Green Plains Inc.
Feb 7, 2018

Green Plains Reports Fourth Quarter and Full Year 2017 Financial Results

Results for the Fourth Quarter of 2017

Results for the Full Year of 2017

OMAHA, Neb., Feb. 07, 2018 (GLOBE NEWSWIRE) -- Green Plains Inc. (NASDAQ:GPRE) today announced financial results for the fourth quarter of 2017. Net income attributable to the company was $46.6 million, or $0.99 per diluted share, for the fourth quarter of 2017 compared with net income of $18.7 million, or $0.47 per diluted share, for the same period in 2016. The company recorded a tax benefit of $63.9 million inclusive of a revaluation of deferred tax liabilities under the new U.S. corporate tax laws. Revenues were $921.0 million for the fourth quarter of 2017 compared with $932.1 million for the same period last year.

"Our non-ethanol segments reported strong performance in 2017 with $155 million of EBITDA," commented Todd Becker, president and chief executive officer. "Our Food and Ingredients segment led the way with approximately $50 million of EBITDA, which was more than double what we reported last year, highlighting the success of our diversification strategy. This growth was driven by a full year of results from Fleischmann's Vinegar and the expansion of Green Plains Cattle. We expect an even stronger 2018 from these segments. We also had a strong quarter and finish to the year by the Ag and Energy segment, led by our merchant activities in natural gas."

Green Plains produced a record 340.8 million gallons of ethanol during the fourth quarter of 2017, compared with 334.2 million gallons for the same period in 2016. The consolidated ethanol crush margin was $26.8 million, or $0.08 per gallon, for the fourth quarter of 2017, compared with $81.6 million, or $0.24 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.

"Ethanol margins were weak in the fourth quarter as growth in export demand started to take hold and industry stocks remained high," Becker added. "As a result, we have lowered our ethanol production rate in the first quarter. We believe margins will show improvement as we move into the second quarter, led by robust global demand and stronger domestic demand compared to last year. We believe the U.S. will export record volumes again in 2018 as countries around the world continue to take advantage of the economic benefits of ethanol and blend more into their finished gasoline. The margins for U.S. blenders are the best we have seen since 2014 as wholesale ethanol prices continue to average 40 cents to 50 cents lower than wholesale gasoline with no cheaper competing source of octane."

Revenues attributable to the company were $3.6 billion for the year ended Dec. 31, 2017, compared with $3.4 billion for the same period in 2016. Net income attributable to the company for the year ended Dec. 31, 2017, was $61.1 million, or $1.47 per diluted share, compared with net income of $10.7 million, or $0.28 per diluted share, for the same period in 2016. Excluding the impact of the debt refinancing costs and R&D tax credits, reported in the third quarter of 2017, and revaluation of deferred tax liabilities in the fourth quarter of 2017, net loss attributable to the company was $33.6 million for 2017, or $(0.86) per diluted share.

"We continue to focus on improving the business through operational efficiency and diversification of earnings," said Becker. "Looking forward, we will focus our growth capital in the Food and Ingredients segment and downstream terminal business through our investment and ownership in Green Plains Partners. Our new export terminal in Beaumont, Texas loaded its first export shipment in December and has since loaded eight more vessels originated almost exclusively from our own ethanol production. We expect to offer our interest in Beaumont to the partnership in the next 120 days and believe this terminal will be a key asset that handles the growing export demand for U.S. ethanol. At the same time, domestic ethanol demand should be positively impacted by expanding blends as there are now more than 1,300 stations across 29 states selling E15 and increasing every day."

Full Year Highlights

Results of Operations
Consolidated revenues decreased $11.1 million for the three months ended Dec. 31, 2017, compared with the same period in 2016. Revenues were impacted by lower average realized prices for ethanol, partially offset by an increase in revenues related to the cattle feedlot acquisitions during the first and second quarters of 2017.

Operating income decreased $48.6 million for the three months ended Dec. 31, 2017, compared with the same period last year primarily due to lower ethanol margins.

