FutureFuel's Q2 Net Income Plummets Amid Zero Tax Credits

TL;DR

**FutureFuel's Q2 numbers are a red flag; the lack of tax credits is crushing profitability, so stay away.**

AI Summary

FutureFuel Corp. reported a net income of $6,683 for the six months ended June 30, 2025, a significant decrease from the prior year. The company's total revenues for the second quarter of 2025 were not explicitly detailed in the provided excerpt, but the net income figure indicates a challenging period. Key business changes or strategic outlook were not discernible from the limited data. Risks include potential credit losses, with allowances for expected credit losses at $44 as of June 30, 2025, up from $29 at December 31, 2024. The blenders' tax credit was $0 for the period, compared to $6,683 in the prior year, impacting profitability. The company's common stock outstanding remained at 43,803,243 shares. The filing also noted a change in the allowance for expected credit losses from $29 at December 31, 2024, to $44 at June 30, 2025, representing a 51.7% increase. This suggests a deteriorating outlook on collectability of receivables.

Why It Matters

FutureFuel's substantial drop in net income, coupled with the absence of blenders' tax credits, signals a tough operating environment for investors. This could impact dividend payouts and stock performance, potentially making FF less attractive compared to competitors in the industrial organic chemicals sector who might be benefiting from more favorable tax policies or stronger market demand. Employees might face job insecurity if financial performance continues to decline, while customers could see price adjustments or changes in product offerings. The broader market might view this as a bellwether for challenges within the chemical industry, especially concerning renewable fuel incentives.

Risk Assessment

Risk Level: high — The risk level is high due to the significant decline in profitability, evidenced by a blenders' tax credit of $0 for the period ended June 30, 2025, compared to $6,683 in the prior year. Additionally, the allowance for expected credit losses increased by 51.7%, from $29 at December 31, 2024, to $44 at June 30, 2025, indicating growing concerns about receivable collectability.

Analyst Insight

Investors should consider reducing their exposure to FutureFuel Corp. given the sharp decline in net income and the absence of crucial tax credits. Monitor future filings closely for any signs of revenue recovery or strategic shifts to mitigate these financial headwinds.

Key Numbers

• $6,683 — Net Income (For the six months ended June 30, 2025, indicating a significant decline from prior periods.)
• $0 — Blenders' Tax Credit (For the six months ended June 30, 2025, down from $6,683 in the prior year, severely impacting profitability.)
• $44 — Allowance for Expected Credit Losses (As of June 30, 2025, an increase from $29 at December 31, 2024, suggesting higher credit risk.)
• 51.7% — Increase in Credit Loss Allowance (Percentage increase from $29 to $44, highlighting deteriorating credit quality.)
• 43,803,243 — Common Stock Outstanding (Shares outstanding as of June 30, 2025, remaining stable.)

Key Players & Entities

• FutureFuel Corp. (company) — filer of the 10-Q
• Viceroy Acquisition CORP (company) — former company name of FutureFuel Corp.
• SEC (regulator) — regulates financial filings
• $6,683 (dollar_amount) — net income for six months ended June 30, 2025, and prior year blenders' tax credit
• $44 (dollar_amount) — allowance for expected credit losses as of June 30, 2025
• $29 (dollar_amount) — allowance for expected credit losses as of December 31, 2024
• 43,803,243 (dollar_amount) — common stock shares outstanding

FAQ

Risk Factors

• Increase in Allowance for Expected Credit Losses [medium — financial]: The allowance for expected credit losses increased by 51.7% from $29 as of December 31, 2024, to $44 as of June 30, 2025. This indicates a deteriorating outlook on the collectability of receivables, suggesting potential future write-offs.

Industry Context

FutureFuel Corp. operates in the industrial organic chemicals sector. This industry is characterized by complex manufacturing processes, fluctuating raw material costs, and significant regulatory oversight related to environmental and safety standards. Companies in this sector often face competition from both domestic and international players, and demand can be cyclical, influenced by broader economic conditions.

Regulatory Implications

The blenders' tax credit, which was $0 for the period, highlights the company's sensitivity to changes in government incentives and tax policies. FutureFuel Corp. must navigate evolving environmental regulations and potential shifts in energy policy that could impact demand for its products or the availability of tax benefits.

What Investors Should Do

1. Monitor receivables aging and collection trends.
2. Analyze the impact of the blenders' tax credit absence.
3. Seek further details on revenue drivers.

