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Green Plains Reports Second Quarter 2017 Financial Results

  • Net loss of $16.4 million, or $(0.41) per diluted share
  • EBITDA of $24.1 million
  • Segment EBITDA, excluding ethanol production and corporate activities, of $33.8 million
  • Company expects better third and fourth quarter performance

OMAHA, Neb., July 31, 2017 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ:GPRE) today announced financial results for the second quarter of 2017. Net loss attributable to the company was $16.4 million, or $(0.41) per diluted share, for the second quarter of 2017 compared with net income of $8.2 million, or $0.21 per diluted share, for the same period in 2016. Revenues were $886.3 million for the second quarter of 2017 compared with $887.7 million for the same period last year.

“While ethanol margins were weak, our food and ingredients and ag and energy segments generated over $17 million in quarterly EBITDA led by strong performance from Fleischmann’s Vinegar and our cattle operations, further validating the strategy we put in place,” said Todd Becker, president and chief executive officer. “We proactively took action against the weakened ethanol margin environment by idling approximately 50 million gallons, or 40%, of production capacity in June. While we have returned to full production, we will remain disciplined in our response to supply/demand imbalances. Although volumes were lower this quarter, the partnership segment contribution was strong with over $16 million of EBITDA.”

“Both U.S. and global demand remain strong for ethanol. U.S. ethanol exports are 48% ahead of last year through May, putting us on pace to export between 1.1 to 1.3 billion gallons this year,” Becker added. “We are encouraged by the recent change allowing 10% ethanol blends in a large portion of Mexico and the momentum we are seeing with E15 station adoption, which has increased demand for higher blends in the U.S.”

During the second quarter, Green Plains produced 275.5 million gallons of ethanol compared with 274.3 million gallons for the same period in 2016. The consolidated ethanol crush margin was $18.9 million, or $0.07 per gallon, for the second quarter of 2017 compared with $42.3 million, or $0.15 per gallon, for the same period in 2016. The consolidated ethanol crush margin is the ethanol production segment’s operating income before depreciation and amortization, which includes corn oil production, plus intercompany storage, transportation and other fees, net of related expenses.

“Our segment EBITDA, excluding ethanol production and corporate activities, was approximately $71 million for the first half of 2017 and we expect these segments will generate approximately $150 million of EBITDA this year, including our stake in Green Plains Partners, which remains a significant driver of value for our shareholders,” commented Becker. “Our strategy to diversify our revenue and income streams and provide more predictable cash flows for Green Plains’ shareholders remains a key focus of our growth objectives.”

Revenues attributable to the company were $1.8 billion for the six-month period ended June 30, 2017, compared with $1.6 billion for the same period in 2016. Net loss for the six-month period ended June 30, 2017, was $20.0 million, or $(0.51) per diluted share, compared with net loss of $15.9 million, or $(0.42) per diluted share, for the same period in 2016.

“During the quarter, the platform generated free cash flow and we continue to maintain ample liquidity,” stated Becker. “We invested $51 million of growth capital during the quarter to acquire two cattle feed yards, expand vinegar production capacity and continue constructing our new export terminal in Beaumont. We used $8.5 million of cash, along with 2.8 million shares of common stock, to extinguish $56.3 million of convertible debt, paid $4.7 million in dividends and ended the quarter with $225 million of total cash on the balance sheet and $171 million of available liquidity.”

“While we’re not happy with the bottom line results this quarter, our balance sheet remains strong and we will continue to focus on growing and diversifying our business going forward. Based on current markets, we expect better performance in the third and fourth quarters and will move quickly to reduce volatility and lock away margins as they expand from here.”

Recent Developments

  • On July 28, 2017, Green Plains’ wholly owned subsidiary, Green Plains Trade, amended its senior secured revolving credit agreement, increasing the maximum commitment from $150 million to $300 million and extending the maturity date from Nov. 26, 2019, to July 28, 2022. The amendment reduces the interest rate spreads, increases inventory advance rates and expands eligible inventory locations and commodities.
  • On May 16, 2017, Green Plains Cattle Company LLC completed the acquisition of two cattle feed yards from Cargill Cattle Feeders, LLC for approximately $37.2 million, plus certain working capital adjustments. The transaction includes feed yards located in Leoti, Kan. and Yuma, Colo., adding combined cattle capacity of 155,000 head to the company’s operations, supported by a long-term supply agreement with Cargill Meat Solutions.
  • On April 28, 2017, Green Plains Cattle entered into an amendment of its senior secured asset-based revolving credit facility to finance the expanded working capital requirements for the cattle feedlot operations. The amendment increased the maximum commitment from $100 million to $200 million until July 31, 2017, at which time it was increased again to $300 million. The maturity date was also extended from Oct. 31, 2017, to April 30, 2020.

