FutureFuel Corp. (FF) Business

Item 1. Business

OVERVIEW

FutureFuel Corp. (“FutureFuel,” the “Company,” “we,” “us,” or “our,” and includes our wholly-owned subsidiaries) is a Delaware corporation operating primarily through our subsidiary, FutureFuel Chemical Company.  We manufacture a diverse portfolio of inorganic chemicals, bio-based specialty chemicals, and biofuels in our integrated facility in Batesville, Arkansas.

FutureFuel is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “FF”.  Our headquarters are located at our facility in Batesville, Arkansas.

Unless noted otherwise, all financial figures in this report are presented in thousand United States dollars, excluding per-share data.

Financial Highlights & Dividends

We maintained a consistent commitment to returning value to our shareholders.

Segment Operations

Our operations are organized into two primary segments: Chemicals and Biofuels.

Chemicals Segment

Our Chemicals segment is a premier provider of custom manufacturing solutions, serving a diverse portfolio of third-party customers. By combining high-barrier technical expertise with a sophisticated integrated infrastructure, we deliver mission-critical chemistry at scale.

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Biofuels Segment

This segment leverages chemical manufacturing know-how with cost effective infrastructure to produce biodiesel (fatty acid mono-alkyl esters) sustainable fuel solutions.

NARRATIVE DESCRIPTION OF OUR BUSINESS

Principal Executive Offices and Facility Location

FutureFuel maintains its principal executive offices in Batesville, Arkansas. Our 2,200-acre site serves as the hub for our operations, with approximately 500 acres dedicated to:

Operations and Revenue Mix

For the year ended December 31, 2025, our revenue was distributed across three primary categories:

Please see below for additional information regarding these segments and offerings.

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Chemicals Segment (62% of Total 2025 Revenue)

Our Chemicals segment is comprised of two distinct business models: Custom Manufacturing (manufacturing specialty chemicals for specific customers) and Performance Chemicals (multi-customer specialty chemicals).  We operate as a strategic, full-service partner, leveraging our technical expertise and integrated infrastructure to serve a diverse client base.  For both chemical models, we are pursuing development and commercialization of building block chemicals and intermediate chemicals essential to the manufacture of pharmaceuticals.  The manufacture of pharmaceuticals requires compounds produced under ISO certified quality systems as well as compounds produced in accordance with Good Manufacturing Practices (“GMP”). The manufacture of both non-GMP and GMP products provides the Company with more growth opportunities to serve customers active in the pharmaceutical intermediate, food ingredient, and other fine chemicals segment. While pursuing this strategy, we continue our efforts to establish a name identity for both chemical business models.

Custom Manufacturing (54% of Total 2025 Revenue)

Custom manufacturing is a service-based business focused on producing unique, proprietary molecules for strategic customers, typically under long-term or multi-year contracts.

We offer a diversified portfolio serving the following markets:

Performance Chemicals (8% of Total 2025 Revenue)

Performance chemicals include specialty products available to the open market and sold to multiple customers based on technical specifications for specific end-use applications. This portfolio includes:

Future Strategy

We have established a robust reputation as a safe, reliable, and technology-driven producer within the global chemical and biofuels markets. To drive shareholder value and maximize earnings, our strategy focuses on leveraging our integrated infrastructure and technical core competencies to capture high-margin growth opportunities.

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Key Strategic Pillars

Growth and Margin Improvement

We intend to continue to improve operating margins through a disciplined approach to business development:

Customers and Markets

Our chemical products serve a diverse array of end-use markets, including detergents, agrochemicals, automotive, oil and gas, coatings, nutrition, and polymer additives. While this broad reach provides stability, certain product lines are subject to cyclicality driven by fluctuations in global macroeconomic demand.

Custom Manufacturing Dynamics

In our custom manufacturing segment, our customers are typically the primary brand owners. Consequently, they maintain control over the key drivers of production demand, including:

Because these factors are outside of our direct control, we may face challenges in maintaining or increasing sales levels for specific custom products if a customer’s strategy or market position shifts.

Three chemical customers each represented greater than 10% of total sales revenue in 2025 for a total of 48%. No chemical customer represented greater than 10% of total sales revenue in 2024.

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Competition

The specialty chemicals industry has historically been characterized by high barriers to entry, driven by the concentration of proprietary technology and complex manufacturing capabilities among a limited number of established suppliers. However, the competitive landscape has evolved as technology and capital investment have shifted globally

Global Competitive Dynamics: We face intensifying competition from international multinational chemical manufacturers, particularly those based in India and China. Our competition is generally categorized into two groups:

Our Competitive Advantages: We compete primarily on the basis of price, quality, technical innovation, and reliability. We believe FutureFuel is uniquely positioned for growth by bridging the gap between large-scale capacity and mid-market agility. Key differentiators include:

Supply and Distribution

Our specialty chemicals are generally high-unit-value products sold either in bulk or as low-volume packaged goods. Due to their high value relative to weight, distribution expenses typically represent a relatively minor component of our total cost structure.