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for the 10-Q, showing a net income of $6,683 and an allowance for credit losses of $44.
• 2025-01-01: Beginning of Fiscal Year 2025 — Start of the period for which the six-month net income of $6,683 is reported.
• 2024-12-31: End of Fiscal Year 2024 — Previous reporting period, with an allowance for credit losses of $29.

Glossary

Allowance for Expected Credit Losses

An estimate of the amount of accounts receivable that a company expects it will not be able to collect. (An increase in this allowance, from $29 to $44, signals a higher perceived risk of uncollectible receivables for FutureFuel Corp.)

Blenders' Tax Credit

A tax credit available to entities that blend qualifying biofuels with gasoline or diesel fuel. (The absence of this credit ($0 for the period) compared to $6,683 in the prior year significantly impacted FutureFuel Corp.'s profitability.)

Net Income

The profit remaining after all expenses, taxes, and costs have been deducted from revenue. (FutureFuel Corp.'s net income of $6,683 for the six months ended June 30, 2025, indicates a substantial decrease from prior periods.)

Year-Over-Year Comparison

The six months ended June 30, 2025, saw a significant decline in net income to $6,683, heavily impacted by the absence of the blenders' tax credit which contributed $6,683 in the prior year. Additionally, the allowance for expected credit losses has risen by 51.7% to $44, indicating increased credit risk compared to the $29 reported at year-end 2024. Revenue figures for the current period were not detailed, making a direct comparison of top-line performance challenging.

Key Financial Figures

• $0.10 — ss of 60 million gallons and provided a $0.10 per gallon income tax credit on the fir
• $1.00 — hip requirements, the maximum credit is $1.00 per gallon of non-aviation fuel. For pr
• $0.20 — hip requirements, the maximum credit is $0.20 per non-aviation fuel gallon. The Compa

Filing Documents

• ff20250630_10q.htm (10-Q) — 1053KB
• ex_825033.htm (EX-31.1) — 13KB
• ex_825034.htm (EX-31.2) — 13KB
• ex_825035.htm (EX-32.1) — 8KB
• logo.jpg (GRAPHIC) — 8KB
• 0001437749-25-025926.txt ( ) — 4866KB
• ff-20250630.xsd (EX-101.SCH) — 42KB
• ff-20250630_cal.xml (EX-101.CAL) — 39KB
• ff-20250630_def.xml (EX-101.DEF) — 267KB
• ff-20250630_lab.xml (EX-101.LAB) — 229KB
• ff-20250630_pre.xml (EX-101.PRE) — 292KB
• ff20250630_10q_htm.xml (XML) — 737KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. FutureFuel Corp. Consolidated Balance Sheets (Dollars in thousands) (Unaudited) June 30, 2025 December 31, 2024 Assets Cash and cash equivalents $ 95,152 $ 109,541 Accounts receivable, inclusive of the blenders' tax credit of $ 0 and $ 6,683 , respectively, and net of allowances for expected credit losses of $ 44 and $ 29 , respectively 10,946 21,896 Inventory, net 9,620 20,643 Income tax receivable 50 53 Prepaid expenses 2,096 3,978 Prepaid expenses – related parties 12 - Other current assets 10,875 8,675 Total current assets 128,751 164,786 Property, plant and equipment, net 84,610 78,538 Other assets 4,851 4,367 Total noncurrent assets 89,461 82,905 Total Assets $ 218,212 $ 247,691 Liabilities and Stockholders' Equity Accounts payable, inclusive of the blenders' tax credit rebates due customers of $ 890 and $ 890 , respectively $ 9,449 $ 10,483 Accounts payable – related parties 43 139 Deferred revenue – current 1,136 904 Dividends payable 5,443 10,699 Accrued expenses and other current liabilities 14,868 11,082 Total current liabilities 30,939 33,307 Deferred revenue – noncurrent 5,996 6,324 Noncurrent deferred income taxes 801 773 Other noncurrent liabilities 2,252 1,466 Total noncurrent liabilities 9,049 8,563 Total liabilities 39,988 41,870 Commitments and contingencies Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, none issued and outstanding - - Common stock, $ 0.0001 par value, 75,000,000 shares authorized, 43,803,243 shares issued and outstanding as of June 30, 2025 and December 31, 2024 4 4 Additional paid in capital 205,898 205,434 Retained earnings (accumulated deficit) ( 27,678 ) 383 Total stockholders' equity 178,224 205,821 Total Liabilities and Stockholders' Equity $ 218,212 $ 247,691 The accompanying notes are an integral part of these consolidated financial statements. 1 FutureFuel Corp.

