Green Plains (GPRE) Q4 2024 Earnings Call February 07, 2025 09:00 AM ET Company Participants Phil Boggs - Chief Financial OfficerTodd Becker - President and Chief Executive OfficerJordan Levy - Vice President - Sustainability Equity ResearchSaumya Jain - Equity Research AssociateAdam Shepherd - Research AssociateMatthew Blair - Managing Director Conference Call Participants Craig Irwin - Managing Director, Senior Research AnalystSalvator Tiano - AnalystEric Stine - Senior Research AnalystKristen Owen - Exec ...

Company Performance - Green Plains Renewable Energy (GPRE) reported a quarterly loss of $0.86 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.28, and compared to earnings of $0.12 per share a year ago [1] - The earnings surprise for this quarter was -207.14%, following a previous quarter where the company exceeded expectations with earnings of $0.35 per share against an estimate of $0.11, resulting in a surprise of 218.18% [2] - The company posted revenues of $584.02 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 6.59%, and down from $712.39 million in the same quarter last year [3] Stock Performance and Outlook - Green Plains shares have declined approximately 12.6% since the beginning of the year, while the S&P 500 has gained 3.4% [4] - The current consensus EPS estimate for the upcoming quarter is -$0.27 on revenues of $651.6 million, and for the current fiscal year, it is $0.07 on revenues of $2.75 billion [8] Industry Context - The Chemical - Specialty industry, to which Green Plains belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, indicating potential challenges for stock performance [9] - The performance of Green Plains may also be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]

Financial Performance - Net loss attributable to Green Plains for Q4 2024 was $54.9 million, or $(0.86) per diluted share, compared to a net income of $7.2 million, or $0.12 per diluted share in Q4 2023[1]. - Revenues for Q4 2024 decreased to $584.0 million, down 18.0% from $712.4 million in Q4 2023, primarily due to lower selling prices and volumes of ethanol and distillers grains[5]. - The consolidated ethanol crush margin for Q4 2024 was $(15.5) million, a significant decline from $53.0 million in Q4 2023[4]. - EBITDA for Q4 2024 was $(18.9) million, a decrease of $63.6 million compared to $44.7 million in Q4 2023[6]. - Total revenues for the twelve months ended December 31, 2024, were $2,458,796 thousand, a decline of 25.4% from $3,295,743 thousand in 2023[30]. - For the twelve months ended December 31, 2024, Green Plains Inc. reported a net loss of $81.189 million, compared to a net loss of $76.299 million in 2023, indicating a decline in performance[33]. - The company's EBITDA for the twelve months ended December 31, 2024, was $47.646 million, down from $54.031 million in 2023, reflecting a decrease of approximately 11.4% year-over-year[35]. - The company incurred net payments of $61.697 million on long-term debt during the twelve months ended December 31, 2024, compared to $4.838 million in 2023, indicating increased debt repayment efforts[33]. - Green Plains Inc. reported a significant loss on the sale of assets, netting a loss of $30.723 million for the twelve months ended December 31, 2024, compared to a loss of $5.265 million in 2023[35]. - The company’s adjusted EBITDA for the twelve months ended December 31, 2024, was $18.715 million, down from $45.506 million in 2023, showing a substantial decline[35]. Operational Highlights - The company sold 209.5 million gallons of ethanol in Q4 2024, a slight decrease from 215.7 million gallons in Q4 2023[4]. - Ethanol production for Q4 2024 was 209,540 gallons, a decrease of 2.9% compared to 215,717 gallons in Q4 2023[16]. - Corn consumed in Q4 2024 was 71,221 bushels, a decrease of 4.0% from 74,152 bushels in Q4 2023[16]. - Gross margin for ethanol production in Q4 2024 was $(10.4) million, compared to $59.0 million in Q4 2023, reflecting a 91.7% decline[11]. - Adjusted ethanol production operating loss for Q4 2024 was $19,870 thousand, down from a profit of $46,309 thousand in Q4 2023[18]. - The company completed the acquisition of the remaining interest in Green Plains Partners LP on January 9, 2024, streamlining operations and improving efficiencies[8]. Strategic Initiatives - Green Plains has initiated a corporate reorganization and cost reduction initiative targeting annual savings of up to $50 million, with $30 million in improvements already implemented[2]. - The 'Advantage Nebraska' strategy is on track, with carbon capture operations expected to begin in the second half of 2025, potentially contributing significantly to future earnings[2]. - The company expects that combining cost reduction initiatives with carbon earnings could achieve a combined $180 million annualized contribution to future earnings[2]. Cash and Debt Management - Total cash and cash equivalents as of December 31, 2024, were $209.4 million, with total debt outstanding at $575.4 million[21]. - The company had $200.7 million available under a committed revolving credit facility as of December 31, 2024[21]. - The total cash and cash equivalents, and restricted cash at the end of the period was $209.395 million, a decrease from $378.762 million at the beginning of the period[33]. - The net change in cash and cash equivalents, and restricted cash for the twelve months ended December 31, 2024, was a decrease of $169.367 million, compared to a decrease of $121.514 million in 2023[33]. - Interest expense for the twelve months ended December 31, 2024, was $33.095 million, a decrease from $37.703 million in 2023, indicating a reduction in borrowing costs[35]. Asset Management - The company reported a decrease in total assets from $1,939,322 thousand in 2023 to $1,782,174 thousand in 2024[28].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Green Plains Renewable Energy (GPRE) due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - The earnings report is expected on February 7, 2025, with a consensus estimate of a quarterly loss of $0.28 per share, reflecting a year-over-year change of -333.3% [3]. - Revenues are projected to be $625.2 million, down 12.2% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 170% lower in the last 30 days, indicating a significant reassessment by analysts [4]. - The Most Accurate Estimate for Green Plains is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -41.49% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with a strong predictor for positive readings [7][8]. - Green Plains currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [11]. Historical Performance - In the last reported quarter, Green Plains exceeded expectations with earnings of $0.35 per share against an estimate of $0.11, resulting in a surprise of +218.18% [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Market Context - The performance of Green Plains may not solely dictate stock movement, as other factors can influence investor sentiment [14]. - Despite not appearing as a compelling earnings-beat candidate, other market factors should be considered when evaluating the stock [16]. Industry Comparison - Linde (LIN), another player in the Zacks Chemical - Specialty industry, is expected to report earnings per share of $3.93 for the same quarter, indicating a year-over-year change of +9.5% [17]. - Linde's revenues are projected at $8.36 billion, up 0.7% from the previous year, with a recent EPS estimate revision of 1.4% down [18].

