Renewable Energy : Q4 2019 Earnings Call Presentation

March 05, 2020 at 07:03 pm EST

March 5, 2020

Q4 and Full Year 2019 Earnings Conference Call

Speakers

Cynthia (CJ) Warner

President & Chief

Executive Officer

Chad Stone

Chief Financial Officer

Todd Robinson

Treasurer

Safe Harbor

This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, the future operation and success of our business, capital allocation, the Company's repurchase program, and our outlook for gallons sold, gallons produced, and Adjusted EBITDA for Q1 2020 and full year 2020. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the Company's financial performance, including revenues, cost of revenues and operating expenses; changes in governmental programs and policies requiring or encouraging the use of biofuels, including RFS2 on the federal level, and on the state level, programs such as California's Low Carbon Fuel Standard; availability of federal and state governmental tax incentives and incentives for biomass-based diesel production; changes in the spread between biomass-based diesel prices and feedstock costs; the availability, future price, and volatility of feedstocks; the availability, future price and volatility of petroleum and products derived from petroleum; risks associated with fire, explosions, leaks and other natural disasters at our facilities; any disruption of operations at our Geismar renewable diesel refinery (which would have a disproportionately adverse effect on our profitability); the effect of excess capacity in the biomass-based diesel industry and announced large plant expansions and potential co-processing of renewable diesel by petroleum refiners; unanticipated changes in the biomass-based diesel market from which we generate almost all of our revenues; seasonal fluctuations in our operating results; potential failure to comply with government regulations; competition in the markets in which we operate; our dependence on sales to a single customer; technological advances or new methods of biomass-based diesel production or the development of energy alternatives to biomass-based diesel; our ability to successfully implement our acquisition strategy; the Company's ability to retain and recruit key personnel; the Company's indebtedness and its compliance, or failure to comply, with restrictive and financial covenants in its various debt agreements; risk management transaction, and other risks and uncertainties described in REG's annual report Form 10-K for the period ended December 31, 2018 and subsequent quarterly reports on Form 10-Q and other periodic filings with the Securities and Exchange Commission.

All forward-looking statements are made as of the date of this presentation and REG does not undertake to update any forward- looking statements based on new developments or changes in our expectations.

Retroactive 2018-2019 Biodiesel Tax Credit1

	Biodiesel Tax Credit
	Adjustments1
(in millions)
Gross 2018 - 2019 BTC benefit to be	$664.6
received from the IRS


BTC sharing payments	$(165.2)

Net 2018 - 2019 BTC benefit	$499.4

Net BTC allocated to full year 2018	$238.6

Net BTC allocated to full year 2019	$260.8

On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the 2018 operating performance, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to each of the four quarters of 2018 based upon the portion of the BTC benefit that related to that quarter. The portion of the credit related to 2019 was allocated to each of the four quarters based upon the portion of the BTC benefit that related to that

quarter.	4
© 2020 Renewable Energy Group, Inc. All Rights Reserved.

REG Performance in Q4 2019

GALLONS SOLD

GALLONS

PRODUCED

REVENUE AS

ADJUSTED 1

ADJUSTED EBITDA 2

without BTC

ADJUSTED EBITDA 2

with BTC

153 million

114 million $572 million $16 million $65 million

Q4 pre-BTC Adjusted EBITDA increased 60% over Q3

On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our Revenue and GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the operating performance in other periods, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to 2019 based upon the portion of the BTC benefit that related to 2019.
Adjusted EBITDA is anon-GAAP measure. See Appendix for the definition of Adjusted EBITDA and reconciliation to Net Income (loss) determined in accordance with GAAP.

REG Performance in 2019

GALLONS SOLD

GALLONS

PRODUCED

REVENUE AS

ADJUSTED 1

ADJUSTED EBITDA 2

with BTC

700 million

495 million

$2.4 billion

$218 million

On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our Revenue and GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the operating performance in other periods, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to 2019 based upon the portion of the BTC benefit that related to 2019.
Adjusted EBITDA is anon-GAAP measure. See Appendix for the definition of Adjusted EBITDA and reconciliation to Net Income (loss) determined in accordance with GAAP.

