Business Update. May 14, Copyright 2018 Renewable Energy Group, Inc.

Transcription

1 Business Update May 14, 2018

2 Safe Harbor Statement This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including statements regarding the possible retroactive reinstatement of the BTC, the estimated benefits to Adjusted net income and Adjusted EBITDA if the BTC is retroactively reinstated and our expectations regarding second quarter results. 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, potential changes in governmental programs and policies requiring or encouraging the use of biofuels, including RFS2; availability of federal and state governmental tax incentives and incentives for biomass-based diesel production, including that the BTC may not be retroactively reinstated for 2018 or that it may be reinstated on less favorable terms; changes in the spread between biomass-based diesel prices and feedstock costs; the future price and volatility of feedstocks; the future price and volatility of petroleum and products derived from petroleum; risks associated with fire, explosions, leaks and other natural disasters at our facilities; the effect of excess capacity in the biomassbased diesel industry; unanticipated changes in the biomass-based diesel market from which we generate almost all of our revenues; seasonal fluctuations in our operating results; 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; our ability to generate revenue from the sale of renewable chemicals, fuels and other products on a commercial scale and at a competitive cost, and customer acceptance of the products produced; whether our Geismar biorefinery will be able to produce renewable diesel consistently or profitably; and other risks and uncertainties described in REG's annual report on Form 10-K for the year ended December 31, 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. 2

3 REG converts waste fats and oils into high quality renewable fuels and chemicals to meet growing global demand for cleaner products 3

4 #1 in North America and Growing Internationally REG Performance in Million gallons of fuel sold 1 $2.2 Billion in revenue Note: 1. Includes all bio-mass based diesel and petroleum gallons sold: domestic, international and third party gallons Source: REG Analysis 4

5 $ Millions REG Annual Adjusted EBITDA $ Step change 150 $ $97 $108 5 Year Average $101 $ $ Note: 1. Adjusted EBITDA is a non-gaap measure. See REG Q earnings release for the definition of Adjusted EBITDA. 5

6 Business Model 50-90% fewer fossil CO 2 emissions than petroleum fuel Lipids (Oils & Fats) Refining Fuel Blending Existing Petroleum Supply Chain Feedstock Sourcing Refining Capabilities Marketing & Logistics 6

7 Large Scale International Presence 13 Biomass-Based 575 MMGY Effective Diesel Plants Capacity 1 Note: 1. Effective capacity for Represents the maximum average throughput that satisfies certain defined technical constraints Source: REG Analysis 7

8 Diversified Customer Base Travel Center/ Convenience Store REG 2017 Finished Product Sales by Segment 1 Petroleum Major Distributor/ Jobber Other 2 36% 34% 20% 10% Note: 1. Includes only North America sales gallons 2. Includes sales to fleets, home heating, Co-ops and others Source: REG Analysis 8

9 Optimized Sales Through National Reach In 2017, 71% of sales were to states with market leading policy Legend States with market leading policy with REG sales Other states with REG sales Note: Delivered biodiesel and co-products to 48 states. Source: REG Analysis 9

10 ILLUSTRATIVE Multi-Feedstock Advantage Over Integrated Producers Maximizing profits in California 1 Lower cost feedstock provides advantage Ability to efficiently convert lower cost feedstock Lower CI scores result in increased value in LCFS markets $ = $ $0.67 Avg. Feedstock Cost Advantage ($/gal) 2 Refining Avg. Available Margin Advantage ($/gal) 3 Notes: 1. Representative of input, refining, and compliance values on an average sale to California 2. $/gal on yield adjusted basis in 2H 2017 using Jacobsen and CME pricing 3. Available Margin excluding transportation and logistics costs Source: REG Analysis 10

11 ILLUSTRATIVE Industry Biodiesel Pricing & COGS Per Gallon $6.00 Averages for April $5.00 $4.00 $3.00 $2.00 $1.00 $0.84 $1.00 $0.91 $2.07 $3.06 $2.37 $0.72 $1.73 $- Reported Value Jacobsen B100 Upper Midwest Costs 2 ULSD - NYMEX RIN Value - OPIS BTC State Incentive B100 - Jacobsen Feedstock Operating Costs Remaining Value 3 4 Notes: 1. BTC lapsed on 12/31/2017 and the charts above assume retroactive re-instatement of BTC for Illustrative Midwest multiple feedstock plant running on lower cost feedstock 3. Represents an average of Iowa and Illinois incentives 4. Represents the difference between the Reported Value Without State and Local Incentives less illustrative costs 11

