Betting on Success

6 profitable quarters for GPRE
By Kris Bevill | November 15, 2010
Green Plains Renewable Energy Inc. CEO Todd Becker credits a successful hedging strategy for much of the company's success in the third quarter of 2010. "We continued to take advantage of opportunities to lock away forward margins as they became available," he told investors during a conference call to announce GPRE's quarterly earnings. "In the past few months, ethanol industry operating margins expanded as ethanol prices increased more than the recent increases in corn prices. As a result, we expect an even stronger fourth quarter."

Net income at GPRE for the third quarter was $7.4 million, up nearly $2 million from the same period last year. The quarter was the sixth consecutive profitable quarter for GPRE. According to Becker, the company had locked in margins for 76.5 million gallons of ethanol production for the next 12 months as of Sept. 30, assuring "price agnostic" operations for the coming year.

Additional production and marketing capacities and coproducts will also contribute to GPRE's profitability in the future, Becker says. In October, GPRE acquired two former Global Ethanol LLC plants, increasing its production capacity to 657 MMgy. The company now also has the capability to market and distribute more than 1 billion gallons of ethanol annually. Within the next six months, corn oil extraction technology will be installed at all of GPRE's existing plants. Becker says the project should generate operating income of $15 million to $19 million annually, based on the production of 75 to 90 million pounds of corn oil.