Green Plains(US:GPRE)2025-02-07 20:20Part I Business The company is a biorefining firm transitioning into an agricultural technology leader via high-value products and carbon capture initiatives - Green Plains is transitioning from a commodity-processing business to a value-added agricultural technology company, focusing on creating lower carbon, high-value ingredients like Ultra-High Protein, low-CI dextrose, and renewable corn oil26 - The company has committed seven biorefineries to carbon capture and sequestration projects, which are expected to significantly lower their carbon intensity28 - In February 2024, the company initiated a strategic review to enhance shareholder value, idling a facility and targeting approximately $30 million in annual financial improvement48 Operating Segments Overview | Segment | Description | | :--- | :--- | | Ethanol Production | Includes the production, storage, and transportation of ethanol, distillers grains, Ultra-High Protein, and renewable corn oil at ten biorefineries. Annual production capacity is approximately 903 million gallons of ethanol, 2.2 million tons of distillers grains/Ultra-High Protein, and 310 million pounds of renewable corn oil | | Agribusiness and Energy Services | Includes grain procurement with ~20.2 million bushels of storage, and a commodity marketing business for ethanol, distillers grains, renewable corn oil, and other commodities | Operating Segments The company's two segments produce ethanol and co-products, supported by grain procurement and commodity marketing services - Five plants are equipped to produce Ultra-High Protein, a feed ingredient with over 50% protein concentration3262 - The Agribusiness and Energy Services segment includes 20.2 million bushels of grain storage capacity and provides marketing services for all co-products6769 Ethanol Plant Production Capacity (mmgy) | Plant Location | Plant Production Capacity (mmgy) | | :--- | :--- | | Central City, Nebraska | 116 | | Fairmont, Minnesota (Idled Jan 2025) | 119 | | Madison, Illinois | 90 | | Mount Vernon, Indiana | 90 | | Obion, Tennessee | 120 | | Otter Tail, Minnesota | 55 | | Shenandoah, Iowa | 82 | | Superior, Iowa | 60 | | Wood River, Nebraska | 121 | | York, Nebraska | 50 | | Total | 903 | Recent Developments The company advanced its technology initiatives, idled a plant, sold a terminal, and completed a partnership merger - The company achieved successful ongoing production of dextrose syrups with CST™ at its Shenandoah facility, capable of producing 60 million pounds per year45 - In January 2025, the company idled its 119 million gallon ethanol plant in Fairmont, Minnesota due to persistent margin pressures47 - On September 30, 2024, the company sold its Birmingham, Alabama terminal for $47.5 million, using the proceeds to repay a term loan50 - On January 9, 2024, the company completed the acquisition of all publicly held common units of Green Plains Partners LP51 Risk Factors The company faces significant risks from commodity price volatility, strategic execution, government regulations, and debt covenants - Operating results are highly sensitive to the spread between input costs (corn, natural gas) and output prices (ethanol, co-products)86 - The company's strategic transformation involves significant capital expenditure and construction risks with no guarantee of market acceptance98 - Changes to government biofuel programs like the RFS and IRA could significantly impact ethanol demand and profitability100101105 - Future demand for ethanol is uncertain due to the potential widespread adoption of electric vehicles109110111 - The company's debt exposes it to risks including dedication of cash flow to debt service and vulnerability to interest rate increases121123 Unresolved Staff Comments The company reports no unresolved staff comments - None183 Cybersecurity Cybersecurity risk is managed through a comprehensive program with board oversight, and no material incidents have been identified - The company's cybersecurity program is based on industry-standard frameworks (NIST, CISA) and includes external experts and a formal response plan185 - The Audit Committee of the Board of Directors oversees cybersecurity, with quarterly updates from IT leadership188 - As of December 31, 2024, the company has not identified any cybersecurity incident that would have a material impact on its business191 Properties The company owns and leases sufficient properties for its operations, including production plants, land, and corporate offices - The company leases approximately 54,000 square feet for its corporate headquarters in Omaha, Nebraska193 - The Ethanol Production segment owns approximately 1,599 acres and leases about 79 acres of land for its facilities194 - The Agribusiness and Energy Services segment has grain storage capacity of approximately 20.2 million bushels at the ethanol plant sites195 Legal Proceedings The company is involved in ordinary course litigation not expected to have a material adverse effect on its financial position - The company is involved in ordinary course of business litigation, which is not expected to have a material adverse effect197 Mine Safety Disclosures This item is not applicable to the company - Not applicable198 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's stock trades on Nasdaq, no dividends are paid, and a share repurchase program is in place - The company's common stock trades on Nasdaq under the symbol "GPRE"200 - The company did not pay cash dividends in 2024 and 2023 and does not anticipate paying them in the foreseeable future202 - A share repurchase program of up to $200.0 million is authorized, with $92.8 million used since inception and no repurchases in 2024203294 Issuer Purchases of Equity Securities (Q4 2024) | Period | Total Number of Shares Withheld | Average Price Paid per Share | | :--- | :--- | :--- | | October 1 - October 31 | 1,429 | $12.85 | | November 