HOBO + RINs Spread History

$/gal

$1.90 $1.80 $1.70 $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20

HOBO Spread

HOBO + RINs

HOBO = HO NYMEX + 1 - (CBOT SBO/100*7.5)

HOBO + RINs= HOBO + 1.5xRIN7

REG's Underlying Performance during 2019

Regional placement

35% of Geismar renewable diesel production shipped to Norway
66% increase of biodiesel gallons sold in California

Blending

65% increase of blended fuel
12% average blend of biodiesel into petroleum
135% increase of our proprietary REG Ultra CleanTM- a low carbon fuel for diesel engines
19 new end user customers

Feedstock flexibility

- Optimized margins by switching to advantaged feedstocks

Operational excellence

Increased Geismar throughput buy 7% y/y
Achieved industry leading safety performance 0.44 RII

Optimization

- Scheduled our diverse fleet for optimization of margins

Feedstock Flexibility

Usage percentage

100%

80%

60%

40%

20%

2018 Q1

2018 Q2

2018 Q3

2018 Q4

2019 Q1

2019 Q2

2019 Q3

2019 Q4

Feedstock A

Feedstock B

Feedstock C

Feedstock D

Feedstock E

REG Organic Growth

Fleet Effective Capacity Improvement versus Nameplate since 2016

140

120

123

100

gal (millions)

Effective Capacity

Nameplate

Jan-16

Apr-16

Jul-16

Oct-16

Jan-17

Apr-17

Jul-17

Oct-17

Jan-18

Apr-18

Jul-18

Oct-18

Jan-19

Apr-19

Jul-19

Oct-19

Jan-20

(20)

(40)

(29)

152 million gallons of increased effective production capacity from continuous improvement and small

capital projects since 2016

Notes: 1. Effective capacity represents the maximum average annualized throughput that satisfies certain defined technical constraints.

Includes estimated effective capacity increase data for REG Madison, REG Emden and REG Oeding prior to acquisition. Months with unavailable data were interpolated from months with available data; excludes idled REG New Boston
Includes Biodiesel, Renewable Diesel, LPG and Naphtha

Source:REG Analysis

REG Global Aggregate Incident Rate Trend

4.00

3.00

RII (Total Incident Rate)

DART Rate

Rate

Industry Average (RII Rate)

"Industry Leader" (RII Rate)

Incident

2.00

Industry

RII (0.44)

Average: 2.1

DART:

Days away

1.00

Restricted

Transferred

Industry Average:

Industry Leader: 0.7

2.1

"Industry Leader":

0.00

0.7

Jan-14

Mar-14May-14Jul-14Sep-14Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

Jan-16

Mar-16

May-16

Jul-16

Sep-16

Nov-16

Jan-17

Mar-17

May-17

Jul-17

Sep-17

Nov-17

Jan-18

Mar-18

May-18

Jul-18

Sep-18

Nov-18

Jan-19

Mar-19

May-19

Jul-19

Sep-19

Nov-19

Carbon Reduction Requirement

	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030
	0
	-2									Reduction
Intensity									increase of 20%

-4									from 2019 to
									2020
								-6.25

Carbon	-6
								-7.5

-8										-8.75
in												-10
Reduction	-10												-11.25
-12													-12.5
													-13.75

Percent	-14															-15
-16																-16.25
																-17.5

	-18																		-18.75	-20
	-20

Historic Compliance Targets (black solid line)

Reported % CI Reduction (green line)

Future Compliance Targets (black dotted line)

Carbon intensities based on composite of gasoline and diesel fuels

Sales Volume Growth Trajectory

Gallons Sold (millions)

750

650

550

450

350

250

150

50
(50)	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019

Actual

City of Ames Snow Plows on B100

Supportive Existing State Policies

Illinois

Iowa

Oregon

Illinois offers a sales tax incentive for retailers selling biodiesel blended fuels

