Market Overview

Green Plains Reports Second Quarter 2018 Financial Results

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  • Net loss attributable to the company of $1.0 million, or $(0.02) per diluted share
  • EBITDA of $41.8 million
  • Record quarter in food and ingredients segment of  $19.0 million EBITDA
  • Portfolio optimization plan on track to significantly reduce or eliminate term debt with sale proceeds by the end of 2018
  • Green Plains Cattle Acquires Bartlett Cattle Company, Expanding cattle-feeding operations to 355,000 head

OMAHA, Neb., Aug. 01, 2018 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ:GPRE) today announced financial results for the second quarter of 2018. Net loss attributable to the company was $1.0 million, or $(0.02) per diluted share, for the second quarter of 2018 compared to net loss of $16.4 million, or $(0.41) per diluted share, for the same period in 2017. Revenues were $986.8 million for the second quarter of 2018 compared with $886.3 million for the same period last year.

"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," commented Todd Becker, president and chief executive officer. "We also experienced improvement in our ethanol production segment, generating a consolidated ethanol crush margin of $25.6 million, or approximately $0.09 per gallon."

"Yesterday we announced that we have signed a definitive agreement to purchase two cattle feedlots from Bartlett Cattle Company," said Becker. "Our investment aligns with our strategy to capitalize on the growing demand for all proteins around the world, leverages our risk management expertise and further diversifies our earnings especially in industries that are not subject to policy-driven volatility. We expect this acquisition to deliver consistent earnings for our shareholders and be immediately accretive to earnings."

"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," commented Becker. "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."

Revenues attributable to the company were $2.0 billion for the six-month period ended June 30, 2018, compared with $1.8 billion for the same period in 2017. Net loss for the six-month period ended June 30, 2018, was $25.1 million, or $(0.63) per diluted share, compared with net loss of $20.0 million, or $(0.51) per diluted share, for the same period in 2017.

"Our portfolio optimization plan is on track with the strategic objectives we communicated in May. We are in the middle of a robust process which we believe will allow us to significantly reduce or eliminate term debt by the end of 2018," Becker stated. "We have also made good progress on our plan to reduce controllable expenses by $10 to $15 million, starting with the current quarter. Finally, our high-protein initiative is fully engaged, as we continue to work through permitting, engineering and site preparations."  

Second Quarter Highlights and Recent Developments

  • On May 7, 2018, Green Plains announced it will divest assets that do not support the company's strategic focus on the production of high-protein feed ingredients and ethanol exports, using the proceeds to significantly reduce or eliminate the company's term debt and invest in high-protein process technology at certain ethanol facilities. The plan's five strategic objectives include:

    ○  Prove value of Green Plains' assets for our shareholders through strategic divestments
    ○  Significantly reduce or eliminate term debt by the end of 2018 with sale proceeds
    ○  Invest in high-protein process technology at the Shenandoah, Iowa ethanol facility with other locations to follow
    ○  Repurchase shares with remaining proceeds and free cash flow when market conditions are optimal
    ○  Reduce controllable expenses $10 to $15 million on an annual run rate basis, starting in the third quarter of 2018
  • On Feb. 16, 2018, Green Plains Partners and Delek Logistics Partners LP formed DKGP Energy Terminals LLC, a 50/50 joint venture, to acquire and manage light products terminal assets in Texas and Arkansas. DKGP has since decided not to pursue the acquisition due to regulatory obstacles.

Results of Operations

Green Plains produced 296.3 million gallons of ethanol during the second quarter of 2018, compared with 275.5 million gallons for the same period in 2017. The consolidated ethanol crush margin was $25.6 million, or $0.09 per gallon, for the second quarter of 2018, compared with $18.9 million, or $0.07 per gallon, for the same period in 2017. The consolidated ethanol crush margin is the ethanol production segment's operating income before depreciation and amortization, which includes corn oil, plus intercompany storage, transportation and other fees, net of related expenses.

