10-Q 1 regi-20220331.htm 10-Q regi-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549   
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-35397
RENEWABLE ENERGY GROUP, INC.
(Exact name of registrant as specified in its charter)
   
Delaware   26-4785427
(State of other jurisdiction of
incorporation or organization)
   (I.R.S. Employer
Identification No.)
      
416 South Bell AvenueAmesIowa50010
(Address of principal executive offices)   (Zip code)
(515) 239-8000
(Registrant’s telephone number, including area code)    

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.0001 per shareREGIThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
   
Large accelerated filerx   Accelerated filer
Non-accelerated filer   Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No   x

As of April 30, 2022, the registrant had 50,507,290 shares of Common Stock outstanding.



TABLE OF CONTENTS

3


FORWARD LOOKING STATEMENTS
This quarterly report on Form 10-Q contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations of future operations, are forward-looking statements. The words "believe," "may," "will," "would," "might," "could," "estimate," "continue," "anticipate," "design," "intend," "plan," "seek," "potential," "expect" and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. Forward-looking statements include, but are not limited to, statements about:

our pending merger transaction with Chevron Corporation (the "Merger") and the amount of costs, fees and expenses related to the Merger;
the risk that the Agreement and Plan of Merger, dated as of February 27, 2022, by and among Chevron Corporation, a Delaware corporation, Cyclone Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Chevron, and Renewable Energy Group, Inc. (as it may be amended from time to time, the "Merger Agreement"), may be terminated in circumstances requiring REG to pay a termination fee;
the inability to consummate the transaction within the anticipated time period, or at all, due to any reason, including the failure to obtain stockholder approval to adopt the Merger Agreement, the failure to obtain required regulatory approvals or the failure to satisfy the other conditions to the Merger;
the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against us and others;
our business plans and strategies, including, but not limited to, our downstream objectives and undertakings and the proposed capacity expansion of our Geismar, Louisiana renewable diesel ("RD") biorefinery, including financing such expansion;
our financial performance, including expectations regarding revenues, cost of revenues and operating expenses;
changes in governmental programs, policymaking and requirements or encouraged use of biofuels, including Biodiesel Mixture Excise Tax Credit, Renewable Fuels Standard 2 ("RFS2") in the United States, renewable fuel policies in Canada and Europe, and state level programs such as California's Low Carbon Fuel Standard ("LCFS");
the availability, future price and volatility of feedstocks and other inputs;
the expansion of our distribution network and transportation costs;
the future price and volatility of petroleum;
our liquidity and working capital requirements;
our leasing practices;
anticipated trends and challenges in our business and competition in the markets in which we operate;
our ability to successfully implement our acquisition strategy and integration strategy;
our ability to protect proprietary technology and trade secrets;
our risk management activities;
the industry’s capacity, production and imports;
product performance, in cold weather or otherwise;
seasonal fluctuations in our business;
our current products as well as products we are developing;
our ability to retain and recruit key personnel;
our current and future indebtedness and our compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;
our marketable securities;
critical accounting policies and estimates, the impact or anticipated impact of recent accounting pronouncements, guidance or changes in accounting principles and future recognition of impairments for the fair value of assets, including goodwill, financial instruments, intangible assets and other assets acquired;
operating risks and the impact of disruptions to our business including, but not limited to, closures at our plant located in Geismar, Louisiana and the COVID-19 pandemic, including any potential resurgence of COVID-19 such as from the more transmissible Delta and Omicron variant strains; and
assumptions underlying or relating to any of the foregoing.
These statements reflect current views with respect to future events and are based on assumptions and subject to risks and uncertainties. We note that a variety of factors, including but not limited to those Risk Factors discussed in Item 1A of Part II, could cause actual results and experience to differ materially from the anticipated results or expectations expressed in our
4


forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Forward-looking statements contained in this report present management’s views only as of the date of this report. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our 10-Q and 8-K reports filed with the Securities and Exchange Commission after the date hereof.
5


PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION
RENEWABLE ENERGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share amounts)
   March 31,
2022
December 31,
2021
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents$340,703 $497,653 
Marketable securities342,572 290,818 
Accounts receivable (net of allowance for doubtful accounts of $1,111 and $1,814, respectively)
212,584 158,187 
Inventories550,612 453,592 
Prepaid expenses and other assets134,659 93,443 
Restricted cash3,000 4,218 
Total current assets1,584,130 1,497,911 
Long-term marketable securities104,131 167,767 
Property, plant and equipment, net727,052 677,444 
Right of use assets54,178 51,730 
Goodwill40,066 43,864 
Intangible assets, net52,028 53,175 
Deferred income tax assets5,514 6,171 
Other assets 60,947 60,882 
TOTAL ASSETS$2,628,046 $2,558,944 
LIABILITIES AND EQUITY      
CURRENT LIABILITIES:      
Current maturities of operating lease obligations$13,217 $13,026 
Accounts payable 221,982 162,847 
Accrued expenses and other liabilities46,003 53,884 
Deferred revenue26,890 16,856 
Total current liabilities308,092 246,613 
Deferred income tax liabilities3,896 4,659 
Long-term debt (net of debt issuance costs of $12,727 and $13,243, respectively)
537,273 536,757 
Long-term operating lease obligations40,778 38,989 
Other liabilities4,034 4,100 
Total liabilities894,073 831,118 
COMMITMENTS AND CONTINGENCIES
EQUITY:      
Common stock ($0.0001 par value; 300,000,000 shares authorized; 50,469,456 and 50,294,505 shares outstanding, respectively)
6 6 
Common stock—additional paid-in-capital710,967 709,186 
Retained earnings1,117,507 1,105,030 
Accumulated other comprehensive loss(5,370)(2,111)
Treasury stock (6,333,133 and 6,240,907 shares outstanding, respectively)
(89,137)(84,285)
Total equity 1,733,973 1,727,826 
TOTAL LIABILITIES AND EQUITY$2,628,046 $2,558,944 
See notes to condensed consolidated financial statements.
1


RENEWABLE ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
Three months ended
   March 31, 2022March 31, 2021
REVENUES:      
Bio-based diesel sales$757,914 $449,894 
Separated RIN sales111,474 29,601 
Bio-based diesel government incentives63,729 60,249 
   933,117 539,744 
Other revenue2,872  
   935,989 539,744 
      
COSTS OF GOODS SOLD868,239 465,942 
GROSS PROFIT67,750 73,802 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES48,712 31,177 
(GAIN) ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT(1,935) 
IMPAIRMENT OF ASSETS2,748 822 
INCOME FROM OPERATIONS18,225 41,803 
OTHER EXPENSE, NET:      
(Loss) on debt extinguishment (1,922)
Interest income496 652 
Other income (expense)1,656 1,439 
Interest expense(7,479)(1,117)
   (5,327)(948)
INCOME BEFORE INCOME TAXES12,898 40,855 
INCOME TAX EXPENSE(421)(1,633)
NET INCOME$12,477 $39,222 
LESS—EFFECT OF PARTICIPATING SHARE-BASED AWARDS85 639 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS$12,392 $38,583 
Basic net income per share available to common stockholders:      
Net income per share $0.25 $0.95 
Diluted net income per share available to common stockholders:
Net income per share$0.25 $0.88 
Weighted-average shares used to compute basic net income per share available to common stockholders:      
Basic50,338,496 40,425,593 
Weighted-average shares used to compute diluted net income per share available to common stockholders:
Diluted50,558,898 43,661,568 
See notes to condensed consolidated financial statements.
2


RENEWABLE ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands)
Three months ended
March 31, 2022March 31, 2021
Net income$12,477 $39,222 
Unrealized gains (losses) on marketable securities, net of taxes of $ and $(11), respectively
(1,831)(173)
Foreign currency translation adjustments(1,428)(1,337)
Other comprehensive income (loss)(3,259)(1,510)
Comprehensive income$9,218 $37,712 
See notes to condensed consolidated financial statements.

