Green Plains, Inc. (GPRE)

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Green Plains Renewable Energy, Inc. (GPRE)

Q4 2012 Earnings Call

February 07, 2013, 12:00 pm ET


Jim Stark - VP, Investor & Media Relations

Todd Becker - President & CEO

Jerry Peters - CFO

Steve Bleyl - EVP, Ethanol Marketing


Farha Aslam - Stephens, Inc.

Patrick Jobin - Credit Suisse

Brent Rystrom - Feltl & Company

A.J. Strasser - Cooper Creek Partners



Good day everyone and welcome to the Green Plains Fourth Quarter and Fiscal Year 2012 Financial Results Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Jim Stark. Please go ahead.

Jim Stark

Thanks, Erin. Welcome to our fourth quarter and full-year 2012 earnings conference call. On the call today are Todd Becker, President and CEO; Jerry Peters, our CFO; Jeff Briggs, our Chief Operating Officer and Steve Bleyl, who is our Executive Vice President of Ethanol Marketing. We are here to discuss our quarterly financial and fiscal year results and recent developments for Green Plains Renewable Energy.

There is a slide presentation for you to follow along with as we go through our comments today. You can find that presentation on our website at It’s on the Investor page under the Events and Presentations link.

Our comments today will contain forward-looking statements, which are any statements made that are not historical facts. These forward-looking statements are based on the current expectations of Green Plains’ management team, and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, Green Plains’ actual results could differ materially from management’s expectations.

Please refer to page two of the website presentation and our 10-K and other periodic SEC filings for information about factors that could cause different outcomes. The information presented today is time sensitive and is accurate only at this time. If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Green Plains will not be reviewing or updating this material.

I would like to turn the call now over to Todd Becker.

Todd Becker

Thanks Jim, and thanks for joining the call this morning. I am going to run down some of the highlights for the fourth quarter and then discuss 2012 overall. I am pleased with our operating performance and results for the quarter. We believe that generating operating income before depreciation of $0.14 per gallon in our ethanol production segment in the current environment reinforces with you that our risk management strategy works and is a very effective practice for commodity processing business like Green Plains. Keep in mind, this was without the additional corn oil operating income earned this quarter as we break that out separately.

When you look at the chart on page five of the presentation online you will see that the average daily spot platform crush was negative $0.07 per gallon during the fourth quarter of 2012. Our team reacted quickly in late 2011 and early 2012 to take advantage of positive margin to out on the forward curve. The difference between this year and the prior was that we originated physical bushels at the same time we would lock the financial margin away. This way we reduced the volatility of that factor.

Our non-ethanol segments generated $17.8 million in operating income and combined with the operating income from the ethanol production and the $47 million gain on the sale of the agribusiness assets, our total segment operating income was approximately $77 million in the fourth quarter before corporate expenses.

Revenues in the fourth quarter of 2012 were $884 million and we reported a net income before the gain on the sale of the 12 grain elevators of $6.7 million or $0.21 a share. We weren’t just profitable in the fourth quarter, but combined with the third, we are profitable in the last half of 2012, probably one of the roughest patches in the history of this industry.

We produced a 168 million gallons of ethanol in the fourth quarter which is approximately 91% of our stated operating capacity. All of our plants are running and to contrast that to the ethanol industry, over 2 billion gallons of industry capacity is offline. Our ethanol yield in the quarter was 2.81 gallons of ethanol per bushel of corn which was down mainly due to new crop quality factors. We are seeing better yield as we move further away from these harvest bushels.

Our yield for corn oil production was 0.61 pounds per bushel in the quarter. We managed as closely so not to degregate our high quality distillers grains that we sell to our customers. Both our internal technology that was installed and the ICM technology continue to performance very well, but again we believe the yield should hold at least this level for 2013.

Our rail car redeployment to transport crude oil hit our target in the fourth quarter with over 500 cars in service and $4.3 million of operating income; we should see this run rate hold at least for the end of September as we are working on extending this program through the end of 2013 and beyond. We began our loading unit trains at our BlendStar terminal in Birmingham, Alabama this quarter. Our initial customer response has been strong at this terminal and we are evaluating similar opportunities at our other terminal locations. So between corn oil production and our marketing and distribution segment, we expect non-ethanol operating income to remain at approximately $60 million in 2013. The agribusiness segment will have a small operating income during the harvest quarter of ‘13 as well.

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