12 Strategic Focus

13 Gallons in Billions Growing Global Distillate Market Supports REG s Long-term Opportunities Projected step change in demand due to IMO 2020 approximately 1-2 billion barrels per day Historic Demand Expected Demand IMO Spec Increase For the World, 3% per year annual growth equals new sales opportunities for diesel of >12 billion gallons per year 1 Note: 1. As measured against 2017 projections moving forward 2. IMO spec change from sulfur specification of marine bunker fuel from 3.5% to 0.5% in 2020, with predictions of 0.8 to 2.0 million bbl/day increase in distillate demand Source: LMC International, Stillwater Associates 13

14 Millions of Gallons World Demands Cleaner Fuel Solutions 16,000 14,000 Historic and Forecasted Global BBD Production 12,000 10,000 8,000 6,000 4,000 2, Actual RD Production Actual Biodiesel Production LMC Forecasted RD Production LMC Forecasted Biodiesel Production Source: LMC International 14

15 Billions of Gallons Billions of Gallons Current RVO 1 in U.S. Market Biomass-based diesel (Bn gal) Advanced biofuel (Bn gal) n/a Cellulosic biofuel (MM gal) n/a Total renewable fuels (Bn gal) n/a Growth in Biomass Based Diesel Standard Growth Advanced Biofuels Standard Notes: 1. RVO Renewable Volume Obligation 2. All volumes are ethanol-equivalent, except for biomass-based diesel which is actual Source: EPA 11/30/17 RVOs are final as of 11/30/17 15

16 MMGY Top 10 States Demand 1.5 Billion Gallons Notes: California Texas Illinois Iowa Minnesota Oregon New York Pennsylvania Washington Rhode Island Represents market demand for biodiesel and renewable diesel in each state REG and National Biodiesel Board Analysis Source: 16

17 Gallons in thousands Biomass-based Diesel Gallons Imported to USA Increasing imports caused unbalanced market and compressed margins 90,000 80,000 70,000 US Imports of Biodiesel from Argentina and Indonesia Countervailing Duties Imposed by ITC, Imports Ceased 60,000 50,000 40,000 30,000 20,000 10,000 - ARGENTINA INDONESIA Source: EIA 17

18 $/gallon Biodiesel spread to feedstock $3.00 $2.50 SME Chicago - CWG/100 x 8.0 SME Chicago - SBO/100 x 7.5 SME Chicago - TT /100 x 7.6 SME Chicago ICO/100 x 8.5 $2.00 $1.50 $1.00 $0.50 $0.00 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Source: OPIS and Jacobsen 18

19 1.000 HOBO Spread January February March March April May June July August September October November December (0.200) (0.400) (0.600) 2016 HOBO Spread 2017 HOBO Spread 2018 HOBO Spread Note: 1. For all years HOBO Spread includes $1 of BTC: HOBO = HO NYMEX + 1 (CBOT SBO/100*7.5) Source: OPIS and Jacobsen 19

20 $/gallon Monthly Average RIN Value and HOBO Spread History $1.80 $1.60 $1.40 $1.20 $ Correlation Since 2017 $0.80 $0.60 $0.40 $0.20 $0.00 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 Note: HOBO = HO NYMEX + 1 (CBOT SBO/100*7.5) Source: OPIS D4 RIN x HOBO spread

21 Balanced Approach to Capital Allocation Required Investments in Safety & Maintenance Repurchase Programs High ROIC Projects Business Profit 21