3


RENEWABLE ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(in thousands, except share amounts)

   Company Stockholders’ Equity
   Common
Stock
Shares
Common
Stock
Common Stock -
Additional
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Treasury
Stock
Total
BALANCE, January 1, 202250,294,505 $6 $709,186 $1,105,030 $(2,111)$(84,285)$1,727,826 
Conversion of restricted stock units to common stock (net of 78,021 shares of treasury stock purchased)
143,068 — — — — (4,538)(4,538)
Settlement of stock appreciation rights in common stock (net of 14,205 shares of treasury stock purchased)
31,883 — (475)— — (314)(789)
Stock compensation expense— — 2,256 — — — 2,256 
Other comprehensive loss— — — — (3,259)— (3,259)
Net income— — — 12,477 — — 12,477 
BALANCE, March 31, 202250,469,456 $6 $710,967 $1,117,507 $(5,370)$(89,137)$1,733,973 

   Company Stockholders’ Equity
   Common
Stock
Shares
Common
Stock
Common Stock -
Additional
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Treasury
Stock
Total
BALANCE, January 1, 202139,334,839 $5 $392,247 $891,211 $1,160 $(110,668)$1,173,955 
Conversion of restricted stock units to common stock (net of 150,906 shares of treasury stock purchased)
254,396 — — — — (10,026)(10,026)
Settlement of stock appreciation rights in common stock (net of 2,598 shares of treasury stock purchased)
4,673 — (176)— — (1,431)(1,607)
Equity issuance (net of issuance costs of $19,970)
5,750,000 1 365,279 — — — 365,280 
Settlement of 2036 convertible senior notes conversions (net of tax impact of $1,143)
2,195,836 — (26,183)— — 22,946 (3,237)
Stock compensation expense— — 1,844 — — — 1,844 
Other comprehensive loss— — — — (1,510)— (1,510)
Net income— — — 39,222 — — 39,222 
BALANCE, March 31, 202147,539,744 $6 $733,011 $930,433 $(350)$(99,179)$1,563,921 


4


RENEWABLE ENERGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three months ended
   March 31, 2022March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income$12,477 $39,222 
Adjustments to reconcile net income to net cash flows from operating activities:      
Depreciation expense10,497 10,915 
Amortization expense of assets and liabilities, net6,790 4,701 
Accretion of convertible note discount 179 
Amortization of marketable securities1,018 659 
Gain on sale of property, plant and equipment(1,935) 
Loss on debt extinguishment 1,922 
Provision (benefit) for doubtful accounts(301)21 
Impairment of property, plant and equipment2,748 822 
Stock compensation expense2,256 1,844 
Deferred tax expense806 1,000 
Other operating activities(34)49 
Changes in assets and liabilities:      
Accounts receivable, net(52,339)13,770 
Inventories(97,100)(80,664)
Prepaid expenses and other assets(42,563)(16,241)
Accounts payable50,583 (24,865)
Accrued expenses and other liabilities(5,697)(5,908)
Operating lease obligations(3,757)(4,158)
Deferred revenue10,033 (4,264)
Cash used in operating activities(106,518)(60,996)
CASH FLOWS FROM INVESTING ACTIVITIES:      
Cash paid for marketable securities(53,257)(93,092)
Cash received from maturities of marketable securities62,184 90,722 
Cash paid for purchase of property, plant and equipment(58,534)(10,487)
Cash receipts for sale of property, plant and equipment3,984  
Other investing activities(500)(1,500)
Cash used in investing activities(46,123)(14,357)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Cash paid on notes payable (27,159)
Cash received from equity offering 385,250 
Cash paid for equity offering costs (19,565)
Cash paid for conversion of restricted stock units and stock appreciation rights(5,327)(11,633)
Cash provided from (used in) financing activities(5,327)326,893 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(157,968)251,540 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, Beginning of period501,871 88,218 
Effect of exchange rate changes on cash(200)(223)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, End of period$343,703 $339,535 

(continued)
5



RENEWABLE ENERGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three months ended
March 31, 2022March 31, 2021
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:      
Cash paid for income taxes$1,662 $913 
Cash paid for interest$180 $606 
Leased assets obtained in exchange for new operating lease liabilities$6,121 $11,293 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:      
Amounts included in period-end accounts payable for:      
Purchases of property, plant and equipment$29,427 $5,701 
Equity issuance costs$ $405 
(concluded)
   
See notes to condensed consolidated financial statements.


