FF - NYSE

Ladies and gentlemen, thank you for standing by. Welcome to the FutureFuel 2012 Second Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, August 10, 2012. I'd like to turn the call over to Mr. Lee Mikles, CEO of FutureFuel Corp. Please go ahead, sir.

Good morning. This is Lee Mikles from FutureFuel Corporation. Thank you for participating in today's call to discuss FutureFuel's 2012 second quarter financial results and business progress. Joining me from FutureFuel today is Chris Schmitt, our Chief Financial Officer. I'd like to remind the listeners that comments made during this call will include forward-looking statements within the meaning of Federal Securities Laws. These forward-looking statements involve risk and uncertainties that could cause actual results to be meaningfully and materially different from any anticipated results. For a list and description of these risks and uncertainties, please review FutureFuel's filings with the Securities and Exchange Commission. Please note that the content of this call contains time-sensitive information that is accurate only as of today, August 10, 2012. FutureFuel disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether as a result of new information, future events or otherwise. That out of the way, I'd like to turn our attention to our second quarter results. The second quarter results for 2012 did not show the same level of growth that our company had experienced over the last several quarters. Some of this is driven by accounting treatment that will be discussed later in the call. Overall, we are pleased with the results that we enjoyed. Revenues increased 38% from Q2 2011. Our adjusted EBITDA totaled $5.9 million. Net income remained relatively flat over Q2 2011, $8.4 million in the last year and $8.5 million this year. This point, I'll turn the call over to Chris Schmitt. Chris?

Thank you, Lee, and welcome everyone to today's call. Revenues for the second quarter 2012 were up 38% to $103.2 million versus $74.7 million in the second quarter of 2011. Biofuel revenues totaled $62.3 million in the second quarter of 2012, as compared to $37.9 million in the second quarter of 2011. Despite the lack of the $1 federal blenders tax credit, demand for biodiesel remained steady in the second quarter of 2012. Throughout 2011 and into 2012, we have made improvements to our production processes which have resulted in increased production. The increased production has been a significant driver in our increased sales from biofuels. Chemical revenues increased 11% to $40.9 million from $36.9 million in the second quarter of 2011. Revenues from the bleach activator product increased, while sales of the proprietary herbicide product decreased due to declining volume metric demands of our customer. Revenues from our other custom chemical products increased 72% for the second quarter of 2012 compared to the second quarter of 2011. We continue to have discussions with the customer for proprietary herbicides surrounding their future product needs, and how these needs will impact FutureFuel. In terms of gross profit, biofuels -- the biofuels segment gross profit totaled $3.2 million in the second quarter of 2012 as compared to $8.4 million in the second quarter of 2011. Margins on biodiesel in the second quarter of 2012 are lower than the margins in the second quarter of 2011. There are various reasons for this, however, the single largest most easily identifiable factor is the lack of the $1 federal blenders credit. Additionally, our reported margins on biodiesel were impacted by our accounting treatment of RINs held in inventory at June 30, 2012. We do not allocate production cost to internally generated RINs. When we enter into sales of biodiesel on a RINs-free basis, we retain possession of the RINs associated with the sold biodiesel and are responsible for the eventual sale of those RINs. Only when the RINs are sold do we recognize any RIN value. Such treatment results in sales, revenues being recognized on the biodiesel at the time of the biodiesel sale, they may result in the value on the RINs sale not being realized until later accounting period. At June 30, 2012, we did retain an inventory of internally generated RINs. We did not carry a significant corresponding inventory at June 30, 2011. This accounting treatment may lead to volatility in our reported operating results. Chemicals segment gross profit increased 59% to $11.2 million from $7.1 million in the second quarter of 2011. In the second quarter of 2011, we incurred certain expenses, which we're unable to pass along to our customers. In the second quarter of 2012, such expenditures were not incurred. Additionally, we were able to reduce certain fixed cost of FutureFuel as a result of an ongoing effort to minimize such expenditures. Income from operations increased to $11.6 million -- decreased from $11.6 million from $12.7 million. Net income totaled $8.5 million as compared to $8.4 million in the second quarter of 2012. Diluted earnings per share were $0.20 in the second quarter of 2012 as compared to $0.21 in the second quarter of 2011. Moving on to the financial results for the 6 months ended June 30, 2012. Revenues for the 6 months ended June 30, 2012, were up 45% to $189 million versus $130 million in the 6 months ended June 30, 2011. Biofuel revenues totaled $109.7 million in the first 6 months of 2012 as compared to $48.4 million in the comparable period of last year. As mentioned above, overall demand for biodiesel has remained steady in the first 6 months of 2012. Additionally, implemented production process improvements have increased the amount of biodiesel we were able to make and sell as compared to the first 6 months of 2011. Chemical revenues decreased 3% in the 6 months ended June 30, 2012, to $79.3 million from $81.5 million in the 6 months ended June 30, 2011. Revenues from the bleach activator product and from our proprietary herbicide both decreased in the period. Partially offsetting these decreases in these 2 products were the only 42% increase in other custom chemicals in the 6 months ended June 30, 2012, as compared to the 6 months ended June 30, 2011. Biofuels segment gross profits totaled $4.3 million for the 6 months ended June 30, 2012, as compared to $5.6 million in the 6 months ended June 30, 2011. The primary drivers for the decline in gross profit despite the increased revenue totals and biofuels for the 6 months June 30, 2012, are the earlier discussed pressure on biodiesel margins and accounting treatment of internally generated RINs. Chemicals segment gross profit increased 54% to $22.9 million from $14.8 million in the 6 months ended June 30, 2012. Chemicals segment gross profit increased despite the decrease in Chemicals segment revenues due to reduction in the fixed cost experienced by FutureFuel in the second quarter of 2012, as well as certain expenditures being incurred in 2011, which we're unable to pass on to our customers that we did not incur in the 6 months of June 30, 2012. Income from operations increased to $22.2 million from $15.9 million, net income totaled $15.6 million as compared to $11.2 million, and diluted earnings per share for the first 6 months of 2012 totaled $0.38 per share as compared to $0.28 in the 6 months ended June 30, 2011. And with that, I'll turn the call back over to Lee.

