leadership roles. He started his career with Monsanto Company, and held management positions in engineering, manufacturing, and global product management serving numerous specialty market segments.

 

Kyle Gaither was appointed as our Chief Operations Officer in February 2023. Prior to this appointment, Mr. Gaither served as General Manager since January 2018. Mr. Gaither has worked for FutureFuel Chemical Company and its predecessor, Eastman Chemical Company, and Eastman Kodak Company, for over 33 years in various leadership and engineering roles. He has spent the majority of his career in manufacturing and manufacturing support which has allowed him to gain a great working knowledge of the Company’s manufacturing operations and capabilities. Mr. Gaither received a BS degree in Chemical Engineering from the University of Arkansas and holds a Professional Engineer license. Our board believes that Mr. Gaither’s experience, knowledge, skills, and expertise acquired through his years of working in manufacturing for FutureFuel Chemical Company and its predecessors add significant value to the Company.

 

 

Involvement in Legal Proceedings

 

None of our directors or executive officers were involved within the past ten years in any matter described in Item 401(f) of Regulation S-K.

 

Code of Business Conduct and Ethics

 

We adopted a code of business conduct and ethics that applies to all of our employees and the employees of our subsidiaries, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of business conduct and ethics has been posted on our Internet website and may be accessed at https://futurefuelcorporation.gcs-web.com/corporate-governance. We will provide any person, without charge, a copy of such code of business conduct and ethics upon request to FutureFuel Corp., 8235 Forsyth Blvd., 9th Floor, Clayton, Missouri 63105, attention: Investor Relations.

 

 

Nominating/Corporate Governance Committee

 

Our board established a Nominating/Corporate Governance Committee and adopted a charter for such committee. A copy of this nominating/corporate governance committee charter is posted on our website and may be accessed at http://futurefuelcorporation.gcs-web.com/corporate-governance. The nominating/corporate governance committee charter contains procedures for Company shareholders to submit recommendations for nomination to our board. The nominating/corporate governance committee charter was attached as an exhibit to our Form 10 Registration Statement filed with the SEC on April 24, 2007 and was last updated on July 16, 2015.  The current members of the Nominating/Corporate Governance Committee are as follows:

 

Donald C. Bedell (Chair)

Dale E. Cole

Terrance C.Z. Egger

G. Bruce Greer

Paul M. Manheim

 

Audit Committee

 

We have a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act, and have adopted an audit committee charter. A copy of this audit committee charter has been posted on our website and may be accessed at http://futurefuelcorporation.gcs-web.com/corporate-governance. The current members of the Audit Committee are as follows:

 

Paul M. Manheim (Chair)

Dale E. Cole

Terrance C.Z. Egger

G Bruce Greer

Richard P. Rowe

 

Audit Committee Expert

 

Our board of directors determined that each member of our Audit Committee is an audit committee financial expert. Each such member of our Audit Committee is independent, as independence for audit committee members is defined in the listing standards applicable to us.

 

Insider Trading Policies

 

Our board adopted insider trading policies governing the purchase and sale of securities by our directors, officers, and employees and those of our subsidiaries. A copy of this insider trading policy is attached as Exhibit 19.1 to this Annual Report on Form 10-K and has also been posted on our website and may be accessed at https://futurefuel-corporation.ir.rdgfilings.com/wp-content/uploads/sites/34/2021/04/Insider_Trading_Policy.pdf.

 

 

Item 11.

Executive Compensation.

 

General 

 

Our board of directors has established a Compensation Committee. The Compensation Committee’s responsibilities include, among other things, determining our policy on remuneration to the Company’s officers and directors and the executive officers and directors of FutureFuel Chemical Company. In 2024, we paid salaries, bonuses, and other forms of compensation to the Company's officers and the officers of FutureFuel Chemical Company as described below.

 

With the exception of Rose M. Sparks, who serves as our principal financial officer and chief financial officer and FutureFuel Chemical Company’s chief financial officer, we determined for 2024 not to pay salaries, bonuses, or other forms of cash compensation to any of our board members that serve as executive officers (in their capacities as such). Executive officer compensation will be monitored during 2025 and set or adjusted as the board deems appropriate.

 

Compensation Discussion and Analysis

 

The objectives of our compensation program are to provide a competitive compensation package that rewards sustained financial and operating performance that creates long-term value for our shareholders. Our compensation programs are intended to meet the goals of attracting and retaining qualified personnel; motivating these individuals to achieve short-term and long-term corporate goals without undue risk-taking and to promote equity among executive officer positions, while considering external competitiveness and differences in job responsibilities.

 

The elements of our compensation program include base salary, bonuses, certain equity awards to our CEO, and certain retirement, insurance, and other benefits generally available to all employees. In addition, in 2017, our board adopted the Incentive Plan which was approved by our shareholders at our 2017 annual meeting. The Incentive Plan provides equity-based compensation to our executive officers and our directors. Our Compensation Committee, and the Company generally, makes decisions with respect to each compensation element paid or payable to our personnel on an individual-by-individual basis and does not necessarily take into account decisions made with respect to other elements of compensation that may be paid to such individual. The overall goal of our compensation program, however, is to achieve the goals described above.

 

Cash Salaries and Bonuses

 

Mr. McKinlay resigned as Chief Executive Officer in May 2024.  Prior to his resignation, Mr. McKinlay was compensated based on an annual base salary of $400 as approved by the Compensation Committee.  Upon his resignation, Mr. McKinlay was given a separation package which included his anticipated bonus for 2024 and one year's salary to be distributed in two payments with one payment in 2024 and one in 2025. 

 

Mr. Polet was hired in August 2024 to replace Mr. McKinlay.  In connection with his appointment, the Company and Mr. Polet entered into an Employment Agreement dated August 16, 2024 (the “Employment Agreement”). The Employment Agreement provides for, among other things, an annual base salary of $500 and a target annual bonus equal to 50% his annual base salary, subject to performance conditions established from time to time by the Compensation Committee.

