Green Plains(US:GPRE)2024-08-06 20:35Production and Utilization - In Q2 2024, the company achieved an average utilization rate of approximately 92.6%, resulting in ethanol production of 208.5 million gallons, compared to 194.7 million gallons in the same quarter last year [144]. - Domestic ethanol production averaged 1.02 million barrels per day in Q2 2024, a 1.0% increase from the same quarter last year [145]. - Ethanol production volume increased by 7.0% to 208,483 thousand gallons for the three months ended June 30, 2024, compared to 194,753 thousand gallons in the same period last year [172]. - Ethanol production increased by 3.7% to 416,387 thousand gallons for the six months ended June 30, 2024, compared to 401,633 thousand gallons in the same period in 2023 [178]. Financial Performance - Ethanol production segment revenues from external customers decreased by 28.0% to $524.3 million in Q2 2024, compared to $727.8 million in Q2 2023 [164]. - Total segment revenues for agribusiness and energy services fell by 25.7% to $100.9 million in Q2 2024, down from $135.8 million in Q2 2023 [164]. - Consolidated revenues decreased by $238.8 million for the three months ended June 30, 2024, primarily due to lower selling prices on ethanol, distillers grains, and renewable corn oil [171]. - Consolidated revenues decreased by $474.5 million for the six months ended June 30, 2024, primarily due to lower selling prices on ethanol, distillers grains, and renewable corn oil [175]. - Revenues in the ethanol production segment decreased by $395.6 million for the six months ended June 30, 2024, primarily due to lower selling prices [178]. Costs and Expenses - Cost of goods sold in the ethanol production segment decreased by $224.8 million, primarily due to lower corn prices and reduced utility costs [173]. - Cost of goods sold in the ethanol production segment decreased by $422.7 million for the six months ended June 30, 2024, primarily due to lower corn prices [179]. - Interest expense decreased by 23.1% to $7,494 for the three months ended June 30, 2024, compared to $9,741 in the same period last year [169]. - Depreciation and amortization expense for the ethanol production segment was $20.5 million for the three months ended June 30, 2024, compared to $23.3 million in the same period last year [174]. Strategic Initiatives - The company completed the acquisition of all publicly held common units of Green Plains Partners LP on January 9, 2024, as part of a merger agreement [132]. - The company is executing a strategic review process to explore opportunities for enhancing long-term shareholder value, including acquisitions and partnerships [142]. - The company has installed FQT MSC™ technology at five biorefineries, producing Ultra-High Protein with protein concentrations of 50% or greater, with an annual capacity of approximately 430 thousand tons [135]. - The company is collaborating with Equilon Enterprises LLC to combine FQT's precision separation technology with Shell Fiber Conversion Technology, enhancing high protein production [139]. Regulatory and Market Environment - The EPA set the implied conventional ethanol levels at 15.25 billion gallons for 2023, and 15 billion gallons for both 2024 and 2025 [152]. - The IRA introduced a Clean Fuel Production Credit of $0.02 per gallon for fuels below a 50 CI threshold, which could impact fuel ethanol production from 2025 to 2027 [150]. - The USDA announced $500 million in funding for biofuel blending infrastructure, which may enhance the availability of higher ethanol blended fuel [151]. - The RFS mandates that obligated parties use renewable fuels, with RINs impacting supply and demand dynamics in the market [153]. - The One-Pound Waiver allows E15 to be sold year-round, marking the sixth consecutive year of such sales, except in California [154]. - The company anticipates regulatory changes from the EPA regarding RVOs for 2026 and beyond, with proposals expected by March 2025 [152]. Cash Flow and Debt - Net cash used in operating activities was $65.7 million for the six months ended June 30, 2024, compared to $168.4 million for the same period in 2023 [185]. - The company had $195.6 million in cash and cash equivalents and $29.5 million in restricted cash as of June 30, 2024 [184]. - The outstanding principal balance on the 2.25% convertible senior notes was $230.0 million as of June 30, 2024 [193]. - As of June 30, 2024, the company had $614.4 million in total debt, with $177.5 million bearing variable interest rates [202]. - A 10% increase in interest rates would result in an additional interest cost of approximately $1.8 million per year [202]. Risk Factors - The business is highly sensitive to commodity price risks, particularly for ethanol, corn, and natural gas [203]. - Estimated net income effect from a hypothetical 10% price change for ethanol is $112.1 million, with total volume requirements of 903,000 gallons [205]. - For corn, the estimated net income effect from a 10% price change is $98.5 million, with total volume requirements of 310,000 bushels [205]. Legal and Compliance - The company maintains effective disclosure controls and procedures as of June 30, 2024 [210]. - There were no material changes in internal control over financial reporting during the reporting period [211]. - The company is currently involved in litigation arising during the ordinary course of business, but it does not expect a material adverse effect on its financial position [213].