Green Plains Inc. released fourth quarter financial results on Feb. 7, reporting a larger-than-expected net loss despite the satisfactory performance of its plant assets. The company announced it is launching a corporate reorganization.
During a fourth quarter earnings call, Green Plains President and CEO Todd Becker referenced the company’s development work on protein, corn oil and carbon initiatives. "Over the last several years we invested significant capital to get our new products to market and the time has come to rationalize those costs, among other decisions we have made,” he said.
“To accomplish significant cost savings and margin expansion, we took the necessary step of reorganizing our corporate and commercial functions to streamline and enhance our agility and resilience and to improve alignment around our core strategic focus,” Becker added. “We have identified up to $50 million in annualized cost savings and based on the actions we have already done this week, we executed on the first $30 million of improvements already. This included: a move to smaller corporate workforce; winding down some of our innovation platform; attacking SG&A expenses; having a smaller executive leadership team with a number of executive departures; and lastly, looking at everything we do across the board that does not make us money. This was our natural move from innovation to commercialization, including rationalization.”
As part of the restructuring, Green Plains has cold idled its 120 MMgy ethanol plant in Fairmont, Minnesota. Becker stressed the decision to shut down the plant was not just a function of the macro-ethanol market, but rather acute issues stemming from local flooding last spring that resulted in a short corn crop and elevated basis levels in that area. He said the company expects those elevated basis levels to continue throughout the current year.
“We are keeping a skeleton crew to perform maintenance on the facility, while it is in cold idle for the foreseeable future,” Becker said. “The plant also needs a new upgrade to the grain handling and drying systems, and permitting in Minnesota is just a long slog. If market conditions dictate, we can always bring this production back online, but we will be careful and thoughtful on this decision.” He also noted Green Plains is still planning to implement carbon capture at that plant in the future.
Becker also addressed current market fundaments, explaining ethanol margins deteriorated during the fourth quarter, with high production levels and elevated stocks. “We were largely unhedged and open to the crush going into the fourth quarter, which was the wrong choice to make as many of our shareholders have voiced concerns with our hedging programs, this quarter would have been the one to hedge,” Becker said. He also pointed to exports as a bright spot in the market, and said the company currently expects ethanol exports for 2025 to exceed the record-setting level of 2024.
Moving into 2025, Becker said the ethanol market remains under pressure, but noted that the forward curve is in better shape and position than is typical for this time of year. Despite that positive indication, Becker stressed the market needs to see an increase in demand, a decrease in supply, or both.
Regarding plant performance, Becker said the company’s ethanol facilities operated at 92% capacity during the fourth quarter. Operations are expected to continue in the mid-90% range during the first quarter of 2025.
“Our plants continue to operate better and better every month, and we are also focused on reducing our OpEx per gallon as well with many programs that are being kicked off as well there,” Becker said. “We continued to track record for strong corn oil yields and yields at our MSC plants continue to push the upper end of what is possible with corn oil, even exceeding 1.2 pounds to 1.3 pounds per bushel."
Becker also discussed upcoming milestones for the company’s carbon capture initiatives. He said the CO2 pipeline project under development by Tallgrass has acquired all the necessary rights of way to reach Green Plains’ three facilities in Nebraska. Carbon capture is currently expected to begin during the second half of 2025.
Green Plains’ ethanol segment sold 209.5 million gallons of ethanol during the fourth quarter, down from 215.7 million gallons during the same period of 2023. The consolidated ethanol crush margin was negative 15.5 million, compared to positive $53 million.
Net loss attributable to the company for the fourth quarter was $54.9 million, or 89 cents per diluted share, compared to net income of $7.2 million, or 12 cents per diluted share, during the same period of 2023. Revenues were $584 million, down from $712.4 million. EBTIDA was negative $18.89 million, compared to positive $44.7 million.