Thank you, Chris. I appreciate it very much. Good job. Well, let me just make a couple of notes and kind of bring up to some of the questions I think that we're going to be discussing here. On the chemical side, I think we're very proud of the job that we've done in picking up new business, increasing existing business, given that our 2 largest customers showed declines in volumes in the first 6 months. And we have been able to plug that hole and I think operate very efficiently. Please understand, when you see now in this quarter, because there's some season seasonality to the biodiesel business you're looking at 50%, roughly a little more than that, increase in biodiesel sales over our chemical sales. We did $62 million in at biodiesel sales in the quarter versus $40 million of the chemicals sales. You're going to get more allocated overhead at going to biodiesel because it's the -- some of our allocated overhead at the overall plant is by revenues, by reactors used, et cetera. So that's going to have the effect of putting more of a cost to the overall plan to biodiesel than chemicals. So I think we've done a good job on that side, and I think it's something that as you kind of get into these on a more granular basis one needs to understand. 2 questions, I think, on the front of mind when it comes to chemical business are bleach activator business, and where are we with that business going forward. I think we've had a good, very good discussions with our customers. We think we'll be continuing with that customer for a period of time that fits both of our needs, and we look forward to doing business with them on ongoing basis. Existing contract is -- has been disclosed, I believe it's April of 2013. We're hopeful to do business with that party after that period of time. So I think that, that is moving in a positive direction. Our pre-emergent herbicide business continues to decline, we anticipate that, that's probably the direction of that business. We've given out cancellation notice, it's a mechanism within the contract. That contract has 2 portions to it, one expires in September of 2013, the other of October '13. So again, if we can't negotiate a new contract there, we believe that we'll be doing business with them on an ongoing basis on a purchase order basis. So again, I think with the 2 largest customers declining, we've done a terrific job of being able to plug that hole with other with custom chemicals, so I'm very pleased with that. I think that I would -- I warn anybody looking at our results on a quarter-to-quarter basis, this isn't a business that will lend itself to linking, linking quarter-to-quarter where everything grows in some linear fashion. And there's a lot of reasons for that. Chris went over it, I think in detail, but I think it's very important to note that, that the timing of the derivative of business that we have that's a hedge against the biodiesel, how that's reported, have some really material affect. How many RINs we retain in the quarter and don't sell that don't show up to the income statement, maybe a quarter late, maybe longer than that. So I think it's very hard to look at this business on a quarter-by-quarter basis. I think you need to take a little longer view. And again, there's some seasonality to the biodiesel business that I think is important to note. So with that, I'll turn it back it over to the operator and we'll try to go to some questions.