22 Share and Bond Repurchases Net Book Value per share Year end Historical Average Share Repurchase Price $16.27 $17.53 $14.01 $ $20.00 $9.52 $ $9.31 $8.92 $8.98 $8.73 $8.91 $ Q Q Q Q Q Q Q Q 2018 Number of Shares Repurchased (in thousands) Share Repurchase ($MM) 1 4,533 2 Cumulative Repurchased Value $ $ $5.0 $6.5 $7.8 $4.0 $5.8 $5.6 $7.8 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2018 Notes: 1. Net Book Value adjusted 2017 BTC impact 2. Includes share repurchases from February 2015 and March 2016 Programs 3. Value of shares or convertible debt repurchase includes fees and commissions Source: REG Analysis March 2014 Convertible Debt Repurchase 3 Q1 16 Q2 16 Q1 18 Value Repurchased $60.9 $5.6 $6.3 Repurchase Value 95.3% 93.1% 106.0% 22

23 Return from Growth Strategies Illustrative & Estimated Capital Projects Under Consideration Biodiesel Plant Improvements Estimate as of March 2018 Geismar Upgrade & Expansion Estimate as of March Rep. RD Facility Estimate as of March 2018 CAPEX (MM) $60-$65 $100-$110 $ Incremental Plant Volume (MMGY) Adjusted EBITDA Opportunity 2 (MM) $30-$35 $30-$35 $105-$115 ROIC 3 TBD 25-35% 25-30% Projects Combined Notes: 1. Project includes capacity increase, rail expansion, and catalyst upgrade 2. Calculated as a projected adjusted EBITDA range for each project represents estimates for steady-state, post completion production rates 3. ROIC measured by pretax operating income divided by total project capital Source: REG Analysis 23

24 Terminal Expansion Strategy Future Terminal Growth Opportunities Attractive existing state incentives or usage standards Operational Facility Terminal Blended Fuel Terminal Petroleum Terminal Biodiesel Future terminal growth based on REG assessment of locations providing optimal profit and throughput Note: As of March 1, 2018 Source: REG Analysis 24

25 ILLUSTRATIVE Downstream Outlets of Interest Oil refineries process crude oil and refine it into products such as petroleum naphtha, gasoline, and diesel fuel Oil Refining BBD Refining Biomass-based diesel plants produce biodiesel, renewable diesel, and various co-products. Fuel Blending Terminal blenders are businesses who purchase fuel from petroleum refineries and biodiesel plants to be stored, blended, Terminal Blending and sold to fuel distributors Transportation Wet hose operators transport fuel and act as the retail mechanism Transportation Transportation from terminals to fuel retailers Fuel Retailing Mechanism Wet Hose Provide mobile fueling services to fleet customers. Operators typically purchase from a terminal and deliver to the tanks of fleet customers Fleet-owned Fuel Tank Selling a blended biodiesel product to a fleet customer who has tank storage on site that it uses to fuel its vehicles Card-Lock Unattended, immobile retail fuel pumps that sell fuel to commercial and consumer customers C-store Fueling cites that also sell food, drinks and other merchandise to both commercial and noncommercial consumers Travel Center Large facilities that provide similar offerings to c-stores with additional amenities tailored for commercial customers Consumer Fleet Fleet Non-commercial Commercial 25

26 ILLUSTRATIVE Downstream Outlets of Interest Oil refineries process crude oil and refine it into products such as petroleum naphtha, gasoline, and diesel fuel Oil Refining BBD Refining Biomass-based diesel plants produce biodiesel, renewable diesel, and various co-products. Fuel Blending Terminal blenders are businesses who purchase fuel from petroleum refineries and biodiesel plants to be stored, blended, Terminal Blending and sold to fuel distributors Transportation Wet hose operators transport fuel and act as the retail mechanism Transportation Transportation from terminals to fuel retailers Fuel Retailing Mechanism Wet Hose Provide mobile fueling services to fleet customers. Operators typically purchase from a terminal and deliver to the tanks of fleet customers Fleet-owned Fuel Tank Selling a blended biodiesel product to a fleet customer who has tank storage on site that it uses to fuel its vehicles Card-Lock Unattended, immobile retail fuel pumps that sell fuel to commercial and consumer customers C-store Fueling cites that also sell food, drinks and other merchandise to both commercial and noncommercial consumers Travel Center Large facilities that provide similar offerings to c-stores with additional amenities tailored for commercial customers Consumer Fleet Fleet Non-commercial Commercial 26

