FutureFuel (FF) risk factors, FY2024 10-K

Other

1. 01Securities Authorized for Issuance Under Equity Compensation Plan
2. 02Purchase of Securities by Us
3. 03The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with our consolidated financial statements, including the Notes thereto, set forth herein
4. 04Pricing for the other custom manufacturing products is negotiated directly with the customer. Some, but not all, of these products have pricing mechanisms and/or protections against raw material, energy, or conversion cost changes
5. 05Pricing for the other performance chemical products is established based upon competitive market conditions. Some, but not all, of these products have pricing mechanisms and/or specific protections against raw material or conversion cost changes
6. 06$ 394,671 $ 1,343 $ 396,014
7. 07$ 15,503 $ 37,382 $ (21,879 ) (59 )%
8. 08$ 17,594 $ 34,983 $ (17,389 ) (50 )%
9. 09Gain on marketable securities
10. 10Operating expenses decreased $339 in 2024 compared to 2023. This decrease was primarily the result of decreased research and development and legal expenses
11. 11The income tax provision was $792 in 2024 or an effective tax rate of 4.9% as compared to a provision in 2023 of $1 or an effective tax rate of 0.0%
12. 12Consolidated sales revenue decreased 7.0% or $27,764 in 2023 compared to 2022 primarily from lower average sales prices in the biofuel segment ($71,198) and, to a lesser extent, in the chemical segment ($1,916). This decrease was partially offset by higher biodiesel sales volumes in the biofuel segment ($44,994)
13. 13Operating expenses increased $2,164 in 2023 compared to 2022. This increase was primarily the result of increased compensation expense
14. 14The income tax provision was $1 in 2023 or an effective tax rate of 0.0% as compared to a benefit in 2022 of ($1,473) or an effective tax rate of (10.7%)
15. 15Biofuels sales revenue decreased 8.3% or $26,204 in 2023 compared to 2022, primarily from decreased selling prices of biodiesel and biodiesel blends, inclusive of a decline in separated RIN sale prices. RIN prices declined during 2023 as production levels exceeded the renewable volume obligations set by the EPA
16. 16Useful Lives of Property, Plant, and Equipment
17. 17We had $1,460 of new chemical production equipment and infrastructure capital repair projects that generated commitments as of December 31, 2024. We plan to continue to invest in capital infrastructure to increase the reliability of plant operations
18. 18In 2023, we paid regular cash dividends aggregating $0.24 per share on our common stock with record dates and payment dates as previously discussed. The regular cash dividends declared in 2023 totaled $10,503 to be paid in 2024
19. 19Off-Balance Sheet Arrangements
20. 20Market risk represents the potential loss arising from adverse changes in market rates and prices. Commodity price risk is inherent in the chemical and biofuels business both with respect to input (electricity, coal, raw materials, biofuel feedstocks, etc.) and output (manufactured chemicals and biofuels)
21. 21(a) Volume requirements and average price information are based upon volumes used and prices obtained for the year ended December 31, 2024. Volume requirements may differ materially from these quantities in future years as our business evolves
22. 22Opinion on the Financial Statements
23. 23Revenue recognition – Recognition of material rights consideration
24. 24We obtained the contracts with customers containing material rights and evaluated for the proper accounting treatment
25. 25We evaluated the appropriateness of expected contractual volumes to be sold over the remaining contract life which included comparing the estimated volumes to customer forecasts
26. 26Revenue – related parties
27. 27Gain (loss) on marketable securities
28. 28Total unrealized gain (loss), net of tax
29. 29$ 15,503 $ 37,382 $ 15,211
30. 30Change in fair value of equity securities
31. 31Loss on the sale of investments
32. 32Accrued expenses and other current liabilities – related parties
33. 33Proceeds from the sale of marketable securities
34. 34Change in Accounting Principle
35. 35Cash and cash equivalents
36. 36Accounts receivable and allowance for credit losses
37. 37Property, plant, and equipment, net
38. 38Asset retirement obligations and environmental costs
39. 39Cost of goods sold and distribution
40. 40Selling, general, and administrative expenses
41. 41Research and development expenses
42. 42Issued accounting standards not yet adopted
43. 43Recently adopted accounting standards
44. 44The Company received the BTC which provided a one dollar per gallon tax credit to the blender of biomass-based diesel with at least 0.1% petroleum-based diesel fuel. The Company recorded this credit as a reduction to cost of goods sold as applicable sales were made
45. 45The IRA created the clean fuel production credit (“CFPC”) for qualifying transportation fuel produced after 2024 and sold on or before December 31, 2027. The CFPC consolidates and replaces several fuel related credits which expired December 31, 2024 including the BTC and the Small Agri-biodiesel Producer Tax Credit
46. 46CARES ACT – EMPLOYEE RETENTION TAX CREDIT
47. 47The majority of revenue is from contracts with less than one-year arrangements with revenue recognized when a single performance obligation to transfer product under the terms of a contract with a customer is satisfied
48. 48The Company leases warehouse space under a short-term lease agreement with a term of twelve months. Lease revenue recognized under this agreement was $669 for the year ended December 31, 2024
49. 49Transaction price allocated to the remaining performance obligations
50. 50$ 243,339 $ 368,250 $ 396,014
51. 51At December 31, 2024 and 2023, the Company held no marketable equity or trust preferred (debt) securities. The previous sale of these securities was recorded as a component of net income with a gain of $575 in the year ended December 31, 2023
52. 52PROPERTY, PLANT, AND EQUIPMENT