 

For the year 2024, we established a bonus pool for the employees of our subsidiary, FutureFuel Chemical Company. The total bonus target amount was determined by our chief executive officer in consultation with our other executive officers and the Compensation Committee. Eligible FutureFuel Chemical Company employees hired prior to January 1, 2024 received bonuses of approximately 99 hours of pay at their normal hourly rate. Employees hired in 2024 received a prorated or reduced amount based on their length of service. Salaried employees of FutureFuel Chemical Company (other than FutureFuel Chemical Company’s lead management team) received an additional bonus amount ranging from $0 to $5.6. Bonuses to FutureFuel Chemical Company’s managers other than the lead management team were determined by FutureFuel Chemical Company’s officers. Bonuses in 2024 for Mr. Polet, Mrs. Sparks, Mr. Lyon, Mr. Gaither, and other members of lead management of FutureFuel Chemical Company were recommended by our Compensation Committee in respect of our chief executive officer and by our chief executive officer for all other executive officers, then reviewed and approved by the Compensation Committee of our Board after considering several factors, including our overall financial performance and comparative information regarding the executive pay practices of our competitors. Such bonus distributions were designed to be sufficient compensation for the services rendered, competitive with market rates for similar services, and sufficient to motivate these individuals to aid in our achievement of short-term and long-term corporate goals.  Mr. Polet voluntarily took a 50% decrease in his bonus to increase the amounts payable to other employees of the Company. 

 

 

Incentive Plan

 

Our board of directors adopted the Incentive Plan, which was approved by our shareholders at our 2017 annual shareholder meeting. The purpose of the Incentive Plan is to:

 

	●	Encourage ownership in us by key personnel whose long-term employment with or engagement by us or our subsidiaries (including FutureFuel Chemical Company) is considered essential to our continued progress and, thereby, encourage recipients to act in our shareholders’ interests and share in our success;
	●	Encourage such persons to remain in our employ or in the employ of our subsidiaries; and
	●	Provide incentives to persons who are not our employees to promote our success.

 

The Incentive Plan authorizes us to issue stock options (including incentive stock options and non-qualified stock options), stock awards, and stock appreciation rights. As of December 31, 2024, we have issued or awarded 84,000 options to purchase shares of our common stock, 750,000 restricted stock units (“RSUs”) and 40,000 shares of restricted stock, in each case under the Incentive Plan. The Employment Agreement for Mr. Polet provided for the issuance of the 750,000 RSUs to him, vesting in five equal installments on each anniversary of the award date and subject to the other terms and conditions of the Incentive Plan and an award agreement entered into by the Company and Mr. Polet. See Note 17 to our consolidated financial statements for a detailed discussion of 2023 stock-based compensation awards. Historically, the Company has not regularly issued equity awards under the Incentive Plan and therefore has not had a determined schedule for award issuance. However, the Compensation Committee did not take material nonpublic information into account when determining the timing and terms of equity awards in 2024, and the Company does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

 

Eligible participants in the Incentive Plan include (i) members of our board of directors and our executive officers; (ii) regular, active employees of us or of any of our subsidiaries; and (iii) persons engaged by us or by any of our subsidiaries to render services to us or our subsidiaries as an advisor or consultant.

 

Awards under the Incentive Plan are limited to shares of our common stock, which may be shares reacquired by us, including shares purchased in the open market, or authorized but unissued shares. Awards are limited to 10% of the issued and outstanding shares of our common stock in the aggregate, or 4,310,167 shares, as of the date of the adoption of the Incentive Plan. Taking into account the prior grants of stock options and stock awards under the Incentive Plan, 3,506,324 shares are available to be issued under the Incentive Plan as of December 31, 2024.

 

The Incentive Plan is administered by: (i) our board, (ii) a committee of our board appointed for that purpose; or (iii) if no such committee is appointed, our board’s Compensation Committee (in any case, the “Administrator”). The Administrator may appoint agents to assist it in administering the Incentive Plan. The Administrator may delegate to one or more individuals the day-to-day administration of the Incentive Plan and any of the functions assigned to the Administrator in the Incentive Plan. Such delegation may be revoked at any time. All decisions, determinations, and interpretations by the Administrator regarding the Incentive Plan and the terms and conditions of any award granted thereunder will be final and binding on all participants.

 

The Incentive Plan became effective upon its approval by our shareholders and will continue in effect for a term of ten years thereafter unless amended and extended by us or unless earlier terminated. The individuals and number of persons who may be selected to participate in the plan in the future is at the discretion of the Administrator and, therefore, are not determinable at this time. Likewise, the number of stock options, stock awards and stock appreciation rights that will be granted to eligible participants pursuant to the plan are not determinable at this time.

 

The Administrator may grant a stock option or provide for the grant of a stock option either from time to time in the discretion of the Administrator or automatically upon the occurrence of events specified by the Administrator, including the achievement of performance goals or the satisfaction of an event or condition within the control of the participant or within the control of others. Each option agreement must contain provisions regarding (i) the number of shares of common stock that may be issued upon exercise of the option; (ii) the type of option; (iii) the exercise price of the shares and the means of payment for the shares; (iv) the term of the option; (v) such terms and conditions on the vesting or exercisability of the option as may be determined from time to time by the Administrator; (vi) restrictions on the transfer of the option and forfeiture provisions; and (vii) such further terms and conditions not inconsistent with the plan as may be determined from time to time by the Administrator. Unless otherwise specifically determined by the Administrator or otherwise set forth in the Incentive Plan, the vesting of an option will occur only while the participant is employed or rendering services to us or one of our subsidiaries, and all vesting will cease upon a participant’s termination of employment for any reason.

 

 

The Administrator may grant annual performance vested options. Performance will be tied to annual cash flow targets (our consolidated income plus depreciation plus amortization) in amounts to be determined. Annual performance vested options will vest 25% for each year that the annual cash flow target is achieved (with provisions for subsequent year catch-ups). Neither our management nor our Compensation Committee, however, has through the year ended December 31, 2023 made any awards that were contingent upon the achievement of specified performance goals or that were otherwise performance-vested. Rather, through 2022, all grants were made in the discretion of our Compensation Committee based upon their authority under the Incentive Plan.

