Green Plains Renewable Energy's Q1 net income drops 50% year-over-year to US$7.7M despite revenues nearly doubling to US$812.2M; ethanol production up, but margins down on acquisition of two ethanol plants
Rachel Carter
OMAHA, Nebraska
,
April 27, 2011
(press release)
–
* Net Income of $7.7 Million
Interest expense increased $2.9 million in the first quarter of 2011 compared to the same period of 2010 due to the additional debt issued to finance acquisitions and the $90.0 million convertible debt offering completed in November 2010. Weighted average shares outstanding for diluted earnings per share purposes for the first quarter of 2011 reflect additional shares outstanding under the as-if-converted method of accounting for convertible debt. The following summarizes the effects of this method on net income attributable to Green Plains and weighted average shares outstanding for the periods indicated (in thousands): Operating Segment Information Green Plains' operating segments are as follows: (1) production of ethanol and related distillers grains, collectively referred to as ethanol production, (2) grain warehousing and marketing, as well as sales and related services of agronomy and petroleum products, collectively referred to as agribusiness, and (3) production and sales of corn oil, along with the marketing and distribution of Company-produced and third-party ethanol and distillers grains, collectively referred to as marketing and distribution. Selling, general and administrative expenses, primarily consisting of compensation of corporate employees, professional fees and overhead costs not directly related to a specific operating segment, are reflected in the table below as corporate activities. The following are revenues, gross profit and operating income by segment for the periods indicated (in thousands):
* Diluted Earnings Per Share of $0.20
Green Plains Renewable Energy, Inc. (Nasdaq:GPRE) announced today its financial results for the first quarter of 2011. Net income attributable to Green Plains for the quarter ended March 31, 2011 was $7.7 million, or $0.20 per diluted share, compared to $15.6 million, or $0.58 per diluted share, for the same period in 2010. Revenues were $812.2 million for the first quarter of 2011 compared to $426.5 million during the same period in 2010.
"We are pleased to report our eighth consecutive quarter of profitability at Green Plains," said Todd Becker, President and Chief Executive Officer. "We continue to focus on managing risk and increasing our operating efficiency. All of our businesses performed well in the first quarter with positive operating income in each of our segments. Our production platform produced and sold a record 172 million gallons of ethanol, which is a 39 percent increase over the first quarter of last year."
"Our corn oil extraction technology deployment is proceeding well. We now have six locations producing corn oil and expect to complete the installations at two additional plants by the end of the second quarter. Additionally, we plan on installing the extraction equipment at our recently-acquired Otter Tail ethanol plant during the third quarter," Becker commented. "These projects have had a positive effect on operating income in this quarter, and we expect their contributions to grow as we progress through the year."
"We have committed capital to expand our grain storage capacity at our Tennessee grain elevators and our Otter Tail ethanol facility this year by a total of 3.6 million bushels. Both of these locations will provide advantaged opportunities to originate more harvest grain directly from farmers," Becker stated. "These projects, along with other opportunities we are pursuing, show our commitment to growing our presence as an agricultural processor and handler."
"Similar to last year at this time, forward ethanol margins are compressed during the middle of the year with no clear visibility of acceptable margins," stated Becker. "We have defensively locked away margins for a substantial portion of expected production in the second quarter of 2011. We also have been active in markets for fourth quarter production as we are seeing a return to more normalized industry margins. We believe the actions we have taken to diversify our business, with a goal of generating at least $50 million of total operating income annually from corn oil production, our agribusiness operations, and marketing, blending and distribution activities, will be successful."
