Renewable Energy Group, Inc.
Q3 2017 Earnings Call Transcript

Published: 8 Nov 2017

[Operator:]

Good day, ladies and gentlemen and welcome to the Third Quarter 2017 Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference maybe recorded. I'd now like to turn the conference over to host of today’s call Mr. Todd Robinson. You may begin.

[Todd Robinson:]

Thank you, operator. Good afternoon, everyone, and welcome to our third quarter 2017 earnings conference call. With me today is our Interim President and Chief Executive Officer, Randy Howard; our Chief Financial Officer, Chad Stone; Brad Albin, our Vice President of Manufacturing; and Gary Haer, our Vice President of Sales and Marketing. Let me cover a few housekeeping items before I turn the call over to Randy. First, I would like to remind everyone that this call is being webcast and is available at the Investor Relations section of our Web site at regi.com. A replay will be available on our Web site beginning later this afternoon. The webcast includes an accompanying slide deck, which will appear automatically with the webcast, but you will need to advance the slides manually as we prompt you. For those of you dialing in, the slide deck can be downloaded, along with the earnings press release, in the Investor Relations section of our Web site. Turning to Slide 2. We would like to advise you that some of the information discussed on this conference call will contain forward-looking statements. These statements involve risks, uncertainties and assumptions that are difficult to predict and such forward-looking statements are not a guarantee of performance. The company's actual results could differ materially from those contained in such statements. Several factors could cause or contribute to those differences. These factors are described in detail in the risk factors and other sections of our Annual Report on Form 10-K for 2016 and subsequent quarter reports on Form 10-Q, which are on file with the SEC. These forward-looking statements speak only as of the date of this call. The company undertakes no obligation to publicly update any forward-looking statements based on new information or revised expectations. Today's discussion also includes non-GAAP financial measures. We believe these metrics will help investors assess the operating performance of our core business. Please see the press release for a reconciliation of the non-GAAP measures to the most comparable GAAP measure. With that, let me turn the call over to our Interim President and Chief Executive Officer, Randy Howard. Randy?

[Randy Howard:]