Cyclicality and Seasonality

While our Chemicals segment benefits from a diversified portfolio, several product lines are subject to cyclicality driven by fluctuations in global energy and agricultural markets.

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Backlog

The nature of our Chemicals segment revenue, which is primarily derived from long-term custom manufacturing agreements, relies on a collaborative planning model rather than a traditional order-book system.

Biofuels Segment (38% of Total 2025 Revenue)

Established in 2005, our biofuels segment focuses on biodiesel, a renewable energy product made from fatty acid mono-alkyl esters which are typically produced from vegetable oil, fat, or grease feedstocks.

Production Capabilities

Regulatory Environment

The biofuel industry is heavily influenced by federal mandates:

The table below outlines the finalized and proposed volume requirements established by the USEPA, indicating increased volumes under RFS2 and growth for biomass-based diesel and other renewable fuels.

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Renewable Identification Numbers (“RINs”)

RFS2 utilizes RINs as a regulatory tracking mechanism to ensure that U.S. refiners, blenders, and importers meet mandatory renewable fuel blending requirements.

The RIN Lifecycle

Our Strategy for RIN Management

As a biodiesel producer, we generate RINs as an integral part of our production process. Our approach to selling these credits is flexible and market-driven:

Market Risk

While RINs are currently traded through market makers, we cannot guarantee the long-term sustainability of a separate RIN market or the future valuation of these credits upon sale.

Byproducts of Biodiesel Production

The manufacturing of biodiesel generates valuable secondary products, primarily glycerin and distillation residue, the sale of which contribute to our overall revenue stream.

Glycerin

Glycerin is a natural byproduct of the transesterification process used in biodiesel production, generated at a rate of approximately 10% by mass of the total biodiesel produced. We manage this byproduct in two ways:

Our strategy is to maximize the production of refined glycerin whenever refining capacity and market pricing provide a favorable return.

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Biodiesel Residue

The final stage of the biodiesel production process leaves behind a distillation residue. While this is a lower-value commodity, we aggregate and market it to various industrial customers. Its primary applications include use as:

2025 Biodiesel Market & Production Trends

Data from the U.S. Energy Information Administration (“EIA”) highlights a shifting landscape in the biofuels sector. As of late 2024, domestic biodiesel production capacity saw a slight contraction, decreasing to 1,995 MMgy from 2,083 MMgy the previous year. Conversely, capacity for renewable diesel and other biofuels experienced robust growth, surging to 4,580 MMgy from 3,897 MMgy. Despite the rapid expansion of renewable diesel, the conventional biodiesel industry continues to demonstrate significant operational resilience.

Current Industry Challenges and 2025 Performance

The industry faced a complex start to 2025, largely due to regulatory ambiguity. The lack of timely guidance from the U.S. Treasury regarding the CFPC, combined with delays in finalized Renewable Fuel Obligations (“RVO”) for 2026, created a cautious market environment.

According to USEPA reporting, these factors contributed to a sharp year-over-year decline in production volumes during the first month of 2025:

Source: USEPA RIN Generation Summary

While biodiesel and renewable diesel volumes softened in early 2025, Sustainable Aviation Fuel (“SAF”) emerged as a growth leader, nearly doubling its output in the same period while it enjoyed a higher CFPC during 2025 which was reduced effective January 1, 2026 to the same level of credit as biodiesel and renewable diesel.

Customers and Markets

Market Reach and Applications

Biodiesel and its various blends serve nearly all traditional petroleum diesel end markets. In the United States, consumption is primarily driven by the on-road transportation sector. However, our products are also utilized in significant off-road applications, including:

Logistics and Distribution

We maintain a robust distribution network to reach customers across the United States. Our logistics capabilities include:

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Customer Concentration and Sales Strategy

Our biofuel sales are characterized by a varying but occasionally concentrated customer base.

The following table details the revenue concentration for our top two customers within the Biofuels segment and their impact on total Company revenue.

*During 2024 and 2025, our customer base was more diversified, with significant revenue distributed across five distinct entities rather than concentrated in the top two.

Contractual Framework and Risk Mitigation

We do not typically enter into long-term supply contracts for our biofuels. Instead, sales are conducted through monthly or short-term purchase orders at prevailing market prices. We believe the potential loss of any single customer would not result in a material adverse effect on the Company because:

Competition in the Biofuels Sector

Our biofuels segment operates in a highly competitive environment, primarily contending with renewable diesel, other biodiesel producers, and the traditional petroleum industry.