6


RENEWABLE ENERGY GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three Months Ended March 31, 2022 and 2021
(unaudited)
(in thousands, except share and per share amounts)
NOTE 1 — BASIS OF PRESENTATION AND NATURE OF THE BUSINESS
The condensed consolidated financial statements have been prepared by Renewable Energy Group, Inc. and its subsidiaries (the "Company" or "REG"), pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted as permitted by such rules and regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes that the disclosures are adequate to present fairly the financial position, results of operations and cash flows at the dates and for the periods presented. It is suggested that these interim financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in the Company’s latest annual report on Form 10-K filed on March 1, 2022. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.
The Company currently owns and operates a network of eleven bio-based diesel production facilities, with nine locations in North America and two locations in Europe, and an aggregate nameplate production capacity of 470 million gallons per year ("mmgy"). Ten of these plants are “multi-feedstock capable”, which allows them to use a broad range of low carbon feedstocks, such as distillers corn oil, used cooking oil and inedible animal fats in addition to vegetable oils, such as soybean oil, and canola oil.
The bio-based diesel industry and the Company’s business have benefited from certain federal and state government programs. The federal biodiesel mixture excise tax credit (the "BTC") was retroactively reinstated on December 20, 2019 for the years 2018 and 2019. The BTC has also been extended through December 31, 2022. The modification of federal and state government programs could adversely affect the financial results of the Company.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies should be read in conjunction with a summary of the significant accounting policies the Company has disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021.
Accounting for Business Combinations
The Company accounts for business combinations under the acquisition method of accounting. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, royalty rates and asset lives, among other items.

Restricted Cash
The Company segregates certain cash balances as restricted cash that represent those funds required to be set aside by a contractual agreement. The Company classifies restricted cash between current and non-current assets based on the length of time of the restricted use.
7


As of March 31, 2022 and 2021, current restricted cash was $3,000 and $3,746 for each period, representing pledges for outstanding letters of credit issued to support our operations. See the table below for reconciliation of "Cash, Cash Equivalents and Restricted Cash" in the Condensed Consolidated Statements of Cash Flows:
March 31, 2022March 31, 2021
Cash and cash equivalents$340,703 $335,789 
Restricted cash3,000 3,746 
Total cash, cash equivalents and restricted cash in the Condensed Statements of Cash Flows$343,703 $339,535 

Marketable Securities
The Company's marketable securities are classified as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss). The Company classifies its marketable securities as either current or long-term based on each instrument's underlying contractual maturity date. Realized gains or losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are reported in other income, net. The Company evaluates such investments periodically for possible other-than-temporary impairment. A decline of fair value below amortized costs of debt securities is considered an other-than-temporary impairment if the Company has the intent to sell the security or if it is more likely than not that the Company will be required to sell the security before recovery of the entire amortized cost basis. In those instances, an impairment charge equal to the difference between the fair value and the amortized cost basis is recognized in earnings. Regardless of the Company's intent or requirement to sell a debt security, an impairment is considered other-than-temporary if the Company does not expect to recover the entire amortized cost basis; in those instances, a credit loss equal to the difference between the present value of the cash flows expected to be allocated based on credit risk and the amortized cost basis of the debt security is recognized in earnings. The Company has no current requirement or intent to sell a material portion of marketable securities as of March 31, 2022. The Company expects to recover up to (or beyond) the initial cost of investment for securities held. In computing realized gains and losses on available-for-sale securities, the Company determines cost based on amounts paid, including direct costs such as commissions to acquire the security, using the specific identification method.
Renewable Identification Numbers ("RINs")
When the Company produces and sells a gallon of bio-based diesel for use in the United States, 1.5 to 1.7 RINs per gallon are generated. RINs are used to track compliance with the Renewable Fuel Standard, using the EPA moderated transaction system. RFS2 allows the Company to attach between zero and 2.5 RINs to any gallon of bio-based diesel. As a result, a portion of the selling price for a gallon of bio-based diesel sold in the U.S. is generally attributable to RFS2 compliance. However, RINs that the Company generates are a form of government incentive and not a result of the physical attributes of the bio-based diesel production. Therefore, no cost is allocated to the RIN when it is generated, regardless of whether the RIN is transferred with the bio-based diesel produced or held by the Company pending attachment to other bio-based diesel production sales. Additionally, RINs, once obtained through the production and sale of gallons of bio-based diesel, may be separated by the acquirer and sold separately.
In addition, the Company also obtains RINs from third parties who have separated the RINs from gallons of bio-based diesel. From time to time, the Company holds varying amounts of these separated RINs for resale. RINs obtained from third parties are initially recorded at their cost and are subsequently revalued at the lower of cost or net realizable value as of the last day of each accounting period. The resulting adjustments are reflected in costs of goods sold for the period. The value of these RINs is reflected in “Prepaid expenses and other assets” on the Condensed Consolidated Balance Sheets. The cost of goods sold related to the sale of these RINs is determined using the average cost method, while market prices are determined by RIN values, as reported by the Oil Price Information Service ("OPIS").

