Green Plains Renewable Energy Inc. (GPRE)
Q3 2012 Earnings Call
October 31, 2012 11:00 am ET
Jim Stark, Vice President – Investor and Media Relations
Todd Becker – President, Chief Executive Officer and Director
Jerry Peters – Chief Financial Officer & Treasurer
Jeffrey S. Briggs – Chief Operating Officer
Brent Rystrom – Feltl & Company
Laurence Alexander – Jefferies & Co.
Patrick Jobin – Credit Suisse
Matthew Farwell – Imperial Capital, LLC
Michael Cox – Piper Jaffray
A.J. Strasser – Cooper Creek Partners
Good day and welcome to the Green Plains Third Quarter 2012 Financial Results Conference Call. Today’s call will be recorded.
And now at this time, I’ll turn the call over to your host Mr. Jim Stark. Please go ahead sir.
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There is a slide presentation for you to follow along with as we go through our comments today. You can find this presentation on our website at www.gpreinc.com. 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 result could differ materially from management’s expectations. Please refer to page 2 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.
Now I’d like to turn the call over to Todd Becker.
Thanks Jim, and thanks everybody for joining our call this morning. We have a lot of interesting news to talk about, so let's get started. First a quick run down on the third quarter. Our risk managers and traders were diligently in the quarter to produce a positive EBITDA per gallon in our ethanol production segment. Well, that doesn’t sound like much when you consider the margin environment during this defensive quarters a good performance by the team and shows the ability of our overall asset base to perform during cyclical swing as compared to our peers.
In fact the average daily spot platform crush was a negative $0.14 per gallon for the third quarter, compared to a positive $0.02 a gallon crush we were able to achieve. Our industry group often reports some margin including corn oil, but as you know we break this out temporarily. If you take this in to considerations, our margins would have been high single-digits.
Our non-ethanol segments were significant contributor to the third quarter overall performance, generating a record $20.8 million in operating income. The components was follows; $7.8 million from corn oil production, $7.2 million from our marketing and distribution segment, which was up significantly which was up significantly over last year primarily as a result of our railcar program and $5.8 million from our non-methanol operating income came from agro businesses, which are strong quarter as a result of the early harvest this year.
The early harvest were influent to seasonal earnings pattern of agro business where we anticipate the fourth quarter results Where we anticipate the four quarter results to be more tempered with harvest income accelerated in the third quarter, basically the quarters will flip-flop positions this year.
On a consolidated level, our revenues in the third quarter of 2012 were $947 million. As we reported, a net loss of $1 million or $0.03 a share that is a $6.5 million improvement over the loss in the second quarter of 2012 and sets this up for solid finish to the year with a profitable fourth quarter, and now a profitable last half expected from ongoing operations.
We produced a 161 million gallons of ethanol in the third quarter, down about 13% from last year. The lower production level is a result of slowing a few of our plants [Audio Gap] plant and region to region for Green Plains. Our data tells us to keep running all at this time albeit some of our plants at a lower rate.
Our ethanol yield in the quarter was 2.84 gallons per bushel of corn, and we had a slight uptick in our yield on corn oil 2.66 pounds per bushel. We are still assessing new crop processing yields and expect some variation next year, no more as the fourth quarter progresses.
We hit our goal for railcars redeployed to transport crude oil in the third quarter to over 500 cars. We expect that run rate to remain for the next three quarters as the majority of our agreements we entered into on a railcars for a year. We are working to extent some of those current agreements, but even if some of them expire there is good interest from other parties to step in for another year or so after that.
We are approximately 60% locked for ethanol margins in the current quarter at profitable levels and even though the early harvest accelerated operating income from our agribusiness segment into the third quarter, I'm confident to say that our ongoing operations will return to profitability at the net income line in the fourth quarter. The program started late last year as we saw some good margins on the curve, and we were able to buy physical corn needed to walk them away.