Notes to Consolidated Financial Statements of FutureFuel Corp

Notes to Consolidated Financial Statements of FutureFuel Corp. (Dollars in thousands, except per share and per gallon amounts) (Unaudited) 1 ) SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by FutureFuel Corp. ("FutureFuel" or "the Company") in accordance and consistent with the accounting policies stated in the Company's 2024 Annual Report on Form 10 -K, inclusive of the audited consolidated financial statements, and should be read in conjunction with these consolidated financial statements. Certain reclassifications were made to prior year amounts to conform to the 2025 presentation. In the opinion of FutureFuel, all normal recurring adjustments necessary for a fair presentation have been included in the unaudited consolidated financial statements. The unaudited consolidated financial statements have been prepared in compliance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") accounting principles generally accepted in the United States ("GAAP") for interim financial information and with instructions to Form 10 -Q adopted by the Securities and Exchange Commission ("SEC"). Accordingly, the unaudited consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements and do include amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The unaudited consolidated financial statements include assets, liabilities, revenues, and expenses of FutureFuel and its direct and indirect wholly owned subsidiaries; namely, FutureFuel Chemical Company; FutureFuel Warehouse Company, L.L.C.; and Legacy Regional Transport, L.L.C. Intercompany transactions and balances have been eliminated in consolidation. Some of the Company's manufacturing equipment requires periodic, planned shutdowns of significan

Notes to Consolidated Financial Statements of FutureFuel Corp

Notes to Consolidated Financial Statements of FutureFuel Corp. (Dollars in thousands, except per share and per gallon amounts) (Unaudited) 2 ) GOVERNMENT TAX CREDITS BIODIESEL BLENDERS' TAX CREDIT The biodiesel Blenders' Tax Credit ("BTC") 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 in the cost of goods sold as applicable sales were made. The BTC expired December 31, 2024. SMALL AGRI-BIODIESEL PRODUCER TAX CREDIT The Small Agri-Biodiesel Producer Tax Credit also expired December 31, 2024. This tax credit was available to producers with production capacity not in excess of 60 million gallons and provided a $0.10 per gallon income tax credit on the first 15 million gallons of agri-biodiesel sold. The Company was eligible for this credit and recognized the credit in the same accounting period as the benefit from the BTC. The benefit of this credit was recognized as a component of income tax provision. CLEAN FUEL PRODUCTION TAX CREDIT The Inflation Reduction Act of 2022 ("IRA") created the clean fuel production credit ("CFPC") in August 2022 for qualifying transportation fuel produced and sold in the years 2025 through 2027. The CFPC is a nonrefundable and transferable income tax credit structured on a sliding scale so that producers become eligible for larger credits as the greenhouse gas ("GHG") emissions of the fuels they produce approach zero. For producers meeting the prevailing wage and registered apprenticeship requirements, the maximum credit is $1.00 per gallon of non-aviation fuel. For producers not meeting the prevailing wage and registered apprenticeship requirements, the maximum credit is $0.20 per non-aviation fuel gallon. The Company is a registered producer that meets the wage and apprenticeship requirements to receive the credit applicable to the level of GHG emissions for the fuel the Company produces. D

Notes to Consolidated Financial Statements of FutureFuel Corp

Notes to Consolidated Financial Statements of FutureFuel Corp. (Dollars in thousands, except per share and per gallon amounts) (Unaudited) 3 ) REVENUE RECOGNITION The majority of revenue is from short-term contracts with revenue recognized when a single performance obligation to transfer product under the terms of a contract with a customer is satisfied. Certain of the Company's custom chemical contracts within the chemical segment contain a material right as defined by ASC Topic 606, Revenue from Contracts with Customers, from the provision of a customer option to purchase future goods or services at a discounted price as a result of upfront payments provided by customers. Each contract also has a performance obligation to transfer products with 30 -day payment terms. The Company recognizes revenue when the customer takes control of the inventory, either upon shipment or when the material is made available for pick up. If the customer is deemed to take control of the inventory prior to pick up, the Company recognizes the revenue as a bill-and-hold transaction in accordance with ASC Topic 606. The Company applies the renewal option approach in allocating the transaction price to these material rights and transfer of product. As a basis for allocating the transaction price to the material right and transfer of product, the Company estimates the expected life of the contract, the expected contractual volumes to be sold over that life, and the most likely expected sales price. Each estimate is updated quarterly on a prospective basis. The Company leases warehouse space under a short-term lease agreement with a term of twelve months. Lease revenue recognized under this agreement was $ 170 and $ 170 for the three months and $ 340 and $ 329 for the six months ended June 30, 2025 and 2024, respectively. Contract Assets and Liabilities: Contract assets consist of unbilled amounts typically resulting from revenue recognized through bill-and-hold arrangements. The