  • During the second quarter, Green Plains entered into privately negotiated agreements with holders, on behalf of certain beneficial owners, of the company’s 3.25% Convertible Senior Notes due 2018. Under these agreements, the company exchanged approximately 2.8 million shares of its common stock and $8.5 million in cash for approximately $56.3 million in aggregate principal amount of the 2018 notes. The company incurred a non-cash charge of $1.3 million, before taxes, related to the debt extinguishment.

Results of Operations
Consolidated revenues decreased $1.5 million for the three months ended June 30, 2017, compared with the same period in 2016. Revenues were impacted by decreased grain trading activity and lower average realized prices for distillers grains. This was partially offset by an increase in revenues related to ethanol volumes sold plus the additions of Fleischmann’s Vinegar during the fourth quarter of 2016 and the cattle feedlots during the first and second quarters of 2017.

Operating income decreased $31.2 million for the three months ended June 30, 2017, compared with the same period last year primarily due to decreased margins on ethanol production. Interest expense increased $8.9 million for the three months ended June 30, 2017, compared with the same period in 2016, primarily due to higher average debt outstanding and borrowing costs, as well as the expense recorded on the extinguishment of a portion of the 3.25% convertible notes. Income tax benefit was $9.7 million for the three months ended June 30, 2017, compared with income tax expense of $5.5 million for the same period in 2016.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the second quarter of 2017 was $24.1 million compared with $47.7 million for the same period last year.

Segment Information
During the fourth quarter of 2016, management restructured its operating segments. The four segments are: (1) ethanol production, which includes ethanol, distillers grains and corn oil production, (2) agribusiness and energy services, which includes grain handling and storage, commodity marketing and merchant trading, (3) food and ingredients, which includes the vinegar, cattle feedlot 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. Prior periods have been reclassified to conform to the revised segment presentation.


GREEN PLAINS INC.
SEGMENT OPERATIONS
(unaudited, in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 % Var. 2017 2016 % Var.
Revenues:
Ethanol production$618,846 $595,168 4.0 % $1,240,221 $1,123,496 10.4 %
Agribusiness and energy services 160,536 211,747 (24.2) 338,339 379,301 (10.8)
Food and ingredients 116,697 87,484 33.4 214,757 146,232 46.9
Partnership 25,065 25,493 (1.7) 52,294 49,281 6.1
Intersegment eliminations (34,881) (32,165) 8.4 (71,664) (61,379) 16.8
$886,263 $887,727 (0.2)% $1,773,947 $1,636,931 8.4 %
Gross margin:
Ethanol production$6,200 $29,730 (79.1)% $28,437 $23,560 20.7 %
Agribusiness and energy services 8,426 16,670 (49.5) 19,835 24,809 (20.0)
Food and ingredients 16,688 6,443 159.0 31,713 5,937 434.2
Partnership 25,065 25,493 (1.7) 52,294 49,281 6.1
Intersegment eliminations (135) (133) 1.5 (247) (867) (71.5)
$56,244 $78,203 (28.1)% $132,032 $102,720 28.5 %
Depreciation and amortization:
Ethanol production$20,142 $15,150 33.0 % $40,484 $30,930 30.9 %
Agribusiness and energy services 659 947 (30.4) 1,319 1,253 5.3
Food and ingredients 3,240 274 * 6,120 545 *
Partnership 1,247 1,488 (16.2) 2,501 2,705 (7.5)
Corporate activities 900 842 6.9 1,847 1,413 30.7
$26,188 $18,701 40.0 % $52,271 $36,846 41.9 %
Operating income (loss):
Ethanol production$(22,459) $7,558 * % $(29,057) $(22,007) 32.0 %
Agribusiness and energy services 3,083 9,766 (68.4) 9,452 13,503 (30.0)
Food and ingredients 10,714 5,758 86.1 20,340 4,395 362.8
Partnership 14,798 14,803 - 31,417 27,874 12.7
Corporate activities (9,842) (10,381) (5.2) (18,391) (18,209) 1.0
Intersegment eliminations (80) (95) (15.8) (155) (793) (80.5)
$(3,786) $27,409 (113.8)% $13,606 $4,763 185.7 %
EBITDA:
Ethanol production$(873) $22,744 * % $12,951 $9,008 43.8 %
Agribusiness and energy services 3,747 11,881 (68.5) 10,760 14,936 (28.0)
Food and ingredients 13,955 6,042 131.0 26,469 4,965 433.1
Partnership 16,066 16,312 (1.5) 33,960 30,621 10.9
Corporate activities (8,742) (9,009) (3.0) (16,063) (16,505) (2.7)
Intersegment eliminations (80) (314) (74.5) (155) (1,135) (86.3)
$24,073 $47,656 (49.5)% $67,922 $41,890 62.1 %
* Percentage variance not considered meaningful.