 

The Administrator may grant cumulative performance vested options. Performance will be tied to cumulative cash flow in amounts to be determined for periods to be determined.

 

The Administrator may issue other options based upon the following performance criteria either individually, alternatively, or in any combination, applied to either us as a whole or to a business unit, subsidiary, or business segment, either individually, alternatively, or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Administrator: (i) cash flow; (ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, and net earnings) ; (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average shareholders’ equity; (vii) total shareholder return; (viii) return on capital; (ix) return on assets or net assets; (x) return on investment; (xi) revenue; (xii) income or net income; (xiii) operating income or net operating income; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue; (xvii) market share; (xviii) overhead or other expense reduction; (xix) growth in shareholder value relative to the moving average of the S&P 500 Index or a peer group index; (xx) strategic plan development and implementation; and (xxi) any other similar criteria.

 

Such options will vest and expire (including on a pro rata basis) on such terms as may be determined by the Administrator from time to time consistent with the terms of the Incentive Plan.

 

The Administrator may award shares of our common stock to participants. The grant, issuance, retention, or vesting of each stock award may be subject to such performance criteria and level of achievement versus these criteria as the Administrator determines, which criteria may be based on financial performance, personal performance evaluations, or completion of service by the participant. Unless otherwise provided for by the Administrator, upon the participant’s termination of employment other than due to death or retirement, the unvested portions of the stock award and the shares of our common stock subject thereto will generally be forfeited. Unless otherwise provided for by the Administrator, if a participant’s termination of employment is due to death or retirement, all outstanding stock awards will continue to vest provided certain conditions to be determined are met. Unless otherwise provided for by the Administrator, if a participant’s termination of employment is due to his death, a portion of each outstanding stock award granted to such participant will immediately vest and all forfeiture provisions and repurchase rights will lapse as to a prorated number of shares of common stock determined by dividing the number of whole months since the grant date by the number of whole months between the grant date and the date that the stock award would have fully vested.

 

The Administrator may grant stock appreciation rights either alone or in conjunction with other awards. The Administrator will determine the number of shares of common stock to be subject to each award of stock appreciation rights. The award of stock appreciation rights will not be exercisable for at least six months after the date of grant except as the Administrator may otherwise determine in the event of death, disability, retirement, or voluntary termination of employment of the participant. Except as otherwise provided by the Administrator, the award of stock appreciation rights will not be exercisable unless the person exercising the award of stock appreciation rights has been at all times during the period beginning with the date of the grant thereof and ending on the date of such exercise, employed by or otherwise performing services for us or one of our subsidiaries.

 

In the event there is a change in control of the Company, as determined by our board, our board may, in its discretion: (i) provide for the assumption or substitution of, or adjustment to, each outstanding award; (ii) accelerate the vesting of awards and terminate any restrictions on cash awards or stock awards; and (iii) provide for the cancellation of awards for a cash payment to the participant.

 

 

Federal Income Tax Consequences of the Incentive Plan

 

Upon the exercise of a non-qualified stock option, a participant in the Incentive Plan will realize income in the year of exercise equal to the difference between the exercise price and the value of the shares acquired, and we may deduct an amount equal to the income recognized by the participant, subject to the limits under applicable laws. We will not receive a tax deduction at the time of a grant or exercise of an incentive stock option, and no income is recognized by a participant when an incentive stock option is granted or exercised. When an incentive stock option is exercised, the difference between fair market value at the date of exercise and the exercise price will be an item of adjustment for purposes of calculating the participant’s alternative minimum tax for the year of exercise. 

 

If the shares of our common stock acquired upon exercise of an incentive stock option are disposed of after the later of two years from the date of option grant or one year after the transfer of the shares to the participant (the “holding period”), any gain or loss upon disposition of the shares will be treated for federal income tax purposes as long-term capital gain or loss, as the case may be. A disposition includes a sale, exchange, gift or other transfer of legal title. In general, a participant’s basis in the shares of our common stock received upon exercise of an incentive option will be the exercise price paid by him or her for the shares. If the option shares are disposed before the expiration of the holding period, all or part of any gain will be characterized as ordinary income depending upon the relative amount of the sale price of the shares as compared with the exercise price of the shares. The amount of ordinary income realized by an employee in a sale or exchange for which a loss would be recognized is limited to the excess of the amount realized on the sale or exchange over the stock’s adjusted basis.

 

Upon issuance of RSAs, a participant in the Incentive Plan will not recognize income in the year of grant but will, absent a Section 83(b) election, receive taxable income in the year which the shares' restrictions lapse equal to the market value of the stock on the lapse date.  We will receive a corresponding tax deduction when the participant recognizes taxable income. 

 

Ordinary income received on account of a disposition of shares within the holding period will be taxable as additional compensation, and we may treat that income as a deductible expense for federal income tax purposes.

 

Retirement Benefits

 

We adopted a 401(k) plan for FutureFuel Chemical Company which is generally available to all of its employees.

 

Life Insurance and Other Employee Benefits

 

Our executive officers generally participate in employee welfare plans (life insurance, medical insurance, disability insurance, vacation pay, and the like) maintained by FutureFuel Chemical Company for all of its employees.

 

The Compensation Committee

 

Our Compensation Committee currently consists of Donald C. Bedell, Dale E. Cole (Chair), and Terrance C.Z. Egger. Each of these individuals is an “independent director” under the rules of the NYSE, a “Non-Employee Director” within the meaning of Section 16 of the Exchange Act, and an “outside director” within the meaning of §162(m) of the Internal Revenue Code of 1986, as amended.

 

Recommendations from Management

 

Our chairman and chief executive officer make recommendations to the Compensation Committee regarding salaries and bonuses for executive officers, as well as awards under the Incentive Plan. The Compensation Committee takes these recommendations into consideration in approving all such salaries, bonuses, and awards.