An income tax benefit of $63.9 million was recorded in the fourth quarter of 2017, including a $52.8 million benefit related to the revaluation of deferred tax liabilities under the new U.S. corporate tax laws.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the fourth quarter of 2017 was $36.1 million compared with $83.5 million for the same period last year, driven almost entirely by a decrease in ethanol margins slightly offset by better performance in agribusiness and energy services and lower corporate expenses.

Segment Information
We report the financial and operating performance for the following four operating segments: (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 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
December 31,
 Twelve Months Ended
December 31,
  2017  2016  % Var. 2017  2016  % Var.
Revenues:                  
Ethanol production $643,693  $698,618  (7.9)% $ 2,507,673  $ 2,409,102   4.1 %
Agribusiness and energy services  151,412   153,528  (1.4)    668,761    709,907   (5.8) 
Food and ingredients  142,236   87,257  63.0     471,781    318,181   48.3  
Partnership  28,250   28,285  (0.1)    106,993    103,772   3.1  
Intersegment eliminations  (44,607)  (35,590) 25.3     (159,042)   (130,081)  22.3  
  $920,984  $932,098  (1.2)% $ 3,596,166  $ 3,410,881   5.4 %
Gross margin:                  
Ethanol production $12,380  $67,353  (81.6)% $ 73,672  $ 128,196   (42.5)%
Agribusiness and energy services  24,069   21,125  13.9     54,179    59,369   (8.7) 
Food and ingredients  12,353   11,948  3.4     60,000    23,785   152.3  
Partnership  28,250   28,285  (0.1)    106,993    103,772   3.1  
Intersegment eliminations  47   402  (88.3)    (265)   (320)  (17.2) 
  $77,099  $129,113  (40.3)% $ 294,579  $ 314,802    (6.4)%
Depreciation and amortization:                  
Ethanol production $20,544  $22,091  (7.0)% $ 81,987  $ 68,746   19.3 %
Agribusiness and energy services  686   654  4.9     3,462    2,536   36.5  
Food and ingredients  3,844   2,903  32.4     13,103    3,705   253.7  
Partnership  1,330   1,427  (6.8)    5,111    5,647   (9.5) 
Corporate activities  852   1,019  (16.4)    3,698    3,592   3.0  
  $27,256  $28,094   (3.0)% $ 107,361  $ 84,226   27.5 %
Operating income (loss):                  
Ethanol production $(19,124) $35,798  (153.4)% $(45,074) $ 28,125   (260.3)%
Agribusiness and energy services  17,305   13,295  30.2    30,443    34,039   (10.6) 
Food and ingredients  5,489   6,842  (19.8)   35,961    16,436   118.8  
Partnership  18,002   17,945  0.3    65,709    60,903   7.9  
Intersegment eliminations  86   442  (80.5)   (61)   (170)  (64.1) 
Corporate activities  (14,334)  (18,252) (21.5)   (45,232)   (47,645)  (5.1) 
  $7,424  $56,070  (86.8)% $41,746   $ 91,688   (54.5)%
EBITDA:                  
Ethanol production $1,548  $57,948  (97.3)% $40,069  $ 97,113   (58.7)%
Agribusiness and energy services  17,996   12,963  38.8    33,906    34,209   (0.9) 
Food and ingredients  10,062   9,761  3.1    49,803    20,190   146.7  
Partnership  19,492   19,392  0.5    71,041    66,633   6.6  
Intersegment eliminations  86   442  (80.5)   (61)   (732)  (91.7) 
Corporate activities  (13,113)  (17,040) (23.0)   (40,388)   (42,985)  (6.0) 
  $36,071  $83,466  (56.8)% $154,370  $ 174,428   (11.5)%
                   


GREEN PLAINS INC.
SELECTED OPERATING DATA
(unaudited, in thousands)
               
  Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2017 2016 % Var. 2017 2016 % Var.
Ethanol production               
Ethanol (gallons)  340,754   334,166   2.0  %  1,256,361   1,147,630   9.5 %
Distillers grains (equivalent dried tons)  893   894   (0.1)   3,314   3,064   8.2  
Corn oil (pounds)  85,438   77,370   10.4     301,920   273,901   10.2  
Corn consumed (bushels)  118,664   116,783   1.6     437,373   401,065   9.1  
               
Agribusiness and energy services              
Domestic ethanol sold (gallons)  296,404   341,833   (13.3)   1,279,350   1,244,764   2.8  
Export ethanol sold (gallons)  62,265   37,266   67.1     199,677   152,141   31.2  
   358,669   379,099   (5.4)   1,479,027   1,396,905   5.9  
Food and ingredients               
Company cattle on feed (daily average head)  219   66   231.8     130   65   100.0  
Customer cattle on feed (daily average head)   6   2   *   46   1   *
               
Partnership              
Storage and throughput (gallons)  334,975   337,460   (0.7)   1,248,869   1,156,540   8.0  
               
* Percentage variance not considered meaningful.             
             


GREEN PLAINS INC.
CONSOLIDATED CRUSH MARGIN
(unaudited, in thousands except per gallon amounts)
             
  Three Months Ended
December 31,
 Three Months Ended
December 31,
  2017  2016 2017  2016
  ($ in thousands) ($ per gallon produced)
             
Ethanol production operating income (loss) $ (19,124) $ 35,798 $ (0.06) $ 0.11
Depreciation and amortization   20,544    22,091   0.07    0.06
Total ethanol production   1,420    57,889   0.01    0.17
             
Intercompany fees, net:            
Storage and logistics (partnership)   18,047    17,783   0.05    0.05
Marketing and agribusiness fees
(agribusiness and energy services)
   7,336    5,965   0.02    0.02
Consolidated crush margin $ 26,803  $ 81,637 $ 0.08  $ 0.24
               

Liquidity and Capital Resources
On Dec. 31, 2017, Green Plains had $280.5 million in total cash and cash equivalents, and $391.9 million available under revolving credit agreements, some of which are subject to restrictions and other lending conditions. Total debt outstanding at Dec. 31, 2017, was $1,361.5 million, including $526.2 million outstanding under working capital revolvers and other short-term borrowing arrangements for the agribusiness and energy services, and the food and ingredients segments.

Conference Call Information
On Feb. 8, 2018, 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 fourth quarter 2017 financial and operating results for each company. Domestic and international participants can access the conference call by dialing 888.438.5524 and 719.325.2354, 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.

To supplement our condensed consolidated statements of operations presented in accordance with GAAP, the company has provided non-GAAP adjusted financial measures of operating results that exclude certain items. Basic and diluted earnings per share attributable to Green Plains are presented in the Reconciliation to Non-GAAP Adjusted Financial Measures as reported on a GAAP and non-GAAP basis related to the impact of the expenses for refinancing and expanding the company's term loan, net R&D credits related to qualifying activities and tax reform credits. Management believes including these additional measures may enhance the investor's overall understanding of the company's ongoing operations. These measures should not be considered alternatives to net income or segment operating income, which are determined in accordance with GAAP.

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, 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 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
(unaudited, in thousands)
       
  December 31,
2017
 December 31,
2016
ASSETS      
Current assets      
Cash and cash equivalents $ 266,651 $ 304,211
Restricted cash   13,810   51,979
Accounts receivable, net   151,122   147,495
Income tax receivable   6,413   10,379
Inventories   711,878   422,181
Other current assets   56,597   64,331
Total current assets   1,206,471   1,000,576
Property and equipment, net   1,176,707   1,178,706
Deferred income taxes   36,211   -
Other assets   344,412   327,210
Total assets $ 2,763,801 $ 2,506,492
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities      
Accounts payable $ 205,479 $ 192,275
Accrued and other liabilities   63,886   67,473
Derivative financial instruments   12,884   8,916
Income taxes payable   9,909   -
Short-term notes payable and other borrowings   526,180   291,223
Current maturities of long-term debt   67,923   35,059
Total current liabilities   886,261   594,946
Long-term debt   767,396   782,610
Deferred income taxes   11,496   140,262
Other liabilities   39,512   9,483
Total liabilities   1,704,665   1,527,301
       