B11 and higher blended fuels - Exempt from 100% of the 6.25% sales tax

Iowa offers sales tax incentives for retailers who sell biodiesel blended fuels

B5 to B10 blended fuels

$0.035 retail tax credit on every gallon soldB11 and higher blended fuels
$0.055 retail tax credit on every gallon sold
$0.030 retail gas tax differential on every gallon sold
$0.085 total savings on every gallon sold of B11+

Grants are available to assist retailers in infrastructure development

Oregon requires a reduction in the carbon intensity of transportation fuels that are sold, supplied or offered for sale in the state by a minimum of 10% by 2025

Diesel sold in Oregon must contain at least 5% biodiesel

Minnesota requires the use of biodiesel blended fuel April to September

All diesel fuel sold in Minnesota must contain at least 20% biodiesel (B20)

October to March

All diesel fuel sold in Minnesota must contain at least 5% biodiesel (B5)

California

California requires a reduction in the carbon intensity of transportation fuels that are sold, supplied or offered for sale in the state by a minimum of 20% by 2030

The Low Carbon Fuel Standard (LCFS) Program allows producers and importers to generate, acquire, transfer, bank, borrow and trade credits

The state assigns biofuels with Carbon Intensity (CI) values

Biodiesel and Renewable Diesel are among the lowest CI scores in the program

Texas

Texas offers a sales tax incentive for retailers who sell biodiesel blended fuels

The biodiesel portion of a blended fuel is exempt from the diesel fuel tax

Biodiesel Blend Percentage	State Sales Tax per Gallon
Contains up to 5% biodiesel	$0.19
Contains up to 10% biodiesel	$0.18
Contains up to 15% biodiesel	$0.17
Contains up to 20% biodiesel	$0.16

The biodiesel fuel blend must be clearly identified on the retail pump, storage tank and sales invoice to be eligible for the exemption

Grants are available to assist retailers in infrastructure development

2019 REG Carbon Saved

BIOMASS-BASED DIESEL PRODUCED

495 million gallons

LOWER CARBON INTENSITY FUEL

3.7 million metric tons of carbon reduction

9.1 billion miles driven by an average

passenger vehicle

8.5 million barrels of oil

Source: EPA:https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator

Fourth Quarter Financial Highlights

(in millions)	Q4 2019	Q4 2018	Y/Y Change

Gallons Sold	152.9	163.2	(6.3)%
ASP per gallon excluding BTC allocation	$2.90	$2.82	2.8%
Total Revenues	$1,018.2	$519.8	95.9%
Net income from continuing operations available to	$492.6	$30.4	1,520.4%
common stockholders

Adjusted EBITDA1excluding BTC	$16.1	$45.1	(64.3)%
allocation

Adjusted EBITDA1	$65.0	$103.2	(37.0)%

(1) Adjusted EBITDA is a non-GAAP measure. See Appendix for the definition of Adjusted EBITDA and reconciliation to Net Income determined in accordance with GAAP.

Adjusted Fourth Quarter Highlights

	Q4 2019	Q4 2018	Y/Y Change
GAAP1
Total Revenues	$1,018.2	$519.8	95.9%
Operating Income	$ 503.9	$33.4	1,408.5%
Net income from continuing operations available to	$492.6	$30.4	1,520.4%
common stockholders


BTC Allocated to Period Earned2
Total Revenues	$572.0	$575.0	(0.5)%
Net income from continuing operations available to	$50.9	$87.0	(41.5)%
common stockholders

Adjusted EBITDA	$65.0	$103.2	(37.0)%

GAAP results reflect recognition in Q4 2019 of all BTC benefits earned in 2018 and 2019.
BTC benefits are allocated to the respective periods when associated gallons were sold.

Full Year Highlights

(in millions except for ASP)	2019	2018	Y/Y Change
Gallons Sold	700.3	649.2	7.9%
ASP excluding BTC allocation	$2.75	$3.03	(9.2)%
Total Revenues	$2,641	$2,383	10.8%
Net income from continued operations attributable to common	$381.1	$295.8	28.8%
stockholders

Adjusted EBITDA1	$217.9	$388.3	(43.9)%

(1) Adjusted EBITDA is a non-GAAP measure. See Appendix for the definition of Adjusted EBITDA and reconciliation to Net Income determined in accordance with GAAP.