Thank you, Todd, and thank you, everyone, for joining the call. Our third quarter performance met our expectations in spite of a risk management loss of $25 million. For adjusted EBITDA, we guided to negative $7 million to positive $8 million. And our actual third quarter results was negative $1.5 million. We estimate that we are on track to be in excess of $200 million in adjusted EBITDA for the full-year if either the proposed domestic production incentive or the blenders tax credit is retroactively reinstated as expected. This would represent a record for REG. It has been a rather busy quarter from a regulatory standpoint. Some of it anticipated and some unexpected. I will speak to the regulatory developments first. After that I will discuss our operations, where our biorefineries continue to run efficiently and our optimization continues. The key regulatory developments expected to impact us are the trade case against Argentine and Indonesian imported biodiesel, the final RVO volumes, and the tax credit. Let me address each in turn. The American biodiesel industry is succeeding in fighting the flood of subsidized imports from Argentina. Preliminary Commerce Department ruling supported both countervailing and antidumping duty petitions brought by the National Biodiesel Fair Trade coalition. As you can see on Slide 3, the Commerce Department has imposed preliminary countervailing duties of 41% to 68% on imports from producers in those countries. They recognize the surge of imports that occurred in the spring and summer after the coalition's complaint was filed and are applying the duties retroactive back 90 days on many importers of record and requiring cash deposits. The Commerce Department indicated that the final determination for countervailing duties should be announced this week. Then on October 23, the Department of Commerce announced its affirmative preliminary ruling in the antidumping case. Commerce calculated preliminary dumping rates of 54% to 70% as a result of the preliminary affirmative determination Commerce has instructed U.S Customs and Border Protection to require cash deposits based on these preliminary rates. Final antidumping determinations are expected in early January. Based on these very positive preliminary rulings, we're confident that the final decision will be supportive of domestic biodiesel production. The industry was also successful in pushing back against EPA's attempt to revisit the 2018 final RVO for biomass-based diesel of 2.1 billion gallons as well as to adjust the 2019 proposed RVO downward in their published notice. We believe that notice incorrectly suggested that there would not be sufficient supply of biomass-based diesel RINs. The EPA's notice failed to recognize more than a billion gallons of domestic capacity that is offline or underutilized due to a subsidize imported product. The entire renewable fuel industry, our partners in agriculture and many supporters were successful by providing fact-based information to the White House and EPA to overcome their misconceptions. We owe a great deal of thanks to the 38 senators and more than two dozen House members and governors that signed letters to the EPA and President Trump in support of higher biodiesel volumes. This broad bipartisan support affirms our confidence in the future of the RFS [ph] because of its enormous benefits, job creation, increased energy security, value-added agriculture, and cleaner air. We look forward to seeing the final RVOs later this month. As most of you know on the tax credit front, our industry is advocating for a domestic production incentive. We believe that the passage of a 2018 federal budget and the introduction of a house tax reform bill, potentially clear the way for reinstatement and reform of the BTC to a domestic incentive. As we expected, the house build did not include either form of incentive. The Senate is expected to introduce their tax reform bill later this week. We have strong advocates in the House and Senate to convert the traditional BTC into a domestic production incentive. We're confident these advocates will address this important industry issue at the appropriate time. As many of you know, the Senate Finance Committee has approved this commonsense reform to a domestic incentive in previous tax extender legislation and we continue to have strong bipartisan support there. Both bodies pass their respective tax reform bills, then comes the challenge of reconciling the differences to generate a final bill that can win approval. So there is still a lot of work that needs to be done to get tax reform done by year end. However, in the absence of tax reform and a domestic incentive, we expect the BTC to be reinstated with retroactive effect for 2017 and prospectively for 2018 and possibly longer. Similar to the RVO, we do not expect the federal government to discontinue an incentive specifically designed to benefit our country's energy, food, and environmental security, especially when that is creating thousands of middle-class jobs around the country. We believe that the reduction in unfair importers and the tax credit separately or together are likely to positively impact our earnings power in the near-term. We set a goal of $150 million in adjusted EBITDA this year, assuming that a tax credit is put in place on the same terms. If the BTC is retroactively reinstated, we estimate that we have already exceeded that goal in just nine months. And we believe we can push our earnings power even higher as the regulatory environment correct some of the unfair headwinds our industry has been fighting. Now let's turn to our operations on Slide 6. In the third quarter, our fleet ran well, having produced 120 million gallons in the quarter. Our Houston facility was down for approximately a week due to hurricane Harvey. Our sales and marketing team delivered good results selling 152 million gallons. This was slightly below our Q3 guidance due to fewer third-party gallons sold and fewer gallons sold in Europe as well as the downtime at Houston. As we have said renewable diesel is very important to our future. We turned in another solid quarter at Geismar as the plant continues to run effectively and efficiently. We have now run at 96% utilization of nameplate capacity for the past 12 months. We are now performing early engineering studies to expand our capacity in Geismar by approximately 50%. Beyond the expansion we're in the planning stages to build another renewable diesel biorefinery. We believe Geismar and renewable diesel in general will be an important growth driver for us in the years ahead. We continue to optimize our biodiesel fleet as well. We produced at 92% utilization of nameplate capacity, our most significant upgrade project currently in progress is our Ralston biorefinery where we'll increase capacity to 30 million gallons per year. We expect to complete the expansion in early 2018. Recall that earlier this year, we had a fire at our Madison Wisconsin biorefinery. We're working with our insurance company and we believe we're fully insured for the property losses as well as business interruption. We also have invested in a few capital improvements while the plant is down which should increase annual capacity and yield. Our goal is to be up and running at Madison by the end of this year or early next year as well. I now want to provide a brief update on life sciences where our strategic review remains on track. We're making good progress to identify the best ways to monetize the value of this technology. Our goal remains to have a decision by year end. We're pleased with the amount of interest in the technology. In addition, as we recently announced, we have extended our joint development agreement with ExxonMobil, which we believe speaks to the quality and the value of the work being done. Let me now turn the call over to Chad for the financial update and then I will return to discuss our guidance and outlook. Chad?

