$REGI -- Excellent entry here on misunderstood earnings for the largest biodiesel independent producer/blender.
The earnings release for 2012 came out yesterday and was followed by a conference call and a PDF presentation, both of which can be accessed on the company website.
Bottom line is that the tax blender credit for renewable fuels that was passed by congress on New Year's Eve was too late to be applied as received income for the 2012 GAAP earnings.
However, $58M will be received THIS QUARTER, which adds cash income per share of $58M / 34M shares, or around $1.70 per share.
In addition, the tax blender credit is in effect for 2013 and will add even more revenue to be received in 2013 for 2013 sales. Since given REGI's recent acquisitions, plus the 28% increase in 2013 renewable fuels blending mandate over 2012, plus given RIN prices are now back in the $0.80s range according to the conference call (which is above the low $0.50s range that they were trading during much of 2012), this means 2013 will INCREASE gallons sold and blended. Therefore expect 2013 tax blender credits to be at least $73M.
Bottom line is, even without considering organic profits from RIN trading and biodiesel sales, REGI will earn an EPS just from the tax blender credit alone in 2013 of $58M + $73M = $133M.
So forward EPS has to be AT LEAST $133M / 34M shares, or $3.91 EPS. Now factor in earnings BEFORE taxes, depreciation, and amortization have been predicted for Q1 as $5M-$15M and Q2 as $15-$25M, and Q3 as greater than Q2 but not specified. So ORGANIC earnings, having nothing to do with tax credits, on the average should be at least $10M + $20M + maybe $27M for (Q1 + Q2 + Q3), for a total of $57M.
Adding $57M from organic profits for Q1-Q3 to $133M from tax blender credit the forward EPS of REGI is now $133M + $57M = $190M.
Forward EPS for 2013 is expected to be around $190M / 34M shares = $5.50.
REGI has a forward P/E of $6.20/$5.50 = 1.13
Now THAT's undervalued !!!!
BUY TODAY BEFORE THE MARKET FIGURES OUT THAT LAST YEAR'S earnings don't matter, it's this year that counts.
FWIW, they did a pro forma adjustment on the last page of the PDF presentation and it showed IF the 2012 tax credit has been passed by congress on-time instead of after the fact and retroactive, then 2012 EPS WOULD HAVE BEEN $96M / 34M shares = $2.82
Ignore the shorts - this is a gift today; it won't last.
AI
