Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies should be read in conjunction with a summary of the significant accounting policies the Company has disclosed in its Annual Report on Form 10-K for the year ended December 31, 2019.

Restricted Cash

The Company segregates certain cash balances as restricted cash that represent those funds required to be set aside by a contractual agreement. The Company classifies restricted cash between current and non-current assets based on the length of time of the restricted use.

As of March 31, 2020 and 2019, current restricted cash was $3,000, representing pledges for outstanding letters of credit issued to support our operations. See the table below for reconciliation of "Cash, Cash Equivalents and Restricted Cash" in the Condensed Consolidated Statements of Cash Flows:

	March 31, 2020		March 31, 2019
Cash and cash equivalents	$	188,550	$	123,062
Restricted cash	3,000		3,000
Total cash, cash equivalents and restricted cash in the Condensed Statements of Cash Flows	$	191,550	$	126,062

Accounts Receivable and Subsequent Events

Accounts receivable are carried at invoiced amount less allowance for doubtful accounts. Management estimates the allowance for doubtful accounts based on existing economic conditions, the financial conditions of customers and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for doubtful accounts only after reasonable collection attempts have been exhausted.

	March 31, 2020		December 31, 2019
Trade accounts receivable from customers (net of allowance for doubtful accounts of $1,455 and $1,001, respectively)	$	169,219	$	185,156
BTC receivables from the government	585,305		672,627
Other trade receivables	—		1,139
Total	$	754,524	$	858,922

Through May 1, 2020, the Company has received $671,740 of the 2018 and 2019 BTC receivable from the federal government.

Renewable Identification Numbers ("RINs")

When the Company produces and sells a gallon of biomass-based diesel, 1.5 to 1.7 RINs per gallon are generated. RINs are used to track compliance with the Renewable Fuel Standard ("RFS2"). RFS2 allows the Company to attach between zero and 2.5 RINs to any gallon of biomass-based diesel. As a result, a portion of the selling price for a gallon of biomass-based diesel is generally attributable to RFS2 compliance. However, RINs that the Company generates are a form of government incentive and not a result of the physical attributes of the biomass-based diesel production. Therefore, no cost is allocated to the RIN when it is generated, regardless of whether the RIN is transferred with the biomass-based diesel produced or held by the Company pending attachment to other biomass-based diesel production sales.

In addition, the Company also obtains RINs from third parties who have separated the RINs from gallons of biomass-based diesel. From time to time, the Company holds varying amounts of these separated RINs for resale. RINs obtained from third parties are initially recorded at their cost and are subsequently revalued at the lower of cost or net realizable value as of the last day of each accounting period. The resulting adjustments are reflected in costs of goods sold for the period. The value of these RINs is reflected in “Prepaid expenses and other assets” on the Condensed Consolidated Balance Sheets. The cost of goods sold related to the sale of these RINs is determined using the average cost method, while market prices are determined by RIN values, as reported by the Oil Price Information Service ("OPIS").

Low Carbon Fuel Standard

The Company generates Low Carbon Fuel Standard ("LCFS") credits for its low carbon fuels or blendstocks when its qualified low carbon fuels are transported into an LCFS market. LCFS credits are used to track compliance with the LCFS. As a result, a portion of the selling price for a gallon of biomass-based diesel sold into an LCFS market is also attributable to LCFS compliance. However, LCFS credits that the Company generates are a form of government incentive and not a result of the physical attributes of the biomass-based diesel production. Therefore, no cost is allocated to the LCFS credit when it is generated, regardless of whether the LCFS credit is transferred with the biomass-based diesel produced or held by the Company.

In addition, the Company also obtains LCFS credits from third-party trading activities. From time to time, the Company holds varying amounts of these third-party LCFS credits for resale. LCFS credits obtained from third parties are initially recorded at their cost and are subsequently revalued at the lower of cost or net realizable value as of the last day of each accounting period, and the resulting adjustments are reflected in costs of goods sold for the period. The value of LCFS credits obtained from third parties is reflected in “Prepaid expenses and other assets” on the Condensed Consolidated Balance Sheet. The cost of goods sold related to the sale of these LCFS credits is determined using the average cost method, while market prices are determined by LCFS values, as reported by the OPIS. At March 31, 2020 and December 31, 2019, the Company held no LCFS credits purchased from third parties.

The Company records assets acquired and liabilities assumed through the exchange of non-monetary assets based on the fair value of the assets and liabilities acquired or the fair value of the consideration exchanged, whichever is more readily determinable.