[Chad Stone:]

Thank you, Randy. Let's turn to Slide 7, to review our third quarter financial results. Our adjusted EBITDA of negative $1.5 million was within guidance. This included a risk management loss of $25 million which was in excess of what we forecasted. Perking Harvey disrupted the nations refining complex in Houston at the end of August and into September causing a significant increase in ULSD prices, which were up 23% in the quarter. The natural offset to risk management loss is improving margins on delivered gallons throughout the quarter and end of the fourth quarter. We estimate that if domestic production incentive or BTC is retroactively reinstated for 2017 on the same terms as in 2016, our net income and adjusted EBITDA for business conducted in the third quarter would increase by approximately $55 million. For the first nine months of 2017 the increase in net income and adjusted EBITDA from a retroactive reinstatement is estimated to be $153 million, which will bring adjusted EBITDA for the nine-month period to approximately $172 million. As we mentioned in our last earnings call, we feel trailing 12-month adjusted EBITDA is more appropriate than a single quarter to evaluate our performance. On Slide 8, you get trailing 12-month adjusted EBITDA declined as one would expect without the tax credit in effect, but would increase in the event the tax credit reinstatement. Additionally, on Slide 10, you can see our return on invested capital metric that we're tracking. ROIC on a trailing 12-month basis is 22% with the retroactive tax credit and 5% without. Now let's circle back and go over to the financials in a little more detail. During the third quarter, we sold 152 million gallons of fuel that included 160 million gallons we produced in North America, 50 million gallons from third parties, 13 million gallons of petrol diesel and 8 million gallons produced by our operations in Germany. As Randy said, we sold fewer gallons in this quarter primarily due to fewer gallons of third-party sales and lower volumes from Germany. Our average selling price increased slightly from last year and our separated RIN sales were higher which resulted in a slight increase in our revenue. Gross margin was down this quarter to 2.4%. During the quarter, ULSD increased 23% going from $1.47 to $1.81 per gallon, which was the primary cause of risk management loss that pressured gross margins. The good news is that a higher ULSD index price generally improves our sales price and future gallons sold, which improves gross margin if all else is held constant. Our SG&A expenses were up this quarter and this increase was largely by charges for executive severance costs as well as temporary increase in costs related to focused efforts on the trade case and regulatory activities. R&D expenses were down compared to Q3 2016. The increase in other income is primarily due to the change in the fair value of the convertible debt conversion liability. For modeling purposes, you can expect our annual effective tax rate to be in the range of 5% to 8% for 2017 and recall our low effective tax rate is due to a valuation allowance reserve against our deferred tax assets, which is mostly made up of tax NOLs resulting from the BTC tax treatment. Without the valuation allowance, the future cash tax benefit of our NOLs was $340 million at year-end 2016. As a result, our net loss was $9 million or $0.24 per share on a diluted basis. Turning to the balance sheet on Slide 16, we maintained our financial strength in the quarter. Compared to Q2, our cash balance increased with increases in receivables and payables offset by the usual seasonal drawdown and inventory. We also increased borrowings on our line of credit in support of seasonal demand. On a scale basis, day sales outstanding decreased and inventory turnover ratio increased reflecting a normal seasonal pattern. Our term debt is $290 million and represents 28% of capital. In terms of cash flow, we continue to fund ongoing capital expenditures for Ralston, Mason City, and Geismar facilities during the quarter. Again for modeling purposes, budgeted capital expenditures for the remainder of 2017 are planned to be $15 million to $25 million and this is aimed mainly at upgrades and expansions of our facilities at Ralston and upgrades at Madison and Geismar. As a reminder, at Ralston we do have $20 million of financing for the expansion and upgrades and for the Madison CapEx we're covered by insurance but like replacements. Finally, our average interest rate on debt is 4%. Now before turning the call back over to Randy, I want to reiterate the impact of the convertible debt conversion liability from the bonds we issued in 2016. For the third quarter, we recorded a non-cash benefit of $8.6 million due to a decline in our stock price in the quarter. However, year-to-date we have incurred a non-cash expense of $24.2 million largely resulting from our stock price increase from December 31, 2016. Now I will turn the call back to Randy to discuss the outlook. Randy?

