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Green Plains Reports Second Quarter 2018 Financial Results

August 1, 2018 8:00 AM

OMAHA, Neb., Aug. 01, 2018 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ: GPRE) today announced financial results for the second quarter of 2018. Net loss attributable to the company was $1.0 million, or $(0.02) per diluted share, for the second quarter of 2018 compared to net loss of $16.4 million, or $(0.41) per diluted share, for the same period in 2017. Revenues were $986.8 million for the second quarter of 2018 compared with $886.3 million for the same period last year.

“Our second quarter had a solid financial performance from our non-ethanol businesses, led by a record quarter in our food and ingredients segment driven by performance in our cattle feeding operations and strong grain handling margins in our ag and energy services segment,” commented Todd Becker, president and chief executive officer. “We also experienced improvement in our ethanol production segment, generating a consolidated ethanol crush margin of $25.6 million, or approximately $0.09 per gallon.”

“Yesterday we announced that we have signed a definitive agreement to purchase two cattle feedlots from Bartlett Cattle Company,” said Becker. “Our investment aligns with our strategy to capitalize on the growing demand for all proteins around the world, leverages our risk management expertise and further diversifies our earnings especially in industries that are not subject to policy-driven volatility. We expect this acquisition to deliver consistent earnings for our shareholders and be immediately accretive to earnings.”

“Ethanol margins improved in June, which has carried over into the beginning of the third quarter as physical markets remain tight and basis levels are above historical averages,” commented Becker. “There still remains a mismatch between the weakness of financial markets and strength of physical markets that has negatively impacted realized margins. We have made the decision to run all of our plants at higher rates notwithstanding normal turnaround scheduling and seasonal shutdowns of a few smaller assets. We believe this move will improve our plant expense absorption rates on a go forward basis.”

Revenues attributable to the company were $2.0 billion for the six-month period ended June 30, 2018, compared with $1.8 billion for the same period in 2017. Net loss for the six-month period ended June 30, 2018, was $25.1 million, or $(0.63) per diluted share, compared with net loss of $20.0 million, or $(0.51) per diluted share, for the same period in 2017.

“Our portfolio optimization plan is on track with the strategic objectives we communicated in May. We are in the middle of a robust process which we believe will allow us to significantly reduce or eliminate term debt by the end of 2018,” Becker stated. “We have also made good progress on our plan to reduce controllable expenses by $10 to $15 million, starting with the current quarter. Finally, our high-protein initiative is fully engaged, as we continue to work through permitting, engineering and site preparations.”

Second Quarter Highlights and Recent Developments

Results of Operations

Green Plains produced 296.3 million gallons of ethanol during the second quarter of 2018, compared with 275.5 million gallons for the same period in 2017. The consolidated ethanol crush margin was $25.6 million, or $0.09 per gallon, for the second quarter of 2018, compared with $18.9 million, or $0.07 per gallon, for the same period in 2017. The consolidated ethanol crush margin is the ethanol production segment’s operating income before depreciation and amortization, which includes corn oil, plus intercompany storage, transportation and other fees, net of related expenses.

Consolidated revenues increased $100.6 million for the three months ended June 30, 2018, compared with the same period in 2017 primarily as a result of the cattle feedlot acquisitions during the first half of 2017. The increase was partially offset by lower average realized prices for ethanol and corn oil.

Operating income increased $15.6 million for the three months ended June 30, 2018 compared with the same period last year primarily due to higher cattle volumes sold, higher average prices for distiller grains and increased ethanol margins. Interest expense increased $2.6 million for the three months ended June 30, 2018, compared with the same period in 2017, primarily due to higher average debt outstanding and higher borrowing costs. Income tax benefit was $10.8 million for the three months ended June 30, 2018, compared with $9.7 million for the same period in 2017. During the three months ended June 30, 2018, the company recognized a net tax benefit of $8.3 million for federal and state research and development credits relating to current and prior periods.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased $17.8 million for the second quarter of 2018 compared with the same period last year.

Segment InformationThe company reports the financial and operating performance for the following four operating segments: (1) ethanol production, which includes the production of ethanol and distillers grains, and recovery of corn oil, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading for company-produced and third-party ethanol, distillers grains, corn oil, natural gas and other commodities, (3) food and ingredients, which includes cattle feeding, vinegar production and food-grade corn oil operations and (4) partnership, which includes fuel storage and transportation services. Intercompany fees charged to the ethanol production segment for storage and logistics services, grain procurement and product sales are included in the partnership, and agribusiness and energy services segments and eliminated upon consolidation. Third party costs of grain consumed and revenues from product sales are reported directly in the ethanol production segment.