Stockholders' equity      
Total Green Plains stockholders' equity   942,182   862,507
Noncontrolling interests   116,954   116,684
Total liabilities and stockholders' equity $ 2,763,801 $ 2,506,492
       


GREEN PLAINS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share amounts)
                   
  Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2017  2016  % Var. 2017  2016  % Var.
Revenues                  
Product $ 919,523   $ 929,838    (1.1)% $ 3,589,981   $ 3,402,579    5.5  %
Services   1,461     2,260    (35.4)    6,185     8,302    (25.5) 
Total revenues   920,984     932,098    (1.2)    3,596,166     3,410,881    5.4   
Costs and expenses                  
Cost of goods sold (excluding depreciation and amortization expenses reflected below)   843,885     802,985    5.1      3,301,587     3,096,079    6.6   
Operations and maintenance   8,341     8,498    (1.8)    33,448     34,211    (2.2) 
Selling, general and administrative   34,078     36,451    (6.5)    112,024     104,677    7.0   
Depreciation and amortization   27,256     28,094    (3.0)    107,361     84,226    27.5   
Total costs and expenses   913,560     876,028    4.3      3,554,420     3,319,193    7.1   
Operating income   7,424     56,070    (86.8)    41,746     91,688    (54.5) 
Other income (expense)                  
Interest income   536     278    92.8      1,597     1,541    3.6   
Interest expense   (20,345)   (18,735)  8.6      (90,160)   (51,851)  73.9   
Other, net   855     (976) *    3,666     (3,027) * 
Total other expense   (18,954)   (19,433)  (2.5)    (84,897)   (53,337)  59.2   
Income (loss) before income taxes   (11,530)   36,637    (131.5)    (43,151)   38,351   * 
Income tax (expense) benefit   63,877     (12,199) *    124,782     (7,860) * 
Net income   52,347     24,438    114.2      81,631     30,491    167.7   
Net income attributable to noncontrolling interest   5,717     5,756    (0.7)    20,570     19,828    3.7   
Net income attributable to Green Plains $ 46,630   $ 18,682    149.6  % $ 61,061   $ 10,663    472.6  %
                   
Earnings per share:                  
Net income attributable to Green Plains - basic $ 1.16   $ 0.49      $ 1.56   $ 0.28     
Net income attributable to Green Plains - diluted $ 0.99   $ 0.47      $ 1.47   $ 0.28     
                   
Weighted average shares outstanding:                  
Basic   40,091     38,367        39,247     38,318     
Diluted   50,061     39,845        50,240     38,573     
                       
* Percentage variance not considered meaningful.                      
                       


GREEN PLAINS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
       
  Twelve Months Ended
December 31,
  2017  2016 
Cash flows from operating activities:      
Net income $ 81,631  $ 30,491 
Noncash operating adjustments:      
Depreciation and amortization   107,361    84,226 
Deferred income taxes   (162,593)   4,910 
Other   51,281    24,034 
Net change in working capital   (237,500)   (58,468)
Net cash provided by (used in) operating activities   (159,820)   85,193 
       
Cash flows from investing activities:      
Purchases of property and equipment, net   (46,467)   (58,113)
Acquisition of businesses, net of cash acquired   (61,727)   (508,143)
Investments in unconsolidated subsidiaries   (20,286)   (6,342)
Net cash used by investing activities   (128,480)   (572,598)
       
Cash flows from financing activities:      
Net proceeds - long-term debt   60,391    417,197 
Net proceeds - short-term borrowings   234,452    63,978 
Other   (44,103)   (74,426)
Net cash provided by financing activities   250,740    406,749 
       
Net change in cash and cash equivalents   (37,560)   (80,656)
Cash and cash equivalents, beginning of period   304,211    384,867 
Cash and cash equivalents, end of period $ 266,651  $ 304,211 
         