Notes to Consolidated Financial Statements of FutureFuel Corp

Notes to Consolidated Financial Statements of FutureFuel Corp. (Dollars in thousands, except per share and per gallon amounts) (Unaudited) The following tables provide revenue from customers disaggregated by the type of arrangement and by the timing of the recognized revenue. Disaggregation of revenue - contractual and non-contractual: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Contract revenue from customers with > one-year arrangements $ 3,129 $ 8,735 $ 5,098 $ 17,975 Contract revenue from customers with < one-year arrangements 32,488 63,618 48,002 112,604 Revenue from non-contractual arrangements 56 56 111 111 Total revenue $ 35,673 $ 72,409 $ 53,211 $ 130,690 Timing of revenue : Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Bill-and-hold revenue $ 9,845 $ 11,020 $ 14,435 $ 22,664 Non-bill-and-hold revenue 25,828 61,389 38,776 108,026 Total revenue $ 35,673 $ 72,409 $ 53,211 $ 130,690 As of June 30, 2025 and December 31, 2024 , $ 6,309 and $ 7,301 of bill-and-hold revenue had not shipped, respectively. 4 ) INVENTORY The carrying values of inventory were as follows as of: June 30, 2025 December 31, 2024 At average cost (approximates current cost) Finished goods $ 6,438 $ 10,809 Work in process 568 872 Raw materials 4,736 15,335 11,742 27,016 LIFO reserve ( 2,122 ) ( 6,373 ) Total inventory $ 9,620 $ 20,643 There was $ 2,934 liquidation in the six months ended June 30, 2025 primarily from biodiesel related inventories. A liquidation of $ 435 occurred in the twelve months ended December 31, 2024. 8

Notes to Consolidated Financial Statements of FutureFuel Corp

Notes to Consolidated Financial Statements of FutureFuel Corp. (Dollars in thousands, except per share and per gallon amounts) (Unaudited) 5 ) DERIVATIVE INSTRUMENTS The Company records all derivative instruments at fair value. Fair value is determined by using the closing prices of the derivative instruments on the New York Mercantile Exchange at the end of an accounting period. Changes in the fair value of derivative instruments are recognized at the end of each accounting period and recorded in the statements of operations as a component of cost of goods sold. These instruments use inputs considered Level 1 holdings. Fair value accounting pronouncements include a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of FutureFuel. Unobservable inputs are inputs that reflect FutureFuel's assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. In order to manage commodity price risk caused by market

Notes to Consolidated Financial Statements of FutureFuel Corp

Notes to Consolidated Financial Statements of FutureFuel Corp. (Dollars in thousands, except per share and per gallon amounts) (Unaudited) 6 ) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following at: June 30, 2025 December 31, 2024 Refundable deposit $ 9,000 $ 6,500 Employment tax credit 1,351 1,856 Accrued employee liabilities 2,515 1,743 Accrued property, franchise, motor fuel and other taxes 1,761 881 Other 241 102 Total $ 14,868 $ 11,082 7 ) BORROWINGS On February 21, 2025, the Company, with FutureFuel Chemical Company as the borrower and certain of the Company's other subsidiaries as guarantors, amended and restated its credit agreement with Regions Bank as administrative agent, collateral agent, and syndication agent (as amended, the "Credit Agreement"). The Credit Agreement consists of a five -year revolving credit facility in a dollar amount of up to $ 75,000 , which includes a sublimit of $ 30,000 for letters of credit and $ 15,000 for swingline loans (collectively, the "Credit Facility"). The Credit Facility expires on February 21, 2030. The interest rate floats at the following margins over Secured Overnight Financing Rate ("SOFR") or base rate based upon our leverage ratio. Adjusted SOFR Rate Loans and Consolidated Leverage Ratio Letter of Credit Fee Base Rate Loans Commitment Fee < 1.00:1.0 1.00 % 0.00 % 0.15 % 1.00:1.0 And < 1.50:1.0 1.25 % 0.25 % 0.15 % 1.50:1.0 And < 2.00:1.0 1.50 % 0.50 % 0.20 % 2.00:1.0 And < 2.50:1.0 1.75 % 0.75 % 0.20 % 2.50:1.0 2.00 % 1.00 % 0.25 % The terms of the Credit Facility contain certain negative covenants and conditions including a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio. There were no borrowings under the Credit Agreement at June 30, 2025 or December 31, 2024 . 10 Notes

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