Welcome to the Future Fuel 3rd Quarter 2026 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rose Sparks, Chief Financial Officer. Thank you. You may begin.

Thank you. Good morning and welcome to the Future Fuel Third Quarter 2026 Results Conference Call. Leading the call today are our Chairman and CEO, Roeland Polet, and I am Rose Sparks, the company's Chief Financial Officer. After the close of U.S. trading yesterday, we issued a press release detailing our third quarter operational and financial results. This release is publicly available in the investor relations section of our corporate website at www.futurefuelcorporation.com. I would like to remind you that management's commentary and responses to questions on today's call may include forward-looking statements, which by their nature are uncertain and outside the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, Actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of our latest reports filed with the SEC. Additionally, please note that you can find reconciliations of all our historical non-GAAP financial measures mentioned on this call in the press release issued yesterday. Today's call will begin with prepared remarks from Roeland Polet, who will provide a business update followed by my review of our third quarter financial performance. At the conclusion of these prepared remarks, we will open the line for questions. With that, I'll turn the call over to Roeland.

Thank you, Rose, and good morning to everyone joining us on the call today. Our third quarter performance reflected two distinct operating narratives. On the one hand, we had exceptional operating quarter in our biofuel segment. for capacity utilization increased to the highest level in more than two years, exceeding 80%. Biodiesel demand remains strong as we exit the third quarter, and we expect demand to further accelerate entering 2027. Recent regulatory changes in renewable fuels markets will further narrow the rent equivalency advantage previously enjoyed by renewable diesel producers and improve the competitive position of biodiesel producers, including ourselves. To that end, through early November, we have booked orders for more than 90% of our fourth quarter biodiesel production capacity, well ahead of prior expectations. That incredible visibility for our business provides us a good sense as to what 2027 could look like for our biofuel segment. Even so, despite higher legalization sales volumes and price capture in the biofuel segment, the combined impact of elevated feedstock costs and derivatives losses resulted in a segment gross loss in the period. Worth noting, however, is the fact that we expect to sell 1.5 million of RINs generated from the third quarter biodiesel production and to recover 2.3 million in derivative losses tied to corresponding sales of physical inventory during the fourth quarter. In our core chemical segment, extended maintenance at dedicated process units for two separate customers reduced sales volume by 27% versus the prior year period. At customer A, we pulled forward a planned turnaround on a dedicated production unit after the customer announced it would temporarily pause its normal order cadence to rebalance inventory levels. Importantly, Customer A has expressed its intent to resume normal order cadence in November, and its scheduled turnaround work has since been completed. Further, it should be noted that Customer A has committed $41 million of customer-funded growth capital investment at Batesville between 2026 and 2028. As they seek to leverage the optionality afforded by our site, They are an excellent partner, one that highly values our value proposition, and they remain highly committed to proceeding with investments being made at Batesville. Even so, the turnaround at the Customer Production Unit, together with a separate turnaround at Customer B, another long-term customer, weighed on throughput rates within the chemical segment in the period. Lower production rates with chemical segment impacted operating leverage in the third quarter, resulting in a drag on profitability. Together, these events reduced third quarter adjusted EBITDA by approximately $4.3 million. Importantly, in a period of short-term disruption, we controlled the controllables. Operable production units produced on plan, costs were controlled, Growth initiatives moved forward as planned. Our operational rhythm was unchanged even as we adapt to short-term headwinds that we've since resolved. With Beaufort turnarounds within our chemical business completed and no major plant maintenance scheduled through the first quarter of 2027, we're positioned for a solid end to 2026 and a strong start heading into next year. Before I hand the call over to Rose for a brief overview of our third quarter results, I wanted to share an update on the meaningful progress we're making in advancing our strategic value creation priorities. At Future Fuel, we have three pillars of value creation, commercial growth, operational excellence, and returns-driven capital allocation. In the application, our value creation roadmap is focused on accelerating Quote-to-order conversion across the chemicals opportunities pipeline. Expanding production volumes with existing customers as we deepen our integration into their supply chains. Capitalizing on reshoring opportunities as European chemical producers increasingly evaluate the benefits of our cost-advantaged U.S. manufacturing footprint, where natural gas costs remain substantially below those in Europe. Upgrading waste streams into higher value-added products to improve average selling prices and margins. Restoring our biodiesel's business to optimal production rates as market conditions continue to improve, consistent with what we experienced in the third quarter. Importantly, we're not simply focused on these priorities. We're executing on them as we speak. Beginning with the commercial focus. In the third quarter, we established new relationship with a large European chemicals company that's reshoring production to the United States to better serve its customers and capture the cost advantages of US manufacturing. Natural gas prices in Europe remain several times higher than those in the US, creating a significant structural cost disadvantage to European chemicals producers and making continued production increasingly uneconomic. amid broader operating cost inflation. Future Fuel offers a turnkey cost-competitive domestic manufacturing solution for chemical producers seeking to reshore production from overseas to the United States, leveraging our established infrastructure, specialized technical expertise, and scalable production capabilities. We expect to begin initial batch production with this customer in the first quarter of 2027 and to reach full production rates mid-2027. Operationally, we recently launched a productivity initiative to improve efficiency and optimize our cost structure. Working with third-party advisors, we have identified multiple near-term opportunities to prove efficiency at Batesville, including refining waste streams into higher value-added products. Glycerin, our biodiesel waste stream, can be refined and sold for roughly three times the per gallon value of unrefined glycerin that comes off the biodiesel stream at minimal incremental cost to us, representing a potential opportunity to us of $5 to $10 million beginning in 2027. In an inflationary environment, we also continue to pass through higher energy material and labor costs under the customer agreements that provide us cost indexing. You'll hear more about the cost actions being taken in our business over the coming quarters. We're early days, but the opportunities are significant. Our capital allocation priorities remain unchanged. with an emphasis on disciplined return-driven investments, decision designed to maximize long-term shareholder value. We will continue to prioritize customer-funded investments at Batesville and the working capital needed to support feedstock purchases while maintaining flexibility for a return of capital priorities. A note on liquidity. We're very focused on building our cash position back to $50 million over the next year. Working capital for feedstock purchases remain elevated, which has created a significant draw on available liquidity. It isn't a surprise to us, and we're ready for it, but it also means that we intend to measure our approach towards share repurchases and or increasing the cash dividend until we further bolster the balance sheet, which we'll fully intend to do. One final comment around customer-driven capital investments. This year, customer-funded growth capital was $16.1 million, or approximately 50% of our total capex. Between 2028 and 2029, we currently expect customers to invest another 15 to 20 million in our Batesville site. As we mentioned in the past, the third and Paul Anthony Novelly. Not simply as a supplier, but as an extension of their manufacturing operations, allowing them to reduce capital intensity, maintain stringent quality standards, and reliable scale production. From there, we will focus on building a leaner, more profitable business that delivers greater operating leverage over time. New customer acquisition and growing share of wallet with existing partners will drive the opportunity. But cost rationalization will be critical, important as well. It's an exciting time for the business, and we appreciate the partnership of our partners, customers, and shareholders as we move into a new phase of value creation. With that, I hand Nicole over to Rose for her prepared remarks.

