Fuel Forward: The Digest’s 2019 Enhanced Multi-Slide Guide to Renewable Energy Group

C.J. Warner: On the other hand, market conditions were highly challenging, and our adjusted EBITDA was negative $27 million for the first quarter. So as you can see on Slide 5, we had some significant elements influencing EBITDA both up and down. Relative to first quarter of 2018, factors that affected our 2019 first quarter adjusted EBITDA include the benefit of the 20% increase in volume sold; a $27 million increase in LCFS revenue reflecting our growing emphasis on selling into advantaged markets; a significant reduction in margin, with our average selling price dropping by $0.53 per gallon primarily due to lower RIN prices while feedstock costs held flat; and $20 million greater risk management charges for the quarter. Chad will elaborate shortly on the first quarter impacts in his comments.

Remember that our adjusted EBITDA is before any benefit from a potential retroactive reinstatement of a BTC. We estimate our adjusted EBITDA would increase by $55 million for business conducted in the first quarter if the incentive is reinstated on the same terms. We continue to believe that the BTC will be reinstated in 2019.

To summarize the quarter, underlying operating performance of our business was very good despite the margin environment that resulted in negative biodiesel margins and depressed earnings. Additionally, there remains the potential upside of the BTC, and we continue to address our growth initiatives.

Let me now provide a bit more detail on these initiatives. One area of growth that we continue to focus on is operational excellence and optimization. As I noted, the 117 million gallons we produced was up 10% and is a record for first quarter, with 5 of our plants establishing new production records. This is an exceptional result given that we had to temporarily reduce production at some of our plants due to weather and poor margins.