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GP

Green Plains Inc. (GPRE)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 results deteriorated sharply: revenue $584.0M, EPS $(0.86), EBITDA $(18.9)M, and consolidated crush margin $(15.5)M, reflecting weak ethanol margins and lower pricing across ethanol, DDGs, and corn oil .
  • Management launched a corporate reorganization with up to $50M annualized SG&A savings (first $30M implemented), idled Fairmont due to localized margin pressure, and targeted SG&A per gallon reduction from ~$0.08–$0.09 to $0.02–$0.03, shifting from innovation to commercialization .
  • “Advantage Nebraska” CCS remains on track; laterals are under construction, targeting in-service late Q3/early Q4 2025, with run‑rate carbon earnings “at least” ~$130M (at $70/ton private credit) and combined SG&A+carbon contribution potentially ~$180M annually .
  • Renewable corn oil (DCO) gained relative value; management cited current $0.04–$0.05/lb premium vs soybean oil and a view toward $0.07–$0.10 premium given low-CI advantages and regulatory changes restricting imported UCO .
  • Wall Street consensus (S&P Global) was unavailable; estimate comparisons omitted (values would have come from S&P Global).

What Went Well and What Went Wrong

What Went Well

  • Strategic cost reset underway: “we executed on the first $30 million… identified up to $50 million in annualized cost savings,” including SG&A rationalization and Fairmont idling to stem losses .
  • Carbon strategy progress and favorable rules: Class VI permits and construction milestones achieved; updated GREET model boosts economics; CCS laterals underway, with anticipated H2 2025 start and “at least” ~$130M annualized carbon earnings .
  • DCO pricing tailwind: Management sees clear premium pricing vs soybean oil with low CI advantages and CORSIA certification across plants, enhancing feedstock competitiveness for renewable diesel/SAF markets .

What Went Wrong

  • Ethanol margin compression: Q4 consolidated crush margin swung to $(15.5)M from $53.0M YoY; EBITDA fell to $(18.9)M from $44.7M; revenue down 18% YoY amid lower selling prices and volumes in ethanol/ DDGs/ corn oil .
  • Hedging posture: Company entered Q4 largely unhedged, which “was the wrong choice to make” given the speed of margin deterioration; management will reassess governance and balance sheet constraints around hedging .
  • Protein volumes and market dynamics: Ultra-High Protein production volumes fell sequentially (54 tons in Q4 vs 69 in Q3), amidst oversupplied protein markets and operational downtime (Wood River rebaseline; Mount Vernon maintenance) .

Financial Results

Sequential Performance (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$618.8 $658.7 $584.0
EPS ($)$(0.38) $0.69 $(0.86)
EBITDA ($USD Millions)$4.8 $83.3 $(18.9)
Consolidated Crush Margin ($USD Millions)$22.7 $58.3 $(15.5)
Platform Utilization (%)93% 97% 92%

Year-over-Year (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$712.4 $584.0
EPS ($)$0.12 $(0.86)
EBITDA ($USD Millions)$44.7 $(18.9)
Consolidated Crush Margin ($USD Millions)$53.0 $(15.5)

Segment Breakdown (Q4 YoY)

Segment MetricQ4 2023Q4 2024
Ethanol Production Revenues ($USD Thousands)$622,359 $471,348
Agribusiness & Energy Services Revenues ($USD Thousands)$97,613 $119,302
Consolidated Revenues ($USD Thousands)$712,392 $584,022
Ethanol Production Gross Margin ($USD Thousands)$59,009 $(10,431)
Agribusiness & Energy Services Gross Margin ($USD Thousands)$14,818 $16,582
Consolidated Gross Margin ($USD Thousands)$73,827 $6,151
Ethanol Production Operating Income (Loss) ($USD Thousands)$23,200 $(40,132)
Agribusiness & Energy Services Operating Income ($USD Thousands)$10,488 $12,156
Consolidated Operating Income (Loss) ($USD Thousands)$16,268 $(40,911)

KPIs

KPIQ2 2024Q3 2024Q4 2024
Ethanol Gallons Produced (000s)208,483 220,299 209,540
Ultra-High Protein (tons)65 69 54
Renewable Corn Oil (000s lbs)73,630 77,074 73,376
Corn Consumed (000s bushels)71,819 75,140 71,221
Consolidated Crush Margin ($USD Thousands)$22,658 $58,291 $(15,482)
Cash & Restricted Cash ($USD Millions)$225.1 (as of 6/30/24) $252.0 (as of 9/30/24) $209.4 (as of 12/31/24)
Total Debt ($USD Millions)$610.2 (as of 6/30/24) $556.2 (as of 9/30/24) $575.4 (as of 12/31/24)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SG&A cost savings (annualized)FY 2025 run-rateNot previously quantifiedUp to $50M; $30M implementedIntroduced/raised
SG&A per gallon (Corporate & Trade)2025~$0.08–$0.09/gal (current structure)Target $0.02–$0.03/galLowered target
Nebraska CCS in-serviceH2 2025On track H2 2025Late Q3/early Q4 2025Timing specified/affirmed
Nebraska CCS annualized contributionPost start-up run-rateNot previously quantified in this callAt least ~$130M at $70/ton private credit, net of opex/tollingIntroduced/affirmed
Combined SG&A + Carbon contributionPost start-up run-rateNot previously quantifiedUp to ~$180M annuallyIntroduced
Plant-related CapEx (ex-carbon)FY 2025Not previously quantified~$20–$35MIntroduced
Carbon equipment remainingFY 2025Not previously quantified~$110M (financing in place)Introduced
Normalized tax rateOngoingNot previously quantified~23%–24%Introduced
DCO premium vs soybean oilNear termNot previously quantifiedCurrently $0.04–$0.05/lb; management view $0.07–$0.10 potentialIntroduced
Fairmont facilityImmediatePreviously operatingIdled due to localized margin pressureLowered capacity