Thank you, Roeland, and good morning to all those joining us. Today I will provide a high-level overview of our third quarter financial performance, including a discussion of our balance sheet and liquidity profile at quarter end. Total revenue increased 361.3% to $104.7 million during the third quarter, up from $22.7 million last year. The $82 million increase comprised $36.3 million from volume and product mix and $45.7 million from pricing, principally in the biofuel segment. Total gross loss was $5.4 million during the third quarter of 2026 versus a gross loss of $6.5 million during the third quarter of 2025. Third quarter results include of net derivative losses comprising $8.3 million of realized losses and $0.4 million of unrealized losses. Included in realized derivative losses is $2.3 million associated with physical inventory not yet sold, which is expected to be recovered in the fourth quarter. At September 30th, the company held approximately 0.7 million internally generated RENs with a value of 1.5 million for delivery in the fourth quarter. The related sales benefit was not included in third quarter results and will be recognized when those RENs are transferred. The company reported a net loss of 8.4 million during the third quarter of 2026, versus a net loss of $9.2 million in the third quarter of 2025. Jus-a-dee-ba-dah was a loss of $4.9 million during the third quarter of 2026 versus $5.3 million loss during the third quarter of 2025. Turning to the chemical segment, segment revenue was $16.9 million in the third quarter of 2026, up 8.6% from $15.6 million in the third quarter of 2025. The increase reflected contribution from higher volume and product mix. Custom chemical revenue was 13.3 million, down 8% from 14.5 million a year ago, primarily due to delayed shipments as a large customer rebalanced inventory and production downtime for a second during an extended scheduled turnaround. Performance chemical revenue was 3.6 million, up 223% from 1.1 million a year ago. primarily due to higher volumes from a new customer that began production in the fourth quarter of 2025 and from higher glycerin sales. Gross profit was $4.4 million compared to a loss of $4.1 million in the third quarter of 2025. The improvement was driven by higher sales volumes in the energy market and lower indirect fixed cost absorption from operating infrastructure with strong biofuel volumes. partially offset by the customer disruptions Roeland described previously. Business momentum in the chemical segment continued to build despite temporary volume disruptions in the third quarter as evidenced by recent customer wins and a robust project pipeline. Chemical segment capacity utilization was 32% in the third quarter of 2026 compared to 55% a year ago period. Following recent capacity expansions to de-bottlenecking activities, the company anticipates fourth quarter chemical segment level capacity utilization above prior year levels. For the biofuel segment, revenue was 87.8 million in the third quarter of 2026 compared to 7.1 million in the same period last year. The increase was driven by greater regulatory clarity, record high , and Paul Anthony Novelly, Rose Sparks, Roeland Polet . elevated input costs and increased plant operating and fixed manufacturing expenses compared to shutdown holding costs in the prior year period. The third quarter gross loss included hedging losses of $2.3 million, which are expected to be offset when the underlying physical commodity positions are sold in future periods, and $1.5 million of rent inventory will benefit Q4 when sold. Market conditions in the biofuel segment have improved meaningfully on a year-to-date basis following improved regulatory clarity around domestic renewable fuel blending obligations, tax incentives, and the treatment of domestically produced biofuels. Biofuels capacity utilization increased to 83% in the third quarter versus 56% in the second quarter, and sales volumes are expected to remain high entering the fourth quarter and into 2027. While demand conditions are expected to remain robust over the near to medium term, input costs for soil and other raw materials remain elevated, which is expected to impact biofuel segment gross profit per gallon sold over the near term. Turning to the discussion of cash flow balance sheet and liquidity, as of September 30th, 2026, the company had total cash and equivalents of 21.3 million down from $34.3 million at June 30, 2026, and a $35 million revolving credit facility with no outstanding borrowings. The decrease in total cash during third quarter of 2026 was related to the operating loss in the third quarter of 2026, increased working capital, requirements and capital expenditures to support growth. Net cash used in operations was $10.3 million in the third quarter, compared to a use of 1.1 million in the prior year period. Capital expenditures were 3.3 million in the third quarter, including 0.6 million and 2.7 million related to maintenance and discretionary programs, respectively. In the first nine months of 2026, approximately 74% of the 2.7 million in discretionary capital expenditures were customer-funded investments related to capacity expansions and new customer programs. That concludes our prepared remarks. Operator, we are now ready for the question and answer portion of our call.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Jason Tiltrum with Canaccord Genuity. Please proceed with your question.