27 Downstream Strategy Success Terminal Expansion 10 added in added in Q4 46 total terminals Fleet Customer Development 8 new customers added in 2017 Volume in excess of plan Future terminal growth based on REG assessment of locations providing optimal profit and throughput Source: REG Analysis 27

28 Downstream Strategy New Initiatives Launch of REG Ultra Clean Diesel further expands REG s downstream capabilities Made from a proprietary blend of renewable diesel and biodiesel. Among the cleanest diesel fuels. Superior performance versus both California and federal diesel-compliant fuels Achieves 15-50% emission reduction compared to California CARB diesel and federal ULSD. REG to power New York City Fleet The New York City Department of Citywide Administrative Services (DCAS) will use REG renewable diesel to power over 1,000 City government vehicles. DCAS will procure 900,000 gallons of renewable diesel over about six months. 28

29 Earnings Performance & Financial Strength

30 REG Performance in Q GALLONS SOLD 135 million gallons sold REVENUE $689 million in revenue ADJUSTED EBITDA 1 $17.5 million in adjusted EBITDA 1 $42.5 million estimated net benefit from retroactive reinstatement of the BTC for Q $60.0 million of Adjusted EBITDA 1 including a retroactive reinstatement of the BTC for Q $230 million Adjusted EBITDA 1 for full year 2017 Note: 1. Adjusted EBITDA is a non-gaap measure. See Slide 46 for a definition of Adjusted EBITDA and a detailed reconciliation to Net Income in accordance with GAAP 30 Source: REG Analysis

31 Historical Quarterly Financial Performance Gallons Sold Quarterly Historical (mm gal) Adjusted EBITDA Quarterly Historical ($mm) $2 $8 $32 $60 $37 $79 $55 $59 $17 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 Biofuels Volume Petroleum Volume Revenue Quarterly Historical ($mm) 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 Net Book Value Per Share Quarterly end Historical $298 $558 $625 $560 $419 $535 $627 $577 $689 $14.1 $14.8 $15.3 $15.8 $15.4 $14.5 $14.3 $14.6 $20.8 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18 Notes: 1. See Slide 46 for a definition of Adjusted EBITDA and a detailed reconciliation to Net Income in accordance with GAAP Source: REG Analysis 31 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 3Q '17 4Q '17 1Q '18

32 Q1 Historical Adjusted EBITDA 1 Adjusted EBITDA Net Benefit of reinstatement of retroactive BTC Adjusted EBTIDA with BTC 2014 $1,928 $12,778 $14, $(30,217) $15,745 $(14,472) $2,197 - $ 2, $604 $39,694 $40, $17,474 $42,500 3 $59,974 3 (1) Adjusted EBITDA is a non-gaap measure. See slide 46 for the definition of Adjusted EBITDA and a detailed reconciliation to Net Income determined in accordance with GAAP. (2) In 2016 BTC was in place (3) Estimated amount assumes retroactive reinstatement of BTC for 2018 on same terms as

33 REG Performance in 2017 GALLONS SOLD 587 million gallons sold REVENUE $2.2 billion in revenue ADJUSTED EBITDA 1 $230 million in adjusted EBITDA 1 $230 million of Adjusted EBITDA 1 including a retroactive reinstatement of the BTC for 2017 $205 million net benefit from retroactive reinstatement of the BTC for 2017 with $11 million of net benefit from retroactive reinstatement allocated to Note: 1. Adjusted EBITDA is a non-gaap measure. See Slide 46 for a definition of Adjusted EBITDA. Source: REG Analysis

34 Historical Annual Financial Performance Gallons Sold Annual Historical (MM gal) Adjusted EBITDA Annual Historical ($MM) 1 $ Biofuels Volume Petroleum Volume Revenue Annual Historical ($MM) $148 $108 $102 $ Net Book Value Year end Historical ($MM) $1,498 $1,274 $1,387 $2,041 $2,158 $594 $779 $614 $610 $ Notes: 1. See Slide 46 for a definition of Adjusted EBITDA and a detailed reconciliation to Net Income in accordance with GAAP Source: REG Analysis

