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    Green Plains Inc (GPRE)

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    Business Description

    Green Plains Inc. (GPRE) is a leading biorefining company focused on producing sustainable, value-added ingredients and renewable energy. The company operates across multiple segments, primarily producing ethanol, distillers grains, Ultra-High Protein, and renewable corn oil. GPRE also engages in grain handling, storage, and commodity marketing, providing comprehensive solutions in the renewable energy sector.

    1. Ethanol Production - Produces ethanol, distillers grains, Ultra-High Protein, and renewable corn oil, operating 10 ethanol plants across several states in the U.S..

      • Sub-products:
        • Ethanol - A renewable fuel produced from corn.
        • Distillers Grains and Ultra-High Protein - Used as animal feed ingredients.
        • Renewable Corn Oil - A low-carbon feedstock for biodiesel and renewable diesel.

    2. Agribusiness and Energy Services - Manages grain procurement, storage, and marketing, and engages in merchant trading of ethanol, distillers grains, renewable corn oil, and other commodities.

    3. Partnership (Fuel Storage and Transportation) - Provides fuel storage and transportation services, owning and operating ethanol storage tanks, terminals, and transportation assets.

    Q2 2024 Summary

    Initial Price$23.14April 1, 2024
    Final Price$15.54July 1, 2024
    Price Change$-7.60
    % Change-32.84%

    What went well

    • Strong ethanol export demand driving margins and supporting profitability: The company emphasizes that robust ethanol exports are sustaining strong margins, expecting this trend to continue due to factors like Brazil's ethanol shortfall and competitive U.S. ethanol pricing.
    • Advancements in high-protein products enhancing returns: Green Plains is progressing in increasing protein content to 60% and potentially 70%, improving margins by producing higher-value products more efficiently.
    • Decreasing capital expenditures leading to increased free cash flow and strategic positioning in low-carbon initiatives: With major capital investments winding down, the company anticipates generating free cash flow beyond capital needs. Their fully financed carbon capture projects also position them favorably in the low-carbon fuels market, including opportunities in sustainable aviation fuel.

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Todd A. BeckerPresident and Chief Executive OfficerJanuary 2009Todd A. Becker has served as the President and CEO since January 2009. He has approximately 36 years of experience in commodity processing, risk management, and supply chain management.
    James E. StarkChief Financial OfficerOctober 2022James E. Stark has served as the CFO since October 2022. He rejoined GPRE in January 2022 after working at Darling Ingredients Inc. He has over 30 years of senior management experience.
    Grant D. KadavyExecutive Vice President - Commercial OperationsOctober 2022Grant D. Kadavy has served as EVP - Commercial Operations since October 2022. He oversees all commercial activities and has held executive roles at Darigold and Cargill.
    Michelle S. MapesChief Legal and Administration Officer and Corporate SecretaryJanuary 2018Michelle S. Mapes has served as Chief Legal and Administration Officer and Corporate Secretary since January 2018. She previously held roles as EVP - General Counsel and Corporate Secretary.
    G. Patrich Simpkins Jr.Chief Transformation OfficerOctober 2022G. Patrich Simpkins Jr. has served as Chief Transformation Officer since October 2022. He joined GPRE in May 2012 and has held various leadership roles, including CFO and Chief Development Officer.
    James F. Herbert IIChief Human Resources OfficerOctober 2022James F. Herbert II was appointed as Chief Human Resources Officer in October 2022. Before joining GPRE, he served as VP of Finance and Operations for Capstone IT and held HR leadership roles at Union Pacific Railroad.
    Leslie van der MeulenExecutive Vice President – Product Marketing and InnovationMay 2021Leslie van der Meulen has served as EVP – Product Marketing and Innovation since May 2021. He is responsible for Optimal Aquafeed and has over 20 years of experience in global marketing and sales.
    Chris G. OsowskiExecutive Vice President – Operations and TechnologyJanuary 2022Chris G. Osowski has served as EVP – Operations and Technology since January 2022. He leads the operations organization and has held senior-level positions at ADM and Tate & Lyle.

    Questions to Ask Management

    1. Given that margins for your protein products are being compressed due to the influx of cheap competing products , how do you plan to sustain profitability in this segment, and what specific steps are you taking to differentiate your offerings in an increasingly competitive market?

    2. With the delays and challenges faced in scaling up your Clean Sugar Technology at Shenandoah , what assurances can you provide investors about the timeline and returns on this significant investment, and how will you mitigate risks in deploying this technology at additional facilities?

    3. Considering your increased capital expenditures, including the $9 million allocated to the clean sugar initiative and the $110 million needed for carbon capture equipment , how are you prioritizing these investments, and what financial metrics are you using to ensure they generate adequate returns given your current liquidity position ?

    4. Your ethanol margins have been under pressure due to market volatility and compression late in the quarter. In light of these uncertainties, are you contemplating adjustments to your production strategies, and is there a possibility that you might idle or reduce production at certain facilities if margins do not improve?

