FutureFuel Returns to Profit With Hedging Benefit
FutureFuel reported second-quarter net income of $11.4 million, reversing losses as biofuel production recovered and hedge-related timing benefits lifted gross profit.
FutureFuel Corp. (FF), a manufacturer of custom and performance chemicals and biofuels, returned to profit in the second quarter after losses deepened across the preceding two quarters. The company reported a $12.0 million loss for the final quarter of 2025 and a $20.6 million loss for the first quarter of 2026. The recovery included a substantial benefit from the timing of biofuels hedges.
Quarterly revenue was $78.7 million, while gross profit was $15.0 million. Diluted earnings were $0.25 a share. Chairman and Chief Executive Roeland Polet attributed the return to profitable growth to strengthening demand, improved production economics, cost discipline and better use of the company's Batesville plant. He said both operating segments generated positive gross profit per unit sold.
The hedge effects were material to that result. Gross profit benefited from $9.1 million associated with selling physical inventory above hedged prices, offsetting realized derivative losses recognized in the first quarter. A further $3.2 million benefit came from unrealized derivative gains during the second quarter. Excluding derivative effects, the company attributed the improvement in gross profit to higher throughput and better price realization across both businesses.
Biofuels accounted for the larger share of revenue, contributing $52.9 million and gross profit of $10.1 million. Production reached 8.4 million gallons, compared with 2.0 million gallons in the first quarter. The segment's gross profit included the recovery of previously recognized hedging costs when the underlying physical inventory was sold. That timing benefit accompanied the production recovery rather than representing a separate increase in output.
Production increased despite a biodiesel plant outage lasting more than three weeks during the quarter. Biofuels capacity utilization was 56%. The company attributed improving market conditions to greater regulatory clarity and renewable fuel production requirements, but said elevated soybean oil and other feedstock costs had partly offset favorable finished-product pricing. The company expects those costs to continue affecting near-term gross profit per gallon.
Chemicals supplied the other $25.8 million of quarterly revenue and generated $5.0 million of gross profit. Custom chemicals contributed $18.5 million in sales, with the company citing higher volumes sold to energy customers. Performance chemicals revenue was $7.3 million, supported by increased volumes for a new customer whose production began late in 2025. The two product groups gave the chemicals business separate sources of demand within its existing manufacturing platform.
Chemicals capacity utilization reached 65%, compared with 54% a year earlier, despite an expansion in available capacity over the preceding twelve months. FutureFuel said new customer programs and increased activity from existing customers, particularly energy-related customers, contributed to higher throughput. The company also reported higher pricing and a growing pipeline of project activity during the quarter.
Operating cash flow was $18.8 million for the second quarter and included customer funding for a custom chemical contract. Capital expenditures totaled $8.0 million, including approximately $1.9 million of customer-funded discretionary investment. The company said operating profit and customer funding supported liquidity, while working capital requirements for new programs and capital spending absorbed some cash.
Customer support also extended beyond the quarter's spending. An existing chemicals customer committed under a definitive agreement to invest $25 million at Batesville in 2026 and up to $17 million in 2027. The company expects the incremental production capacity supported by that agreement to come online early in fiscal 2028.
FutureFuel separately secured a four-year agreement with a third party to monetize Section 45Z Clean Fuel Production and Small Producer Tax Credits. The company expects $22 million in gross proceeds during the second half of 2026, with approximately $3 million arriving in the third quarter and $19 million in the fourth. Those expected receipts remained a prospective source of cash beyond the quarter's operating recovery.
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