Lee Mikles – President and Director Rose Sparks – Chief Financial Officer.

Jon Tanwanteng - CJS Securities.

Ladies and gentlemen, thank you for standing by. Welcome to the FutureFuel 2014 First Quarter Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we'll hold a question-and-answer session. (Operator Instructions) As a reminder, this conference call is being recorded today, May 9, 2014.

I would now like to turn the call over to Mr. Lee Mikles, President of FutureFuel Corp. Please go ahead, sir..

Good morning. This is Lee Mikles from FutureFuel Corp. Thank you for participating in today's call to discuss FutureFuel's 2014 first quarter financial results and business progress. Joining me from FutureFuel is Rose Sparks, our Chief Financial Officer.

I like to remind listeners that comments made during this call will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be 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, May 9, 2014.

FutureFuel disclaims any intention or obligation to update or revise any financial projections or forward-looking statement whether as a result of new information, future events or otherwise. With that out of the way, I'd like to turn our attention to the first quarter results.

Certainly we had weakened financial results in terms of performance in the first quarter of 2014. Revenues decreased 11% from the first quarter of 2013; adjusted EBITDA was $10.1 million, net income decreased to $6.3 million versus $14.1 million in year ago first quarter 2013. I'll turn the call over to Rose and take away Rose a few words. .

Thank you, Lee. And welcome today's call. For the first quarter 2014 total revenue was down 11% to $82.2 million versus $92.2 million in the first quarter 2013. Biofuels revenue was flat at $51.9 million versus $52 million last year.

Sales volumes increased but were offset by lower sales prices and reduced sales of refined petroleum products on a common carrier pipeline. Such pipeline revenues totaled $9.2 million in the first quarter 2013 and $0.7 million in the first quarter 2014. Chemical revenues declined 25% to $30.3 million versus $40.1 million in the first quarter 2013.

This reduction was attributed to decreased sales volume of the bleach activator -- decreased sales volume of the proprietary herbicide intermediates which was slightly offset by new sales of another proprietary herbicide intermediates to another customer. The contract with the new customer is in effect through December 31, 2016.

Also impacting chemical revenues was the absence of products we did not sell in Q1 and expected to sell later in the year and the absence of two products we no longer produce. For gross profit the chemical segment decreased 31% to $9 million from $13.1 million for the first quarter 2013.

Reduced sales volumes accounted for the majority of the change in gross profit for the reasons previously mentioned. Biofuels segment gross profit was $0.6 million versus $8.3 million in the first quarter 2013. The first quarter 2013 was benefited by $2.5 million from the 2012 reinstated blender's credit.

However, during Q1, 2014 margins were squeezed as the average sales cost declined greater than the reduction in diesel prices and with the absence of the $1.00 dollar blender's credit. In addition, there was hedging gain in the first quarter of 2013 at $1.3 million and a hedging loss of $0.6 million this quarter.

Income from operations decreased to $7.5 million versus $19 million for the first quarter of 2013, net income was $6.3 million or $0.14 per diluted share versus $14.1 million or $0.33 per diluted share for the first quarter of 2013. Adjusted EBITDA was $10.1 million versus $17.7 million for the first quarter of last year.

And with that Lee I'll turn the call back over to you. .

Thank you, Rose, good job. Couple of points I want to go through with you because I think it is important to understanding this quarter as it may relate to may be the last five or six quarters that we've had.

The bleach activator continuous to experience a decline in volumes but were protected through a price volume curve and so the margins remain relatively the same. I don't think there should be a surprise to anyone. I think we have been on record repeatedly saying that business will continue to slowly decline as anticipation of customer.

So again it shows up in this quarter but not unexpected at all. We've been a little bit slow I think and slower than we would have anticipated in bring it up a new intermediate herbicide with a new large customer.

We started bringing that up late December, it is probably been a little more complicated than we would have hope, but again we are making progress on that but in the quarter we probably did less of that business than we thought we would so but that business just get pushed forward if you will little bit. So little bit of it is timing.

Moving on to biodiesel. The biodiesel is completely different than it was in the fourth and -- what now you've got the lack of the blender credit.

The last time we saw the blender credit go away, we saw big adjustments in the renewal identification number, the win adjustment and places, this time we have it, even having said that our demand for the product actually increased and I've heard other say that they saw decrease in volume in the first quarter. We didn't see that.

We saw strong demand for the product from our customers. So some that maybe where they are located to up and north and maybe it was too cold. So that business is changed a lot. To give you a dynamic words and I talked about yesterday, the win values today are about $0.50, year ago they were $0.93, it is more dramatic than that.

It was $0.93 plus a $1.00 credit so it is effectively $1.93 versus $0.50 per day. So the fact that in that type of environment we could still make money, it is pretty remarkable because I think there are few who are going to be able to do it so I was pleased with our performance given the challenges and the changes in that business.

I think we remain committed to a gross strategy, both internally and externally. We continue to look at opportunities both in the biodiesel and the chemical side. And I think there is ability to grow within our existing footprint both in product and scale.

So we continue to evaluate capital projects and potential acquisition, and clearly we have a very strong balance sheet and a chemical pipeline in terms of new business that we are pleased with. So having said that as a primer, for any questions I'll turn back it over to the operator.