Adjusted Full Year Highlights

	2019	2018	Y/Y Change

GAAP1
Total Revenues	$2,641.4	$2,383.0	10.8%
Operating Income	$399.6	$312.4	27.9%
Net income from continuing operations available to	$381.1	$295.8	28.8%
common stockholders


BTC Allocated to Period Earned2
Total Revenues	$2,404.0	$2,411.3	(0.3)%
Net income from continuing operations available to	$147.8	$327.0	(54.8)%
common stockholders

Adjusted EBITDA	$217.9	$388.3	(43.9)%

GAAP results reflect recognition in Q4 2019 of all BTC benefits earned in 2018 and 2019.
BTC benefits are allocated to the respective periods when associated gallons were sold.

Trailing 12 month Adjusted EBITDA1

$ in thousands

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

2016

2017

2018

2019

Rolling 12 Month Adjusted EBITDA

Source: REG

(1) Adjusted EBITDA is a non-GAAP measure (in thousands). See Appendix for the definition of Adjusted EBITDA and a detailed reconciliation to Net Income (loss) determined in accordance with GAAP.

Trailing 12 Month Return on Invested Capital (ROIC)1

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

2016

2017

2018

2019

Trailing 12 month ROIC(after-tax EBIT/invested capital). Invested capital= Current assets (excludes cash, restricted cash and marketable securities) - Current liabilities + Net fixed asset + Goodwill + Intangible + Other assets excluding investments - Long term liabilities.

Balance Sheet

	December 31,	September 30,	December 31,
(in millions)	2019	2019	2018

Cash and Cash Equivalents	$50.4	$64.1	$123.6
Marketable Securities	----	----	$50.9
Receivables	$858.9	$81.0	$74.6
Inventory	$161.4	$163.5	$168.9
Net Working Capital1	$520.8	$105.7	$170.7
Total Assets	$1,785.3	$1,031.5	$1,107.1
Current Liabilities1	$588.4	$246.5	$294.7
Term Debt2	$106.0	$115.3	$185.8
Total Liabilities	$653.4	$393.9	$341.8

Includes $69.7 million and $75.5 million 2036 Convertible Senior Notes classified as Current Liabilities as of December 31, 2019 and December 31, 2018, respectively. As of September 30, 2019 the $76.9 million 2036 Convertible Senior Notes were classified asLong-term Liabilities.
Term debt before netting of debt issuance costs of $2.8 million , $3.0 million, and $3.4 million at December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

2036 Convertible Bond Repurchases

Repurchased $6.7M principal of the 2036 convertible bonds in December and $4.1M principal in early February

Trade Date	12/4/2019	12/31/2019	2/4/2020
Settlement Date	12/6/2019	1/3/2020	2/6/2020
Principal	$3,000,000.00	$3,673,000.00	$4,100,000.00
Price	$174.52	$255.99	$248.88
Principal + Conversion Premium	$5,235,642.00	$9,402,402.51	$10,204,203.00
Accrued Interest	$57,000.00	$7,346.00	$23,233.00
Total Cash Payments	$5,292,642.00	$9,409,748.51	$10,227,436.00

Source: REG

Notes:

$158M repurchase authorization available ($58M remaining in the January 2019 repurchase program plus $100M authorized in February 2020)
$85.5M of principal outstanding on the 2036 convertible bond issuance

Balanced Approach to Capital Allocation

Required Investments in

Safety & Maintenance

Convertible and ShareBusiness

Repurchases	Profit

High ROIC Projects

In February 2020, the Company's Board of Directors approved a repurchase program of

up to $100 million of the Company's convertible notes and/or shares of common stock

Liquidity and Capital Structure

	December 31,	September 30,	December 31,
(in millions except for Book value per share)	2019	2019	2018

Term Debt1	$106.0	$115.3	$185.8
Term Debt/Total Capitalization	8.6%	15.3%	19.5%
Net Book Value	$1,131.9	$637.6	$765.3
Book value per share2	$29.05	$16.36	$20.51

Term debt before netting of debt issuance costs of $2.8 million, $3.0million, and $3.4 million at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.
Based on common shares outstanding at the end of each period.

