# TO OUR SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_FF_2020/NYSE_FF_2020.mmd` · pages 2-8_

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TO OUR SHAREHOLDERS

At the end of a year defined by the unique challenges of a global pandemic, we are pleased that FutureFuel Corp. was able to deliver \(46.6 million of net income. Our Biodiesel operation benefited from the certainty of the Blenders' Tax Credit being in place from the beginning of 2020 and we set record-breaking production volumes at our plant. It was even more significant that we achieved this milestone while adapting to the impact of the COVID-19 pandemic on our operation and the consequent disruptions to our feedstock supply chain. The diversity of our business model again proved to be valuable as the impact of the pandemic on the economy reduced demand in our chemical segment. We adjusted our operation accordingly and are now well positioned to take advantage of fresh opportunities during the year ahead.

## 2020 Financial Highlights

(all comparisons are with the year ended December 31, 2019)

• Revenues were \(204.5 million, down 0.4% from \)205.2 million

• Adjusted EBITDA was \(29.2 million, down 62.9% from \)78.7 million

• Net income decreased to \(46.6 million, or \)1.06 per diluted share, from \(88.2 million, or \)2.02 per diluted share

Chemical sales revenue decreased 24.5% or \(25.6 million in 2020 compared with 2019. Sales revenue for our custom chemicals product line (chemicals produced for specific customers) totaled \)63.9 million, a decrease of \(27.1 million from 2019. This decrease was primarily attributed to i) an agrochemical product we no longer manufacture of \)15.3 million; ii) a slowdown in near-term business in both automotive and energy related applications resulting from COVID-19 of approximately \(8.0 million; and iii) the phase out of a laundry detergent additive of \)6.9 million. Partially offsetting these declines was the contract revenue of \(2.9 million from a custom chemical contract which expired (see Note 2 of the consolidated financial statements). Performance chemicals revenue (comprised of multi-customer products which are sold based on specification) was \)15.3 million in 2020, an increase of \(1.4 million from 2019. This increase resulted from increased sales volumes of glycerin and was partially offset by reduced sales volumes of our polymer modifier, primarily from COVID-19.

Gross profit for the chemicals segment was \(25.5 million, a decrease of 14.7% or \)4.4 million in 2020 compared with 2019. This decrease resulted primarily from volume effects resulting from COVID-19 and the absence of an herbicide intermediate product we no longer make. Partially offsetting the decrease was the benefit of the recognition of contract revenue of \(2.9 million related to a custom contract that was not renewed at the end of 2020.

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Biofuels sales revenue was \(125.3 million, an increase of 24.8% or \)24.9 million in 2020 compared to 2019. Sales volumes improved on greater availability of feedstocks with the BTC in law during 2020. Revenue was also improved by the reduction of rebates to customers (shown as a price effect) of \(2.0 million in 2020 as compared to \)39.4 million in 2019 (see Note 3 of the consolidated financial statements for further information).

Biofuels gross profit decreased \(38.4 million in 2020 compared to 2019. Gross profit in 2019 was benefited by the recognition of the 2018 BTC for \)31.3 million (which was retroactively reinstated on December 20, 2019). See Note 3 of the consolidated financial statements for additional discussion. Gross profit was also unfavorably impacted by lower margins from COVID-19 in 2020 as compared to 2019. Partially benefiting gross profit in 2020 was the change in the realized and unrealized activity of derivative instruments in comparison to the prior year with a gain of \(4.4 million as compared to a loss of \)1.3 million in 2019.

Our Company's balance sheet remained strong at year end, cash and cash equivalents and marketable securities totaled \(262.5 million as of December 31, 2020, compared with \)317.0 million as of December 31, 2019. On March 23, 2020, we declared a special cash dividend of \(3.00 per share on our common stock resulting in a total amount of \)131.2 million, which was paid on April 17, 2020. A further special cash dividend of \(2.50 per share on our common stock resulting in a total amount of \)109.4 million was paid on June 4, 2021.

In the US, we are beginning to see the economy return to pre-pandemic levels of activity and confidence. We look forward to an exciting future adapting to this new landscape. Thank you for your continued support.

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Paul A. Novelly

Chairman of the Board and Chief Executive Officer

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