 

 

Summary Compensation Table

 

Our executive officers were paid the following compensation for the three-year period ended December 31, 2024.

 

Summary Compensation Table

 

(Dollars in thousands)

 

												Stock				Option				All Other
Person		Year		Salary				Bonus				Awards (g)				Awards				Compensation (h)				Total
Roeland Polet (a), (b)		2024		$	143			$	41			$	4,911			$	-			$	9			$	5,104
Chief Executive Officer
Tom McKinlay (a), (c)		2024			317				52				-				-				60				429
Chief Executive Officer and former		2023			442				206				-				-				51				699
Chief Operating Officer FutureFuel Chemical Company		2022			287				150				-				-				49				486
Rose M. Sparks (a), (d)		2024			317				52				-				-				61				430
Chief Financial Officer, principal financial officer, and treasurer,		2023			280				152				-				-				128				560
FutureFuel Corp. and FutureFuel Chemical Company		2022			212				110				-				-				58				380
Charles Lyon (a), (e)		2024			283				52				-				-				51				386
Chief Commercial Officer FutureFuel Corp.		2023			271				149				-				-				45				465
		2022			225				111				-				-				44				380
Kyle Gaither (a), (f)		2024			258				52				-				-				29				339
Chief Operations Officer		2023			248				145				-				-				24				417
FutureFuel Corp.

 

(a)

Executive officers of FutureFuel Chemical Company for the years indicated.

 

(b)

Mr. Polet was appointed Chief Executive Officer effective September 3, 2024 upon Mr. McKinlay's retirement.  Mr. Polet was issued 750,000 RSUs that vest annually on the anniversary date.  These RSUs and related dividends had an intrinsic value of $4,519 and $392, respectively.

 

(c)

Mr. McKinlay retired from the chief executive officer position May 2024 and was given a separation payment of his expected bonus for 2024 (other compensation) as well as half his annual salary to provide certain consulting services to the Company. He will receive another payment of half his salary in 2025. He had been appointed as chief executive officer on July 31, 2022. In 2023, the Compensation Committee approved an adjustment to Mr. McKinlay's base salary to $400 per annum and that resulted in a lump sum payment in February 2023 of $56 (based on a deemed retroactive adjustment to August 2022). This lump sum payment is included in Mr. McKinlay's compensation for 2023.

 

(d)

For Mrs. Sparks, all other compensation includes director fees of $35, $105 and $37 in 2024, 2023, and 2022, respectively.  Mrs. Sparks resigned from the board of directors in July 2024.

 

(e)

Mr. Lyon and the Company agreed to terminate his employment effective as of March 31, 2025.

 

(f)

Mr. Gaither was appointed Chief Operations Officer effective February 9, 2023.  Prior to such appointment, Tom McKinlay served in this role.

 

	(g)	Represents the grant date valuation of the awards under ASC Topic 718, Stock Compensation. Assumptions used for determining the value of awards reported here are set forth in Note 17 to our consolidated financial statements included elsewhere herein.
	(h)	Includes contributions (including accrued contributions) to vested and unvested defined contribution plans, apartment benefits for Mr. Polet and Mr. Lyon, automobile benefits for Mr. Lyon, HSA matching contributions, and the dollar value of any insurance premiums paid by, or on behalf of, us during or for the covered fiscal year with respect to life and disability insurance for the benefit of the named person. The above amounts do not include travel expenses reimbursed pursuant to Company policy. For 2024, the value of all other compensation not a perquisite or personal benefit in excess of $10 was for 401(k) match and the 2023 401(k) true-up for $0 to Mr. Polet, $19 to Mr. McKinlay, $19 to Mrs. Sparks, $20 to Mr. Lyon, and $24 to Mr. Gaither.

 

 

Grants of Plan-Based Awards

 

In 2024, the Company issued 750,000 RSUs to Roeland Polet, the Company’s Chief Executive Officer in connection with his Employment Agreement. The RSUs vest in five equal installments on each anniversary of the award date, September 3, 2024. The total expense of the award was valued at $4,911 at the grant date inclusive of dividends. The RSUs were estimated at $4,519 and will be recognized as compensation expense over the vesting period.  The compensation expense recorded in 2024 was $392. The equivalent dividends earned on the RSUs are forfeitable and recorded as a reduction in retained earnings and an increase in additional paid in capital in 2024. 

 

Outstanding Equity Awards at Fiscal Year-End  

 

Option Awards

Stock Awards

Name

Number of Securities Underlying Unexercised Options (#) Exerciseable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Equity Incentive Plan Awards: Number of Options (#)

Option Exercise Price ($)

Option Expiration Date

Equity Incentive Plan Awards; Number of unearned RSUs That Have Not Vested

Equity Incentive Plan Awards: Market Value of Number of Unearned RSUs That Have Not Vested $

Tom McKinlay (a)

4,000

0

0

11.56

1/21/2025

N/A

N/A

Roeland Polet (b)

N/A

N/A

N/A

N/A

N/A

750,000

$

3,976,500

 

(a) In January 2020, we granted 24,000 stock options to Tom McKinlay as our chief operating officer. The options awarded have an exercise price equal to the mean between the highest and lowest quoted sales prices for the Company’s common stock as of the grant date as reported by the New York Stock Exchange. The options awarded vested immediately and expire on January 21, 2025. See Note 17 to our consolidated financial statements for a discussion of the Company’s plan-based awards.

 

(b) In 2024, the Company issued 750,000 RSUs to Roeland Polet, the Company’s Chief Executive Officer in connection with his Employment Agreement. The RSUs vest in five equal installments on each anniversary of the award date, September 3, 2024. The market value is based on the closing market price of the Company’s stock on December 31, 2024.

 

Option Exercises and Stock Vested

 

No previously issued options were exercised by our executive officers in 2024. No previously issued stock awards vested in 2024.