Q1 2020 and Full Year 2020 Guidance

(in millions)	Estimated Q1 2020
Gallons Sold1	130 - 145
Adjusted EBITDA2	$50 - $65

This estimate is based on actual performance through February 24 existing forward contracts expected to be fulfilled, existing spot margins being stable through the end of the quarter. Any change to the price of diesel, feedstocks, RINs or LCFS credits through the end of the quarter would be expected to impact the estimated results.

(in millions)	Estimated 2020

Gallons Sold1	640 - 680
Gallons Produced	500 - 530

Reflects total gallons sold.
Adjusted EBITDA is anon-GAAP measure. See Appendix for the definition of Adjusted EBITDA and a detailed reconciliation to Net Income (loss) determined in accordance with GAAP.

Note: This information is based on management's current expectations and estimates, which are based in part on market and industry data. Many factors are outside the control of management including particularly input costs, and actual results may differ materially from the information set forth above. See "Safe Harbor Statement" in slide 2.

Upcoming Conference Appearance

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32ndAnnual Conference

March 15-17, 2020

Orange County, CA

20th Annual Energy Conference

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Appendix

Adjusted EBITDA Reconciliation

(in thousands)			1Q-2019		2Q-2019		3Q-2019			4Q-2019					2019			1Q-2018			2Q-2018			3Q-2018			4Q-2018				2018
Net income (loss) from continuing operations:	$			(41,387)	$	(57,635)	$				(13,753)	$			502,506	$				389,731			$		217,844	$	29,042	$	25,472	$	31,270	$	303,628
Adjustments:
Interest expense				4,219		3,737					2,866				1,354					12,176					4,651				4,925					4,003	3,955	17,534
Income tax expense (benefit)				(430)		(90)					(629)				579					(570)					(1,203)				3,835					854	2,385	5,871
Depreciation				9,099		9,142					9,107				8,950					36,298					8,739				9,004					8,977	9,604	36,324
Amortization of intangible assets				334		510					397				391					1,632					42				44					52	45	183
EBITDA	$	(28,165)		$	(44,336)	$		(2,012)		$	513,780		$	439,267			$	230,073	$	46,850	$	39,358	$	47,259	$		363,540
Gain on involuntary conversion				-		-					-				-					-					(4,000)				(454)					-	(3)	(4,457)
Gain on sale of assets				-		-					-				-					-					(990)				-					(13)	(2)	(1,005)
Change in fair value of contingent liability				304		398					(136)				-					566					458				30					185	444	1,117
Loss (gain) on debt extinguishment				2		-					-				(490)					(488)					232				(2,337)					(788)	(3,404)	(6,297)
Other (income) expense, net				(854)		(691)					(179)				(39)					(1,763)					(225)				(2,067)					(486)	(1,240)	(4,018)
Impairment of assets				-		468					11,145				595					12,208					-				-					-	879	879
Straight-line lease expense				-		-					-				-					-					(33)				(3)					(61)	(31)	(128)
Executive Severance				-		-					-				-					-					165				50					-	-	215
Non-cash stock compensation				1,353		1,824					1,804				1,726					6,707					1,794				2,203					1,227	1,188	6,412
Adjusted EBITDA excluding BTC allocation	$	(27,360)		$	(42,337)	$	10,622		$	515,572		$	456,497	$			227,474	$	44,272	$	39,422	$	45,090	$	356,258
Biodiesel tax credit 20171				-		-					-				-					-					(206,521)				-					-	-	(206,521)
Biodiesel tax credit 20182				-		-					-				(238,564)					(238,564)					42,847				66,499					71,140	58,078	238,564
Biodiesel tax credit 20192				56,385		78,493					77,168				(212,046)					-					-				-					-	-	-
Adjusted EBITDA	$	29,025		$	36,156	$		87,790		$	64,962		$	217,933			$		63,800	$		110,771	$	110,562	$	103,168	$	388,301

Total balance may not foot due to rounding.