[Randy Howard:]

Thanks, Chad. As we look at the fourth quarter and full-year outlook, the current environment is positive. Margins are solid due to the increase in USLD price, that Chad mentioned earlier combined with RIN prices being generally supportive. The reduction of unfair imports increased rent prices somewhat. Although recently they were under pressure from the EPA RVO uncertainty. With the administration support on the RVO, RIN price is confirmed. You can see on Slide 15 that during the 23-day period of uncertainty, RIN prices dropped on average almost 10% versus the prior 30-day period. As shown on Slide 16, we can expect to sell between 140 million and 155 million gallons in Q4. Under current market conditions we expect this will lead to adjusted EBITDA in the range of $5 million to $15 million with no tax credit. For a full-year, this would be $24 to $34 million in adjusted EBITDA. Assuming retroactive reinstatement of the BTC, we're projecting that our full-year adjusted EBITDA performance will be in the range of and $190 million to $220 million, which is well in excess of the $150 million goal we laid out at the Analyst Day last spring. Now I would like to turn the call over to the operator for the question-and-answer segment of our call. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Chip Moore of Canaccord. Your line is open.

[Chip Moore:]

Thanks. Hey, guys. Wondering if you could talk a bit more on the operations at Geismar, particularly now that you’ve been a while since the catalyst upgrade, how things are running there and that is you potentially get the receipts from a BTC, how you prioritize investments in terms of expansions and upgrades etcetera.

[Randy Howard:]

Sure, I will. This is Randy. Let me answer part of that and if Chad wants to add some comments, I will defer to him as well. First of all, Moore, Geismar has continue to run well as we said we’ve been running 96% of nameplate for 12 months. We do continue to learn things for the plant, but they give us confidence on the way forward. We are in preliminary engineering to look at the first step of expanding the operations there. And then relative to how we use our funds with the retroactive reinstatement of the BTC, we take a balanced approach. At this point, we'd imagine that we'd look to either pay off directly or set funds aside to pay off the first convert. That’s on our books and then use the second part to invest in growth primarily at Geismar. So Chad any other …

[Chad Stone:]

Yes. Just to add a little bit to that, Chip, if you go back to our Analyst Day, you saw some investments and in this current presentation you see our return on invested capital and that’s really the measure and the threshold we are using for new investments. So as Randy said, we laid out a number of improvement opportunities on our current fleet biodiesel production and then three discrete potential investments related to renewable diesel and anything else will have to compete with those levels of returns. And if you remember, they were very attractive returns back then.

[Chip Moore:]

Yes, that makes sense Chad thanks. And if I could just sneak in one more just on the quarter. The impact of Harvey, maybe you can flush that out a little bit how much that was just beyond the fuel price move? And then, for Petrotec, anything in particular there we should pay attention to for that slight decline? Thanks guys.

[Chad Stone:]

I will start and Randy you can add on or correct me, but so hurricane Harvey the main impact there that came through at the end of August, we had about a week or little bit more or so downtime. We had sufficient inventories where we could keep people supplied. But a big impact that had on the quarter was, we saw a lot of pressure on ULSD index price going up. We saw the refinery industry in gulf area impacted by the duration of that storm and that cause index prices to go up and keep in mind in the backdrop of that you had some geopolitical risks supporting ULCD, as well as OPEC and Russia talking about restricting production. You also saw inventory draw downs in the -- in ULSD and oil. So that was probably I would say the biggest impact to us for the hurricane.