Renewable Diesel and Sustainable Aviation Fuel (SAF)

Renewable diesel has emerged as a significant competitor to conventional biodiesel. While both utilize similar feedstocks (fats, vegetable oils, and waste oils), their production methods and chemical properties differ substantially:

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Competitive Landscape

We compete across regional, national, and international markets based on several key factors:

While the number of operational biodiesel plants has declined—primarily affecting smaller facilities with limited feedstock access—we continue to face competition from large-scale producers, foreign imports, and emerging cellulosic technologies.

Industry Risks and Barriers

Supply and Distribution

Feedstock Sourcing and Flexibility

Our production process is engineered for high feedstock flexibility, allowing us to remain agile in a shifting market. We source raw materials from a diverse, multi-channel supplier base that includes:

All feedstocks are currently delivered to our facility via rail or truck. As the biofuels industry expands, competition for economically attractive, low-carbon feedstocks has intensified. Our ability to process a wide variety of these materials is a key factor in mitigating supply risks and managing input costs.

Logistics and Sales Channels

We utilize an integrated distribution network to ensure our products reach customers efficiently across the United States:

Cyclicality and Seasonality

The biodiesel industry is subject to periodic fluctuations driven by both environmental conditions and regulatory cycles.

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Weather-Related Seasonality

Historically, biodiesel demand decreases during the winter months, particularly in the Northern and Midwestern United States. This trend is driven by operational concerns regarding fuel performance in cold temperatures.

Regulatory Cyclicality

The Renewable Fuel Standard (RFS2) introduces a secondary seasonal layer to our business.

Industry Outlook and Strategic Direction

The biofuels landscape is currently navigating a pivotal transition. With the expiration of the BTC at the end of 2024, the industry has shifted to the CFPC as of January 1, 2025. While this new credit framework is now in effect, the market continues to seek definitive guidance on its long-term interpretation and its ultimate effect on operating margins.

The Competitive Landscape

Small-scale conventional biodiesel producers currently face significant pressure due to a massive influx of investment into large-scale renewable diesel facilities. This growth has created intense competition for the same limited pool of feedstocks. To remain competitive, we believe producers must be proactive.

Key Pillars of Our Adaptability Strategy:

Strategic Risks:

While our segment is geared toward these proactive responses, our future production levels remain subject to external forces. Our ability to operate could be constrained by:

Future Strategy

Despite these short-term headwinds and the lack of regulatory clarity at the start of the year, we remain confident in the long-term viability of our products. We believe biodiesel will remain a highly competitive and essential component of the renewable fuel mix, provided that established RFS2 pathways remain eligible for federal and state tax incentives.

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Intellectual Property

We consider our intellectual property portfolio to be a valuable corporate asset, which we intend to expand and protect globally through a combination of trade secrets, confidentiality and non-disclosure agreements, patents, trademarks, and copyrights. As a producer of a broad and diverse portfolio of chemicals, our intellectual property relates to a wide variety of products and processes acquired through the development and manufacture of over 300 specialty chemicals. Our primary strategy regarding our intellectual property portfolio is to appropriately protect all innovations and know-how in order to provide our business segments with a technology-based competitive advantage wherever possible. In the Chemicals segment, custom manufacturing projects are primarily conducted within the framework of confidentiality agreements with each customer to ensure that intellectual property rights are defined and protected. Performance chemicals in the Chemicals segment are protected utilizing patents, both United States patents and international patents, or maintained as trade secrets. In the Biofuels segment, innovations and process know-how are vigorously protected as appropriate.

As may be necessary, we seek to license technologies from third parties that complement our strategic business objectives. Neither our business as a whole, nor any particular segment, is materially dependent upon any one particular patent, copyright, or trade secret. As the laws of many foreign countries do not protect intellectual property to the same extent as the laws of the United States, we can make no assurance that we will be able to adequately protect all of our intellectual property assets.

Research and Development

We devote considerable resources to our research and development programs, which are primarily targeted towards three objectives:

Our research and development capabilities comprise analytical chemistry competencies to assay and characterize raw materials and products, organic chemistry expertise applied across a breadth of reaction chemistries and materials, design and process engineering capabilities for batch and continuous processing of both solid and liquid materials, and proficiency in process safety and scale-up necessary to design safe chemical manufacturing processes. We believe that these core competencies, established in support of the legacy chemical business, are applicable to building a technology-based position in biofuels and associated bio-based specialty products and expanding our chemical segment product lines.

Research and development expense incurred by us for the years ended December 31, 2025, 2024 and 2023 were $3,866, $3,993, and $4,398, respectively. Substantially all of such research and development expense are related to the development of new products, services, and processes or the improvement of existing products, services, and processes.