On February 9, 2018, the Biodiesel Mixture Excise Tax Credit ("BTC") was retroactively reinstated for the 2017 calendar year. The retroactive credit for 2017 resulted in a net benefit to us that was recognized in the first quarter of 2018 for GAAP purposes. Because this credit relates to the 2017 full year operating performance and results, we removed the net benefit of the 2017 BTC from our 2018 results.
On December 20, 2019, the BTC wasretroactivelyreinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ending December 31, 2019. However, because a portion of this credit relates to the 2018 operating performance, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to each of the four quarters of 2018 based upon the portion of the BTC benefit that related to that quarter. The portion of the credit related to 2019 was allocated to each of the four quarters based upon the portion of the BTC benefit that related to that quarter.

Note: In the fourth quarter of 2018, the operations of REG Life Sciences were classified as discontinued operations. The Company has excluded the results from these discontinued operations from the calculation of Adjusted EBITDA for all periods		30
presented.	© 2020 Renewable Energy Group, Inc. All Rights Reserved.

Adjusted EBITDA Reconciliation

(in thousands)1		1Q-2018		2Q-2018		3Q-2018			4Q-2018				2018		1Q-2017			2Q-2017		3Q-2017			4Q-2017				2017
Net income (loss) from continuing operations:	$		217,844	$	29,042	$	25,472			$	31,270			$	303,628	$	(12,106)	$	(31,884)	$	(8,413)	$	(13,876)	$	(66,279)
Adjustments:
Interest expense				4,651				4,925				4,003				3,955				17,534				4,536				4,479	4,725	5,015	18,755
Income tax expense (benefit)				(1,203)				3,835				854				2,385				5,871				1,075				1,960	(115)	(33,410)	(30,490)
Depreciation				8,739				9,004				8,977				9,604				36,324				8,313				8,413	8,475	8,578	33,779
Amortization of intangible assets				42				44				52				45				183				(139)				(117)	41	39	(176)

EBITDA	$	230,073	$	46,850	$	39,358			$	47,259	$		363,540	$	1,679	$	(17,149)	$	4,713	$	(33,654)	$	(44,411)
Gain on involuntary conversion				(4,000)				(454)				-				(3)				(4,457)				-				-	(942)	(4,387)	(5,329)
Gain on sale of assets				(990)				-				(13)				(2)				(1,005)				-				-	-	-	-
Change in fair value of convertible debt conversion liability				-				-				-				-				-				172				32,546	(8,560)	(5,325)	18,833
Change in fair value of contingent liability				458				30				185				444				1,117				321				432	1,170	231	2,154
Loss (gain) on debt extinguishment				232				(2,337)				(788)				(3,404)				(6,297)				-				-	-	-	-
Other (income) expense, net				(225)				(2,067)				(486)				(1,240)				(4,018)				297				(32)	(12)	741	994
Impairment of assets1				-				-				-				879				879				-				1,341	-	48,532	49,873
Loss on the Geismar lease termination				-				-				-				-				-				-				3,967	-	-	3,967
Straight-line lease expense				(33)				(3)				(61)				(31)				(128)				(32)				(85)	(85)	(35)	(237)
Executive Severance				165				50				-				-				215				-				-	2,420	991	3,411
Non-cash stock compensation				1,794				2,203				1,227				1,188				6,412				1,308				1,688	2,023	1,890	6,909
Adjusted EBITDA excluding 2017 BTC allocation	$		227,474	$	44,272	$	39,422			$	45,090			$	356,258	$	3,745	$	22,708	$	727	$	8,984	$	36,164
Biodiesel tax credit 20172				(206,521)				-				-				-				(206,521)				36,728				59,365	57,350	53,078	206,521
Biodiesel tax credit 20183				42,847				66,499				71,140				58,078				238,564
Adjusted EBITDA	$		63,800	$		110,771	$			110,562	$		103,168			$	388,301	$	40,473	$	82,073	$	58,077	$	62,062	$	242,685

Total balance may not foot due to rounding.