[Randy Howard:]

Yes, in our European operations early in the quarter margins were constrained in Europe. And so, we did not run at full utilization and that led to lower than expected sales from there.

[Chip Moore:]

Got it. I appreciate the color. Good job. Thanks.

[Randy Howard:]

Thank you, Chip.

[Chad Stone:]

Thanks.

[Operator:]

And our next question comes from Craig Irwin of ROTH Capital Partners. Your line is open.

[Craig Irwin:]

Good evening and thanks for taking my questions. The first thing I wanted to ask about is the hedge loss in the quarter. So we all know Harvey had its impact and energy seems to be strong here. Can you clarify for us, first that the $25 million you called out in your press release is not taking out of the adjusted 54% in adjusted EBITDA. And maybe if you could help us roll this forward into the fourth quarter, the guidance you gave us of 5 to 15. I’m going to guess there is a little bit of a hedge loss anticipated in the fourth quarter. If you could flush it out a little bit for us, and maybe discuss your exposure for heating oil, ultra-low sulfur diesel, RINs as far as where we can think about for any continued moves in the quarter and how they might continue to impact the results.

[Randy Howard:]

Absolutely. Craig, you’re right. We do not back it out of our adjusted EBITDA in that. The $55 million net benefit to the net $53.5 million expected EBITDA with tax credit reinstatements. But we do not back it out, but what we’re trying to do is to put it in broader context, because generally rising energy prices help us over time on future gallon sold. So if you look at the ULSD chart over the quarter, it went up from -- it took a slight dip down, but then it steadily went up all quarter long and it's not so bad when it happens that way for us because we are also delivering physical product alongside that increasing ULSD and when we are selling at index prices, on the one side we have a risk management locked but if deliver that gallon index to ULSD that quarter we also have an improved profitability on the gallon sold. That is what we are protecting is our -- effectively our cash margin. Now there are future gallons sold where we are recognizing a loss in the third quarter associated with protecting some fourth quarter forward sales gallons, which is why you see us going from a third quarter margin environment where we are predicting basically breakeven and we are pre-BTC projecting a $5 million to $15 million positive EBITDA. So you see a slight improvement in our earnings capability at the end of the fourth quarter as a result of better pricings and the feedstock not keeping up with that increased ULSD price. So I hope that helps.

[Craig Irwin:]

A little bit, maybe if I ask the question a slightly different way, it would help. So if we adjust for your hedge losses in the third quarter, it looks like you did it right around $0.15 a gallon, which is a very healthy level of profitability. Looking into the fourth quarter, the midpoint of your guidance range is really pointing to $0.06 again. Now I know there is seasonality in there. But, maybe can you discuss the step from $0.15 a gallon to $0.06 a gallon, given that we have the continued strengthening of the impact of your successful ITC case and other positive macros particularly given the higher energy prices as you just reference?

[Chad Stone:]

Yes. So I will go a little bit more and Randy correct me or add in your perspective. So I think you’re right to point out that our third quarter in the absence of the risk management moves was actually better than we expected with the risk management moves. We ended up within guidance. So effectively you're right on the risk management covering forward gallons. You're seeing a better fourth quarter relative to third quarter. The other thing that occurred in August with the countervailing duties being implemented and cash duties being required, we saw the imports that were coming in through August 23 effectively stopped going forward. And we’ve seen them redirected towards Europe since then, but in the meantime we have seen the flow of imports from Argentina stopped coming into the U.S.

[Craig Irwin:]

Okay. But doesn’t that impact continue to wane as far as a drag in the market in the fourth quarter?

