Workflow
Green Plains(GPRE) - 2024 Q3 - Earnings Call Transcript
GPREGreen Plains(GPRE)2024-10-31 22:58
Filings

Financial Data and Key Metrics Changes - The company reported 83.3millioninEBITDAforQ32024,whichincludesa83.3 million in EBITDA for Q3 2024, which includes a 30.7 million gain from the sale of the Birmingham Unit Train Terminal. Normal operations EBITDA was 53million,andthestandaloneconsolidatedcrushmarginwas53 million, and the standalone consolidated crush margin was 58 million [6][19]. - Consolidated revenues for Q3 2024 were 658.7million,down658.7 million, down 234 million or approximately 26% year-over-year, primarily due to lower prices for ethanol, dry distillers grains, and renewable corn oil [16][19]. - Net income attributable to the company was 48.2millionor48.2 million or 0.69 per diluted share, compared to 22.3millionor22.3 million or 0.35 per diluted share in Q3 2023 [18][19]. - The plant utilization rate was 97% during the quarter, up from 94% in the same period last year [17]. Business Line Data and Key Metrics Changes - Ethanol operating rates reached nearly 97%, with record ultra-high protein production and strong corn oil yield maintained [9][11]. - The company experienced strong demand for ethanol exports, with totals through August reaching 1.2 billion gallons, on track for a record year of 1.8 to 1.9 billion gallons [12]. - Record production of ultra-high protein was achieved during Q3, with ongoing efforts to maximize efficiency and flexibility in production [32][34]. Market Data and Key Metrics Changes - The company noted favorable natural gas and corn prices, contributing to solid margins during the quarter, despite some rapid compression late in the quarter [11][36]. - The corn basis in Q3 was at least 0.50abushelbetterthanthepriorthreeyears,aidingthemarginstructurefortheindustry[52].CompanyStrategyandDevelopmentDirection−ThecompanyisfocusedondecarbonizingitsoperationsinNebraskaandanticipatessignificantcashflowsfromcarboncreditsstartinginthesecondhalfof2025[28][30].−TheongoingstartupoftheCleanSugarTechnologyprojectisakeyfocus,withexpectationsforcommercialsalesinQ42024[13][14].−Thestrategicreviewprocessisongoing,withtheBoardofDirectorsworkingwithfinancialadvisorstoexploreoptionsforenhancingshareholdervalue[15].Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′sabilitytoimproveoperationalperformanceandmargins,despiterecentvolatilityintheindustry[11][41].−Themanagementteamhighlightedtheimportanceofupcomingmilestonesincarboncaptureandthepotentialforincreasedinterestincarboncredits[40][66].−Thecompanyremainsoptimisticaboutthedemandforlow−carbonproductsandthepotentialforstrongmarginsin2025[74].OtherImportantInformation−ThecompanycompletedthesaleoftheBirminghamUnitTrainTerminal,usingproceedstoretirehigh−priceddebt,whichisexpectedtoenhanceefficiency[15].−Capitalexpendituresfortheyearareanticipatedtobeintherangeof0.50 a bushel better than the prior three years, aiding the margin structure for the industry [52]. Company Strategy and Development Direction - The company is focused on decarbonizing its operations in Nebraska and anticipates significant cash flows from carbon credits starting in the second half of 2025 [28][30]. - The ongoing startup of the Clean Sugar Technology project is a key focus, with expectations for commercial sales in Q4 2024 [13][14]. - The strategic review process is ongoing, with the Board of Directors working with financial advisors to explore options for enhancing shareholder value [15]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to improve operational performance and margins, despite recent volatility in the industry [11][41]. - The management team highlighted the importance of upcoming milestones in carbon capture and the potential for increased interest in carbon credits [40][66]. - The company remains optimistic about the demand for low-carbon products and the potential for strong margins in 2025 [74]. Other Important Information - The company completed the sale of the Birmingham Unit Train Terminal, using proceeds to retire high-priced debt, which is expected to enhance efficiency [15]. - Capital expenditures for the year are anticipated to be in the range of 90 million to $100 million, excluding carbon capture equipment financing [24]. Q&A Session Summary Question: What does the market need to see for better valuation? - Management indicated that milestones in carbon projects will be critical for increasing market interest and valuation [40]. Question: How is the clean sugar technology progressing? - The company is receiving positive feedback from North American customers and is working towards food-grade certification [55]. Question: What is the outlook for ethanol exports next year? - Management expects continued robust demand for ethanol exports, particularly as global blend rates increase [74]. Question: How are protein margins expected to evolve? - Management noted that while margins are currently lower than hoped, demand remains strong, and they anticipate stabilization in spreads [80].