One final comment I want to make while we wait for the Q&A to get in line. If you look year-over-year it even compresses a little bit more because we have $2.5 million that came in from the restoration of a credit on a retroactive basis, it came in the first quarter of 2013 and that was $2.5 million.

So again you start to get numbers to get lock first so they gather data work is maybe dramatic year-over-year as they might first appear. So just want to mention that as well. .

(Operator Instructions). Thank you. And our first question is from Jon Tanwanteng with CJS Securities. Your line is open. .

Good morning, guys.

How should we think about the chemical segment revenues and margins going forward? Is the growth in the other businesses that you have going to outpace the decline in at least activated herbicides?.

No, no. Again it just depends on how quickly that bleach activator declines. I think it is a slow decline, is the indication that by all indications we get, it is a question of the uptick on some of the intermediates and some other new business that is out there.

But again I think the margins were roughly 30% and in chemicals in the quarter and that's -- given the reduction of volume that's pretty good margin. But again, our view would be is that we will be able to replace that business either now or in the future. And again, I am pleased with the backlog that we have.

But again, we've got not only to perform and execute on those businesses, Jon, we've got to continue to bring in new businesses into the plan and/ or make acquisition for growth as well. .

Okay, got it, and then you mentioned that feedstock they are not going to caught up with the declines in biodiesel pricing.

Has that moved as we enter the second quarter?.

Not much. I think there is -- it is a little bit out of lack, we probably seen some periods like this in the past, Jon, but this is probably gone a little longer than I would have thought, and our sense is that some of that has been driven by the export market not for finished product but for feedstock being exported.

That's probably even more dramatic than we would have thought. And I think that's affecting all producers.

But again we can only control, we can control and again if you look at our biodiesel business and the fact that we can make money in this environment without the credit with reduced, when prices with add normally post spreads on the lower value feedstocks to the user to use feedstocks and the overburden that we put on the biodiesel business each quarter from the allocate overhead of the larger plan.

I think it is good performance. But something has to happen here because what are going to happen are guys just not going to be able to produce. So here you got to see when prices go up or you got to see feedstocks go down. We are in one of those funny periods and we continue to be where that's in their natural state. .

Okay, got it.

And then may be your opinion on why we priced it and so little, I mean is it function of that expected volume versus the expected mandate or do you think we have kind of win hangover just from the production from last year?.

Yes, both Jon. I think your question tells me you understand it perfectly. I think there is a win hangover.

I think there is some anticipation in the industry that may be you will get some relief on the RBO and the time is that again we are trying to answer unanswerable question but it looks like the submission will all be in by June and may be that final will come out sometime in July and whether they are going to move that up or not.

And again I have no idea. I run my business; it is just not that is going to change. But there is some anticipation and may be there will be move to increase that RBO in July. That's what we will probably know. But again I think it is probably a function of hangover more than anything else.

I think a little bit of the export of the feedstock is makes sense of it. .

Okay, got it.

And then finally just may be an update on what do you see in the M&A opportunity space or if you are going to deploy cash for other purposes as dividends or buybacks?.

I would -- again I can't speak for the Board. I'll speak for myself. Again I am not a buyback guy and I think we endeavored so long Jon to get our trading volume to where it would be acceptable to the market place. And I think we have done that. And to bring stock back out of the market, I think it would almost be self defeating.

Having said that, again we've been I think every shareholder aware and our dividend policy, I think the Board has been up-ing the dividend in the last, each of the last couple of years and then paying special dividends two years ago and last year. So again if the Board continues to want to go that direction I am sure they will.

Having said that than M&A more importantly to your question. I think we are seeing chemical opportunities more -- it seems more chemical opportunities than we've seen in a while.

And that's whole businesses and products; I mean your product coming out of the larger company or someone exiting the particular business or exiting a particularly intermediate that they might need.

You've seen some of the larger chemical companies, again this is old news and new news where they are exiting and closing particular plants and they either have to exit their chemistry or they got outsource to someone else. So I think that we continue to be positioned well for that and continue to have dialogue on that.

We've looked at couple of interesting pieces of business on the M&A side, on chemicals, not much on the biodiesel side recently. Again, I think we are still more or less in the early stages of that.

If you continue as the first quarter went and as we sit today in the biodiesel industry, I can't imagine that if this was persist much longer that there won't be some opportunities and quite a bit-- quite a few sellers in the market place and that would put us in a more advantageous position to make acquisitions in that area..

Thank you. I am not showing any further questions at this time. .

Well, I appreciate your time this morning. And again I encourage everyone to go through our numbers. Take a look at it. I think it was a difficult environment for biodiesel. But I think we did a good job of performing. The chemical side is much timing as it is anything else.

And but again I think that continuous to be a terrific business, it is a great money making business, it has -- although it might not look like at this quarter as quite a bit of predictability to it. And again I think we are encouraged by what we see in our book of business going forward. And I want to thank you all for being on the call this morning.

And look forward to talking to you next quarter. .

Thank you. Ladies and gentlemen, thank you for joining today's conference. This does conclude the program. You may all disconnect. Everyone have a great day. You are welcome Mr. Mikles. .

Thank you..