Green Plains reports improved performance of its ethanol segment

By Erin Voegele | August 01, 2018

On Aug. 1, Green Plains Inc. released second quarter financial results reporting a year-over-year increase in revenues, reduced net loss and improved performance for its ethanol production segment.

“Our second quarter had a solid financial performance from our non-ethanol businesses, led by a record quarter in our food and ingredients segment driven by performance in our cattle feeding operations and strong grain handling margins in our ag and energy services segment,” said Todd Becker, president and CEO of Green Plains. “We also experienced improvement in our ethanol production segment, generating a consolidated ethanol crush margin of $25.6 million, or approximately 9 cents per gallon.”

“Ethanol margins improved in June, which has carried over into the beginning of the third quarter as physical markets remain tight and basis levels are above historical averages,” Becker continued. “There still remains a mismatch between the weakness of financial markets and strength of physical markets that has negatively impacted realized margins. We have made the decision to run all of our plants at higher rates notwithstanding normal turnaround scheduling and seasonal shutdowns of a few smaller assets. We believe this move will improve our plant expense absorption rates on a go forward basis.”

During an investor call, Becker said Green Plains produced 296 million gallons of ethanol during the second quarter, up from 275 million gallons during the same period of last year. That production level was 80 percent of the company’s operating capacity for the quarter.

“Ethanol production ran slower in the second quarter, which is now going to be a thing of the past,” Becker said. “Our approach going forward will be to run our plant to 90 percent or higher of our operating capacity.” Becker noted that while regulatory scheduled maintenance and the amount of export products the company produces can have an effect on quarterly production rates, he said “going forward we will not flex our production down, which has had the unintended consequences of benefiting others rather than for the benefit of Green Plains shareholders as of late.” Becker also noted that the company has increased production levels for July.

According to Becker, Green Plains exported 65.7 million gallons of ethanol during the second quarter, accounting for 22 percent of the company’s total production. “We await the outcome of numerous trade disputes, which we believe provide great upside to our export volumes,” he said.

Green Plains reported a net loss attributable to the company of $1 million, or 2 cents per diluted share, compared to a net loss of $16.4 million, or 41 cents per share, during the second quarter of 2017. Revenues were $986.8 million, up from $886.3 million during the same period of last year.