Financial Data and Key Metrics Changes - The company reported $83.3 million in EBITDA for Q3 2024, which includes a $30.7 million gain from the sale of the Birmingham Unit Train Terminal. Normal operations EBITDA was $53 million, and the standalone consolidated crush margin was $58 million [6][19]. - Consolidated revenues for Q3 2024 were $658.7 million, down $234 million or approximately 26% year-over-year, primarily due to lower prices for ethanol, dry distillers grains, and renewable corn oil [16][19]. - Net income attributable to the company was $48.2 million or $0.69 per diluted share, compared to $22.3 million or $0.35 per diluted share in Q3 2023 [18][19]. - The plant utilization rate was 97% during the quarter, up from 94% in the same period last year [17]. Business Line Data and Key Metrics Changes - Ethanol operating rates reached nearly 97%, with record ultra-high protein production and strong corn oil yield maintained [9][11]. - The company experienced strong demand for ethanol exports, with totals through August reaching 1.2 billion gallons, on track for a record year of 1.8 to 1.9 billion gallons [12]. - Record production of ultra-high protein was achieved during Q3, with ongoing efforts to maximize efficiency and flexibility in production [32][34]. Market Data and Key Metrics Changes - The company noted favorable natural gas and corn prices, contributing to solid margins during the quarter, despite some rapid compression late in the quarter [11][36]. - The corn basis in Q3 was at least $0.50 a bushel better than the prior three years, aiding the margin structure for the industry [52]. Company Strategy and Development Direction - The company is focused on decarbonizing its operations in Nebraska and anticipates significant cash flows from carbon credits starting in the second half of 2025 [28][30]. - The ongoing startup of the Clean Sugar Technology project is a key focus, with expectations for commercial sales in Q4 2024 [13][14]. - The strategic review process is ongoing, with the Board of Directors working with financial advisors to explore options for enhancing shareholder value [15]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to improve operational performance and margins, despite recent volatility in the industry [11][41]. - The management team highlighted the importance of upcoming milestones in carbon capture and the potential for increased interest in carbon credits [40][66]. - The company remains optimistic about the demand for low-carbon products and the potential for strong margins in 2025 [74]. Other Important Information - The company completed the sale of the Birmingham Unit Train Terminal, using proceeds to retire high-priced debt, which is expected to enhance efficiency [15]. - Capital expenditures for the year are anticipated to be in the range of $90 million to $100 million, excluding carbon capture equipment financing [24]. Q&A Session Summary Question: What does the market need to see for better valuation? - Management indicated that milestones in carbon projects will be critical for increasing market interest and valuation [40]. Question: How is the clean sugar technology progressing? - The company is receiving positive feedback from North American customers and is working towards food-grade certification [55]. Question: What is the outlook for ethanol exports next year? - Management expects continued robust demand for ethanol exports, particularly as global blend rates increase [74]. Question: How are protein margins expected to evolve? - Management noted that while margins are currently lower than hoped, demand remains strong, and they anticipate stabilization in spreads [80].