 

Potential Payments upon Termination or Change in Control

 

Pursuant to the Employment Agreement, upon a termination of Mr. Polet’s employment without “cause” or by the executive for “good reason,” he is entitled to receive, among other things, a payment equal to: (i) 12 months’ base salary and (ii) his target annual bonus, paid in equal installments over the 12-month period following termination and execution of a release of claims. Based on Mr. Polet’s base salary and target annual bonus payment in effect as of December 31, 2024, such payment would be equal to $750,000 if Mr. Polet had been terminated as of such date. Mr. Polet is not entitled to any payment upon a change in control unless he is terminated under the circumstances described above. Upon termination of his employment or a change in control, Mr. Polet is not entitled to the acceleration of any equity award that he has received to date.

 

 

Compensation of Directors

 

For 2024, our directors received an annual fee of $50, prorated if their service was for less than the full year. Committee heads received an additional $25 (chairman of the board), $20 (audit committee chairman), or $10 (other committee chairmen), on an annual basis, again prorated if serving as committee chairman for less than the full year. The Compensation Committee also approved the payment to our directors of $5 for each board meeting and $2.5 for each committee meeting, whether attended in person or telephonically.

 

The following was the compensation paid to our directors for 2024.

Summary Compensation of Directors Table

 

(Dollars in thousands)

														Change in
														Pension Value
														and Non-Qualified
		Fees Earned									Non-Equity			Deferred
		or Paid in			Stock			Option			Incentive Plan			Compensation			All Other
		Cash			Awards			Awards			Compensation			Earnings			Compensation			Total
Director		($)			($)			($)			($)			($)			($)			($)
Paul A. Novelly*		59.0			-			0			0			0			0			59.0
Donald C. Bedell		112.0			25.8			0			0			0			0			137.8
Paul M. Manheim		127.5			25.8			0			0			0			0			153.3
Dale E. Cole		120.0			25.8			0			0			0			0			145.8
Terrance C.Z. Egger		110.0			25.8			0			0			0			0			135.8
Alain Louvel*		17.4			0			0			0			0			0			17.4
P.A. Novelly, II**		70.0			25.8			0			0			0			0			95.8
Ron J. Kruszewski*		70.0			25.8			0			0			0			0			95.8
Rose Sparks*		35.0			0			0			0			0			0			35.0
G Bruce Greer		65.1			25.8			21.8			0			0			0			112.7
Richard P. Rowe		29.0			25.8			16.2			0			0			0			71.0

 

*Mr. Alain Louvel resigned from the board in February 2024 and Mrs. Rose Sparks resigned in July 2024. Mr. Novelly's term as a director ended at the 2024 annual meeting of the Company's stockholders.

**Director fees were designated to be paid to a charitable organization by P.A. Novelly, II in the amount of $70.

 

During 2024, the compensation committee reviewed the compensation structure and determined to modify it as follows for 2025:

 

●

An annual cash retainer fee of $95 per director;

●

Additional annual cash retainer fee of $60 for our chairman;

●

Additional annual retainer fee of $30 for the chairman of the Audit Committee;

●

Additional annual retainer fee of $20 for the chairman of the Compensation Committee;

●

Additional annual retainer fee of $15 for the chairman of any other committee of the board;

●

Per meeting fee of $7.5 for each meeting of the board attended by a director in person or remotely, subject to a maximum annual, aggregate fee of $45;

●

Per meeting fee of $7.5 for each meeting of a committee of the board attended by a committeeperson in person or remotely;

●

An annual grant of 5,000 shares of the Company’s common stock pursuant and subject to the terms and conditions of the Incentive Plan, with the grant for 2024 to be in December 2024 and thereafter on the date of the Company’s annual meeting of stockholders; and

●

Upon the appointment of a new director to the Board, such director shall receive a grant of options to purchase up to 10,000 shares of the Company’s Common Stock pursuant and subject to the terms and conditions of the Plan.

---

 

The following table sets forth information concerning unexercised options, stock awards that have not vested, and equity incentive plan awards as of December 31, 2024, with respect to our directors.

 

Option Awards

Stock Awards

Equity

Equity

Incentive

Incentive

Plan

Plan Awards:

Equity

Market

Awards:

Market or

Incentive

Number

Value of

Number of

Payout Value

Plan Awards:

of Shares

Shares

Unearned

of Unearned

Number of

Number

Number of

or Units

or Units

Shares, Units

Shares, Units

Securities

of Securities

Securities

of Stock

of Stock

or Other

or Other

Underlying

Underlying

Unexercised

Option

That

That

Rights That

Rights That

Unexercised

Unexercised

Unearned

Exercise

Option

Have Not

Have Not

Have Not

Have Not

Options (#)

Options (#)

Options

Price

Expiration

Vested

Vested

Vested

Vested

Name

Exercisable

Unexercisable

(#)

($)

Date

(#)

($)

(#)

($)

P.A. Novelly, II

10,000

0

0

7.18

8/1/2027

0

0

0

0

Ron Kruszewski

10,000

0

0

7.18

8/1/2027

0

0

0

0

G Bruce Greer

10,000

0

0

7.55

3/18/2029

0

0

0

0

Richard P. Rowe

10,000

0

0

5.73

8/13/2029

0

0

0

0

 

(a)

In August 2024, March 2024 and August 2022, we granted a total of 10,000, 10,000 and 20,000, respectively, stock options to our new board members. The options awarded have an exercise price equal to the mean between the highest and lowest quoted sales prices for the Company’s common stock as of the grant date as reported by the New York Stock Exchange. The options awarded vested immediately and expire on August 13, 2029, March 18, 2029 and August 1, 2027, respectively. See Note 17 to our consolidated financial statements for a discussion of the company’s plan-based awards.