Low Carbon Fuel Standard
The Company generates LCFS credits for its low carbon fuels when its qualified low carbon fuels are transported into an LCFS market and sold for qualifying purposes. LCFS credits are used to track compliance with the LCFS. As a result, a portion of the selling price for a gallon of bio-based diesel sold into an LCFS market is also attributable to LCFS compliance. However, LCFS credits that the Company generates are a form of government incentive and not a result of the physical attributes of the bio-based diesel production. Therefore, no cost is allocated to the LCFS credit when it is generated, regardless of whether the LCFS credit is transferred with the bio-based diesel produced or held by the Company.
In addition, the Company also obtains LCFS credits from third-party trading activities. From time to time, the Company holds varying amounts of these third-party LCFS credits for resale. LCFS credits obtained from third parties are initially
8


recorded at their cost and are subsequently revalued at the lower of cost or net realizable value as of the last day of each accounting period, and the resulting adjustments are reflected in costs of goods sold for the period. The value of LCFS credits obtained from third parties is reflected in “Prepaid expenses and other assets” on the Condensed Consolidated Balance Sheet. The cost of goods sold related to the sale of these LCFS credits is determined using the average cost method, while market prices are determined by LCFS values, as reported by the OPIS.
The Company records assets acquired and liabilities assumed through the exchange of non-monetary assets based on the fair value of the assets and liabilities acquired or the fair value of the consideration exchanged, whichever is more readily determinable.