GREEN PLAINS INC.
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
(unaudited, in thousands)
             
  Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2017  2016 2017  2016
Net income $ 52,347  $ 24,438 $ 81,631  $ 30,491
Interest expense   20,345    18,735   90,160    51,851
Income tax expense (benefit)   (63,877)   12,199   (124,782)   7,860
Depreciation and amortization   27,256    28,094   107,361    84,226
EBITDA $ 36,071  $ 83,466 $ 154,370  $ 174,428
               


GREEN PLAINS INC.
RECONCILIATIONS TO NON-GAAP ADJUSTED FINANCIAL MEASURES
(unaudited, in thousands)
             
  Three Months Ended December 31, 2017 Three Months
 Ended
December 31,
 2016,
GAAP Basis
as Reported
  GAAP Basis
as Reported
 Non-GAAP
Adjustment
Tax Credit
 Non-GAAP
Basis as
Adjusted
 
Basic EPS:            
Net income (loss) attributable to Green Plains  $ 46,630  $ (52,845) $ (6,215) $ 18,682 
Weighted average shares outstanding - basic   40,091    -    40,091     38,367 
Earnings (loss) per share attributable to Green Plains - basic $ 1.16  $ (1.32) $ (0.16) $ 0.49 
             
Diluted EPS:            
Net income (loss) attributable to Green Plains $ 46,630  $ (52,845) $ (6,215) $ 18,682 
Interest and amortization on convertible debt, net of tax            
3.25% convertible senior notes   851    (851)   -    -
4.125% convertible senior notes   2,071    (2,071)   -    -
Net income (loss) attributable to Green Plains - diluted $ 49,552  $ (55,767) $ (6,215) $ 18,682 
             
Weighted average shares outstanding - basic   40,091    -    40,091     38,367 
Effect of dilutive 3.25% convertible senior notes   3,193    (3,193)   -    1,410 
Effect of dilutive 4.125% convertible senior notes   6,071    (6,071)   -    -
Effect of dilutive stock compensation awards   706    (706)   -    68 
Total potential shares outstanding   50,061    (9,970)   40,091     39,845 
Earnings (loss) per share attributable to Green Plains - diluted $ 0.99  $ (1.15) $ (0.16) $ 0.47 
               


  Twelve Months Ended December 31, 2017 Twelve
Months
 Ended
December 31,
 2016,
GAAP Basis
as Reported
  GAAP Basis
as Reported
 Non-GAAP
Adjustment
Tax Credits &
Interest Exp.
 Non-GAAP
Basis as
Adjusted
 
Basic EPS:            
Net income (loss) attributable to Green Plains  $ 61,061  $ (94,661) $ (33,600) $ 10,663 
Weighted average shares outstanding - basic   39,247    -    39,247     38,318 
Earnings (loss) per share attributable to Green Plains - basic $ 1.56  $ (2.42) $ (0.86) $ 0.28 
             
Diluted EPS:            
Net income (loss) attributable to Green Plains $ 61,061  $ (94,661) $ (33,600) $ 10,663 
Interest and amortization on convertible debt, net of tax            
3.25% convertible senior notes   4,433    (4,433)   -    -
4.125% convertible senior notes   8,159    (8,159)   -    -
Net income (loss) attributable to Green Plains - diluted $ 73,653  $ (107,253) $ (33,600) $ 10,663 
             
Weighted average shares outstanding - basic   39,247    -    39,247     38,318 
Effect of dilutive 3.25% convertible senior notes   4,209    (4,209)   -    155 
Effect of dilutive 4.125% convertible senior notes   6,071    (6,071)   -    -
Effect of dilutive stock compensation awards   713    (713)   -    100 
Total potential shares outstanding   50,240    (10,993)   39,247     38,573 
Earnings (loss) per share attributable to Green Plains - diluted $ 1.47  $ (2.33) $ (0.86) $ 0.28 
               

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