Consolidated revenues increased $100.6 million for the three months ended June 30, 2018, compared with the same period in 2017 primarily as a result of the cattle feedlot acquisitions during the first half of 2017. The increase was partially offset by lower average realized prices for ethanol and corn oil.

Operating income increased $15.6 million for the three months ended June 30, 2018 compared with the same period last year primarily due to higher cattle volumes sold, higher average prices for distiller grains and increased ethanol margins. Interest expense increased $2.6 million for the three months ended June 30, 2018, compared with the same period in 2017, primarily due to higher average debt outstanding and higher borrowing costs. Income tax benefit was $10.8 million for the three months ended June 30, 2018, compared with $9.7 million for the same period in 2017. During the three months ended June 30, 2018, the company recognized a net tax benefit of $8.3 million for federal and state research and development credits relating to current and prior periods.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased $17.8 million for the second quarter of 2018 compared with the same period last year.

Segment Information
The company reports the financial and operating performance for the following four operating segments: (1) ethanol production, which includes the production of ethanol and distillers grains, and recovery of 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, corn oil, natural gas and other commodities, (3) food and ingredients, which includes cattle feeding, vinegar production and food-grade corn oil operations and (4) 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.

                                         
GREEN PLAINS INC.    
SEGMENT OPERATIONS    
(unaudited, in thousands)    
                                         
    Three Months Ended
June 30,

  Six Months Ended
June 30,
    2018   2017   % Var.
  2018   2017   % Var.
Revenues:                                        
Ethanol production   $ 593,475     $ 618,846     (4.1 ) %   $ 1,159,191     $ 1,240,221     (6.5 ) %
Agribusiness and energy services     184,202       160,536     14.7         397,418       338,339     17.5    
Food and ingredients     225,925       116,697     93.6         504,076       214,757     134.7    
Partnership     25,840       25,065     3.1         51,725       52,294     (1.1 )  
Intersegment eliminations     (42,605 )     (34,881 )   22.1         (80,286 )     (71,664 )   12.0    
    $ 986,837     $ 886,263     11.3   %   $ 2,032,124     $ 1,773,947     14.6   %
Gross margin:                                        
Ethanol production   $ 11,862     $ 6,200     91.3   %   $ 13,019     $ 28,437     (54.2 ) %
Agribusiness and energy services     19,028       8,426     125.8         30,532       19,835     53.9    
Food and ingredients     19,485       16,688     16.8         37,871       31,713     19.4    
Partnership     25,840       25,065     3.1         51,725       52,294     (1.1 )  
Intersegment eliminations     (3 )     (135 )   *         17       (247 )   *    
    $ 76,212     $ 56,244     35.5   %   $ 133,164     $ 132,032     0.9   %
Depreciation and amortization:                                        
Ethanol production   $ 20,559     $ 20,142     2.1   %   $ 40,995     $ 40,484     1.3   %
Agribusiness and energy services     618       659     (6.2 )       1,248       1,319     (5.4 )  
Food and ingredients     3,444       3,240     6.3         6,848       6,120     11.9    
Partnership     1,105       1,247     (11.4 )       2,286       2,501     (8.6 )  
Corporate activities     1,097       900     21.9         1,920       1,847     4.0    
    $ 26,823     $ 26,188     2.4   %   $ 53,297     $ 52,271     2.0   %
Operating income (loss):                                        
Ethanol production   $ (17,214 )   $ (22,459 )   23.4   %   $ (44,743 )   $ (29,057 )   (54.0 ) %
Agribusiness and energy services     12,166       3,083     294.6         19,230       9,452     103.4    
Food and ingredients     12,981       10,714     21.2         25,566       20,340     25.7    
Partnership     16,129       14,798     9.0         31,489       31,417     0.2    
Intersegment eliminations     144       (80 )   *         212       (155 )   *    
Corporate activities     (12,441 )     (9,842 )   26.4         (23,914 )     (18,391 )   30.0    
    $ 11,765     $ (3,786 )   410.8   %   $ 7,840     $ 13,606     (42.4 ) %
EBITDA:                                        
Ethanol production   $ 3,362     $ (873 )   *       $ (3,733 )   $ 12,951     *    
Agribusiness and energy services     12,796       3,747     241.5   %     20,498       10,760     90.5   %
Food and ingredients     19,044       13,955     36.5         35,041       26,469     32.4    
Partnership     17,138       16,066     6.7         33,761       33,960     (0.6 )  
Intersegment eliminations     144       (80 )   *         212       (155 )   *    
Corporate activities     (10,642 )     (8,742 )   21.7         (20,817 )     (16,063 )   29.6    
    $ 41,842     $ 24,073     73.8   %   $ 64,962     $ 67,922     (4.4 ) %
                                         
