E15 Market Expansion Seen

OMAHA (DTN) -- The U.S. ethanol industry could see a real market boost in 2015 with an expected expansion of the E15 market, Green Plains Renewable Energy Chief Executive Officer Todd Becker said on Wednesday.

During a call with reporters and others, Becker said Green Plains had a stellar financial third quarter with higher revenues, higher operating income, a 100% increase in the quarterly cash dividend paid to shareholders, and a record volume of ethanol in the third quarter of 2014 when compared to the same time in 2013. The Omaha-based GPRE operates 12 ethanol plants with a production capacity of about 1 billion gallons a year.

Although Becker said the company is booking export sales as far out as the third quarter of 2015, he said the company is hopeful about the expected expansion of the U.S. market next year, in particular through E15. "By the end of next year, we could see 200 to 300 more" stations selling E15, he said. Currently, there are about 90 stations offering the higher blend of ethanol approved for use in vehicles 2001 and newer.

"Our first goal is to get to 100 million gallons, and we have very large metropolitan areas considering E15 as a fuel," Becker said. "It's a stay-tuned kind of thing." He said those stations that do offer E15 currently are "emptying their tanks" as a result of consumer demand.

GPRE PERFORMANCE

Green Plains reported a net income for the quarter of $41.7 million, or $1.03 per diluted share. That compares to net income of $9.4 million, or 28 cents per diluted share, for the same period in 2013. Revenues were $833.9 million for the third quarter of 2014 compared to $758 million for the same period in 2013.

During the third quarter, Green Plains had record production of 246.9 million gallons of ethanol, or about 96% of its daily average production capacity. Operating income for non-ethanol segments of the business including corn oil production, agribusiness, and marketing and distribution segments was $22.2 million in the third quarter of 2014 compared to $14.2 million for the same period in 2013. Non-ethanol operating income for the nine-month period ended Sept. 30, 2014, was $79.9 million compared to $52.7 million for the same period in 2013.

GPRE revenues were $2.4 billion for the nine-month period ended Sept. 30, 2014, compared to $2.3 billion for the same period in 2013. Net income for the nine-month period ended Sept. 30, 2014, was $117.3 million, or $2.90 per diluted share, compared to net income of $17.9 million, or 56 cents per diluted share, for the same period in 2013.

In August 2014, the company repurchased up to $100 million of its common stock.

In September 2014, Green Plains paid a quarterly cash dividend of 8 cents per share on its common stock. The dividend was a 100% increase from the previous quarterly cash dividend. This year to date, Green Plains has paid $5.9 million in dividends to shareholders.

When it comes to corn basis at the company's plants, Becker said in those locations where harvest is completed, basis is "below historical levels." Where corn has not been harvested, basis remains high. With ethanol, Becker said "we've seen now the return of very high basis levels."

Becker said the company continues to see steady export demand from Brazil and growing demand from India and the Philippines, where they have "been much more active than we've seen.

"Brazil's not been a large player so far in our export sales," he said. "It's still wait-and-see to see what Brazil is to do."

Becker said the company is expecting to see in the range of 200 million to 300 million gallons of ethanol exported in the fourth quarter of 2014, compared to about 200 million gallons in the same quarter last year.

"I don't think there's any incentive at this point to slow production," he said. "We've got plenty of room before the market begins to think about slowing down. The long-term fundamentals remain strong. We have never been financially stronger than we are today."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow Todd on Twitter @toddneeleyDTN

(AG/CZ)

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