Green Plains reports on profitable quarter, full year

By Holly Jessen | February 06, 2015

In 2014, Green Plains Inc. produced a record 966 million gallons of ethanol, processed 10 million tons of corn and earned more than $100 million in non-ethanol operating income. The company also is close to meeting its goal of having zero net term debt, said Todd Becker, president and CEO, during the company’s Feb. 5 fourth quarter and full-year financial results call.

"We continue to focus on profitable growth opportunities within and adjacent to our value chain," he said. "This year gave us the opportunity to demonstrate the capability of the large diversified platform we have been building over the last 7 years.”

In the fourth quarter, Green Plains brought in $42.2 million in net income, or $1.07 per diluted share. That’s a significant increase from the $25.5 million, or 65 cents per diluted share, of net income earned in the same time period of 2013.  

The numbers for the last two full years show an even larger increase. In 2014, the company brought in $159.5 million, or $3.96 per diluted share. The previous year it was $43.4 million, or $1.26 per diluted share.

"U.S. ethanol margins have been volatile during the first part of this year. Demand for the product at these lower price levels remains robust, both domestically and internationally. We expect the industry will continue to adjust to lower energy prices and remain optimistic we will perform well over the coming year," added Becker. "Green Plains just completed its sixth consecutive year of profitable operations, a testament to the resiliency of our people, our assets and our strategy."

Jerry Peters, chief financial officer, said on the call that the company’s financial performance was the best in its history. He also noted that Green Plain’s ethanol production generated $267 million in operating income before depreciation. That’s roughly 28 cents in operating income per gallon of ethanol produced. The company has 12 ethanol plants, including its Fairmont, Minnesota, facility, which started production in January 2014, after being idle for more than a year before Green Plains purchased it in November 2013.

The company has a strong focus on diversifying and acquiring assets, which continued in 2014. In fact, in May 2014, the company changed its name from Green Plains Renewable Energy Inc. to Green Plains Inc., reflecting that it is not focused only on renewable energy.

“Up until this point, our growth has come from pursuing organic growth in our platform such as grain storage increases, adding corn oil and terminal distribution capabilities and finally getting more volume from our production plants,” Becker said, adding that there are still opportunities for ethanol plant capacity increases and the company has a strategy to make that happen. “We have extra RIN (renewable information number) capacity across our production platform of approximately 100 million gallons and can get to that production for under 75 cents per gallon on a brownfield expansion project. This can all be done without any need for new pathway approvals.”

Looking at operating income from the nonethanol segments, which include corn oil production, agribusiness, and commodity marketing and distribution, the company earned $23.9 million in the fourth quarter of 2014 and $103.8 million for the full year. The numbers were down about $4 million in the fourth quarter but up for the full year from the $80.9 million brought in the previous year.

The company also purchased a feed yard and a grain storage facility in Kansas in June 2014. The operation includes about 2,600 acers of land able to support 70,000 head of cattle and store about 3.8 million bushels of grain. During the call, Peters pointed to this acquisition as a new source of liquidity, which provides the company with needed working capital in the current environment.

In answer to a question about efforts to reform or repeal the renewable fuel standard (RFS), Becker said it does provide uncertainty to investors but that he didn’t believe it would be passed into law. “But with or without, we set the business up over time to say that eventually we believe that the industry will need to operate on its own and the key point there is that you have to compete head to head with oil,” he said, adding that at current oil prices of $50 a barrel ethanol is still at a discount of 30 cents a gallon to gas. “In general we still feel like international demand or global demand will increase faster than global supply. And with or without the RFS, you had to have a molecule that competes.”