    5. With the decision not to proceed with the Blue Blade Energy catalyst and a shift away from building an alcohol-to-jet plant , how does this impact your long-term strategic goals in renewable fuels, and what alternative growth opportunities are you pursuing to compensate for this change in direction?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateAugust 2014, October 2019
    End Date/DurationNo specific end date
    Total additional amount$200 million
    Remaining authorization$107.2 million
    DetailsThe program may be suspended, modified, or discontinued at any time without prior notice.

    Past Guidance

    1. Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024

    Guidance:

    1. Plant Utilization Rate: Expected to remain in the mid-90% range of stated capacity for Q4 2024, barring uncontrollable events.
    2. Capital Expenditures (CapEx):
      • Total CapEx for FY 2024 expected to be $90 million to $100 million, excluding $110 million for carbon capture equipment in Nebraska.
    3. Protein Production:
      • Upgrades at the Wood River plant to be completed in Q1 2025, enabling more efficient production of the 60 Pro Sequence product.
      • Limiting volumes of 60 Pro Sequence until upgrades are completed.
    4. Clean Sugar Technology (CST):
      • First bulk commercial sales and shipments of low-carbon-intensity dextrose expected in Q4 2024.
      • Optimization and debottlenecking of the Shenandoah facility to continue.
    5. Carbon Capture and Storage (CCS):
      • Groundbreaking on CCS project expected within 30 to 45 days (as of October 31, 2024).

    2. Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024 and Q4 2024

    Guidance:

    1. Profitability: Expected to return to profitability in Q3 2024, assuming stable market conditions.
    2. Plant Utilization:
      • Utilization rates for the rest of FY 2024 expected in the mid-90% range, barring uncontrollable events.
      • High 90% utilization rates targeted after equipment upgrades at Mount Vernon and Obion plants, unlocking 40 million gallons of capacity.
    3. Margins:
      • Q3 2024 margins expected to range from high $0.20s to high $0.30s per gallon.
      • Q4 2024 margins expected to improve, trending back to the long-term mean.
    4. Capital Expenditures (CapEx):
      • Total CapEx for FY 2024 projected at $90 million to $110 million, excluding $110 million for carbon capture equipment.
    5. Tax Rate: Normalized tax rate for FY 2024 expected to remain around 24%.
    6. Interest Expense: Expected to decrease by $1.8 million per quarter starting in Q4 2024, following the sale of the Birmingham terminal and payoff of partnership debt.
    7. Sequence Protein Production: Targeting 20% to 30% of 60% protein production by the end of FY 2024.
    8. Carbon Capture and Storage (CCS): Trailblazer CCS project in Nebraska on track for a second-half 2025 start-up.

    3. Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2025

    Guidance:

    1. EBITDA Contribution for FY 2025:
      • Near $300 million from protein, corn oil, clean sugar, and decarbonization pillars, excluding base ethanol, corporate overhead, or Ag and Energy segments.
    2. Protein Segment:
      • $80 million to $120 million EBITDA contribution from 640 million gallons of converted capacity, including joint venture ownership.
    3. Corn Oil Segment: Base contribution of $100 million in FY 2025, with potential growth.
    4. Clean Sugar Segment: Shenandoah facility expected to generate $15 million to $25 million annually on a full-year basis.
    5. Decarbonization (Nebraska-First Strategy): Nebraska assets alone could generate $110 million or more annually starting in FY 2025.
    6. Plant Utilization Rate: Expected to perform in the mid-90% range of stated capacity for FY 2024.
    7. Depreciation and Amortization (D&A): Anticipated to average approximately $22 million per quarter for FY 2024.
    8. Capital Expenditures (CapEx): Expected to range between $95 million and $115 million for FY 2024.
    9. Tax Rate: Normalized tax rate for FY 2024 expected to average around 24%.
    10. Carbon Capture (Nebraska Facilities): Expected to contribute over $100 million per year in carbon EBITDA starting in the second half of FY 2025.
    11. Sequence Protein Sales: On track to exit FY 2024 with 20%-30% of production capacity committed to repeat sales customers.
    12. Ethanol Margins: Q2 2024 margins expected to range from mid-high single digits to low teens per gallon.
    13. Ethanol Exports: Optimistic for a record year in FY 2024, potentially exceeding 2018\u2019s 1.7 billion gallons.

    4. Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2025

    Guidance:

    1. Plant Utilization Rate: Expected to remain in the low to mid-90% range of stated capacity for FY 2024.
    2. Depreciation and Amortization: Expected to average approximately $24 million per quarter in FY 2024.
    3. Tax Rate: Anticipated to be around 24% for FY 2024.
    4. Capital Expenditures (CapEx): Expected to be in the range of $125 million to $150 million for FY 2024.
    5. Protein Production: Targeting 20% to 30% of the portfolio to be converted to 60% protein sales by the end of FY 2024.
    6. Carbon Opportunities: Carbon-related projects in Nebraska expected to represent over $100 million per year in opportunity as the company exits FY 2025.
    7. 2025 Guidance: Reaffirmed FY 2025 targets, with variability based on pricing, timing, and capital allocation.
    8. Free Cash Flow: Highlighted potential for significant free cash flow generation in FY 2025.
    9. Clean Sugar Technology (CST): First commercial-scale CST system expected to begin delivering product in Q2 2024.

    This table summarizes the issued and guided periods along with the exhaustive guidance metrics for each earnings call.