GREEN PLAINS INC.
SELECTED OPERATING DATA
(unaudited, in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 % Var. 2017 2016 % Var.
Ethanol production
Ethanol (gallons)275,539 274,271 0.5 % 601,965 521,226 15.5%
Distillers grains (equivalent dried tons)728 734 (0.8) 1,605 1,381 16.2
Corn oil (pounds)65,685 64,514 1.8 141,042 124,354 13.4
Corn consumed (bushels)95,680 95,638 - 209,165 182,169 14.8
Agribusiness and energy services
Domestic ethanol sold (gallons)344,158 324,697 6.0 637,908 601,853 6.0
Export ethanol sold (gallons)36,794 30,967 18.8 102,639 79,972 28.3
380,952 355,664 7.1 740,547 681,825 8.6
Food and ingredients
Company cattle on feed (daily average head)89 66 34.8 76 63 20.6
Customer cattle on feed (daily average head)100 2 * 53 2 *
Partnership
Storage and throughput (gallons)284,496 278,879 2.0 605,578 526,389 15.0
* Percentage variance not considered meaningful.


GREEN PLAINS INC.
CONSOLIDATED CRUSH MARGIN
(unaudited, in thousands except per gallon amounts)
Three Months Ended
June 30,
Three Months Ended
June 30,
2017 2016 2017 2016
($ in thousands) ($ per gallon produced)
Ethanol production operating income (loss)$(22,459) $7,558 $(0.08) $0.03
Depreciation and amortization 20,142 15,150 0.08 0.05
Total ethanol production (2,317) 22,708 (0.00) 0.08
Intercompany fees, net:
Storage and logistics (partnership) 14,757 15,006 0.05 0.05
Marketing and agribusiness fees (agribusiness
and energy services)
6,451 4,630 0.02 0.02
Consolidated crush margin$18,891 $42,344 $0.07 $0.15


Liquidity and Capital Resources

On June 30, 2017, Green Plains had $225.0 million in total cash and cash equivalents, and $171.1 million available under revolving credit agreements, some of which are subject to restrictions and other lending conditions. Subsequent to June 30, 2017, the company increased the availability under two of its revolving credit facilities by a total of $250 million. Total debt outstanding was $1,081.4 million, including $341.5 million outstanding under working capital revolvers and other short-term borrowing arrangements for the agribusiness and energy services, and the food and ingredients segments at June 30, 2017.

Conference Call Information
On Aug. 1, 2017, Green Plains Inc. and Green Plains Partners LP will host a joint conference call at 11 a.m. Eastern time (10 a.m. Central time) to discuss second quarter 2017 financial and operating results for each company. Domestic and international participants can access the conference call by dialing 888.417.8531 and 719.457.2080, respectively. 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 Measures
Management uses earnings before interest, income taxes, depreciation and amortization, or EBITDA, segment EBITDA and consolidated ethanol crush margin 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 feedlots, food ingredients, and commodity marketing and logistics services. The company is the second largest consolidated owner of ethanol production facilities in the world with 17 dry mill plants, producing nearly 1.5 billion gallons of ethanol at full capacity. 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 LP
Green 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 Statements
This 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; 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 three ethanol plants, Fleischmann’s Vinegar and three cattle feedlots; 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
(in thousands)
June 30,
2017
December 31,
2016
ASSETS(unaudited)
Current assets
Cash and cash equivalents$195,442 $304,211
Restricted cash 29,592 51,979
Accounts receivable, net 134,885 147,495
Inventories 444,738 422,181
Other current assets 61,569 74,710
Total current assets 866,226 1,000,576
Property and equipment, net 1,199,080 1,178,706
Other assets 331,317 327,210
Total assets$2,396,623 $2,506,492
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$139,732 $192,275
Accrued and other liabilities 44,933 67,473
Short-term notes payable and other borrowings 341,463 291,223
Current maturities of long-term debt 6,178 35,059
Other current liabilities 8,165 8,916
Total current liabilities 540,471 594,946
Long-term debt 733,780 782,610
Other liabilities 131,405 149,745
Total liabilities 1,405,656 1,527,301
Stockholders’ equity
Total Green Plains stockholders’ equity 874,369 862,507
Noncontrolling interests 116,598 116,684
Total liabilities and stockholders’ equity$2,396,623 $2,506,492