[Operator Instructions]

Just as we're waiting for people to queue up, there's been much discussion of the press over the last few weeks about an effort to put pressure from the senate congressional side on RFS2 renewable fuel standards 2 as it relates to ethanol. Again, we fall under that with biodiesel on the 1 billion gallon required usage this year. We're going to make sure during this recess period that we get to many congressional members and senate members to understand there's a meaningful difference between ethanol and biodiesel. They tend to want to confuse the 2. And I know of no one using any meaningful amount of soy product in biodiesel as it relates to the drought, obviously. We don't use that product, and we can't use it profitability. So we use the much lower valued feedstocks than that. So we want to make sure that there's a clear distinction in the mind of the politicians as they -- as they try to apply pressure on the EPA for monitoring of the required usage mandate.

Our first question comes from the line of Craig Irwin from Wedbush Securities.

This is David [ph] for Craig. I was wondering if you could talk a little bit -- that bleach activator looked to be a bit unexpected. Were you expecting it to come in that strong? Or has there been a change to demand?

No, I think a little bit of that is season -- seasonally adjusted, if you will, it's how much product they had on in inventory at the end of the year. How much maybe we had as well. Again, I think that, that business continues to be a very good business for them, a good business for us. Again, I think those volumes over time are probably not in an upward sloping direction but again, I don't know whether it was expected or not, we get indications from the beginning of each quarter, what it's going to be, but that business, I think, has been surprisingly strong for the first 6 months, surprising in a modest way. But again, I think that business remains one that we are highly focused on.

And for the seasonality of that business, can you give us a little sense of what the back half of the year looks like typically for the seasonality?

No. Historically, there's been a little bit of slowdown and then pick up towards the end of the year. But again, we don't know if that's going to happen or not. It really goes to the customer needs. I think David, that's a little bit of being a custom manufacturer. We can't go drive sales. It's the -- it's who really making the product for a customer who's out there driving their sales and they probably got a much better feel than we do for it, to say the least. But we get an indication at the beginning of the quarter what it's going to be. But again, I think that business remains a strong force, it's a great relationship and we hope it continues long into the future.

Okay. Could you talk a little about the anode business that you mentioned in -- I believe that's got a take-or-pay on that. Is there any update you could give us there? Maybe the timing of the take-or-pay or how that's progressing?

Sure. I think a couple of things. I don't anticipate at the end of the first calendar year of that agreement is the end of August, but we don't anticipate that there will be any product produced and shipped during that time period for the requirements of our customer. The take-or-pay provision would kick in at that time, but there's also a 1 year pull back on that over and above past August. So the next year, if they take the product, they know that they get it. So again, Chris could probably get into the accounting granularity of that. I don't think it's going to be meaningful this year either in the August time frame or beyond that. Over the next year, I think you'll start to see that kick in whether we produce the product or not. We're clearly hopeful that -- that the end user, if you will, I know multiple end users, we believe, start to see a pickup in the demand and thus we can at some point start to produce the product and ultimately, produce more than take-or-pay minimums that are out there.

Can you give us a sense of size for that take-or-pay minimum and..?

No. We have never given that information.

Okay. Moving on to the biodiesel side of things. With the gross margins, can you give us further kind of sense what you're looking at going forward? And maybe update us on expected seasonality for the back half of the year?

Couple of things. Again, there's always been a seasonality to this business where your second, third quarter and maybe the beginning of fourth quarter are your strongest time periods, and that's weather-related more than it is anything else. Again, what we anticipate going forward in terms of margins in that business, there's only a certain part, David, that we can control. And we typically hedge our product as soon as we buy the feedstock, we hedge it into the -- into the marketplace and that's really, really done with heating oil, which is diesel. And it's an inelegant [ph] hedge, as I think I've described it prior. Again, the portion that we cannot hedge, because there's no effective mechanism. Two hedge is the RINs. Again, if we hold RINs and don't sell it with the product, where we only get a portion of the value of that RIN, it's typically the most -- it's the highest margin business that we can have. But again, it's the most unpredictable. And again, is that RIN value floats up and down? It has dramatic effect on the profitability of the business. So there's little bit too much in terms of moving parts there to be able to give you a view past this afternoon. But again, I think it's a business that we manage as well as anybody. And I think having the balance sheet that we have has a tremendous positive effect, and the expertise that our Executive Chairman has in this particular area bodes very well for us to be able to mine as much profitability as there is in that business.