Environmental Stewardship and Compliance

We are committed to operating our facilities in a manner that protects the environment and the health of our employees and the public. A key component of our strategy is the on-site treatment of over 97% of our generated waste, which significantly reduces greenhouse gas emissions otherwise associated with waste transportation.

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Environmental Protection Expenditures

Our annual expenditures for environmental protection—including operating costs for pollution control equipment, construction, and development—are reflected in our Cost of Goods Sold:

Note: The decrease in 2025 expenditures primarily reflects reduced waste treatment requirements following the idling of our biodiesel operations due to regulatory uncertainty.

Regulatory Framework

Our chemical and biofuel operations are subject to a complex web of federal and state laws. Compliance requires significant capital for permits, specialized waste handling, and the installation of pollution control technology.

Core Federal Mandates

Risk Management and Reserves

Liability Accruals: We accrue environmental costs when a liability is probable and can be reasonably estimated. These estimates are based on remedial requirements, regulatory discussions, and the financial viability of other potentially responsible parties.

Asset Retirement Obligations: We maintain reserves for the closure and post-closure costs of environmental assets (e.g., waste destructors, storage tanks, and boilers). These costs are charged to earnings over the assets’ estimated useful lives, currently projected at up to 27 years.

Remediation: The prior owner of our Batesville warehouse remains responsible for remediating pre-existing environmental conditions. We continue to monitor their compliance with these indemnification obligations.

Climate Change and Sustainability

As a provider of renewable fuels, we actively work to reduce our carbon footprint. We address the rising costs of energy, transportation, and raw materials—driven by climate change—through:

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We believe we hold all material permits necessary for our current operations and are not aware of any environmental issues that would result in a material adverse effect on our financial standing.

To ensure operational continuity, the Company maintains robust emergency preparedness plans and on-site response equipment, with personnel specifically trained to manage severe weather events.

While our primary production facility is situated in a region generally insulated from hurricanes and major flooding, we recognize that shifting global weather patterns and the rising frequency of extreme weather could disrupt raw material supply chains, product distribution, and overall plant efficiency. To mitigate these risks, we maintain strategic reserves of critical raw materials and essential spare production equipment on-site.

Human Capital and Strategic Management

Our competitive advantage is rooted in a highly stable, technically elite workforce and a leadership team with deep global expertise. The following sections outline the strength of our management and the specialized nature of our operations.

Executive and Management Expertise

The Batesville executive team brings a combined 100+ years of multi-disciplinary experience, spanning technical innovation, large-scale operations, and strategic business management. This leadership is bolstered by significant international experience, including high-level assignments across Europe and Asia.

Supporting this team is an operational and commercial management group of educated professionals, each averaging more than 30 years of industry experience.

Workforce Composition and Technical Caliber

We employ approximately 493 full- and part-time non-union personnel. Our staff includes a high concentration of specialized talent, ensuring we remain at the forefront of chemical manufacturing:

Operational Self-Sufficiency and Automation

Because of the unique regional landscape and the absence of local process industry infrastructure, we have cultivated a substantially self-sufficient workforce. Our team possesses the full range of operational and maintenance skills required to manage our facility mostly independently of external specialized contractors.

To further enhance precision and safety, critical portions of our site manufacturing and infrastructure are automated and computer-controlled, allowing for real-time monitoring and rapid response to operational variables.

The Company remains focused on maintaining its highly automated manufacturing environment through computer-controlled infrastructure. To maintain the security of our proprietary synthesis formulas and intellectual property, the Company is developing a Responsible Artificial Intelligence (“AI”) & large language models (“LLM”) Governance Policy. This framework utilizes a 'Responsible AI by Design' philosophy to govern the current individual use of third-party tools while establishing the safety protocols and human-in-the-loop verification standards necessary to evaluate any future application of emerging technologies within our manufacturing or financial systems.

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Retention and Stability

Our commitment to our employees is reflected in our strong retention rates. Despite broader labor market volatility, our voluntary attrition has averaged just 11.7% over the past five years. This stability ensures that critical institutional knowledge remains within the Company, fostering a reliable and safe production environment.

ACCESS TO COMPANY INFORMATION

We maintain a high standard of transparency by providing the public and our shareholders with timely access to our regulatory filings and corporate governance documents.

SEC Filings and Reports

The Company files annual, quarterly, and current reports, along with proxy statements and other required information, with the SEC. These electronic filings are available to the public through the SEC’s official website at www.sec.gov.

Online Investor Resources

Our corporate website is located at www.futurefuelcorporation.com. Through the “Investors” section of our site (https://futurefuel-corporation.ir.rdgfilings.com), we provide free access to the following documents as soon as reasonably practicable after they are filed with or furnished to the SEC:

Corporate Governance

We are committed to ethical business practices and strong board oversight. The following documents are available in the “Investors - Corporate Governance” section of our website: