Green Plains Inc. (NASDAQ:GPRE) reported a robust Q3 2023, with $52 million in EBITDA and a 93.9% ethanol operating rate, according to the recent earnings call. The company has seen record production of Ultra-High Protein and expects these levels to rise further in Q4. They have also focused on enhancing operations and maximizing corn yields at their biorefineries.
Key takeaways from the call:
- Green Plains is investing in technology, with five facilities currently operating their MSC Ultra-High Protein technology. Two more facilities are under construction, pending permits.
- A joint venture with Tharaldson is set to begin production in Q1 2024.
- The customer base for protein products has grown, and the company is selling to customers globally.
- The company plans to dedicate 20-30% of their portfolio to 60 Pro in 2024, following a successful full-scale production run of 60% protein.
- The company expects improved EBITDA opportunities in 2024 due to higher Ultra-High Protein production in Q4.
- The company is committed to decarbonization through carbon capture and sequestration projects and is nearing completion of the world's first commercial clean sugar technology facility.
- Significant changes have been made to the executive team, with a focus on safety and consistent operations.
The earnings call revealed that the permitting process in Illinois and another state is taking longer than expected, but once obtained, it will increase production capacity. The company has successfully sold all of their protein products and expanded their customer base by 25-30% in the quarter.
Green Plains' CEO, Todd Becker, discussed the company's improved financials and positive outlook, expressing confidence in their carbon strategy and the upcoming partnership with Summit for pipeline construction. He also mentioned a project in Nebraska set to start in 2025 to further benefit their carbon initiative.
The company plans to focus on producing as much 60 Pro protein as possible starting in 2024 and continuing into 2025. They also discussed potential changes to the Greek model for renewable natural gas and expressed confidence in opportunities for ethanol and soy-based feedstocks in sustainable aviation fuel.
Green Plains expects 60 Pro to contribute to its sales during 2024, with potential upside in 2025. The company also discussed its decision to lock in corn oil prices at higher levels and expressed optimism about the progress of its carbon sequestration projects in Nebraska.
The company expects steady growth in 2024 and strong growth in 2025 due to the conversion to the IRA and 45Zs, as well as the advantages of corn oil. They also expressed confidence in their Nebraska plants and carbon sequestration efforts, stating that the projects are on track and fully funded.
InvestingPro Insights
Delving into the insightful data provided by InvestingPro, Green Plains Inc. presents a mixed bag of financial indicators. The company, with a market cap of $1750M USD, has been grappling with weak gross profit margins, which stood at 3.53% over the last twelve months as of Q3 2023. This is in line with an InvestingPro Tip indicating the company's struggle with gross profit margins.
Another InvestingPro Tip suggests that the company is not profitable over the last twelve months, which aligns with the negative P/E Ratio of -12.05, indicating that the company incurred losses.
On a more positive note, the company's liquid assets exceed short term obligations, suggesting a healthy liquidity position. This is a crucial factor for investors as it shows the company's ability to meet its short-term liabilities.
In terms of stock performance, the company has experienced a 1.03% return over the last year as of 2023, indicating a moderate performance.
InvestingPro offers numerous additional tips and data metrics for Green Plains Inc. and other companies, which can serve as a valuable resource for investors seeking in-depth financial analysis. The platform's comprehensive insights can provide a deeper understanding of a company's financial health, performance, and potential investment risks or opportunities.
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