Fantastic. One more kind of a follow up on the RIN, Lee if you could, please. Is there any update on the RIN fraud that's been kind of discussed that you could maybe provide further details on?

Sure, Chris, that's probably something you deal with more on a daily basis.

Sure, I don't know if I have a specific update on it, but it does seem as though the number of cases that are being announced seems to have dwindled down here recently. But this is still -- it's a significant issue. I mean, it's an issue that the obligated parties continue to bring up with the EPA and it continues to be kind of a hot point in any discussions concerning RFS2. So it's -- I think on one hand, it can be sort of seen as healthy thing for the industry, and that it is signaling to obligated parties that they need to be careful who they're dealing with. We believe that we at FutureFuel, are -- we represent as a highest -- the best risk out there for them to take. We manage this process very, very well. We have very strict quality guidelines, we have a very rigorous process to ensure that we're only generating valid RINs. But at the other hand, it has certainly undermined some of the credibility of the industry. We need to be very careful of that. It has been a very unfortunate thing that few very bad apples have really caused issues for the entire industry. But I think, we're -- I think steps are being made now to regress past that point. And there are numerous different initiatives that are being started to allow RIN buyers to feel more comfortable about the RINs as they are purchasing, given verification type services.

And I think it's important, and Chris makes a great point. There's an idea that there'll be a certification. That this is one of the ideas being kicked around that's kind of moving forward, so there'll be certification on the RINs going forward. But again, I think that when an obligated party looks at us, looks at our balance sheet, maybe they've come out and look at our production facility. We're one of the real players in the marketplace and again, Chris said it right, there were a few bad actors [ph] as anything that put some fraudulent RINs in the marketplace and it has an effect on the market and it still does to a lesser degree every day, but it's going to work its way through in short order.

Our next question comes on the line of Ian Gilson from

Just had a few sort of add-ons to the past questions. Is there currently a trading market for RINs? I know that it did then for a while.

Yes, there it is. Ian, you raise a point. I mean, the market is subject to -- it's only so many obligated parties and from time to time, the volume isn't as great as we would like it to be. But there was a period of time, or later in the second quarter where things were less liquid than we're accustomed to. That seems to have picked up here recently. And I guess it's anyone's guess to see how things progress on throughout the rest of the year.

Okay. On the treatment accounting basis, those RINs are going into inventory? Is that at the market value or what value do you apportion to those RINs when they are in the accounting statements?

That's a good question, Ian. They're -- in researching in those particular topic, there are 2 main ways in which RINs could potentially be accounted for. One would be treating them as inventory. It's similar to how you just indicated and allocating a certain value to them, and allocating that value to the balance sheet, again as an element of your inventory. Another way the companies account for RINs is by treating them as an internally generated intangible asset. That's the way in which we have -- have accounted for them. Internally generated intangible assets, generally do not have cost allocated to them so we do not allocate any value to the RINs that we may be holding from 1 accounting period to another. So while we may physically have them, no value has been assigned to them for purposes of our balance sheet.

And again, Ian, it's important to note, that's only on gallons where they're sold without the RINs attached toward the obligated party.

Yes, Yes. I understand that. I understand that. What is the current capacity of the biodiesel plant? You said you've improved the throughput? Is it still -- how close are we to nameplate?

Again, if you go back, we were 59 million gallons using the higher valued feedstocks. We went, I think, as a low on the totem pole as we could go in terms of feedstock, drop down to 39. And Chris, what's in the queue? 45 million gallons?

Right. We've said we would be producing a little over 45 million gallons per year on an annual rate.

And again, Ian, I think the idea is we'll continue to step that up as a constant debottlenecking process, if you will, in process improvement. Again, I think we're pioneering a lot of the front end of that process. So again, it's our intent to take it back if we -- if at all possible to that 59 and try to expand from there's some point in the future if market demands were there.

Do we have any problems or do you have any problems in obtaining feedstock?

No. There's certainly times in which the market for feedstock is more liquid or is more of as buyers' market, and certain times when it flips to be a seller’s market but to date, we have not had any issues in acquiring feedstock, finding sources for it. In some of that is driven by what Lee was just referring to in that we have pretty large menu of feedstocks that we can handle. So that helps us remain from or keep us from being dependent upon any one source and that has helped.

