Q2 2024 Earnings Summary
Reported on Aug 6, 2024 (Before Market Open)
Pre-Earnings Price$16.18Last close (Aug 5, 2024)
Post-Earnings Price$16.18Open (Aug 6, 2024)
Price Change
$0.00(0.00%)
- Strong export demand for ethanol is driving margin improvements, with U.S. ethanol being the lowest-priced molecule globally and on track for potentially record exports for 2024. This sustained export demand is expected to continue due to factors like Brazil being short on ethanol, supporting strong margins despite high inventory levels.
- The company is making successful progress in its transformation initiatives, particularly in high-protein products like Sequence, which are seeing growing demand internationally and domestically. These products have the potential to improve margins and returns on investment, especially as the company optimizes production and moves toward higher protein content, such as 60% protein.
- Advancements in the carbon capture strategy position the company to produce low carbon intensity ethanol, which could significantly enhance profitability. With facilities committed to projects like Summit Carbon Solutions and Trailblazer, and the Advantage Nebraska strategy on track, the company stands ready to capitalize on decarbonization and meet the growing demand for low-carbon fuels, including potential supply to the sustainable aviation fuel industry.
- Green Plains' investment in producing 50% protein products is facing a longer payback period than initially expected, extending from the original 3-4 years to potentially 4-5 or even 6 years in some quarters, due to increased soy protein capacity driven by the Inflation Reduction Act (IRA).
- The company is reconsidering or delaying its move to higher protein products (60% pro and above) because of current market conditions, including collapsed corn gluten meal prices against soy prices, and is uncertain about how fast to proceed, which could negatively impact future profitability.
- Increased competition and supply of protein products in the market, with 10-20 million more tons of soymeal coming online due to the IRA, is compressing margins on Green Plains' protein products, which may impact their returns.
Research analysts covering Green Plains.