1 - November 30 | 7,856 | $10.95 | | December 1 - December 31 | 847 | $10.58 | | Total | 10,132 | $11.19 | Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations Revenues and margins declined in 2024, leading to a higher net loss, while the company continues its strategic transformation - Consolidated revenues decreased by $836.9 million in 2024, primarily due to lower average selling prices for key products278 - Net loss increased by $4.9 million in 2024, driven by lower margins, partially offset by a $30.7 million gain on an asset sale279255 - Projected capital spending for 2025 is $20 million to $35 million, excluding an estimated $110 million for carbon capture projects292 Consolidated Financial Highlights (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $2,458,796 | $3,295,743 | | Gross Margin | $130,450 | $164,751 | | Operating Loss | $(47,459) | $(61,578) | | Net Loss | $(81,189) | $(76,299) | | Adjusted EBITDA | $18,715 | $45,506 | Results of Operations The Ethanol Production segment's loss widened on compressed margins, while Agribusiness income was stable and corporate loss narrowed - The Ethanol Production segment's operating loss increased by $20.8 million in 2024, primarily due to decreased margins on ethanol production283 - The Agribusiness and Energy Services segment's revenues decreased due to lower trading prices, but operating income remained flat284 - The operating loss from Corporate Activities decreased by $34.9 million, mainly due to a gain on asset sale and reduced personnel costs286 Segment Operating Income (Loss) (in thousands) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | Ethanol production | $(40,758) | $(19,958) | | Agribusiness and energy services | $28,156 | $28,100 | | Corporate activities | $(34,857) | $(69,720) | | Total Operating Loss | $(47,459) | $(61,578) | Liquidity and Capital Resources The company maintains sufficient liquidity through cash and credit facilities, despite negative operating cash flow in 2024 - Capital expenditures in 2024 were $95.1 million, primarily for the clean sugar expansion project at Shenandoah292 - The company was in compliance with its debt covenants at December 31, 2024, and anticipates maintaining compliance296 Liquidity Position as of Dec 31, 2024 (in millions) | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $173.0 | | Restricted cash | $36.4 | | Available under revolving credit | $200.7 | Cash Flow Summary (in millions) | Cash Flow | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from (used in) operating activities | $(30.0) | $56.3 | | Net cash used in investing activities | $(62.1) | $(106.9) | | Net cash used in financing activities | $(77.4) | $(71.0) | Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from commodity prices and interest rates, which it manages through derivative instruments - The company has $140.8 million in variable-rate debt; a 10% increase in interest rates would increase annual interest cost by approximately $1.4 million310 - The business is highly sensitive to commodity price risk and uses forward contracts and derivatives to reduce price fluctuation exposure312314 Net Income Effect of a Hypothetical 10% Change in Commodity Prices (in thousands) | Commodity | Estimated Net Income Effect | | :--- | :--- | | Ethanol | $118,410 | | Corn | $104,701 | | Distillers grains | $24,266 | | Renewable corn oil | $9,869 | | Natural gas | $5,352 | Financial Statements and Supplementary Data This section references the consolidated financial statements and notes listed in Part IV, Item 15 of the report - The required consolidated financial statements and accompanying notes are listed in Part IV, Item 15321 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - None322 Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of year-end 2024 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024324 - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024326 - The effectiveness of the company's internal control over financial reporting has been audited by KPMG LLP, which issued an unqualified opinion327330 Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the year - No director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the year ended December 31, 2024336 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable337 Part III Directors, Executive Officers and Corporate Governance Required information on directors, officers, and governance is incorporated by reference from the 2025 Proxy Statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement339 Executive Compensation Required information on executive compensation is incorporated by reference from the 2025 Proxy Statement - Information regarding executive compensation is incorporated by reference from the 2025 Proxy Statement341 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Required information on security ownership is incorporated by reference from the 2025 Proxy Statement - Information regarding security ownership is incorporated by reference from the 2025 Proxy Statement342 Certain Relationships and Related Transactions, and Director Independence Required information on related transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Information regarding related transactions and director independence is incorporated by reference from the 2025 Proxy Statement343 Principal Accounting Fees and Services Required information on accounting fees and services is incorporated by reference from the 2025 Proxy Statement - Information regarding principal accounting fees and services is incorporated by reference from the 2025 Proxy Statement344 Part IV Exhibits, Financial Statement Schedules This section lists the consolidated financial statements, notes, and exhibits filed as part of the annual report - This item lists the consolidated financial statements and exhibits filed with the Form 10-K347349 Form 10-K Summary The company reports no Form 10-K summary - None356