GREEN PLAINS INC.
SEGMENT OPERATIONS
(unaudited, in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 % Var. 2018 2017 % Var.
Revenues:
Ethanol production $593,475 $618,846 (4.1)% $1,159,191 $1,240,221 (6.5)%
Agribusiness and energy services 184,202 160,536 14.7 397,418 338,339 17.5
Food and ingredients 225,925 116,697 93.6 504,076 214,757 134.7
Partnership 25,840 25,065 3.1 51,725 52,294 (1.1)
Intersegment eliminations (42,605) (34,881) 22.1 (80,286) (71,664) 12.0
$986,837 $886,263 11.3 % $2,032,124 $1,773,947 14.6 %
Gross margin:
Ethanol production $11,862 $6,200 91.3 % $13,019 $28,437 (54.2)%
Agribusiness and energy services 19,028 8,426 125.8 30,532 19,835 53.9
Food and ingredients 19,485 16,688 16.8 37,871 31,713 19.4
Partnership 25,840 25,065 3.1 51,725 52,294 (1.1)
Intersegment eliminations (3) (135) * 17 (247) *
$76,212 $56,244 35.5 % $133,164 $132,032 0.9 %
Depreciation and amortization:
Ethanol production $20,559 $20,142 2.1 % $40,995 $40,484 1.3 %
Agribusiness and energy services 618 659 (6.2) 1,248 1,319 (5.4)
Food and ingredients 3,444 3,240 6.3 6,848 6,120 11.9
Partnership 1,105 1,247 (11.4) 2,286 2,501 (8.6)
Corporate activities 1,097 900 21.9 1,920 1,847 4.0
$26,823 $26,188 2.4 % $53,297 $52,271 2.0 %
Operating income (loss):
Ethanol production $(17,214) $(22,459) 23.4 % $(44,743) $(29,057) (54.0)%
Agribusiness and energy services 12,166 3,083 294.6 19,230 9,452 103.4
Food and ingredients 12,981 10,714 21.2 25,566 20,340 25.7
Partnership 16,129 14,798 9.0 31,489 31,417 0.2
Intersegment eliminations 144 (80) * 212 (155) *
Corporate activities (12,441) (9,842) 26.4 (23,914) (18,391) 30.0
$11,765 $(3,786) 410.8 % $7,840 $13,606 (42.4)%
EBITDA:
Ethanol production $3,362 $(873) * $(3,733) $12,951 *
Agribusiness and energy services 12,796 3,747 241.5 % 20,498 10,760 90.5 %
Food and ingredients 19,044 13,955 36.5 35,041 26,469 32.4
Partnership 17,138 16,066 6.7 33,761 33,960 (0.6)
Intersegment eliminations 144 (80) * 212 (155) *
Corporate activities (10,642) (8,742) 21.7 (20,817) (16,063) 29.6
$41,842 $24,073 73.8 % $64,962 $67,922 (4.4)%
* Percentage variance not considered meaningful.

GREEN PLAINS INC.
SELECTED OPERATING DATA
(unaudited, in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 % Var. 2018 2017 % Var.
Ethanol production
Ethanol (gallons) 296,282 275,539 7.5 % 576,692 601,965 (4.2)%
Distillers grains (equivalent dried tons) 739 728 1.5 1,468 1,605 (8.5)
Corn oil (pounds) 75,556 65,685 15.0 144,690 141,042 2.6
Corn consumed (bushels) 103,147 95,680 7.8 200,430 209,165 (4.2)
Agribusiness and energy services
Domestic ethanol sold (gallons) 284,170 344,158 (17.4) 595,360 637,908 (6.7)
Export ethanol sold (gallons) 65,720 36,794 78.6 138,819 102,639 35.2
349,890 380,952 (8.2) 734,179 740,547 (0.9)
Food and ingredients
Cattle sold (head) 118 38 210.5 255 80 218.8
Partnership
Storage and throughput (gallons) 314,337 284,496 10.5 612,610 605,578 1.2