Impairment of Long-lived Assets
The Company tests its long-lived assets for recoverability when events or circumstances indicate that its carrying amount may not be recoverable. Significant assumptions used in the undiscounted cash flow analysis, when it is required, include the projected demand for biomass-based diesel based on annual renewable fuel volume obligations under the Renewable Fuel Standards ("RFS2"), the Company's capacity to meet that demand, the market price of biomass-based diesel and the cost of feedstock used in the manufacturing process.
During the three months ended March 31, 2022, the Company recorded impairment charges of $2,748 related to certain property, plant and equipment due to the change in the intent to utilize these assets and that the carrying amounts of these assets deemed not recoverable given the assets' deteriorating physical conditions identified during the period.
During the first quarter of 2021, the Company recorded impairment charges of $822 related to certain equipment as the carrying amounts of these assets were deemed not recoverable given the assets' deteriorating physical conditions identified during the period.
Green Notes
On May 20, 2021, the Company completed the sale and issuance of $550,000 aggregate principal amount of 5.875% senior secured notes due in 2028 (the "Green Notes"). The Company recorded $14,619 in legal, professional and underwriting fees related to the issuance of the Green Notes. The Company currently intends to use the net proceeds from this offering for capital expenditures related to the improvement and expansion of its Geismar, Louisiana biorefinery. See "Note 8—Debt" for a further description of the Green Notes.
Security Repurchase Program
In February 2020, the Company's Board of Directors approved a repurchase program of up to $100,000 of the Company's shares of common stock and/or its previously outstanding convertible notes (the "2020 Program"). Under this program, the Company may repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means. The timing and amount of repurchase transactions under the program are determined by the Company's management based on its evaluation of market conditions, share price, legal requirements and other factors.
There were no repurchases under the 2020 Program in the three months ended March 31, 2022, and the remaining amount of the 2020 Program was $91,914 as of March 31, 2022.
Equity Offering
On March 19, 2021, the Company completed an equity offering pursuant to which it sold 5,750,000 shares of common stock to various underwriters at a price of $67.00 per share before underwriting discounts and commissions. The proceeds that the Company received from the financing activity were $385,250 before underwriting discounts and commissions, fees, and other out-of-pocket costs of $19,970. The net proceeds from the transaction were $365,280.
Revenue Recognition
The Company generally has a single performance obligation in its arrangements with customers. The Company believes for most of its contracts with customers, control is transferred at a point in time, typically upon delivery to the customers. When the Company performs shipping and handling activities after the transfer of control to the customers (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. The Company generally expenses sales commissions when incurred because the amortization period would have been less than one year. The Company records these costs within selling, general and administrative expenses.
The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
9


sales of biodiesel and RD produced at our facilities, including RINs and LCFS credits;
resale of biodiesel, RD and petroleum and petroleum-based products acquired from third parties, along with the sale of RD and petroleum-based products further blended with biodiesel produced at our wholly owned facilities or acquired from third parties;
sales of separated RINs and LCFS credits;
sales of raw materials, glycerin and other co-products of the bio-based diesel production process;
other revenue, including bio-based diesel facility management and operational services; and
incentive payments from federal and state governments, including the BTC, and from the USDA Advanced Biofuel Program.

Disaggregation of revenue:
All revenue recognized in the income statement, except for Bio-based diesel Government Incentives, is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line and segment:
Reportable Segments
Three months ended March 31, 2022Bio-based
Diesel
ServicesCorporate
and other
Intersegment
Revenues
Consolidated
Total
Bio-based diesel sales$492,944 $ $ $(1,107)$491,837 
Petroleum diesel and other petroleum-based product sales85,719  88,904  174,623 
LCFS credit sales50,470    50,470 
Separated RIN sales111,474    111,474 
Co-product sales28,823    28,823 
Raw material sales2,893    2,893 
Other bio-based diesel revenue9,268    9,268 
Other revenues2,870 68,252  (68,250)2,872 
Total revenues from contracts with customers$784,461 $68,252 $88,904 $(69,357)$872,260 
Bio-based diesel government incentives63,729    63,729 
Total revenues$848,190 $68,252 $88,904 $(69,357)$935,989 
Three months ended March 31, 2021Bio-based DieselServicesCorporate and otherIntersegment RevenuesConsolidated Total
Bio-based diesel sales$348,974 $ $ $(1,027)$347,947 
Petroleum diesel and other petroleum-based product sales  40,509  40,509 
LCFS credit sales38,311    38,311 
Separated RIN sales29,601    29,601 
Co-product sales11,684    11,684 
Raw material sales1,679    1,679 
Other bio-based diesel revenue9,764    9,764 
Other revenues 17,352  (17,352) 
Total revenues from contracts with customers$440,013 $17,352 $40,509 $(18,379)$479,495 
Bio-based diesel government incentives60,249    60,249 
Total revenues$500,262 $17,352 $40,509 $(18,379)$539,744 


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Contract balances:

The following table provides information about receivables and contract liabilities from contracts with customers:
March 31, 2022December 31, 2021
Trade accounts receivable, gross$160,289 $108,443 
Short-term contract liabilities (deferred revenue)$(12,736)$(1,822)
Short-term contract liabilities (accounts payable)$(699)$(699)

