Green Plains: Margins improving in Q2

By Erin Voegele | May 03, 2022

Green Plains Inc. released first quarter 2022 financial results on May 2, reporting that the company was negatively impacted by low margins, rail delays, and other factors during the period. Margins have improved significantly, however, moving into Q2.

Todd Becker, president and CEO of Green Plains, opened the company’s first quarter earnings call by discussing Green Plains’ April 20 announcement that it had produced coproduct with more than 60 percent protein concentrations at its biorefinery in Wood River, Nebraska, using the patented Fluid Quip Technologies MSC system.

Despite the success of the company’s high protein initiative, Green Plains experienced a challenging Q1. “Overproduction from the industry resulted in high ethanol inventories, which led to an extremely challenging margin environment,” Becker said. The company also suffered from poor rail service, with Becker noting Green Plains Green Plains experienced 36 individual operating days during the three-month period where the company could not get adequate rail service to one or more plants.

Ethanol margins for the quarter were at negative 7 cents per gallon in the first quarter, Becker said. Margins have improved in the second quarter, and currently exceed 25 cents per gallon, he added, noting that estimate factors in strong renewable corn oil values and the company’s protein business. Rail service has also been somewhat better in the current quarter, he added.  

Regarding plant operations, Becker said for the first time in three years all of the company’s plants are capable of running at capacity. He said the multi-year upgrade and modernization program is finally complete, with the Madison and Mount Vernon locations returning to full run rates and necessary grain bin repairs completed at the York facility. Construction of MSC facilities in Central City, Mount Vernon and Obion continue to make good progress, according to Becker, with Central City and Mount Vernon systems expected to come online in the third quarter followed by Obion in the fourth quarter. Engineering work is underway to add MSC technology to the Madison and Superior locations, with groundbreaking currently expected in late 2022 or early 2023.

Becker also discussed FQT's new DCO+ corn oil technology. According to Green Plains, a recent full-scale demonstration of DCO+ at Green Plains Wood River achieved a breakthrough 1.4 pounds per bushel low-carbon renewable corn oil yield when integrated in a full MSC system. As a standalone system, DCO+ can achieve up to a 40 percent increase in overall production of corn oil.

In addition, Becker announced that Shenandoah will be the site of the company’s first full-scale clean sugar technology deployment. The facility is expected to make food-grade and industrial-grade products. Engineering on the project is underway, with groundbreaking expected later this year. The clean sugar technology is scheduled to be operational in 2023.

Green Plains sold 196.3 million gallons of ethanol during the first quarter, up from 178 million gallons sold during the same period of last year. The company reported adjusted EBITDA of negative $27.8 million for the quarter, compared to positive $15.4 million in the first quarter of 2021. Earnings per share was negative $1.16 per diluted share, compared to negative 17 cents per diluted share reported for the same period of last year.