I understand that one of the large chicken processes down your way is customer for -- that our grease [ph] is currently not operating as planned. Is that sort of situation to give you an opportunity?

Well, I'm not familiar with that particular situation, Ian, but absolutely. Less competition, less buyers out there in the market for this material. It's certainly better for us.

Okay. And finally there was a rider added to the family business tax cut certainty act. Anything that it's certain. Basically it was scheduled to be added on August 2. Do you remember what happened to that? Is there any resolution? Did it not get added? Did it get added or what?

Ian, I'm not aware of any resolution to that issue. I'm familiar with what you're referring to. We'll -- there has been no resolution on that particular topic. And the way that Congress works, I think we'll -- we kind of take the wait and see mentality. We'll see what happens. But we won't -- it's hard to react to things until they get a little further down the road than that particular bill happens to be.

[Operator Instructions] Our next question comes on the line of Greg Kapoustin from Burlingame Asset Management.

Can you provide any suggestions on how to think about the portion of the gains on derivative instruments corresponding to biofuels sold and hedges closed during the quarter, which anybody can operate and gain offsetting hedge to realize biodiesel price?

That's better for you, Chris.

It's a good question. Historically, and this is why I refer in our adjusted EBITDA figure we have had always backed it out, historically, the gain and losses on hedges hasn't been so large to where it's really pushed around the operating results of the business. Obviously, in the second quarter of this year, the gain on hedges was much larger and that was the result of, I believe, is a pretty steep decline in heating oil prices in the back half of May. And yes, a certain portion of that certainly relates to biodiesel, which was sold in the period. And as you said, would pertain to a hedge that was closed. And certainly a certain portion of it relates to inventory -- a change in inventory value for gallons which are held over to the accounting period. Traditionally, we have not given any break out of as to which dollars relate to biodiesel gallons that are sold versus which were held in inventory. And I really don't anticipate us as providing that going forward. That's not always the easiest breakout to make.

Just to follow-up on it, where would be unrealized gains reside? Would they be in the -- on the balance sheet because you have a change -- change in fair value of the derivative instrument during the second quarter of negative $2 million? So it doesn't seem like gain went there. So this is going to the inventory?

The P&L impact of the changes in -- the P&L impact of all derivate activity, both realized and unrealized, is recorded as an element of our cost of goods sold. To that extent, there was a gain for example, in the second quarter of this year, there was of about $8.6 million. That $8.6 million gain would serve as a reduction of the cost to goods sold within our income statement. On the balance sheet, if the total hedging account is an asset, we record it as another current asset. If it is a net liability as it was at the end of the second quarter of 2012, that liability we record it as an another current liability. The item which you referred to, the change in fair market value of the derivative instruments, I think you got that from the cash flow statement?

No, like -- actually what I did is I looked on the balance sheet, I looked on the fair value of derivative instruments on the balance sheet and it went from, roughly speaking, negative $1 million in the end of the first quarter to negative $3 million in the end of the second quarter. And I said, "Well, so the derivative that you have on the balance sheet, which I assumed were unrealized -- hedges unrealized, actually went negative by $2 million over the quarter."

Yes. Correct.

I was trying to get into -- I was trying to back what is the unrealized hedging gain in the quarter versus the one you actually realized.

Well, I think if you were to look at the total for the quarter, the total gains and losses was $8.6 million, that's both realized and unrealized. And then I think if you look at the balance sheet for the unrealized portion and look at the change like you did, and then look at that change versus the $8.6 million, that would spit out your realized portion.

I think the Page 19 of the Q probably simplifies that as best -- as best we were going to in terms of disclosure.

Okay, no, that's helpful. This is actually -- this answered my question. My second question is it appears -- is also biodiesel question. It appears that producers currently relying on high value, low prepay after the feedstocks, likely unprofitable at the current commodity prices, perhaps substantially so, while local feedstocks still work. Do you have a sense of what it would take for some of the higher cost capacity to drop off of the market and create some margin uplift for the low cost guys?