35 Stabilizing Markets and Improving Asset Performance 35.0% Return on Invested Capital % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Rolling 12 months EOIC with BTC Estimated Net Benefit of BTC reinstatement 2 (1) 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. (2) 2018 Q1 trailing 12 month ROIC includes estimated net benefit of retroactive reinstatement of BTC of $42.5 million. 35

36 Trailing 12 month Adjusted EBITDA 1 300, , , , ,000 50,000 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Rolling 12 month Adjusted EBITDA with BTC Source: REG (1) Adjusted EBITDA is a non-gaap measure (in thousands). See slide 46 for the definition of Adjusted EBITDA and a detailed reconciliation to Net Income determined in accordance with GAAP (2) 2018 Q1 trailing 12 month Adjusted EBITDA includes estimated net benefit of retroactive reinstatement BTC of $42.5 million. 36 Estimated Net Benefit of BTC reinstatement 2

37 Strong Financial Position ($ in millions) 12/31/ /31/ /31/ /31/ /31/2018 Cash & Marketable Securities Net Working Capital $80.3 $47.1 $116.2 $77.6 $69.3 $243.2 $181.6 $229.3 $150.8 $351.1 Total Assets $1,367.7 $1,223.6 $1,136.6 $1,005.6 $1,407.1 Term Debt 1 $252.9 $256.6 $217.9 $228.6 $232.8 Net Book Value 2 $778.7 $614.0 $610.2 $567.6 $775.5 Common Shares (millions) As of 03/31/18 3 Common Outstanding RSU s 0.9 PRSU s 0.4 Notes: 1. Term debt before netting of the debt issuance costs of $ 5.5 million, $6.6 million, and $6.3 million at March 31, 2018, December 31, 2017, and 2016 respectively. 2. Decline in net book value primarily due to nonrecurring, non-cash write-off of goodwill 3. Stock appreciation rights outstanding as of 12/31/ million. SAR s are settled as equity or cash at the discretion of the board. 4. Insider ownership of outstanding common shares is 2.16% Source: REG Analysis

38 Liquidity and Capital Structure (in millions except for Book value per share) March 31, 2018 December 31, 2017 December 31, 2016 Term Debt $232.8 $228.6 $217.9 Term Debt/Total Capitalization 23.1% 28.7% 26.3% Net Book Value $775.5 $567.6 $610.2 Book value per share 1 $20.23 $14.61 $15.83 (1) Based on common shares outstanding at the end of each period. 38

39 Favorable Tax Position Estimated NOL net tax value as of 12/31/2017: $196MM 1 NOL optimization over time Certain situations may limit future utilization of NOLs 2 Low effective tax rate for the foreseeable future Notes: 1. NOL value reflects the change in the corporate income tax rate from 35% to 21%, enacted on December 22, 2017 by HR 1, also known as the Tax Cuts and Jobs Act. 2. Section 382 of the Internal Revenue Code generally limits the amount of net operating loss (NOL) carryforwards available to offset future taxable income when a corporation has undergone a greater than 50% change in ownership over a rolling three (3) year period Source: REG Analysis 39

40 Stock Price vs Indices Notes: Comparison of REG stock price to S&P 500 index, Russell 3000 Index and Dow Jones Industrial Average for 2018 Source: Bloomberg 40

41 REG Share Price Performance Total Shareholder Return 1 $16.00 $14.00 $12.00 $ % 95% 34% 35% 43% 50% 59% 36% 14% 12% 12% 1 Year 2 Year 3 Year -29% Ethanol Avg S&P 500 REG Refiners Avg Share Price Performance REG: +49.5% Refiners Avg 2 : 48.2% S&P 500: +28.0% $8.00 $6.00 Ethanol Avg 3 : (30.6%) $4.00 $2.00 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Notes: 1. Total shareholder return represents share price appreciation plus dividends reinvested 2. Refiner average includes: CVI, HFC, MPC, PBF, PSX, and VLO. ANDV has been excluded due to merger with Marathon Petroleum 3. Ethanol average includes: GPRE, PEIX and REX 41 Source: As of May 7, 2018

