Green Plains reports improving margins in Q2
Green Plains Inc. released first quarter financial results on May 4, reporting that operations were impacted by weak margins and high corn costs during the three-month period. Moving into the second quarter, however, margins are improving.
Todd Becker, president and CEO of Green Plains, said overall consolidated crush margins for the first quarter was negative 7 cents per gallon. Corn basis has continued to be high, particularly in the West, he said, noting the company experienced basis that was approximately 25 cents per bushel higher than last year and 40 cents per bushel higher than the five-year average.
First quarter operations were also impacted by lower vegetable oil pricing, weak driving demand and continued excess ethanol production.
Recently, however, Green Plains has experienced significant improvement in overall ethanol margins, Becker said. He attributed the improvement to lower ethanol production and increased demand for gasoline.
According to Becker, approximately 10 percent of the company’s capacity was offline during the first quarter due to margins, with overall production utilization at approximately 87.5 percent, up from 83.1 percent during the first quarter of last year. The Wood River facility in Nebraska, is currently offline following an explosion of a whole stillage tank when the plant was down for routine maintenance, Becker said. Current engineering and construction estimates indicate that the plant will be back online by the end of the second quarter.
Early in the second quarter, Green Plains brought its ethanol production capacity fully back online, with all five of its MSC systems producing high-quality, high-protein coproducts. For 21 days at the end of March and the first half of April, the company averaged more than 900 tons per day of high-protein production, with some days achieving more than 1,000 tons of production, Becker said. The company has achieved yields that exceed 4 pounds per bushel, pushing close to 5 pounds, he added.
Green Plains is working to install the MSC system at additional plants as well. Becker said the company is on track to secure a permit to add MSC technology to its Madison, Illinois, location during the second half of 2023. Works also continues to progress on permitting for the Fairmont, Minnesota, facility.
Becker stressed that Green Plains did not build the MSC systems just to produce and sell 50 percent protein coproducts. He said the company believes the technology can also be leveraged to produce other products, such as fermented clean proteins and clean fiber products.
Becker also briefly discussed the clean sugar project under development in Shenandoah, Iowa. Construction on that project is in progress and expected to be complete by the end of the year.
Green Plains is also moving forward with several decarbonization projects. Becker said the Summit Carbon Solutions carbon capture and sequestration (CCS) pipeline project is currently expected to be operational in 2025. In addition, Green Plains has formed a joint venture with United Airlines and Tallgrass to form Blue Blade Energy, which intends to develop an ethanol-to-sustainable aviation fuel (SAF) technology. Becker said a pilot facility could be constructed as early as 2024.
Green Plains sold 206.9 million gallons of ethanol during the first quarter, up from 196.3 million gallons during the same period of 2022. The consolidated crush margin was negative $15.3 million, or negative 7 cents per gallon, compared with negative $14.2 million, or negative 7 cents per gallon, for the same period of 2022.
Net loss attributable to the company was $70.3 million, or negative $1.20 per basic and diluted share, compared to a net loss attributable to the company of $61.5 million, or negative $1.16 per basic and diluted share, for the same period of last year. Revenues were $832.9 million for the first quarter, compared to $781.4 million. EBITDA was negative $27.7 million, compared to negative $27.8 million.
Source Link: https://ethanolproducer.com/articles/20190/green-plains-reports-improving-margins-in-q2