Convertible Debt

In June 2016, the Company issued $152,000 aggregate principal amount of 4% convertible senior notes due in 2036 (the "2036 Convertible Senior Notes"). See "Note 6 - Debt" for a further description of the 2036 Convertible Senior Notes. During the three months ended March 31, 2020 the Company used $25,949 to repurchase $11,008 principal amount of the 2036 Convertible Senior Notes, reflecting conversion premium, after tax impact, of $17,829 as a reduction of Additional Paid-in Capital and gains on debt extinguishment of $1,172 in the Condensed Consolidated Statements of Operations. During the three months ended March 31, 2019 the Company made no repurchases of the 2036 Convertible Senior Notes.

Security Repurchase Programs

In June 2018, January 2019, and February 2020 the Company's Board of Directors approved a repurchase program, of up to $75,000, $75,000 and $100,000, respectively, of the Company's convertible notes and/or shares of common stock (the "2018 Program", "2019 Program", and "2020 Program", respectively). Under these programs, the Company may repurchase convertible notes or shares from time to time in open market transactions, privately negotiated transactions or by other means. The timing and amount of repurchase transactions under each program are determined by the Company's management based on its evaluation of market conditions, share price, bond price, legal requirements and other factors. The 2018 Program has been fully utilized prior to December 31, 2019. The Company made no repurchases of shares of common stock or convertible notes during the three months ended March 31, 2019.

There was no activity under the 2020 Program during the three months ended March 31, 2020. At March 31, 2020, the remaining amounts were $41,847 under the 2019 Program and $141,847 under both programs. The table below sets out the information regarding the activities under the 2019 Program during the three months ended March 31, 2020:

	Three months ended March 31, 2020
	Number of shares/ Principal amount in 000's		January 2019 Program
2036 Senior Convertible Notes Repurchases	$	11,008	$	25,949

Revenue Recognition

The Company generally has a single performance obligation in its arrangements with customers. The Company believes for most of its contracts with customers, control is transferred at a point in time, typically upon delivery to the customers. When the Company performs shipping and handling activities after the transfer of control to the customers (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. The Company generally expenses sales commissions when incurred because the amortization period would have been less than one year. The Company records these costs within selling, general and administrative expenses.

The following is a description of principal activities from which we generate revenue. Revenues from contracts with customers are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

• sales of biodiesel and renewable diesel produced at our facilities, including RINs and LCFS credits;

• resale of petroleum acquired from third parties, along with the sale of petroleum-based products further blended with biodiesel produced at our wholly owned facilities or acquired from third parties;

• sales of separated RINs and LCFS credits;

• sales of raw materials, glycerin, and other co-products of the biomass-based diesel production process;

• other revenue, including biomass-based diesel facility management and operational services; and

• incentive payments from federal and state governments, including the BTC, and from the USDA Advanced Biofuel Program.

Disaggregation of revenue:

All revenue recognized in the income statement, except for Biomass-based diesel Government Incentives, is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue according to product line and segment:

	Reportable Segments
Three months ended March 31, 2020	Biomass-based Diesel		Services		Corporate and other		Intersegment Revenues			Consolidated Total
Biomass-based diesel sales, net of BTC related amount due to customers of $0	$	306,552	$	—	$	—	$	(25,680	)	$	280,872
Petroleum diesel sales	—		—		44,336		—			44,336
LCFS credit sales	34,034		—		—		—			34,034
Separated RIN sales	15,520		—		—		—			15,520
Co-product sales	12,044		—		—		—			12,044
Raw material sales	10,954		—		—		—			10,954
Other biomass-based diesel revenue	8,638		—		—		—			8,638
Other revenues	—		19,533		—		(19,421		)	112
Total revenues from contracts with customers	$	387,742	$	19,533	$	44,336	$	(45,101	)	$	406,510
Biomass-based diesel government incentives	68,159		—		—		—			68,159
Total revenues	$	455,901	$	19,533	$	44,336	$	(45,101	)	$	474,669
Three months ended March 31, 2019	Biomass-based Diesel		Services		Corporate and other		Intersegment Revenues			Consolidated Total
Biomass-based diesel sales, net of BTC related amount due to customers of $0	$	315,729	$	—	$	—	$	(1,617	)	$	314,112
Petroleum diesel sales	—		—		83,903		—			83,903
LCFS credit sales	36,707		—		—		—			36,707
Separated RIN sales	22,463		—		—		—			22,463
Co-product sales	8,403		—		—		—			8,403
Raw material sales	4,103		—		—		—			4,103
Other biomass-based diesel revenue	7,978		—		—		—			7,978
Other revenues	—		19,583		—		(19,511		)	72
Total revenues from contracts with customers	$	395,383	$	19,583	$	83,903	$	(21,128	)	$	477,741
Biomass-based diesel government incentives	468		—		—		—			468
Total revenues	$	395,851	$	19,583	$	83,903	$	(21,128	)	$	478,209