[Chad Stone:]

We got to work through the inventory that had come in through August 23 for sure.

[Randy Howard:]

Yes, and Craig we are not going to be specific because this number moves around a lot. But obviously our guidance is based on what we know today. And so the implication is we do know today that based on ULSD prices so far in the quarter there are some loss that its already baked into that forecast. So that’s probably the answer to your question you're looking for.

[Craig Irwin:]

Okay, excellent. So that is precisely what I was looking for. Thank you, Randy. So then, as we start looking at 2018 and let's just say we put some green eye shades on and believe the tax reform is going to come through and that Trump's [indiscernible] agriculture and biofuels is something that ends up in the final versions of what we get to see. How do we expect the seasonality that play in '18? Is this going to look like a typical year where the BTC is benign [ph] except likely going to see more robust margins given the absence of inputs or do we expect a more seasonal year given that we are not going to have winter imports from overseas and other factors that will change the seasonality versus a typical year.

[Randy Howard:]

Well, let me take a stab at it and I will let some of my other team weigh in. Our business always have some seasonality based on largely weather, our sales are lower in the northern countries. We, with distillation, we are able to make good cold flow biodiesel and so we continue to sell, but it is -- it does affect the first quarter volumes. With our expectation of a reinstatement of the BTC and proactive putting it in place for 2018, we wouldn't expect to see the added volatility that we see in seasonality because there is a -- race to sell volumes before the BTC expires. So our expectation is that inventory game wouldn't happen to the same extent, relative to the ongoing margins then we would expect to see better improved margins, every quarter of next year that will overlay some seasonality in our volumes.

[Craig Irwin:]

That’s very helpful. Thank you. So my last question is really about your RHD initiatives, the different expansions that you’ve been evaluating. Can you maybe discuss what would be the soonest that you would see incremental capacity come on from expansion or adjustments at Geismar? And the potential timeline to other plans maybe in different geographies as soon as that we could see them come online and start contributing to the P&L?

[Chad Stone:]

So Craig, I would love to give you a definitive answer, but until I see kind of the preliminary engineering, which obviously includes kind of our work plan. I can't give you a good timeline. Our plan is to be able to give you that in the first quarter that's when we will have the results of our engineering studies and be able to tell you and others that. I think what I would say is there's at this point nothing holding us back, other than getting the work done that we need to be able to move forward on certainly this first step of increasing the capacity by 50%. But doing it in a way where we can be on schedule and under budget and have good project management on that project, and so, I'm not quite ready to speak to that until I see the results of that study.

[Craig Irwin:]

Great. Well thank you for that. I guess, we all wait until hopefully when you report your fourth quarter results or first quarter results and congratulations on the strong progress.

[Randy Howard:]

Thank you, Craig.

[Chad Stone:]

Thanks, Craig.

[Todd Robinson:]

Thank you, Craig.

[Operator:]

[Operator Instructions] And our next question comes from Tyler Etten of Piper Jaffray. Your line is open,

[Tyler Etten:]

Hey, good afternoon guys and thanks for taking my questions today. I guess, as per the outlook for down hold in the fourth quarter, it suggests that the gallons will be down -- [indiscernible] down again year-over-year. Could you just maybe give us a high-level expectation for when we would see that kind of level out whether that would be through the fourth quarter or maybe something through 2018?

[Chad Stone:]

Yes, they can -- one of the things that you will see in terms of gallons sold is if you compare our historical third-party gallons to what we have done so far this year and expect to do throughout the year, we've done a lot fewer because that would effectively be leveraging more tax credit risk at marginal third-party gallons that aren't as profitable to us as produced gallons. So that's how I would explain fourth quarter. I guess, going forward in terms of outlook, essentially we've been running our plants at really good rates hitting some record milestones and that bodes well for production capacity going forward.