The Company receives payments from customers based upon contractual billing schedules and accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. Significant changes to the contract liabilities during the three months ended March 31, 2022 and 2021 are as follows:
January 1, 2022Cash receipts
(Payments)
Less: Impact on
Revenue
March 31, 2022
Deferred revenue$1,822 $75,475 $64,561 $12,736 
Payables to customers related to BTC699   699 
 $2,521 $75,475 $64,561 $13,435 
January 1, 2021Cash receipts
(Payments)
Less: Impact on
Revenue
March 31, 2021
Deferred revenue$946 $12,963 $13,306 $603 
Payables to customers related to BTC914  215 699 
 $1,860 $12,963 $13,521 $1,302 

New Accounting Standards
On March 12, 2020, the FASB issued ASU 2020-04, which provides a relief that is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Optional expedients are provided for contract modification accounting under the following Codification topics and subtopics: ASC 310, Receivables; ASC 470, Debt; ASC 840 or ASC 842, Leases; and ASC 815-15, Derivatives and Hedging: Embedded Derivatives. The ASU also establishes (1) a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and (2) certain elective hedge accounting expedients. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020, through December 31, 2022. The Company has determined that the impact of the guidance on its condensed consolidated financial statements is not material.
On August 5, 2020, the FASB issued ASU 2020-06, which reduces the complexity of the accounting for convertible debt instruments and its effect on earnings per share calculation. The guidance reduces the number of accounting models used for convertible debt instruments, which will result in fewer embedded conversion features being recognized separately from the original contract. This will also affect the guidance associated with convertible debt for earnings-per-share by requiring the if-converted method rather than the treasury stock method, requiring that potential share settlement be included in the calculation of diluted earnings per share and clarifying that an entity should use the weighted-average share count from each quarter when calculating the year-to-date weighted-average share count. For public business entities, the amendments in ASU 2020-06 are effective for fiscal years beginning after December 15, 2021, including interim periods within those years, and early adoption is permitted for fiscal years beginning after December 15, 2020, including interim periods within those years. The Company has determined that the guidance has no material impact on its condensed consolidated financial statements.
On October 28, 2021, the FASB issued ASU 2021-08, which updates the guidance related to the acquisition of revenue contracts in a business combination. The new guidance requires that the acquiring entity recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date the acquirer should recognize the contract assets and liabilities under Topic 606 as they would have been recognized at contract origination rather than at fair value at the time of the acquisition. The intent is to create more comparability of recognition and measurement of the acquired contracts in business combinations. For public business entities, the amendments in ASU 2021-08 are effective for
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fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of the guidance on its condensed consolidated finance statements.
On November 17, 2021, the FASB issued ASU 2021-10, which requires business entities to provide certain disclosures when they (1) have received government assistance and (2) use a grant or contribution accounting model by analogy to other accounting guidance. The guidance will require business entities to disclose the nature of the transactions, accounting policies used to account for the transactions, and state which line items on the balance sheet and income statement are affected by these transactions and the amount applicable to each financial statement line. Business entities will also have to disclose significant terms and conditions of transactions with a government such as the duration of the agreement, any commitments made by either side, provisions, and contingencies. The guidance in ASU 2021-10 is effective for all entities for fiscal years beginning after December 15, 2021. Entities may apply the provision either (1) prospectively to all transactions within the scope of ASC 832 that are reflected in the financial statements as of the adoption date and all new transactions entered into after the date of adoption or (2) retrospectively. Early adoption is permitted. The Company has determined that the impact of the guidance on its condensed consolidated financial statements is not material.
On March 28, 2022, the FASB issued ASU 2022-01, which updates the guidance related to the optional hedge accounting model. The guidance better portrays the economic results of an entity's risk management activities in its financial statements by expanding the scope of ASU 2017-12. The expansion allows for multiple hedged layers to be designated for a single closed portfolio of financial instruments or one or more beneficial interests secured by a portfolio of financial instruments, which is referred to as a portfolio layer method hedge. As a result, an entity can achieve hedge accounting for hedges of a greater proportion of the interest rate risk inherent in the assets included in the closed portfolio. The guidance for ASU 2022-10 is effective for public business entities December 15, 2022. Upon adoption, The Company must decide within 30 days which securities already in closed portfolios will be designated in a portfolio layer method hedge. The Company is evaluating the impact of guidance on its condensed consolidated financial statements.