 

 

Compensation Committee Interlocks and Insider Participation

 

The members of our Compensation Committee during 2024 were Donald C. Bedell, Terrance C.Z. Egger, Paul M. Manheim, and Dale E. Cole. The committee was chaired by Mr. Cole. None of such individuals are or have been an officer or employee of the Company, nor did we enter into any transactions with such individuals during 2024 (other than the payment of directors’ fees and other compensation, as noted above, solely in their capacity as directors).

 

Mr. Novelly, II, Mr. Bedell (our chairman and the chair of our Nominating/Corporate Governance Committee), and Mr. Manheim (one of our directors and the chair of the Audit Committee) are directors of World Point Terminals, Inc., a Delaware company based in Missouri that, through its operating subsidiaries, owns and operates petroleum storage facilities in the United States. World Point Terminals, Inc. does not have a separate compensation committee.

 

Compensation Committee Report

 

The Compensation Committee of our board has reviewed and discussed the Compensation Discussion and Analysis set forth above with our management. Based on this review and discussions, the Compensation Committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

 

Dale E. Cole (Chair), Donald C. Bedell, Terrance C.Z. Egger, and Paul M. Manheim Item 12.

 

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

Our board of directors adopted the Incentive Plan which was approved by our shareholders at our 2017 annual shareholder meeting. We do not have any other equity compensation plans or individual equity compensation arrangement. Under the Incentive Plan, awards are limited to 10% of the issued and outstanding shares of our common stock in the aggregate. The shares to be issued under the Incentive Plan were registered with the SEC on a Form S-8 filed on November 9, 2017. Through December 31, 2024, we have issued options to purchase 84,000 shares of our common stock, of which options to purchase 44,000 shares remain issued and outstanding, but have awarded no shares to participants under the Incentive Plan. The following additional information regarding the Incentive Plan is as of December 31, 2024.

 

Number of securities

Weighted-average

Number of securities

to be issued upon

exercise price of

remaining available for future

exercise of

outstanding options,

issuance under equity

outstanding units, options,

warrants and rights

compensation plans (excluding

warrants and rights

(excluding RSUs

securities reflected in column (a))

Plan Category

(a)

reflected in column (a))

Equity compensation plans approved by security holders

794,000

$7.33

3,526,324

 

Security Ownership of Certain Beneficial Owners

 

As of the date of this report, 43,763,243 shares of our common stock are issued and outstanding, and we have no other securities issued and outstanding. The shares of common stock are our only voting securities issued and outstanding. The following table sets forth the number and percentage of shares of common stock owned by all persons known by us to be the beneficial owners of more than 5% of shares of our common stock as of February 25, 2024.

 

		Amount of				Percent of
		Beneficial				Common
Name and Address of Beneficial Owner		Ownership				Stock
Paul Anthony Novelly II (a)			17,475,100				39.9	%
8235 Forsyth Blvd., 4th Floor
Clayton, MO 63105
Dimensional Fund Advisors LP (b)			2,218,292				5.1	%
6300 Bee Cave Road, Building One
Austin, TX 78746
BlackRock, Inc. (c)			2,226,538				5.1	%
55 East 52nd Street
New York, NY 10055

 

	(a)	Includes 17,085,100 shares of common stock held by St. Albans Global Management, LLC and 375,000 shares of common stock held by Apex Holding Co. Mr. Novelly II is the sole manager of SAGM Holdings, LLC, which is the manager of St. Albans Global Management, LLC and the chief executive officer of Apex Holding Co., and thereby has voting and investment power over such shares and may be deemed to share beneficial ownership. Also includes 10,000 shares that may be acquired pursuant to the exercise of options awarded under the Incentive Plan.
	(b)	Based solely upon an Amendment to Schedule 13G/A filed with the SEC by the listed person on January 23, 2025. According to the filing, Dimensional Fund Advisors LP furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-advisor to certain other commingled funds, group trusts and separate accounts (collectively, the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-advisor to certain Funds. In its role as investment advisor, sub-advisor and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Issuer that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Issuer held by the Funds. However, all securities reported above are owned by the Funds. Dimensional reported power to vote or to direct the vote of 2,166,257 shares and sole power to dispose or to direct the disposition of 2,218,292 shares. Dimensional disclaims beneficial ownership of such securities.
	(c)	Based solely upon an Amendment to Schedule 13G/A filed with the SEC by the listed person on January 31, 2024. According to the filing, BlackRock, Inc. filed the Schedule 13G amendment as the parent holding company or control person of Aperio Group, LLC, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Financial Management, Inc., and BlackRock Investment Management, LLC. BlackRock, Inc. reported sole voting power over 2,179,664 shares and sole dispositive power over 2,226,538 shares.

 

 

Security Ownership of Management

 

The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this report by each of our directors and executive officers and the executive officers of FutureFuel Chemical Company. Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of common stock beneficially owned by them and none of such shares have been pledged as security.

 

		Amount of				Percent of
		Beneficial				Common
Name of Beneficial Owner		Ownership				Stock
Paul A. Novelly II (a)			17,475,100				39.9	%
Roeland Polet (b)			760,000				1.7	%
Ron J. Krusweski (d)			115,000				*
Donald C. Bedell (c)			104,975				*
Paul M. Manheim			24,103				*
Rose M. Sparks			19,283				*
G Bruce Greer (d)			15,000				*
Richard P Rowe (d)			15,000				*
Terrance C.Z. Egger			14,895				*
Charlie W. Lyon (e)			11,400				*
Dale E. Cole			7,516				*
Kyle Gaither			1,161				*
All directors and executive officers			18,563,433				42.4	%

 

* less than 1%

 