(1)	Represents the impairment charge to write down the carrying value of certain assets, mostly attributed to the Company's New Orleans and Emporia facilities for the years ended December 31, 2017 and 2016, respectively, to remaining salvage values.
(2)	On February 9, 2018, the BTC was reinstated for the 2017 calendar year. The retroactive credit for 2017 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ended March 31, 2018.	However, because this credit relates to 2017
	operating performance, our presentation of Adjusted net income and Adjusted EBITDA reflects the allocation of the net benefit of the reinstatement to each of the four quarters of 2017 based upon gallons sold in the quarters.
(3)	On December 20, 2019, the BTC was retroactively reinstated for the 2018 and 2019 calendar years. The retroactive credit for 2018 and 2019 resulted in a net benefit to us that was recognized in our GAAP financial statements for the quarter ending December 31, 2019. However,
	because a portion of this credit relates to the 2018 operating performance, our presentation of Adjusted EBITDA reflects the allocation of the net benefit to each of the four quarters of 2018 based upon the portion of the BTC benefit that related to that quarter. The portion of the credit	31
	related to 2019 was allocated to each of the four quarters based upon the portion of the BTC benefit that related to that quarter.		© 2020 Renewable Energy Group, Inc. All Rights Reserved.
Note: In the fourth quarter of 2018, the operations of REG Life Sciences were classified as discontinued operations. The Company has excluded the results from these discontinued operations from the calculation of Adjusted EBITDA for all periods presented.

Adjusted EBITDA Reconciliation


(in thousands)			1Q-2016		2Q-2016		3Q-2016			4Q-2016					2016			1Q-2015			2Q-2015			3Q-2015				4Q-2015					2015

Net income (loss) from continuing operations:	$	(3,790)	$		10,196	$	26,626	$	30,809	$	63,841	$	(35,457)	$		(3,266)	$		(13,658)	$	(59,557)	$		(105,406)
Adjustments:
Interest expense				3,311			3,738			4,487			4,451						15,987			2,743				2,928					2,921					3,275					11,867
Income tax expense (benefit)				728			1,296			(1,203)			3,447						4,268			(897)				(806)					(1,096)				(6,101)				(8,900)
Depreciation				7,506			7,751			7,839			8,267						31,363			5,535					6,051					6,166					6,892					24,644
Amortization of intangible assets				(140)			(134)			(129)			(131)						(534)			(219)				(206)					(199)					(91)					(715)

EBITDA	$	7,615	$	22,847	$	37,620	$	46,843	$		114,925	$	(28,295)	$		11,233	$		(5,866)	$	(55,582)	$	(78,510)
Contingency gain related to insurance payments				(3,543)			(997)			(3,470)			(1,884)						(9,894)			-					-					-					-					-
Change in fair value of convertible debt conversion liability				-			(13,432)			(3,013)			3,400						(13,045)			293					(2,121)				1,106					363					(359)
Gain on bargain purchase				-			-			-			-						-			-				-				(5,358)				-					(5,358)
Change in fair value of contingent liability				(15)			573			369			992						1,919			324				314				6				32				676
Other (income) expense, net				88			(2,306)			314			(854)						(2,758)			(565)				(1,779)				462					1,410					(472)
Impairment of Goodwill																																					140,179				140,179
Impairment of assets1				-			-			-			17,893						17,893			-					-					-					-					-
Straight-line lease expense				(94)			(80)			(73)			(38)						(285)			(158)				(145)					(19)					(94)					(416)
Executive Severance				-			-			-			-						-			197					162					(4)					486					841
Non-cash stock compensation				1,076			858			2,133			1,829						5,896			1,080					1,156					1,191					1,734					5,161
Adjusted EBITDA excluding 2015 BTC allocation	$	5,127	$	7,463	$	33,880	$	68,181				$	114,651	$	(27,417)			$	10,941			$	(9,588)					$ 88,165	$ 62,101
Allocation of 2015 BTC2				-			-			-			-						-			15,745					22,883					27,264					(65,892)					-
Adjusted EBITDA	$	5,127	$	7,463	$	33,880	$	68,181				$	114,651	$	(11,672)	$		33,824	$		17,676	$	22,273	$	62,101

Total balance may not foot due to rounding.