GREEN PLAINS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 % Var. 2017 2016 % Var.
Revenues
Product$884,712 $885,772 (0.1)% $1,770,924 $1,632,956 8.4 %
Service 1,551 1,955 (20.7) 3,023 3,975 (23.9)
Total revenues 886,263 887,727 (0.2) 1,773,947 1,636,931 8.4
Costs and expenses
Cost of goods sold 830,019 809,524 2.5 1,641,915 1,534,211 7.0
Operations and maintenance 8,267 8,504 (2.8) 16,798 17,149 (2.0)
Selling, general and administrative 25,575 23,589 8.4 49,357 43,962 12.3
Depreciation and amortization 26,188 18,701 40.0 52,271 36,846 41.9
Total costs and expenses 890,049 860,318 3.5 1,760,341 1,632,168 7.9
Operating income (loss) (3,786) 27,409 * 13,606 4,763 185.7
Other income (expense)
Interest income 314 368 (14.7) 678 778 (12.9)
Interest expense (19,430) (10,499) 85.1 (37,926) (21,297) 78.1
Other, net 1,357 1,178 15.2 1,367 (497) *
Total other expense (17,759) (8,953) 98.4 (35,881) (21,016) 70.7
Income (loss) before income taxes (21,545) 18,456 * (22,275) (16,253) 37.1
Income tax expense (benefit) (9,749) 5,471 * (12,130) (9,422) 28.7
Net income (loss) (11,796) 12,985 * (10,145) (6,831) 48.5
Net income attributable to noncontrolling
interests
4,570 4,794 (4.7) 9,818 9,116 7.7
Net income (loss) attributable to Green Plains$(16,366) $8,191 * % $(19,963) $(15,947) 25.2 %
Earnings per share:
Net income (loss) attributable to Green Plains
- basic
$(0.41) $0.21 $(0.51) $(0.42)
Net income (loss) attributable to Green Plains
- diluted
$(0.41) $0.21 $(0.51) $(0.42)
Weighted average shares outstanding:
Basic 40,220 38,425 39,326 38,311
Diluted 40,220 38,536 39,326 38,311
* Percentage variance not considered meaningful.



GREEN PLAINS INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended
June 30,
2017 2016
Cash flows from operating activities:
Net loss$(10,145) $(6,831)
Noncash operating adjustments:
Depreciation and amortization 60,196 41,433
Deferred income taxes (12,896) (17,936)
Other 5,460 5,214
Net change in working capital (55,201) (16,946)
Net cash provided (used) by operating activities (12,586) 4,934
Cash flows from investing activities:
Purchases of property and equipment (27,985) (29,084)
Acquisition of a business, net of cash acquired (61,727) (19,935)
Distributions from (investments in) unconsolidated subsidiaries (8,849) 994
Net cash used by investing activities (98,561) (48,025)
Cash flows from financing activities:
Net proceeds (payments) - long-term debt (32,539) 44,777
Net proceeds (payments) - short-term borrowings 50,021 18,416
Other (15,104) (18,049)
Net cash provided by financing activities 2,378 45,144
Net change in cash and cash equivalents (108,769) 2,053
Cash and cash equivalents, beginning of period 304,211 384,867
Cash and cash equivalents, end of period$195,442 $386,920


GREEN PLAINS INC.
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Net income (loss)$(11,796) $12,985 $(10,145) $(6,831)
Interest expense 19,430 10,499 37,926 21,297
Income tax expense (benefit) (9,749) 5,471 (12,130) (9,422)
Depreciation and amortization 26,188 18,701 52,271 36,846
EBITDA$24,073 $47,656 $67,922 $41,890

Contact: Jim Stark | Vice President, Investor & Media Relations | 402.884.8700 | jim.stark@gpreinc.com

Source:Green Plains, Inc.