(a)	Includes 17,085,100 shares of common stock held by St. Albans Global Management, LLC and 375,000 shares of common stock held by Apex Holding Co. Mr. Novelly II is the sole manager of SAGM Holdings, LLC, which is the manager of St. Albans Global Management, LLC, and the chief executive officer of Apex Holding Co. and thereby has voting and investment power over such shares and may be deemed to share beneficial ownership. Includes 10,000 shares that may be acquired pursuant to the exercise of options awarded to Mr. Novelly II as director under the Incentive Plan.
(b)	Includes 750,000 RSUs subject to certain vesting conditions.
(c)	Includes 2,500 shares of common stock owned by the Alexandra Nicole Bedell Trust, a trust established by Mr. Bedell for his granddaughter as to which Mr. Bedell serves as trustee but holds no pecuniary interest; Mr. Bedell disclaims beneficial ownership of all shares of our common stock held by this trust. Includes 2,553 shares of common stock owned by the Ashlyn Tate Bedell Trust, a trust established by Mr. Bedell for his granddaughter as to which Mr. Bedell serves as trustee but holds no pecuniary interest; Mr. Bedell disclaims beneficial ownership of all shares of our common stock held by this trust. Includes 2,500 shares of common stock owned by the Hailey Bedell Trust, a trust established by Mr. Bedell for his granddaughter as to which Mr. Bedell serves as trustee but holds no pecuniary interest; Mr. Bedell disclaims beneficial ownership of all shares of our common stock held by this trust. Includes 86,197 shares of our common stock held by the Africa Exempt Trust, of which Mr. Bedell is a beneficiary. Includes 200 shares of common stock owned by the Charlie Cash Bedell Trust, a trust established by Mr. Bedell for his grandson as to which Mr. Bedell serves as trustee but holds no pecuniary interest; Mr. Bedell disclaims beneficial ownership of all shares of our common stock held by this trust.
(d)	Includes 10,000 shares that may be acquired pursuant to the exercise of options awarded under the Incentive Plan.
(e)	Mr. Lyon and the Company agreed to terminate his employment effective as of March 31, 2025.

 

Change in Control

 

We are not aware of any arrangement the operation of which may at a date subsequent to the date of this report result in a change of control of our company.

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

Transactions with Related Persons

 

From time to time, we may sell to Apex Oil Company, Inc. and/or its affiliates biofuels (including biodiesel) produced by us, and Apex Oil Company, Inc. and/or its affiliates may sell to us, or we may sell to them, diesel fuel, gasoline, natural gas, and other petroleum products in our biofuels business. Such sales will be at then posted prices for comparable products plus or minus applicable geographical differentials. We also may reimburse Apex Oil Company, Inc. for certain legal, trading and administrative services. The dollar amounts of such transactions and other related party transactions are detailed in Note 20 to our consolidated financial statements included elsewhere herein.

 

Review, Approval, or Ratification of Transactions with Related Persons

 

Any transaction in which we (or one of our subsidiaries) are a participant, the amount involved exceeds the lesser of $120 or 1% of our net income, total assets, or total capital, and in which any party related to us has or will have a direct or indirect material interest must be approved by a majority of the disinterested members of our board of directors as fair to us and our shareholders. This policy was adopted by our board on January 8, 2007 and amended on February 2, 2011, and can be found through the “Investors - Corporate Governance” section of our website (https://futurefuel-corporation.ir.rdgfilings.com/corporate-governance/). All of the agreements described above in this Item 13 and in Note 20 to our consolidated financial statements have been approved by a majority of the disinterested members of our board of directors.

 

In addition, we adopted a Code of Business Conduct and Ethics which sets forth legal and ethical standards of conduct for our directors, officers, and employees and the directors, officers, and employees of our subsidiaries. This Code is designed to deter wrongdoing and to promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by us; (iii) compliance with applicable governmental laws, rules, and regulations; (iv) the prompt internal reporting of violations of this Code to appropriate persons identified in this Code; and (v) accountability for adherence to this Code. This Code was adopted by our board on November 30, 2005 and was amended on February 3, 2011, January 1, 2016, and August 5, 2023, is in writing, and can be found through the “Investors - Corporate Governance” section of our website (https://futurefuel-corporation.ir.rdgfilings.com/corporate-governance/). Each of the transactions described above (under the caption “Transactions with Related Persons”) was undertaken in compliance with our Code of Business Conduct and Ethics and approved by a majority of the disinterested members of our board of directors.

 

Director Independence

 

The SEC has promulgated Rule 10A-3, which sets forth the independence requirements for members of an audit committee. The following members of our board of directors are independent under the SEC’s definitions of independence:

 

Donald C. Bedell

Paul M. Manheim

Terrance C.Z. Egger

Dale E. Cole

Ron J. Kruszewski

G. Bruce Greer

Richard P. Rowe

 

Each member of our board of directors’ Compensation, Audit, and Nominating/Corporate Governance Committees are comprised of directors who are independent under the definition of independence adopted by the NYSE.

 

 

Item 14. Principal Accountant Fees and Services.

 

Audit Fees

 

During fiscal 2024, we incurred $519,117 and $146,000 for audit and financial statement review services from Grant Thornton LLP and RSM US LLP, respectively.  During fiscal 2023, we incurred $445,000 for audit and financial statement review services from RSM US LLP.

 

Audit-Related Fees

 

During fiscal 2024 we incurred $21,000 employee benefit plan audit procedures from Grant Thornton LLP.  During fiscal 2023, we incurred $16,000 for employee benefit plan audit procedures from RSM US LLP.

 

Tax Fees

 

During fiscal 2024 and 2023, we incurred fees of $0 and $0, respectively, for tax compliance, tax advice and tax planning services from Grant Thornton LLP or RSM US LLP.

 

All Other Fees

 

We did not incur any other fees for other services from Grant Thornton LLP and RSM US LLP during fiscal 2024 or fiscal 2023.

 

Pre-Approval Policies

 

Our Audit Committee approves the engagement of our independent auditors prior to their rendering audit or non-audit services and sets their compensation. Pursuant to SEC regulations, our Audit Committee approves all fees payable to the independent auditors for all routine and non-routine services provided. Our Audit Committee considers and approves the budget for the annual audit and financial statement review services prior to the initiation of the work. Non-routine services in the ordinary course of business, which are not prohibited under SEC regulation, such as tax planning, tax compliance, and other services are generally pre-approved on a case-by-case basis.

