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November 06, 2019 |
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Green Plains Reports 3Q Loss

Results attributed to continued weak ethanol margin environment

Green Plains Inc. announces financial results for the third quarter of 2019.

Net loss attributable to the company was $39 million, or $(1.06) per diluted share, for the third quarter of 2019 compared with net loss of $12.5 million, or $(0.31) per diluted share, for the same period in 2018.

Revenues were $632.4 million for the third quarter of 2019 compared with $789.0 million for the same period last year.

“As expected, our third quarter results were attributable to a continued weak ethanol margin environment that began to show improvement in late September,” comments Todd Becker, president and chief executive officer. “Based on the current environment, we have seen ethanol margins turn positive for our platform, which should result in a positive outlook for cash flow from operations for the fourth quarter. While margins remain volatile, we have seen some industry rationalization taking place and our balance sheet strength and strategic initiatives have put us in a very good position to take advantage of the recent expansion in ethanol margins.

“During the quarter we made significant strides both strategically and operationally," Becker continues. "We were successful in selling a 50% share of our cattle feeding business to a group of strategic investors enabling us to take the business off balance sheet and provide investors better clarity of our financial strength. More importantly, our operating expense per gallon continues to decline as we move into the expanded construction phase of our project 24 and operate at higher utilization rates. Finally, consistent with our previous messaging, we supported our share value by investing in substantial open market share repurchases during the third quarter and the beginning of the fourth quarter totaling approximately $21.8 million for 2.2 million shares.”

Green Plains Inc. also announces its board of directors approved an increase in the current share repurchase authorization by $100 million during October of 2019.

The authorization now totals $200 million, with approximately $119 million available under the repurchase program authorized by the Board of Directors in 2014.

Green Plains Inc. is also announces it has signed a definitive agreement to sell its 50% joint venture interest in JGP Energy Partners LLC to its partner, Jefferson Energy Holdings LLC, a subsidiary of Fortress Transportation and Infrastructure Investors LLC for $29 million. The transaction is expected to close on or before December 15, 2019.

“Based on current energy infrastructure markets, and our ability to secure long term competitive elevation agreements at third party terminals, selling our interest in this terminal will allow us to re-deploy capital into our current projects and achieve higher returns for our shareholders,” comments Becker.

“We expect commissioning of our protein project in Shenandoah, IA late in the 4th quarter with full production rates approximately 60 days thereafter," he continues. "More importantly, we have signed a term sheet with one of the premier pet food raw material processors and suppliers in the industry. Initially, this customer will guarantee purchase of 60% of Shenandoah’s production, priced at a premium to high protein soymeal prices and we continue negotiations for the remainder of the production along with the potential for a second location to be named. This, we believe, validates the expected returns of the project which gives us the confidence to continue to build out the high protein technology throughout the platform.

“We completed the first Project 24 upgrade at our Wood River, NE ethanol facility and the plant is ramping up to its operating capacity this week,” says Becker. “This upgrade is transformational in terms of operating cost per gallon related to the base technology of the plant. This location will now be one of our lowest operating costs plants per gallon and clearly puts this plant in the top 10% of all plants in the industry. This investment in Wood River, more importantly, reduces its carbon intensity score in order to take advantage of markets that pay premiums for low carbon fuels. We continue on our path to 24 cents a gallon by the middle of 2020 and believe we might achieve lower costs based on the preliminary results of the first project.

“We are encouraged that the recent announcements by the EPA and the potential trade deal with China will turn what we believe could be tail winds for the ethanol industry,” concludes Becker. “With that said, for the first time in over a year, we are experiencing positive ethanol margins in the current period. While cautious in our guidance, it is nice to see our projects over the last two years have put the company in the position to have these discussions.”

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