NOTE 3 — ACQUISITIONS

On December 30, 2021, the Company acquired 100% of the stock of Amber Resources. Amber Resources is one of the leading full-service petroleum distributors and providers in Southern California, offering a broad product line of fuel, lubricants and diesel exhaust fluid ("DEF") solutions via highly differentiated, service-oriented model. Amber Resources is consolidated into REG in accordance with ASC 805, Business Combinations and is part of the Bio-based Diesel Reportable Segment. The Company completed its preliminary accounting of this business combination as the valuation of the acquired assets and assumed liabilities, including a tax reserve, was not finalized as of the date of this report. The consideration for the acquisition of Amber Resources, after adjusting for net working capital items allowed under the purchase agreement, was $78,434.

The Company used the income approach to value certain intangible assets. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The Company used the income approach known as the relief from royalty method to value the fair value of the trade names. The relief from royalty method is based on the hypothetical royalty stream that would be received if we were to license the trade name and was based on expected revenues. The determination of the fair value of other assets acquired and liabilities assumed involves assessing factors such as the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

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December 30, 2021
Assets (liabilities) acquired of Amber Resources:
Cash$5,643 
Accounts receivable (net of allowance for doubtful accounts)15,502 
Inventory8,830 
Other current assets4,558 
Property, plant and equipment16,248 
Right of use assets15,773 
  Intangibles45,000 
  Goodwill23,986 
Other assets4,023 
Total assets acquired139,563 
  Accounts payable20,467 
  Accrued expenses and other liabilities9,495 
Current maturities of operating lease obligations1,528 
Other liabilities2,625 
Deferred income taxes12,600 
Long-term operating lease obligations14,414 
Total liabilities acquired$61,129 
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NOTE 4 — MARKETABLE SECURITIES
The Company's investments in marketable securities are stated at fair value and are available-for-sale. The following table summarizes the Company's investments in marketable securities:
March 31, 2022
MaturityGross Amortized CostTotal Unrealized GainsTotal Unrealized LossesFair Value
Short-term marketable securities
Commercial paperWithin one year$109,247 $ $(228)$109,019 
Corporate bondsWithin one year224,119 2 (897)223,224 
Municipal bondsWithin one year10,392  (63)10,329 
Total$343,758 $2 $(1,188)$342,572 
Long-term marketable securities
Corporate bondsWithin one - five years$103,953 $ $(1,293)$102,660 
Municipal bondsWithin one - five years1,500  (29)1,471 
Total$105,453 $ $(1,322)$104,131 

December 31, 2021
MaturityGross Amortized CostTotal Unrealized GainsTotal Unrealized LossesFair Value
Short-term marketable securities
Commercial paperWithin one year$116,937 $1 $(36)$116,902 
Corporate bondsWithin one year166,311 2 (170)166,143 
Municipal bondsWithin one year7,781  (8)7,773 
Total$291,029 $3 $(214)$290,818 
Long-term marketable securities
Corporate bondsWithin one - five years$164,071 $ $(437)$163,634 
Municipal bondsWithin one - five years4,162  (29)4,133 
Total$168,233 $ $(466)$167,767 
NOTE 5 — INVENTORIES
Inventories consist of the following:
   March 31, 2022December 31, 2021
Raw materials$196,661 $168,039 
Work in process7,971 7,920 
Finished goods345,980 277,633 
Total$550,612 $453,592 
Inventories are valued at the lower of cost or net realizable value. Cost is determined based on the first-in, first-out method. There were no lower of cost or market adjustments made to the inventory values reported as of March 31, 2022 and December 31, 2021.
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NOTE 6 — OTHER ASSETS
Prepaid expense and other assets consist of the following:
   March 31, 2022December 31, 2021
Commodity derivatives and related collateral, net$46,735 $9,651 
Prepaid expenses26,890 25,537 
Deposits1,777