I think we're already seeing it. I can't imagine there's producer in the country who can produce with soy or a meaningful amount of soy and make any money. It's a loser, and it's a loser by a lot. So again, I think that they'll continue over time to come out of the market, if they're not already out. Certainly, the smaller players are out. In terms of the bigger players that have any portion of their capacity running on soy, and -- you think that they're going to take it at dramatically reduced margin if they're using it as a mix or they're going to lose an awful lot per gallon if they are using soy. So again, I think that's a progression, Greg, over time. But I think we've seen a little bit of that. And it's really part of this issue at it relates to the renewable identification number, the RIN values. And as we start to get towards the end of the year and the mandates, the billion of gallons it's out there is -- if the industry is trending well below that, you could see a pressure at the end of the year to either buy RINs or take products with RINs attached, as we move forward. I can't imagine if these prices for soy that any portion--if it's certainly not meaningful portion that is going to come out of the soy producer, so I think that, that's why going to give an advantage to people, a distinct advantage to people who can produce at a lower valued feedstocks, and there are many.

Are you in any way positioning for the potential RIN shortage if soy buys continue to drop and aren't able to come back in the end of the year. And if some of the RINs inventory base on the opportunity -- opportunistic positioning for that?

I don't think we'd like to get into that, because that's -- that kind of gives away our strategy a little bit, if you will. And that strategy is changing dependent on market conditions. Again, it's, thus far, it's been kind of a -- I think one of our colleagues described it as a dog that hasn't barked yet. But again, we're hopeful that, that transpires towards the end of the year, and we'll continue to manage our RIN inventory accordingly.

Our next question comes from the line of Ted Jordan [ph], private investor.

I'm a new small shareholder and so this question may have been discussed previously. I bought the stock because I think it's rather cheap. And so I wonder if given your very strong balance sheet, whether you've considered a significant Dutch auction share repurchase. It appears to me like you could handle rather easily $100 million.

Ted [ph], thanks for the question. Obviously, we've got a very strong balance sheet, $178 million in cash, no debt. I think we pay an attractive dividend. We're paying over $16 million, almost $16.5 million in dividends a year currently on an announced basis. Again, there's a lot of different potentials for that cash acquisitions. I think we'll probably be first and foremost on the list. But it's something I think that the board actually actively discusses. In terms of your Dutch auction part, again, I think the board -- I think I speak for the board when I say that any purchase of shares would have the effect of taking what little de minimis float that we have in the marketplace out. Again, we'd like to try to increase that float if we possibly could, and not decrease it. And again, anything above book value tangible book has the effect of making that number go down and decreasing the book value of the company. So it's something -- I think we've got some pretty sophisticated financial minds on our board. It's something that we look at actively. I think we've been very shareholder friendly at this company, and we'll continue to do so. But I think we're exploring at all times all alternatives for that cash.

And our next question is a follow-up from the line of Ian Gilson from

Yes, if we go back and look at the time as when you use a breakout the business with P&G and Arista, the ratio of the 2 revenue streams, Tom [ph], basically is 2:1, with P&G being 2 and the Arista revenue 1. That would lead me to believe that with the reductions you've discussed, that Arista is down about the $5 million per quarter run rate, is that a reasonable assumption?

Well, again on a run rate going forward, or run rate previously?

The run rate currently.

We don't really get into that level of detail for a couple of reasons, but I mean, one of the reasons is that the type of information can also be information that customers don't necessarily want disclosed either. You can back in some numbers, but I don't know they are going to be able to comment with any great deal of specificity with regard to those 2 particular customers.

Okay. Now, on the P&G business, which you said was strong in the quarter, and pretty good in the first half, was that just a normal contract basis seasonally adjusted or did you pick up extra business?

No, no. We only producer for 1 customer.

Excuse me, Lee?

We only produce for 1 customer. You say extra business. Do you mean from other customers? Because that's...

No, no. Just from that the one customer.

Yes, just from that 1 customer.

Did you pick up any extra that you would have expected, given the prior year's decline?

No, I don't think that there's anything that you can link year-to-year in that business. And again, a lot of those is inventory driven, some of it is demand-driven. Ultimately, it's going to be demand-driven, but I think again, some of that flux and modulation in that business has to do with inventory and then ultimate demand as it shakes out over it is a number of linked quarters.

Okay, is there a potential of finding another customer for that?

There may be at some point in the future.

And with no further questions in queue, I'd like to turn the conference over back to Mr. Mikles for any closing remarks.

Thank you, all, very much for your time this morning, and we appreciate your interest in FutureFuel, and we look forward to talking to you on further quarter calls. Thank you.