Hey, everyone. Good afternoon, and thanks for taking my questions. I guess to start, I wanted to dive a little bit deeper on the reshoring opportunity and the new relationship that you referenced with Large European Chemicals customer. Can you just give us a little more background about how that relationship came about, the sort of timing and magnitude of the contribution that those customers are going to provide in 2027, and then more broadly, maybe how you're thinking about additional reshoring opportunities in this sort of serving as a proof of concept, if you will? Sure.

Yeah, Jason, thank you very much for calling and for your question. We have seen, particularly over the last year, a significant uptick in inquiries from European chemical producers that service US customers from European production. And that's how this opportunity came about. This customer approached us knowing that we have capabilities here in Batesville to make complex chemistries. They are importing product from Europe today where it's become economically not feasible to do so anymore and have chosen us to build a production line on the Batesville site in order to pick up that production. So we see a number of these inquiries coming in. It's definitely picked up significantly. It probably is an even bigger opportunity than the reshoring activity from China and India. And we anticipate that this won't be the last customer that we see looking to reshore. So this is a meaningful impact on our bottom line or material impact on our bottom line. But really the bigger impact here is going to be The other opportunities that are coming our way with respect to reshoring to the United States.

Okay, great. That's really helpful. And you mentioned in the prior remarks this glycerin opportunity. Just wondering if you could just talk about some of the operational milestones, also commercially, for you to capture this opportunity. What sort of maybe the capex will look like and how quickly you could reach that run rate of $5 to $10 million of incremental profits that was referenced.

Yeah, so in all transparency, we refined a small amount of glycerin We have a modest, very modest amount of capex that we are putting into this in order to convert more equipment to take crude glycerin to refined glycerin. So less than a million dollars in capex to build this additional capacity. And what really is driving this is the The margin expansion that we've seen in refined glycerin. So refined glycerin has seen significant upside in market pricing to the point where this became an almost no-brainer project for us to go execute. And we'll be up and running by, I'd say, the end of Q4, and we'll be running all through Q, through 2027.