Ethanol Production and Utilization - In Q3 2024, the company maintained an average utilization rate of approximately 96.8%, resulting in ethanol production of 220.2 million gallons, compared to 223.4 million gallons in Q3 2023[174]. - Domestic ethanol production averaged 1.07 million barrels per day in Q3 2024, a 3.1% increase from 1.04 million barrels per day in Q3 2023[176]. - U.S. domestic ethanol ending stocks increased by approximately 1.6 million barrels, or 7.2%, to 23.5 million barrels as of September 30, 2024[176]. - Domestic ethanol exports through August 31, 2024, were approximately 1,240 million gallons, up from 921 million gallons for the same period in 2023[177]. - Ethanol production segment revenues from external customers decreased by 27.2% to $563.564 million in Q3 2024 compared to $774.321 million in Q3 2023[195]. - Ethanol production segment revenues decreased by $210.9 million for Q3 2024 compared to Q3 2023, primarily due to lower selling prices of ethanol, distillers grains, and renewable corn oil[207]. Financial Performance - Overall revenues, including intersegment activity, declined by 26.0% to $666.499 million in Q3 2024 from $900.610 million in Q3 2023[195]. - The company reported a 27.6% decrease in total segment revenues for the nine months ended September 30, 2024, totaling $1.595741 billion compared to $2.202182 billion for the same period in 2023[195]. - Consolidated revenues decreased by $234.0 million for the three months ended September 30, 2024, primarily due to lower average selling prices and volumes sold in the ethanol production segment[205]. - For the nine months ended September 30, 2024, consolidated revenues decreased by $708.6 million compared to the same period in 2023, mainly due to lower selling prices of ethanol and distillers grains[212]. - Net income increased by $22.3 million for the three months ended September 30, 2024, primarily due to a gain on the sale of assets and higher margins in the ethanol production segment[206]. - Adjusted EBITDA increased by $10.4 million primarily due to higher margins in the ethanol production segment[206]. Capital Expenditures and Investments - Capital expenditures for the nine months ended September 30, 2024, were approximately $67.8 million, with an expected additional $110 million for carbon capture projects in 2024 and 2025[224]. - The company has contracted future purchases of grain, distillers grains, and natural gas valued at approximately $187.8 million as of September 30, 2024[239]. - Future commitments for storage and transportation are valued at approximately $26.3 million as of September 30, 2024[239]. Debt and Financial Obligations - The outstanding principal balance on the 2.25% convertible senior notes was $230.0 million as of September 30, 2024[229]. - The company anticipates maintaining compliance with debt covenants for the next twelve months based on current forecasts[228]. - Total senior secured revolving commitments amount to $350.0 million, with an accordion feature allowing an increase of up to $100.0 million, maturing in March 2027[234]. - As of September 30, 2024, the outstanding principal balance on the facility was $109.0 million with an interest rate of 8.11%[234]. - The company had $559.8 million in total debt as of September 30, 2024, with $123.1 million bearing variable interest rates[243]. Operational Highlights - The company produced approximately 430 thousand tons of Ultra-High Protein annually, utilizing FQT MSC™ technology at five biorefineries[164]. - The company is collaborating on carbon capture projects at seven biorefineries, with completion anticipated in the second half of 2025[168]. - The company has a grain storage capacity of approximately 20.2 million bushels in its agribusiness and energy services segment[163]. - The company expects to begin shipments from its first commercial scale FQT CST™ facility in Q4 2024, producing low carbon-intensity glucose and dextrose corn syrups[165]. Market and Regulatory Environment - The EPA finalized Renewable Volume Obligations (RVOs) for 2023 at 15.25 billion gallons, and 15 billion gallons for both 2024 and 2025[182]. - The IRA introduced a Clean Fuel Production Credit of $0.02 per gallon for fuels below a 50 CI threshold, effective from 2025 to 2027[181]. - The EPA proposed a modest increase in biomass-based diesel volumes, setting them at 2.82 billion gallons for 2023, 3.04 billion for 2024, and 3.35 billion for 2025[182]. - The One-Pound Waiver allows E15 to be sold year-round, with the exception of California, marking the sixth consecutive year of such sales[185]. - The USDA announced $50 million in initial awards for biofuel infrastructure, part of a $500 million funding initiative[186]. Shareholder Value and Strategic Initiatives - The company initiated a strategic review process in February 2024 to explore opportunities for enhancing long-term shareholder value[172]. - The company has a share repurchase program authorized for up to $200.0 million, with $92.8 million spent to repurchase 7.4 million shares since inception[226]. Miscellaneous - Interest expense was $10.1 million for the three months ended September 30, 2024, compared to $9.6 million for the same period in 2023, due to higher loan fees[206]. - The gross margin for ethanol production increased by 12.4% to $66,313 for the three months ended September 30, 2024, compared to $58,973 in 2023[197]. - Operating income for ethanol production increased by 47.3% to $35,240 for the three months ended September 30, 2024, compared to $23,931 in 2023[199]. - The cost of goods sold decreased by 29.0% to $580,626 for the three months ended September 30, 2024, compared to $818,008 in 2023[196]. - The company reported a depreciation and amortization expense of $26,070 for the three months ended September 30, 2024, an increase of 9.1% from $23,899 in 2023[198]. - The agribusiness and energy services segment reported a gross margin decrease of 25.3% to $11,796 for the three months ended September 30, 2024, compared to $15,789 in 2023[197]. - The company recognized a $30.7 million pretax gain on the sale of assets for the three months ended September 30, 2024[199]. - Net cash used in operating activities was $3.0 million for the nine months ended September 30, 2024, a significant improvement from $55.4 million in the same period of 2023[222]. - Revenues for the three months ended September 30, 2024, included net gains of $16.1 million from derivative financial instruments, while cost of goods sold included net losses of $4.2 million[246]. - Estimated total volume requirements for ethanol for the next 12 months is 903,000 gallons, with a 10% price change estimated to impact revenue by $98,304[248]. - A 10% increase in interest rates would affect the company's interest cost by approximately $1.2 million per year[243]. - The company has no off-balance sheet arrangements[241].