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Cost structure/SG&AFocus on transformation; strategic review launched; progressing on divestitures and efficiency Aggressive SG&A reduction, $50M target; first $30M implemented; SG&A/gal target $0.02–$0.03 Accelerating cost-down/streamlining
Carbon capture (Advantage Nebraska)Equipment ordered; start in H2 2025; early 45Z opportunity Laterals under construction; in-service late Q3/early Q4 2025; at least ~$130M run‑rate carbon earnings Execution milestones improving visibility
Protein strategy (UHP/Sequence)Record yields; expanding pet/aqua customers Lower volumes due to downtime; oversupplied markets; growing aqua orders; premium positioning for Sequence Near-term softness; progressing in target channels
Clean Sugar Technology (CST)Commissioning began Q2; startup announced Oct Producing on-spec; certifications nearly complete; wastewater constraint limiting to ~1/3 rate; campaign mode until full solution Operational proof; ramp constrained by wastewater
Hedging/governanceNo explicit changes discussedAcknowledged unhedged exposure hurt Q4; Board engaged; will reassess case-by-case Re-evaluating risk management
Regulatory/macro (45Z/LCFS/UCO tariffs)Pursuing 45Z; CCS economics supportive IRS IRB guidance favorable; imported UCO restricted; supportive for DCO premiums and CCS monetization Policy tailwinds crystallizing

Management Commentary

  • “We have identified up to $50 million in annualized cost savings… executed on the first $30 million” as part of a move “from innovation to commercialization” and SG&A rationalization .
  • “Our outlook for the annualized run rate financial contribution for carbon… is on track for at least $130 million using a $70 per ton private carbon credit value” with CCS start late Q3/early Q4 2025 .
  • “We were largely unhedged and open to the crush going into the fourth quarter, which was the wrong choice to make” and will reassess programs and governance .
  • “We would have no problem selling $0.04 to $0.05 premium to soybean oil… our view is it should trade at a $0.07 to $0.10 premium” for DCO given low CI advantages and certification .
  • CFO: normalized tax rate ~23%–24%; 2025 plant CapEx $20–$35M; remaining ~$110M for carbon equipment with financing in place .

Q&A Highlights

  • SG&A plan granularity: Rapid 90-day program to reach $50M run-rate savings; Phase I executed; Phase II underway; significant innovation platform downsizing .
  • CCS monetization: In-service late Q3/early Q4 2025; active markets for tax credits and offsets; plan to use/monetize credits, with LCFS pathways as baseline .
  • Protein market/operations: Q4 downtime at Mount Vernon; Wood River rebaseline to optimize carbon economics; sequence runs advancing; near-term protein margins pressured .
  • Hedging approach: Acknowledged misstep; Board involvement; reassessment to balance margin protection and cash/margin call management .
  • Fairmont asset options: Idled now; seeking permits for upgrades; potential monetization considered, with CCS pathway enhancing strategic value .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 and FY 2024 were unavailable at the time of analysis due to access limitations. As a result, comparisons to Wall Street consensus are omitted. Values would have been retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term earnings pressure stemmed from ethanol oversupply and weak margins; Q4 crush margin and EBITDA turned negative despite high utilization, underscoring sensitivity to hedging and commodity spreads .
  • Structural reset is material: up to $50M SG&A savings and SG&A/gal cut to $0.02–$0.03 could meaningfully lift baseline profitability independent of margin cyclicality .
  • Carbon capture is the core re-rating catalyst: CCS laterals in progress; in-service late Q3/early Q4 2025; run‑rate carbon earnings “at least” ~$130M with additional upside from offsets/low-CI molecules .
  • DCO premium supports forward margins: management cites $0.04–$0.05/lb current premium vs soybean oil and further premium potential given regulatory shifts and CORSIA certification .
  • Clean Sugar is validated but ramp-constrained: on-spec product and certifications near, yet wastewater limits imply campaign-mode until full solution; commercialization path intact .
  • Capital discipline: 2025 plant CapEx ~$20–$35M (ex-carbon) with ~$110M carbon equipment financed; normalized tax rate ~23–24% supports clearer outlook for after-tax earnings .
  • Trading implications: watch CCS construction milestones, DCO pricing vs soybean oil, protein volume/pricing traction, and any hedging policy updates as near-term stock catalysts .