[Randy Howard:]

Yes, and I think the other thing you'll see is certainly our production in the fourth quarter, we are in the middle of upgrading our Ralston facility, our Madison facility is down. So both of those things as we approach the first quarter of next year, we will be up in operating. So I think you'll see improvement just from our barrels produced -- excuse me, gallons produced because of those upgrades and the timing of those.

[Tyler Etten:]

Okay. That’s helpful. And then could you just talk about a little bit just how stock margins look right now, and how you expect the margin to transpire through the quarter.

[Randy Howard:]

Yes. I mean, right now we see some good margins compared to where we were earlier in the year. We -- in some cases feedstock prices have gone down which have been very supportive. Obviously, we spoke to the ULSD increase which drove our product price up. So we see improved margins, certainly you look at that spread, so for us you can get a pretty good idea just by looking at the spread between ULSD and as a marker soybean oil. Although we don't run a lot of soybean oil, the other feedstocks due tend to track it generally. So I’d say I think the margins look pretty good. RIN prices, as I said, have stabilized since the EPA started and stopped causing periods of uncertainty. So that has helped. I think we would guess that the large imports from Argentina earlier in the year, a lot of obligated parties, probably we're certainly we're in the market getting their RINs there. So, but now as we approach year end, we see again some stability in that RIN market as they approach their year-end and prepare for 2018. So far like I said we are positive about what the fourth quarter looks like and we've got almost a month and a half left and we hope it will continue to improve.

[Chad Stone:]

Hi, Tyler. It's Chad. I wanted to add to that if you recall the last time we operated in a year without the tax credit, we went through the year and we had lost about $50 million of EBITDA before it was reinstated. So each month we're investing roughly $4 million a month with tax credit upside. So we’re pretty happy with where we're at and where we -- how we plan to finish the year relative to other years when we’ve gone without a tax credit to have first of all positive EBITDA profitable operations with some good upside with the tax credit reinstatement.

[Randy Howard:]

Yes, I think it speaks to a lot of not only optimization that you’re starting to see kick in, but also just the work that’s been done to get our plans to where they can operate even in the worst of times. So, yes, I too am pleased that we’re going to end up like we said somewhere between $24 million and $34 million positive without the tax credit. That’s a big improvement if you look over past periods.

[Tyler Etten:]

Oh, absolutely. And so, it's really exciting to see the development of the business over the last couple of years and not hanging on a tax credit by any means. I guess there is with all the -- last one for me, just with all the tax talk right now and business in Washington. Is it safe to say that we shouldn’t be looking for any news on the BTC before mid December or so?

[Randy Howard:]

Based on history, that’s probably a pretty good assumption. The Congress has stated that they’re trying to get this thing done by Thanksgiving. That’s aggressive by everything you read, but that’s their goal. So far they’ve been successful in these first two steps that I mentioned to reach that goal which is get the 2018 budget passed and then submit the house bill. So let’s see. Certainly and based on history especially if they kick the can down the road and put the BTC in, then that would probably be mid-December, yes.

[Tyler Etten:]

All right. Thanks, guys.

[Operator:]

And I’m showing no further questions at this time. I would now like to turn the call back over to Randy Howard, CEO for closing remarks.

[Randy Howard:]

Thank you, operator. To wrap up, I want to emphasize that we are very optimistic about our future. I am pleased with recent successes in the trade case and RVO which should boost our earnings power substantially in the near-term. We're now focused on optimizing the fleet and accelerating our push to grow renewable diesel production. Assuming retroactive BTC reinstatement, we estimate that we would have exceeded our full-year goal of 150 million in just the first nine months. Our future indeed looks promising. Now before we close, Todd is going to mention upcoming Investor events for REG, Todd.

[Todd Robinson:]

Thanks, Randy. We will be attending the ROTH Investor Conference on December 12, in New York. Attendants to this conference is by invitation only. So please contact your off sales representative if you want to attend or schedule one-on-one meeting with it. Thank you all again. This concludes the call and you may now disconnect.

[Operator:]

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day.