Great, that's very helpful. And one last one for me, if I can sneak it in. We saw a pretty big significant shift in the political winds last week with the midterm results. Curious if Future Fuel has any expanded thoughts on how that outcome may impact the business, either directly or indirectly, how the regulatory backdrop may evolve, anything like that would be very helpful.

Yeah, we don't really see a tremendous amount of shift in how that's going to affect our business, right? So Let's go to our biofuels business. So our biofuels business is really supported by both Republican Party as well as the Democratic Party. It includes farmers. It includes sort of the heartbeat of America. And both parties have been very favorable to that portion of the economy. And so we don't anticipate there to be a major change. You know that we have regulatory clarity all the way through the beginning of 2030, really the end of 2029. We see no reason why that shouldn't continue beyond that. And that really has driven the upside, by the way, in our biofuels business, right? We are, you know, we are completely, almost completely booked for Q4. We've seen a great uptick in that, and that's really because of that clarity. We don't think that the clarity is going to go away. regardless of party that is in office or has control.

Very helpful. Thank you very much. Thank you. Thanks for calling.

Our next question comes from a line of Jeff Van Cenderen with B. Reilly. Please proceed with your question.

Good morning, everyone. Just wondering if we can chat a little bit about the elevated input costs Maybe you can walk us through how you're offsetting those as we think about the metrics improving in Q4.

Yeah, I can start and Rose will certainly jump in here and by the way, thank you very much for calling. So the elevated, you know, we look at that biofuels business, right? We look at it as a spread business. So we look at, regardless of the input and the sales price, we look at generating a certain amount of spread. That spread actually has been higher than what we had expected in the beginning of the year. It's been pretty healthy, but as diesel prices have been elevated, significantly elevated, so have been the prices for the inputs. Bean oil, that is one of our primary inputs, has been at all-time highs. A lot of the other fats and greases that we use to make to make biodiesel have been at all-time highs. Now, I will tell you that we have started seeing a moderation of these inputs, and particularly the inputs that, you know, maybe to step back, right? So Future Fuel is a very unique position to be able to run a multitude of inputs. The way that we are set up as a chemical plant that makes biodiesel, we can take a wide variety of inputs. and all inputs were high. What we're starting to see now is that there's a larger group of inputs starting to relax in pricing, including bean oil, but also some of the animal fats that previously had not been available as well. So we think that that environment will improve as we go into Q4. We see it improving as we go into Q4, and hopefully that will be the case for 2027. Rose.

Thank you, Roland. Yes, you highlighted that very well. And I would say effective 1.1 of 27 also, we will have an equivalency factor benefit where our competitors, renewable diesel, will be equivalent to our 1.5 D4 REN. And so that will help as well close the margin. There's also the timing issue. We mentioned on our call just a moment ago in our comments, that we had some timing differences of 2.3 million on our derivatives. And so that will benefit the physical gallons moving in Q4 of 2.3 million and then another one and a half million on separated rent sales. We generated them in Q3, but they were sold to deliver in Q4.

Okay, and then I know you mentioned visibility with some of the new wins you have. Obviously, some of the European reshoring I would think would help, but maybe just frame a little bit. I know it's early, but as we think about 2027, is there a way to have a sense of how margins could evolve in 2027? Sure.

Yeah, I would actually, you know, I would say Q3 was an atypical quarter, right? So if you think about, we had a turnaround that took longer than anticipated. Then we had an inventory adjustment for what we call customer A. And it was about 4.3 million of EBITDA that we left there. We think that That was atypical. Q4 we feel is coming back a lot more to a more typical operating rate of our plant and a more typical EBITDA generation. And then going into 2027, I'll remind you of two things. The first one is we built this large methacrylate plant that we ran this year at 50% that next year we're going to run at probably closer to 70% capacity utilization. That's new capacity. and then the customer that took the inventory adjustment this year is the same customer that's investing 41 million. And some of that is the bottlenecking, which will come on next year. And then there's a significant step up in production capabilities end of 2027 into 2028. So it's the European onshoring. So we'll see more of that in terms of conversion out of the pipeline in 2027. But it's the actual investments that we made last year and the investments that are being made now, the customer-funded investments, that's going to drive volume upside into 2027.

Okay, that's helpful.

Thanks for taking my questions.

You're welcome. Thanks for calling.

We have reached the end of the question and answer session. I'd like to turn the floor back over to management for closing comments.

Thank you very much for calling in. Thank you very much for your interest in FutureFuel. We feel strongly about our business. We feel very strongly that this business is on a trajectory upwards and we look forward to hosting you on the next quarterly investment call. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.