Represents the impairment charge to write down the carrying value of certain assets, mostly attributed to the Company's New Orleans and Emporia facilities for the years ended December 31, 2017 and 2016, respectively, to remaining salvage values.
On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was signed into law, which reinstated a set of tax extender items including the retroactive reinstatement of the BTC for 2015 and prospectively in effect for 2016. The retroactive credit for 2015 resulted in a net benefit to us of $95 million that was recognized in the fourth quarter of 2015. Because this credit relates to the full year operating performance and results, the Company allocated a portion of the credit to each of the first three quarters of 2015 based upon gallons sold in each quarter and excluded those amounts from the fourth quarter 2015 adjusted EBITDA.

Note: In the fourth quarter of 2018, the operations of REG Life Sciences were classified as discontinued operations. The Company has excluded the results from these discontinued operations from the calculation of Adjusted EBITDA for all periods	32
presented.
© 2020 Renewable Energy Group, Inc. All Rights Reserved.

Estimated Q1 2020 Adjusted EBITDA Reconciliation

	Q1 2020		Q1 2020
(in thousands)	Low		High

Net income (loss) from continuing operations:				$ 36,600			$ 51,300

Adjustments:

Income tax expense (benefit)				700			1,000

Interest expense				2,200			2,200

Depreciation				8,900			8,900

Amortization				400			400

EBITDA				$ 48,800	$	63,800
Other (income) expense, net				(200)			(200)

Non-cash stock compensation				1,600			1,600

Adjusted EBITDA	$	50,000	$	65,000

HOBO Spread to D4 RIN

	1.20
	1.10
	1.00
	0.90
($/RIN)	0.80
0.70
RIN
0.60
D4

	0.50						y = -0.6679x + 1.1121
		y = -0.3797x + 0.5966					R² = 0.9341
	0.40
	R² = 0.236
	0.30			Dec after BTC		y = -0.6863x + 0.9953

	0.20					R² = 0.8799
	0.00	0.20	0.40	0.60	0.80	1.00	1.20
				HOBO Spread ($/gal)

2017

2018

2019

2020

Note: HOBO Spread includes $1 of BTC for all years: HOBO = HO NYMEX + 1 - (CBOT SBO/100*7.5)	© 2020 Renewable Energy Group, Inc. All Rights Reserved. 34
Source: OPIS and Jacobsen

Risk Management

REG's risk management policy works to minimize earnings volatility from feedstock costs and

fuel prices across varying market conditions

	0.3																			2.50
	0.2																			2.00

	0.1
																				1.50
$/gal	0.0

																				1.00
	-0.1
	-0.2																			0.50

	-0.3																			0.00
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
			2015				2016				2017				2018				2019

Hedge gain/(loss) per gallon - LHS

NYMEX HO (at end of the period)

Source: REG Analysis

Energy and SBO Market Prices

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

B100 NYMEX HO WTI Crude Oil CBOT SBO

Source: OPIS

ULSD vs Biodiesel Price

$/gal

3.30

3.20

3.10

3.00

2.90

2.80

2.70

2.60

2.50

2.40

2.30

2.20

2.10

2.00

1.90

1.80

1.70

1.60

1.50

1.40

NYMEX ULSD

OPIS Chicago SME

Source: NYMEX and OPIS	37
© 2020 Renewable Energy Group, Inc. All Rights Reserved.

California Low-Carbon Credit Price

$/MT

$220 $210 $200 $190 $180 $170 $160

$150 $140 $130 $120 $110 $100

2018 Average LCFS price $168.28

2019 Average LCFS price $196.76

CA LCFS

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REG - Renewable Energy Group Inc. published this content on 05 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 March 2020 00:02:03 UTC

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