* Percentage variance not considered meaningful.    
                             


                             
GREEN PLAINS INC.
SELECTED OPERATING DATA
(unaudited, in thousands)
                             
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018   2017   % Var.   2018   2017   % Var.
Ethanol production                            
Ethanol (gallons)   296,282   275,539   7.5   %   576,692   601,965   (4.2 ) %
Distillers grains (equivalent dried tons)   739   728   1.5       1,468   1,605   (8.5 )  
Corn oil (pounds)   75,556   65,685   15.0       144,690   141,042   2.6    
Corn consumed (bushels)   103,147   95,680   7.8       200,430   209,165   (4.2 )  
                             
Agribusiness and energy services                            
Domestic ethanol sold (gallons)   284,170   344,158   (17.4 )     595,360   637,908   (6.7 )  
Export ethanol sold (gallons)   65,720   36,794   78.6       138,819   102,639   35.2    
    349,890   380,952   (8.2 )     734,179   740,547   (0.9 )  
Food and ingredients                            
Cattle sold (head)   118   38   210.5       255   80   218.8    
                             
Partnership                            
Storage and throughput (gallons)   314,337   284,496   10.5       612,610   605,578   1.2    
                             


                         
GREEN PLAINS INC.
CONSOLIDATED CRUSH MARGIN
(unaudited, in thousands except per gallon amounts)
                         
    Three Months Ended
June 30,
  Three Months Ended
June 30,
    2018   2017   2018   2017
                         
Ethanol production operating loss   $ (17,214 )   $ (22,459 )   $ (0.05 )   $ (0.08 )
Depreciation and amortization     20,559       20,142       0.07       0.08  
Total ethanol production     3,345       (2,317 )     0.02       0.00  
                         
Intercompany fees, net:                        
Storage and logistics (partnership)     15,880       14,757       0.05       0.05  
Marketing and agribusiness fees
(agribusiness and energy services)
    6,363       6,451       0.02       0.02  
Consolidated crush margin   $ 25,588     $ 18,891     $ 0.09     $ 0.07  
                                 

Liquidity and Capital Resources
On June 30, 2018, Green Plains had $251.0 million in total cash, cash equivalents and restricted cash, and $568.6 million available under revolving credit agreements, some of which are subject to restrictions and other lending conditions. Total debt outstanding at June 30, 2018, was $1,295.3 million, including $457.5 million outstanding under working capital revolvers and other short-term borrowing arrangements for the agribusiness and energy services, and food and ingredients segments.

Conference Call Information
Green Plains Inc. and Green Plains Partners LP will host a joint conference call today, at 11 a.m. Eastern time (10 a.m. Central time), to discuss second quarter 2018 financial and operating results for each company. Domestic and international participants can access the conference call by dialing 877.711.2374 and 281.542.4862, respectively, and referencing conference ID 6849088. The company advises participants to call at least 10 minutes prior to the start time. Alternatively, the conference call, transcript and presentation will be accessible on Green Plains' website at http://investor.gpreinc.com/events.cfm.

Non-GAAP Financial Measures
Management uses earnings before interest, income taxes, depreciation and amortization, or EBITDA, segment EBITDA and consolidated ethanol crush margins to measure the company's financial performance and to internally manage its businesses. Management believes these measures provide useful information to investors for comparison with peer and other companies. These measures should not be considered alternatives to net income or segment operating income, which are determined in accordance with generally accepted accounting principles (GAAP). These non-GAAP calculations may vary from company to company. Accordingly, the company's computation of EBITDA, segment EBITDA and consolidated ethanol crush margins may not be comparable with similarly titled measures of another company.

