Green Plains Reports Second Quarter 2023 Financial Results

Green Plains Inc. (NASDAQ:GPRE) today announced financial results for the second quarter of 2023. Net loss attributable to the company was $52.6 million, or ($0.89) per diluted share, compared to net income attributable to the company of $46.4 million, or $0.73 per diluted share, for the same period in 2022. Revenues were $857.6 million for the second quarter of 2023 compared with $1,012.4 million for the same period last year. EBITDA of ($15.0) million compared to $84.4 million inclusive of a USDA COVID-19 relief payment of $27.7 million for the same period in the prior year.

“The quarter was negatively impacted by unfortunate events that operationally have now been rectified, and our system is once again operating near full capacity in order to take advantage of solid fundamentals for the last half of 2023 across all of our products, when we expect to show the financial capability of the first stage of our transformation,” said Todd Becker, President and Chief Executive Officer. “In addition to the significant impact of our Wood River plant being down most of the quarter, which we expect partial insurance recovery in the last half for this event, we experienced planned and unplanned downtime at many of our largest facilities that also negatively impacted the quarter. We acted in the second quarter to prepare our assets for a solid last half of the year where we expect to now be able to avoid fall shutdowns at several of our large locations. In recent weeks, our entire platform has been operating near capacity, with Ultra-High Protein production once again achieving rates above 900 tons per day.”

“Fundamentals for our strategy have improved across our platform in all four pillars – protein, oil, sugar and carbon,” commented Becker. “Driving demand remains robust, protein margins have expanded, and renewable corn oil prices have improved. With the current margin structure and higher anticipated operational rates, EBITDA for the last half of 2023 is projected to be materially stronger.”

“Our protein sales strategy is seeing continued success, and we are in significant late stage negotiations on our first commercial quantities of 60% protein with deliveries of this innovative ingredient expected in the fourth quarter,” added Becker. “We also continue to have material negotiations with customers for our clean sugar product suite to be produced in the first quarter of 2024. Renewable corn oil pricing has improved from recent lows, and we are positioned to capitalize on the continued growth in demand for this low-CI feedstock from the renewable diesel market.”

“The future we have been talking about since we started on this transformation journey is upon us,” concluded Becker. “Our clean sugar facility at Shenandoah and our MSC turnkey project with Tharaldson are both on track to come online in the first quarter of 2024, and we remain focused on execution to deliver on the remaining components of our evolution into the biorefinery platform of the future.”

Highlights and Recent Developments

• Announced technology collaboration with Equilon Enterprises LLC to combine fermentation, mechanical separation and processing, and fiber conversion into one platform
• Returned to full run rate capabilities across biorefinery platform in July 2023
• Announced offer to acquire all publicly held common units of Green Plains Partners LP
• Hosted IRA Teach-in, highlighting opportunities to decarbonize biorefinery platform supported by incentives included in the Inflation Reduction Act

Results of Operations

Green Plains ethanol production segment sold 194.8 million gallons of ethanol during the second quarter of 2023, compared with 231.4 million gallons for the same period in 2022. The consolidated ethanol crush margin was $1.9 million, or $0.01 per gallon, for the second quarter of 2023, compared with $65.3 million, or $0.28 per gallon, for the same period in 2022. The consolidated ethanol crush margin is the ethanol production segment’s operating income before depreciation and amortization, which includes renewable corn oil and Ultra-High Protein, plus intercompany storage, transportation, nonrecurring decommissioning costs, nonethanol operating activities and other fees, net of related expenses.

Consolidated revenues decreased $154.8 million for the three months ended June 30, 2023, compared with the same period in 2022, primarily due to lower volumes sold on ethanol, distillers grains and renewable corn oil, and lower weighted average selling prices on distillers grains and renewable corn oil, offset by higher weighted average selling prices on ethanol and Ultra-High Protein, and higher volumes for Ultra-High Protein. Revenues were also lower within our agribusiness and energy services segment as a result of decreased trading volumes and margins.

Net loss attributable to Green Plains increased $99.0 million and EBITDA decreased $99.4 million for the three months ended June 30, 2023, compared with the same period last year, primarily due to decreased volumes and margins in our ethanol production segment, lower trading volumes and margins in our agribusiness and energy services segment and the $27.7 million USDA COVID-19 relief grant received in the second quarter of 2022. Interest expense increased $1.9 million for the three months ended June 30, 2023, compared with the same period in 2022, primarily due to reduced capitalized interest as certain projects have been completed. Income tax benefit was $1.0 million for the three months ended June 30, 2023, compared with income tax expense of $2.9 million for the same period in 2022, primarily due to a decrease in the valuation allowance recorded against certain deferred tax assets for the three months ended June 30, 2023.

Segment Information

The company reports the financial and operating performance for the following three operating segments: (1) ethanol production, which includes the production of ethanol, distillers grains, Ultra-High Protein and renewable corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, Ultra-High Protein, renewable corn oil, grain, natural gas and other commodities and (3) partnership, which includes fuel storage and transportation services. Intercompany fees charged to the ethanol production segment for storage and logistics services, grain procurement and product sales are included in the partnership and agribusiness and energy services segments and eliminated upon consolidation. Third-party costs of grain consumed and revenues from product sales are reported directly in the ethanol production segment.