Contract balances:

The following table provides information about receivables and contract liabilities from contracts with customers:

	March 31, 2020			December 31, 2019
Trade accounts receivable from customers	$	169,219		$	185,156
Short-term contract liabilities (deferred revenue)	$	(365	)	$	(631	)
Short-term contract liabilities (accounts payable)	$	(255,193	)	$	(255,193	)

The Company receives payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. Significant changes to the contract liabilities during the three months ended March 31, 2020 and 2019 are as follows:

	January 1, 2020		Cash receipts (Payments)		Less: Impact on Revenue		Other		March 31, 2020
Deferred revenue	$	631	$	9,067	$	9,333	$	—	$	365
Payables to customers related to BTC	255,193		—		—		—		255,193
	$	255,824	$	9,067	$	9,333	$	—	$	255,558
	January 1, 2019		Cash receipts (Payments)		Less: Impact on Revenue		Other		March 31, 2019
Deferred revenue	$	300	$	28,658	$	15,643	$	—	$	13,315

Discontinued Operations

Income (loss) from discontinued operations mainly relates to the research and development activities and the sale of REG Life Sciences, the Company's industrial biotechnology business, which had been classified as assets held for sale following the Company's decision to pursue a sale of this business in the fourth quarter of 2018. In May 2019, the sale of REG Life Sciences core assets and business was closed. The wind-down of operations of REG Life Sciences was completed in the fourth quarter of 2019.

New Accounting Standards

On June 16, 2016, the FASB issued ASU 2016-13, which amends the Board's guidance on the impairment of financial instruments. The ASU 2016-13 adds to U.S. GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes as an allowance its estimate of expected credit losses. For public companies, the ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company's adoption of ASU 2016-13 effective January 1, 2020 did not have a material impact on its condensed consolidated financial statements.

On August 28, 2018, the FASB issued ASU 2018-13, which changes the fair value measurement disclosure requirements of ASC 820. ASU 2018-13 eliminates or modifies certain disclosure requirements of ASC 820 and requires new disclosures relating to changes in unrealized gains or losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the applicable reporting period. ASU 2018-13 also explicitly requires entities to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. The Company's adoption of ASU 2016-13 effective January 1, 2020 did not have a material impact on its condensed consolidated financial statements.

On December 18, 2019, the FASB issued ASU 2019-12, which affects general principles within ASC 740, Income Taxes. The ASU removes the following exceptions: (1) incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items, (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, (3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and (4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The ASU also will make changes to franchise tax recognition, consideration of the tax basis recognition of goodwill related to acquisitions, specify tax allocation to subsidiaries, reflecting a change in tax law in the interim period annual effective tax rate computation in the period of enactment, and changes to the employee stock ownership plans and investments. For public business entities, the amendments in ASU 2019-12 are effective for fiscal years beginning December 15, 2020, and interim periods within those fiscal years. The Company is evaluating the impact of the guidance on its condensed consolidated financial statements, but does not expect the impact to be significant.

On January 16, 2020, the FASB issued ASU 2020-01, which clarifies the interaction between Topic 321 (Equity Securities), Topic 323 (Equity Method Investments) and Topic 815 (Derivatives and Hedging). This amendment clarifies that an entity should not consider whether the settlement of a forward contract or exercise of an option is accounted for under Topic 323 or whether the fair value option is in accordance with Topic 825. For public business entities, the amendments in ASU

2020-01 are effective for fiscal years beginning December 15, 2020, and interim periods within those fiscal years. The Company is evaluating the impact of the guidance on its condensed consolidated financial statements, but does not expect the impact be significant.

On March 9, 2020, the FASB issued ASU 2020-03, which clarifies and updates various topics specific to the Company such as: (1) Amending Topic 820 to explicitly apply to non-financial items accounted for as derivatives under Topic 815. (2) Improve the understanding of Topic 470 and the alignment of Line-of-Credit arrangements and Revolving-Debt arrangements. (3) Clarification on the determination of a contractual term in a net investment in a lease determined in accordance with Topic 842 and Topic 326. For public business entities, the amendments in ASU 2020-03 are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. The Company is evaluating the impact of the guidance on its condensed consolidated financial statements.