42 Comparable Group Analysis 42

43 Experienced Management Team Randy Howard President & Chief Executive Officer Doug Lenhart Vice President, Procurement & Logistics, North America Chad Stone Chief Financial Officer Natalie Merrill Vice President, Chief of Staff Brad Albin Vice President, Manufacturing Raymond Richie Vice President, SP&A Managing Director, European Operations Eric Bowen Vice President, Corporate Business Development & Legal Affairs Chad Baker Controller, Chief Accounting Officer Gary Haer Vice President, Sales & Marketing Todd Robinson Treasurer Biographies available at 43

44 Stock Information Symbol Exchange REGI NASDAQ 50 Day Avg Daily Volume (616,056 as of 5/14/18 per NASDAQ) Market Cap (5/14/18) Analyst Coverage $563.5 million, $15.1 per share Canaccord Genuity: Chip Moore Roth Capital Partners: Craig Irwin 44

45 Adjusted Net Income (Loss) and Adjusted EPS Reconciliation 1Q Q Q Q-2017 Year ended 12/31/17 1Q-2018 Net income (loss) attributable to the Company $ (15,914) $ (34,809) $ (11,373) $ (16,983) $ (79,079) $ 214,389 Gain on involuntary conversion - - (942) (4,387) (5,329) (4,000) Gain on sale of assets (990) Change in fair value of convertible debt conversion liability ,546 (8,560) (5,325) 18,833 - Change in fair value of contingent considerations 589 (24) 1, ,484 (1,540) Loss on debt extinguishment 232 Loss on the Geismar lease termination - 3, ,967 - Other (income) expense, net 320 (32) (12) 742 1,018 (222) Impairment of assets - 1,341-48,532 49,873 - Straight-line lease expense (32) (85) (85) (35) (237) (33) Executive severance payment - - 2, , Non-cash stock compensation 1,308 1,688 2,023 1,890 6,909 1,794 Biodiesel tax credit 1 36,728 59,365 56,505 52, ,936 (204,936) Adjusted net income (loss) attributable to the Company $ 23,171 $ 63,957 $ 41,409 $ 78,249 $ 206,786 $ 4,859 Net income (loss) per share attributable to common stockholders Diluted $ (0.41) $ (0.90) $ (0.29) $ (0.44) $ (2.04) $ 5.30 Adjusted net income (loss) per share attributable to common stockholders Diluted $ 0.59 $ 1.61 $ 1.04 $ 1.97 $ 5.21 $ 0.12 Note: 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 is recognized in our GAAP financial statements for the quarter ending March 31, 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 quarter. 45

46 Adjusted EBITDA Reconciliation (in thousands) 1Q Q Q Q Q-2018 Net income (loss): $ (15,914) $ (34,809) $ (11,373) $ (16,983) $ (79,079) $ 214,389 Adjustments: Interest expense 4,536 4,479 4,725 5,015 18,755 4,651 Income tax expense (benefit) 1,075 1,960 (115) (33,410) (30,490) (1,203) Depreciation 8,423 8,523 8,639 8,698 34,283 8,859 Amortization EBITDA $ (1,753) $ (19,698) $ 2,183 $ (36,375) $ (55,643) $227,004 Gain on involuntary conversion - - (942) (4,387) (5,329) (4,000) Gain on sale of assets (990) Change in fair value of convertible debt conversion liability ,546 (8,560) (5,325) (18,833) - Change in fair value of contingent liability 589 (24) 1, ,484 (1,540) Loss on debt extinguishment Other (income) expense, net 320 (32) (12) 742 1,018 (222) Impairment of assets 1-1,341-48,532 49,873 - Loss on the Geismar lease termination - 3, ,967 - Straight-line lease expense (32) (85) (85) (35) (237) (33) Executive Severance - - 2, , Non-cash stock compensation 1,308 1,688 2,023 1,890 6,909 1,794 Biodiesel tax credit 2 36,728 59,365 56,505 52, ,936 (204,936) Adjusted EBITDA $ 37,332 $ 79,068 $ 54,965 $ 58,857 $ 230,222 $ 17, 474 Total balance may not foot due to rounding. Notes: 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 is recognized in our GAAP financial statements for the quarter ending March 31, 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 quarter. 46