EBITDA, which is defined as earnings before interest, income taxes, noncontrolling interests, depreciation and amortization, was $32.0 million for the first quarter of 2011 compared to $33.2 million during the same period in 2010. Green Plains had $162.0 million total cash and equivalents and $53.8 million available under committed loan agreements (subject to satisfaction of specified lending conditions and covenants) at March 31, 2011. Total cash and equivalents declined during the quarter primarily due to normal first quarter payments to farmers for grain sold to the Company in 2010 under deferred payment contracts, as well as payments on long-term debt of $23.1 million, which included free cash flow payments of $13.0 million under various loan agreements. During the quarter, Green Plains also invested cash totaling $17.7 million for the Otter Tail acquisition, corn oil extraction equipment and other capital expenditures. For reconciliations of EBITDA to net income attributable to Green Plains, see "EBITDA" below.
Recent Business Highlights
* On January 21, 2011, the senior secured revolving credit facility of Green Plains Trade Group was amended to increase the amount available to $70.0 million from $30.0 million. The revolving credit facility is secured by accounts receivable and other assets.
* On March 24, 2011, Green Plains completed the purchase of an ethanol plant from Otter Tail Ag Enterprises, LLC. The dry-mill ethanol plant is located near Fergus Falls, MN. Green Plains financed the $55.0 million acquisition with cash and financing from a group of lenders, led by AgStar Financial Services.
* On April 15, 2011, BioProcess Algae, LLC and Green Plains hosted U.S. Agriculture Secretary Tom Vilsack at the grand opening of Phase II of BioProcess Algae's Grower HarvesterTM bioreactors in Shenandoah, Iowa. BioProcess Algae anticipates building an algae farm at Green Plains' ethanol plant in Shenandoah over the coming months.
* Green Plains has begun construction on expanding its grain storage capacity by 3.6 million bushels in 2011. The construction projects are located at the Tennessee grain elevators and the Otter Tail ethanol facility. It is anticipated that the expansion projects will be completed before fall harvest. Once completed, Green Plains will own 43.3 million bushels of grain storage with 33.4 million at its agribusiness operations and approximately 9.9 at its nine ethanol plants.
Conference Call
On April 28, 2011, Green Plains will hold a conference call to discuss its first quarter 2011 financial results. Green Plains' participants will include Todd Becker, President and Chief Executive Officer, Jerry Peters, Chief Financial Officer, and Jeff Briggs, Chief Operating Officer. The time of the call is 11:00 a.m. ET / 10:00 a.m. CT. To participate by telephone, the domestic dial-in number is 877-868-1833 and the international dial-in number is 914-495-8604. The conference call will be webcast and accessible at www.gpreinc.com. Listeners are advised to go to the website at least 10 minutes prior to the call to register, download and install any necessary audio software. A slide presentation will be available on Green Plains' website at http://investor.gpreinc.com/events.cfm. The conference call will also be archived and available for replay through May 5, 2011.
About Green Plains Renewable Energy, Inc.
Green Plains Renewable Energy, Inc. (Nasdaq:GPRE) is North America's fourth largest ethanol producer, operating a total of nine ethanol plants in Indiana, Iowa, Michigan, Minnesota, Nebraska and Tennessee, with annual expected operating capacity totaling approximately 740 million gallons. Green Plains also markets and distributes ethanol for independent ethanol producers with annual expected operating capacity totaling approximately 360 million gallons. Green Plains owns 51% of Blendstar, LLC, a biofuel terminal operator which operates nine blending or terminaling facilities with approximately 495 million gallons per year of total throughput capacity in seven states in the south central United States. Green Plains operates grain storage facilities and complementary agronomy and petroleum businesses in Iowa, southern Minnesota and western Tennessee.
Revenues increased in the first quarter of 2011 compared to the same period of 2010 primarily as a result of the acquisition of two ethanol plants from Global Ethanol, LLC in October 2010 and from additional agribusiness operations in western Tennessee acquired in April 2010. Ethanol production volumes were higher, while operating margins per gallon were lower, in the first quarter of 2011 compared to the same period of 2010. Operating expenses increased as a result of the expanded scope of the business resulting from the acquisitions completed. These factors contributed to the overall increase in revenues of $385.7 million and a decrease in operating income of $4.7 million in the first quarter of 2011 compared to the same period of 2010.
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