About Green Plains Inc.
Green Plains Inc. (NASDAQ:GPRE) is a diversified commodity-processing business with operations related to ethanol production, grain handling and storage, cattle feeding, food ingredients, and commodity marketing and logistics services. The company is one of the leading producers of ethanol in the world and, through its adjacent businesses, is focused on the production of high-protein feed ingredients and export growth opportunities. Green Plains owns a 62.5% limited partner interest and a 2.0% general partner interest in Green Plains Partners. For more information about Green Plains, visit www.gpreinc.com.

About Green Plains Partners LP
Green Plains Partners LP (NASDAQ:GPP) is a fee-based Delaware limited partnership formed by Green Plains Inc. to provide fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses. For more information about Green Plains Partners, visit www.greenplainspartners.com.

Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements reflect management's current views, which are subject to risks and uncertainties including, but not limited to, anticipated financial and operating results, plans and objectives that are not historical in nature. These statements may be identified by words such as "believe," "expect," "may," "should," "will" and similar expressions. Factors that could cause actual results to differ materially from those expressed or implied include: competition in the industries in which Green Plains operates; commodity market risks, financial market risks; counterparty risks; risks associated with changes to federal policy or regulation, including changes to tax laws; risks related to closing and achieving anticipated results from acquisitions; risks associated with the joint venture to commercialize algae production and growth potential of the algal biomass industry; risks associated with the recent acquisitions of cattle feedlots; risks associated with the company's portfolio optimization plan; and other risks discussed in Green Plains' reports filed with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. Green Plains assumes no obligation to update any such forward-looking statements, except as required by law.

Consolidated Financial Results

             
GREEN PLAINS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
             
    June 30,
2018
  December 31,
2017
ASSETS            
Current assets            
Cash and cash equivalents   $ 235,133   $ 266,651
Restricted cash     15,863     45,709
Accounts receivable, net     137,068     151,122
Income tax receivable     33,891     6,413
Inventories     625,302     711,878
Other current assets     45,562     24,698
Total current assets     1,092,819     1,206,471
Property and equipment, net     1,139,249     1,176,707
Other assets     353,705     401,472
Total assets   $ 2,585,773   $ 2,784,650
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities            
Accounts payable   $ 121,573   $ 205,479
Accrued and other liabilities     53,859     63,886
Derivative financial instruments     22,868     12,884
Income taxes payable     -     9,909
Short-term notes payable and other borrowings     457,472     526,180
Current maturities of long-term debt     69,752     67,923
Total current liabilities     725,524     886,261
Long-term debt     768,111     767,396
Deferred income taxes     40,591     56,801
Other liabilities     14,434     15,056
Total liabilities     1,548,660     1,725,514
             
Stockholders' equity            
Total Green Plains stockholders' equity     921,530     942,182
Noncontrolling interests     115,583     116,954
Total liabilities and stockholders' equity   $ 2,585,773   $ 2,784,650
             


                                     
GREEN PLAINS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share amounts)
                                     