GREEN PLAINS INC.
CONSOLIDATED CRUSH MARGIN
(unaudited, in thousands except per gallon amounts)
Three Months Ended June 30, Three Months Ended June 30,
2018 2017 2018 2017
Ethanol production operating loss $(17,214) $(22,459) $(0.05) $(0.08)
Depreciation and amortization 20,559 20,142 0.07 0.08
Total ethanol production 3,345 (2,317) 0.02 0.00
Intercompany fees, net:
Storage and logistics (partnership) 15,880 14,757 0.05 0.05
Marketing and agribusiness fees (agribusiness and energy services) 6,363 6,451 0.02 0.02
Consolidated crush margin $25,588 $18,891 $0.09 $0.07

Liquidity and Capital ResourcesOn June 30, 2018, Green Plains had $251.0 million in total cash, cash equivalents and restricted cash, and $568.6 million available under revolving credit agreements, some of which are subject to restrictions and other lending conditions. Total debt outstanding at June 30, 2018, was $1,295.3 million, including $457.5 million outstanding under working capital revolvers and other short-term borrowing arrangements for the agribusiness and energy services, and food and ingredients segments.

Conference Call InformationGreen Plains Inc. and Green Plains Partners LP will host a joint conference call today, at 11 a.m. Eastern time (10 a.m. Central time), to discuss second quarter 2018 financial and operating results for each company. Domestic and international participants can access the conference call by dialing 877.711.2374 and 281.542.4862, respectively, and referencing conference ID 6849088. The company advises participants to call at least 10 minutes prior to the start time. Alternatively, the conference call, transcript and presentation will be accessible on Green Plains’ website at http://investor.gpreinc.com/events.cfm.

Non-GAAP Financial MeasuresManagement uses earnings before interest, income taxes, depreciation and amortization, or EBITDA, segment EBITDA and consolidated ethanol crush margins to measure the company’s financial performance and to internally manage its businesses. Management believes these measures provide useful information to investors for comparison with peer and other companies. These measures should not be considered alternatives to net income or segment operating income, which are determined in accordance with generally accepted accounting principles (GAAP). These non-GAAP calculations may vary from company to company. Accordingly, the company’s computation of EBITDA, segment EBITDA and consolidated ethanol crush margins may not be comparable with similarly titled measures of another company.

About Green Plains Inc.Green Plains Inc. (NASDAQ: GPRE) is a diversified commodity-processing business with operations related to ethanol production, grain handling and storage, cattle feeding, food ingredients, and commodity marketing and logistics services. The company is one of the leading producers of ethanol in the world and, through its adjacent businesses, is focused on the production of high-protein feed ingredients and export growth opportunities. Green Plains owns a 62.5% limited partner interest and a 2.0% general partner interest in Green Plains Partners. For more information about Green Plains, visit www.gpreinc.com.

About Green Plains Partners LPGreen Plains Partners LP (NASDAQ: GPP) is a fee-based Delaware limited partnership formed by Green Plains Inc. to provide fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses. For more information about Green Plains Partners, visit www.greenplainspartners.com.

Forward-Looking StatementsThis news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements reflect management’s current views, which are subject to risks and uncertainties including, but not limited to, anticipated financial and operating results, plans and objectives that are not historical in nature. These statements may be identified by words such as “believe,” “expect,” “may,” “should,” “will” and similar expressions. Factors that could cause actual results to differ materially from those expressed or implied include: competition in the industries in which Green Plains operates; commodity market risks, financial market risks; counterparty risks; risks associated with changes to federal policy or regulation, including changes to tax laws; risks related to closing and achieving anticipated results from acquisitions; risks associated with the joint venture to commercialize algae production and growth potential of the algal biomass industry; risks associated with the recent acquisitions of cattle feedlots; risks associated with the company’s portfolio optimization plan; and other risks discussed in Green Plains’ reports filed with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. Green Plains assumes no obligation to update any such forward-looking statements, except as required by law.

Consolidated Financial Results

GREEN PLAINS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
June 30, 2018 December 31, 2017
ASSETS
Current assets
Cash and cash equivalents $235,133 $266,651
Restricted cash 15,863 45,709
Accounts receivable, net 137,068 151,122
Income tax receivable 33,891 6,413
Inventories 625,302 711,878
Other current assets 45,562 24,698
Total current assets 1,092,819 1,206,471
Property and equipment, net 1,139,249 1,176,707
Other assets 353,705 401,472
Total assets $2,585,773 $2,784,650
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $121,573 $205,479
Accrued and other liabilities 53,859 63,886
Derivative financial instruments 22,868 12,884
Income taxes payable - 9,909
Short-term notes payable and other borrowings 457,472 526,180
Current maturities of long-term debt 69,752 67,923
Total current liabilities 725,524 886,261
Long-term debt 768,111 767,396
Deferred income taxes 40,591 56,801
Other liabilities 14,434 15,056
Total liabilities 1,548,660 1,725,514
Stockholders' equity
Total Green Plains stockholders' equity 921,530 942,182
Noncontrolling interests 115,583 116,954
Total liabilities and stockholders' equity $2,585,773 $2,784,650