Group 1: Earnings Performance - Green Plains Renewable Energy (GPRE) reported quarterly earnings of $0.35 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and matching the earnings from the same quarter last year [1] - The earnings surprise for this quarter was 218.18%, contrasting with a previous quarter where a loss of $0.16 per share was expected, but the company reported a loss of $0.38, resulting in a surprise of -137.50% [2] - Over the last four quarters, the company has only surpassed consensus EPS estimates once [2] Group 2: Revenue Performance - For the quarter ended September 2024, Green Plains posted revenues of $658.74 million, which missed the Zacks Consensus Estimate by 0.11%, and represented a decline from year-ago revenues of $892.77 million [3] - The company has not been able to beat consensus revenue estimates over the last four quarters [3] Group 3: Stock Performance and Outlook - Green Plains shares have declined approximately 53.9% since the beginning of the year, while the S&P 500 has gained 21.9% [4] - The current consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $651.47 million, and for the current fiscal year, it is -$1.04 on revenues of $2.51 billion [8] - The Zacks Industry Rank indicates that the Chemical - Specialty sector is currently in the bottom 33% of over 250 Zacks industries, suggesting potential challenges for stock performance [9]

Exhibit 99.1 FOR IMMEDIATE RELEASE Green Plains Reports Third Quarter 2024 Financial Results Results for the Third Quarter of 2024 and Future Outlook: • Net income attributable to Green Plains of $48.2 million, or EPS of $0.69 per diluted share, compared to net income attributable to Green Plains of $22.3 million, or $0.35 per diluted share, for the same period in 2023 • EBITDA of $83.3 million, inclusive of a $30.7 million gain on sale of assets • Consolidated crush margin of $58.3 million in the third qua ...

The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.59 per share, indicating a year-over-year rise of 26.5%. The consensus estimate for ECL's current-year earnings has gone up in the past 30 days. ECL, which carries a Zacks Rank of 2 at present, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 1.3%. The company's shares have gained roughly 33.6% in the past year. Green Plains Inc. (GPRE) has stated that the construction manag ...

Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are limited to, those discussed in this presentation, those discussed under "Risk Factors" in our Annual Report on Form 10-K or incorporated by reference. Specifically, we may experience fluctuations in future operating results due to a number of economic conditions and other factors, including: competition in the ethanol and biofuels industry and other industries in which we oper ...