 

Percentage of Hours Expended

 

N/A

 

 

PART IV

 

Item 15. Exhibits and Financial Statement Schedules.

 

(a)	List separately all financial statements filed as part of this report.

 

1.

FutureFuel Corp.’s audited consolidated Balance Sheets as at December 31, 2024 and 2023 and the related consolidated Statements of Operations, Statements of Changes in Stockholders’ Equity, and Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022.

 

(b)	Exhibits required by Item 601 of Regulation S-K.

 

3.1.

Fourth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit No. 3.3.f to Amendment No. 2 to Form 10 filed February 29, 2008)

 

3.2.

FutureFuel Corp.’s Bylaws (incorporated by reference to Exhibit No. 3.2.a to Form 10 filed April 24, 2007)

 

4.1.

Registration Rights Agreement dated July 12, 2006 among FutureFuel Corp., St. Albans Global Management, Limited Partnership, LLLP, Lee E. Mikles as Trustee of the Lee E. Mikles Gift Trust dated October 6, 1999, Lee E. Mikles as Trustee of the Lee E. Mikles Revocable Trust dated March 26, 1996, Douglas D. Hommert as Trustee of the Douglas D. Hommert Revocable Trust, Edwin A. Levy, Joe C. Leach, Mark R. Miller, RAS LLC, Edwin L. Wahl, Jeffery H. Call and Ken Fenton (incorporated by reference to Exhibit No. 4.5 to Form 10 filed April 24, 2007)

 

4.2.

Description of common stock (incorporated by reference to Exhibit No.4.2 to Form 10-K filed March 16, 2021).

 

10.1.

Registrar Agreement dated June 27, 2008 between FutureFuel Corp. and Computershare Investor Services (Channel Islands) Limited (incorporated by reference to Exhibit No. 10.2 to Form 10-K filed March 16, 2009)

 

10.2.

Storage and Thruput Agreement dated November 1, 2006 between FutureFuel Chemical Company and Center Point Terminal Company (incorporated by reference to Exhibit No. 10.4 to Form 10 filed April 24, 2007)

 

10.3

Commodity Trading Advisor Agreement dated November 1, 2006 between FutureFuel Chemical Company and Apex Oil Company, Inc., as amended (incorporated by reference to Exhibit No. 10.5 to Form 10 filed April 24, 2007 and Exhibit No. 10.3 to Form 10-Q filed August 10, 2015)

 

10.4

Service Agreement dated November 1, 2006 between FutureFuel Corp. and Pinnacle Consulting, Inc. (incorporated by reference to Exhibit No. 10.6 to Form 10 filed April 24, 2007)

 

10.5

Time Sharing Agreement dated April 18, 2007 between Apex Oil Company, Inc. and FutureFuel Corp. (incorporated by reference to Exhibit No. 10.15 to Form 10 filed April 24, 2007)

 

 

 

10.6*

Omnibus Incentive Plan (incorporated by reference to Appendix A to Schedule 14A filed July 26,2017)

 

10.7

Amended and Restated Credit Agreement dated as of March 30, 2020 by and among FutureFuel Corp. and FutureFuel Chemical Company, certain Subsidiaries from time to time party thereto, as guarantors, the Lenders from time to time party thereto, and Regions Bank, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.20 to Form 10-Q filed May 8, 2020)

 

10.8

Second Amended and Restated Credit Agreement

 

10.9*

Form of Option Agreement (incorporated by reference to Exhibit No 10.2 to Form 10-Q filed August 8, 2022).

 

10.10*

Separation and Release Agreement by and between Tom McKinlay and the Company dated May 24, 2024 (incorporated by reference to Exhibit 10.1 to Form 8-K filed May 29, 2024).

 

10.11*

Employment Agreement, dated August 16, 2024, by and between Roeland Polet and FutureFuel Corp. (incorporated by reference to Exhibit 10.1 to Form 8-K filed August 20, 2024).

 

10.12*

Form of Restricted Stock Award Agreement (Non-Employee Directors)

 

10.13*

Form of Stock Unit Award Agreement (Employee)

 

18

FutureFuel Corp.- Preferability Letter of Grant Thornton LLP

 

19.1

FutureFuel Corp. Insider Trading Policy

 

21

Subsidiaries of FutureFuel Corp.

 

23.1

Consent of Grant Thornton LLP

 

23.2

Consent of RSM US LLP

 

31.1

Rule 13a-15(e)/15d-15(e) Certification of chief executive officer

 

31.2

Rule 13a-15(e)/15d-15(e) Certification of principal financial officer

 

32

Section 1350 Certification of chief executive officer and principal financial officer

 

97.1

FutureFuel Corp. Clawback Policy

 

	101.1	Interactive Data Files**
	101.INS	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL
	101.SCH	Inline XBRL Taxonomy Extension Schema Document
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*

Management contract or compensatory plan or arrangement

 

**

Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

Item 16. Summary

 

Registrants may voluntarily include a summary of information required by Form 10-K under this Item 16. The Company has elected not to include such summary information.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

FUTUREFUEL CORP.

 

By:   /s/ Rose M. Sparks

 

Rose M. Sparks, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

/s/ Roeland Polet

 

Roeland Polet, Chief Executive Officer

 

By:   /s/ Rose M. Sparks

 

Rose M. Sparks, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer

 

/s/ Donald C. Bedell

 

Donald C. Bedell, Chairman and Director

 

/s/ Paul M. Manheim

 

Paul M. Manheim, Director

 

/s/ Dale E. Cole

 

Dale E. Cole, Director

 

/s/ Terrance C.Z. Egger

 

Terrance C.Z. Egger, Director

 

/s/ Ron J. Kruszewski

 

Ron J. Kruszewski, Director

 

/s/ P.A. Novelly, II

 

P.A. Novelly, II, Director

 

/s/ G Bruce Greer

 

G Bruce Greer, Director

 

/s/ Richard P. Rowe

 

Richard P. Rowe, Director

 

 

 

 

 

Date: March 31, 2025