GREEN PLAINS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 % Var. 2018 2017 % Var.
Revenues
Product $985,217 $884,712 11.4 % $2,028,876 $1,770,924 14.6 %
Services 1,620 1,551 4.4 3,248 3,023 7.4
Total revenues 986,837 886,263 11.3 2,032,124 1,773,947 14.6
Costs and expenses
Cost of goods sold (excluding depreciation and amortization expenses reflected below) 910,625 830,019 9.7 1,898,960 1,641,915 15.7
Operations and maintenance 7,893 8,267 (4.5) 16,293 16,798 (3.0)
Selling, general and administrative 29,731 25,575 16.3 55,734 49,357 12.9
Depreciation and amortization 26,823 26,188 2.4 53,297 52,271 2.0
Total costs and expenses 975,072 890,049 9.6 2,024,284 1,760,341 15.0
Operating income (loss) 11,765 (3,786) 410.8 7,840 13,606 (42.4)
Other income (expense)
Interest income 709 314 125.8 1,346 678 98.5
Interest expense (22,021) (19,430) 13.3 (44,149) (37,926) (16.4)
Other, net 2,545 1,357 87.5 2,479 1,367 81.3
Total other expense (18,767) (17,759) 5.7 (40,324) (35,881) 12.4
Loss before income taxes (7,002) (21,545) 67.5 (32,484) (22,275) (45.8)
Income tax benefit 10,753 9,749 10.3 16,780 12,130 38.3
Net income (loss) 3,751 (11,796) 131.8 (15,704) (10,145) (54.8)
Net income attributable to noncontrolling interest 4,745 4,570 3.8 9,407 9,818 (4.2)
Net loss attributable to Green Plains $(994) $(16,366) 93.9 % $(25,111) $(19,963) (25.8)%
Earnings per share:
Net loss attributable to Green Plains - basic $(0.02) $(0.41) $(0.63) $(0.51)
Net loss attributable to Green Plains - diluted $(0.02) $(0.41) $(0.63) $(0.51)
Weighted average shares outstanding:
Basic 40,194 40,220 40,168 39,326
Diluted 40,194 40,220 40,168 39,326

GREEN PLAINS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended June 30,
2018 2017
Cash flows from operating activities:
Net loss $(15,704) $(10,145)
Noncash operating adjustments:
Depreciation and amortization 53,297 52,271
Deferred income taxes (23,061) (12,896)
Other 10,565 13,385
Net change in working capital 20,762 (80,358)
Net cash provided by (used in) operating activities 45,859 (37,743)
Cash flows from investing activities:
Purchases of property and equipment, net (14,640) (27,985)
Acquisition of businesses, net of cash acquired (1,629) (61,727)
Investments in unconsolidated subsidiaries (2,253) (8,849)
Other investing activities 7,500 -
Net cash used in investing activities (11,022) (98,561)
Cash flows from financing activities:
Net proceeds (payments) - long-term debt (1,070) (32,539)
Net proceeds - short-term borrowings (69,066) 50,021
Other (26,065) (33,193)
Net cash used in financing activities (96,201) (15,711)
Net change in cash, cash equivalents and restricted cash (61,364) (152,015)
Cash, cash equivalents and restricted cash, beginning of period 312,360 406,791
Cash, cash equivalents and restricted cash, end of period $250,996 $254,776

Six Months Ended June 30,
2018 2017
Reconciliation of total cash, cash equivalents and restricted cash:
Cash and cash equivalents $235,133 $195,442
Restricted cash 15,863 59,334
Total cash, cash equivalents and restricted cash $250,996 $254,776

GREEN PLAINS INC.
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Net income (loss) $3,751 $(11,796) $(15,704) $(10,145)
Interest expense 22,021 19,430 44,149 37,926
Income tax benefit (10,753) (9,749) (16,780) (12,130)
Depreciation and amortization 26,823 26,188 53,297 52,271
EBITDA $41,842 $24,073 $64,962 $67,922

Contact: Jim Stark | Vice President, Investor & Media Relations | 402.884.8700 | [email protected]

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Source: Green Plains Inc.

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