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018   2017   % Var.   2018   2017   % Var.
Revenues                                    
Product   $ 985,217     $ 884,712     11.4   %   $ 2,028,876     $ 1,770,924     14.6   %
Services     1,620       1,551     4.4         3,248       3,023     7.4    
Total revenues     986,837       886,263     11.3         2,032,124       1,773,947     14.6    
Costs and expenses                                    
Cost of goods sold (excluding depreciation and amortization expenses reflected below)     910,625       830,019     9.7         1,898,960       1,641,915     15.7    
Operations and maintenance     7,893       8,267     (4.5 )       16,293       16,798     (3.0 )  
Selling, general and administrative     29,731       25,575     16.3         55,734       49,357     12.9    
Depreciation and amortization     26,823       26,188     2.4         53,297       52,271     2.0    
Total costs and expenses     975,072       890,049     9.6         2,024,284       1,760,341     15.0    
Operating income (loss)     11,765       (3,786 )   410.8         7,840       13,606     (42.4 )  
Other income (expense)                                    
Interest income     709       314     125.8         1,346       678     98.5    
Interest expense     (22,021 )     (19,430 )   13.3         (44,149 )     (37,926 )   (16.4 )  
Other, net     2,545       1,357     87.5         2,479       1,367     81.3    
Total other expense     (18,767 )     (17,759 )   5.7         (40,324 )     (35,881 )   12.4    
Loss before income taxes     (7,002 )     (21,545 )   67.5         (32,484 )     (22,275 )   (45.8 )  
Income tax benefit     10,753       9,749     10.3         16,780       12,130     38.3    
Net income (loss)     3,751       (11,796 )   131.8         (15,704 )     (10,145 )   (54.8 )  
Net income attributable to noncontrolling interest     4,745       4,570     3.8         9,407       9,818     (4.2 )  
Net loss attributable to Green Plains   $ (994 )   $ (16,366 )   93.9   %   $ (25,111 )   $ (19,963 )   (25.8 ) %
                                     
Earnings per share:                                    
Net loss attributable to Green Plains - basic   $ (0.02 )   $ (0.41 )         $ (0.63 )   $ (0.51 )      
Net loss attributable to Green Plains - diluted   $ (0.02 )   $ (0.41 )         $ (0.63 )   $ (0.51 )      
                                     
Weighted average shares outstanding:                                    
Basic     40,194       40,220             40,168       39,326        
Diluted     40,194       40,220             40,168       39,326        
                                             


             
GREEN PLAINS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
             
    Six Months Ended
June 30,
    2018   2017
Cash flows from operating activities:            
Net loss   $ (15,704 )   $ (10,145 )
Noncash operating adjustments:            
Depreciation and amortization     53,297       52,271  
Deferred income taxes     (23,061 )     (12,896 )
Other     10,565       13,385  
Net change in working capital     20,762       (80,358 )
Net cash provided by (used in) operating activities     45,859       (37,743 )
             
Cash flows from investing activities:            
Purchases of property and equipment, net     (14,640 )     (27,985 )
Acquisition of businesses, net of cash acquired     (1,629 )     (61,727 )
Investments in unconsolidated subsidiaries     (2,253 )     (8,849 )
Other investing activities     7,500       -  
Net cash used in investing activities     (11,022 )     (98,561 )
             
Cash flows from financing activities:            
Net proceeds (payments) - long-term debt     (1,070 )     (32,539 )
Net proceeds - short-term borrowings     (69,066 )     50,021  
Other     (26,065 )     (33,193 )
Net cash used in financing activities     (96,201 )     (15,711 )
             
Net change in cash, cash equivalents and restricted cash     (61,364 )     (152,015 )
Cash, cash equivalents and restricted cash, beginning of period     312,360       406,791  
Cash, cash equivalents and restricted cash, end of period   $ 250,996     $ 254,776  
                 


             
      Six Months Ended
June 30,
      2018   2017
             
Reconciliation of total cash, cash equivalents and restricted cash:            
Cash and cash equivalents   $ 235,133   $ 195,442
Restricted cash     15,863     59,334
Total cash, cash equivalents and restricted cash   $ 250,996   $ 254,776
             


                         
GREEN PLAINS INC.
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands)
                         
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018   2017   2018   2017
Net income (loss)   $ 3,751     $ (11,796 )   $ (15,704 )   $ (10,145 )
Interest expense     22,021       19,430       44,149       37,926  
Income tax benefit     (10,753 )     (9,749 )     (16,780 )     (12,130 )
Depreciation and amortization     26,823       26,188       53,297       52,271  
EBITDA   $ 41,842     $ 24,073     $ 64,962     $ 67,922  
                                 

Contact: Jim Stark | Vice President, Investor & Media Relations | 402.884.8700 | jim.stark@gpreinc.com

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