53. 53Other current assets primarily comprise supplies and parts which are held in support of maintenance and repair of plant equipment. The balance related to these items totaled $7,733 and $7,595 at December 31, 2024 and 2023, respectively
54. 54ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
55. 55Asset retirement obligations and environmental reserves
56. 56Lease commitments and purchase obligations
57. 57$ 16,295 $ 37,383 $ 13,738
58. 58Dividends received deduction
59. 59The income tax provision in 2024 was $792 or an effective tax rate of 4.9% as compared to an income tax provision of $1 or an effective tax rate of 0.0% in 2023 and an income tax benefit of $1,473 or an effective tax rate of (10.7%) in 2022
60. 60(Dollars in thousands, except per share amounts)
61. 61Capital loss and charitable contribution carryforwards were generated in 2020 through 2024 and will expire in 2025 through 2029
62. 62There are no unrecognized tax positions as of December 31, 2024, 2023, or 2022, and the Company does not anticipate any change over the next twelve months
63. 63In the years ended December 31, 2024, 2023 and 2022, the Company used the treasury method in computing earnings per share as all shares with participating security holders had vested
64. 6443,765,757 43,763,243 43,763,243
65. 65Provide incentives to persons who are not the Company employees to promote the Company’s success
66. 66The Company recognizes compensation expense in its financial statements for common stock-based options, stock units, and stock awards based upon the grant-date fair value over the requisite service period
67. 675,000 shares of restricted stock were awarded in December 2024 to each of the eight members of the Board of Directors for a total of 40,000 shares. The awards vested immediately and had a compensation expense of $206
68. 68In 2023, the Company did not make any grants under the Incentive Plan
69. 69There were no stock options exercised in 2024, 2023 or 2022
70. 70Forfeitures for RSU grants are recognized as they occur
71. 7144,000 3.20 7.33 44,000 7.33
72. 72Defined contribution savings plan
73. 73Related party transactions
74. 74Related party income statement accounts
75. 75Biodiesel, petrodiesel, blends, and other petroleum products
76. 76Distribution and related services
77. 77Commodity trading advisory fees
78. 78Travel and administrative services
79. 79Income tax and consulting services
80. 80$ 80,007 $ 163,332 $ 243,339
81. 81$ 22,632 $ (2,988 ) $ 19,644
82. 82$ 79,333 $ 288,917 $ 368,250
83. 83$ 29,936 $ 11,043 $ 40,979
84. 84$ 80,893 $ 315,121 $ 396,014
85. 85$ 25,645 $ 3,348 $ 28,993
86. 86Evaluation of Disclosure Controls and Procedures
87. 87Management’s Annual Report on Internal Control Over Financial Reporting
88. 88Changes in Internal Control Over Financial Reporting
89. 89Opinion on the Internal Control Over Financial Reporting
90. 90Definition and Limitations of Internal Control Over Financial Reporting
91. 91Identification of Directors
92. 92Identification of Executive Officers
93. 93Our board believes that Mr. Kruszewski’s extensive managerial and leadership experience in the financial services industry in addition to a comprehensive understanding and knowledge of public companies’ day-to-day operations and strategy add significant value to our board and the Company
94. 94Our board believes that Mr. Greer's extensive managerial and leadership experience in the chemical industry add significant value to our board and the Company
95. 95Our board believes that Mr. Rowe's extensive managerial and leadership experience in the chemical industry adds significant value to our board and the Company
96. 96Our board believes that Mr. Polet's extensive experience in the chemical industry, including his managerial and leadership experience, adds significant value to our company
97. 97Code of Business Conduct and Ethics
98. 98Nominating/Corporate Governance Committee
99. 99Compensation Discussion and Analysis
100. 100Cash Salaries and Bonuses
101. 101Provide incentives to persons who are not our employees to promote our success
102. 102The Administrator may grant cumulative performance vested options. Performance will be tied to cumulative cash flow in amounts to be determined for periods to be determined
103. 103Such options will vest and expire (including on a pro rata basis) on such terms as may be determined by the Administrator from time to time consistent with the terms of the Incentive Plan
104. 104Federal Income Tax Consequences of the Incentive Plan
105. 105Life Insurance and Other Employee Benefits
106. 106The Compensation Committee
107. 107Recommendations from Management
108. 108Executive officers of FutureFuel Chemical Company for the years indicated
109. 109Represents the grant date valuation of the awards under ASC Topic 718, Stock Compensation. Assumptions used for determining the value of awards reported here are set forth in Note 17 to our consolidated financial statements included elsewhere herein
110. 110Grants of Plan-Based Awards
111. 111N/A N/A N/A N/A N/A 750,000 $ 3,976,500
112. 112Potential Payments upon Termination or Change in Control
113. 113Compensation of Directors
114. 114Compensation Committee Interlocks and Insider Participation
115. 115Compensation Committee Report
116. 116Securities Authorized for Issuance Under Equity Compensation Plans
117. 117Security Ownership of Certain Beneficial Owners
118. 118Security Ownership of Management
119. 119Includes 750,000 RSUs subject to certain vesting conditions
120. 120Transactions with Related Persons
121. 121Review, Approval, or Ratification of Transactions with Related Persons
122. 122List separately all financial statements filed as part of this report
123. 123FutureFuel Corp.’s Bylaws (incorporated by reference to Exhibit No. 3.2.a to Form 10 filed April 24, 2007)
124. 124Omnibus Incentive Plan (incorporated by reference to Appendix A to Schedule 14A filed July 26,2017)
125. 125Management contract or compensatory plan or arrangement
126. 126Rose M. Sparks, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer