Green Plains to Optimize Portfolio

OAKHURST, N.J. (DTN) -- Green Plains, in its first quarter earnings release, announced its intention to reposition its assets over the next several years to drive improved margins and returns for its shareholders as part of its Portfolio Optimization Program.

"This effort will include divestment of assets that do not support the long-term objectives of the company. This will result in a more efficient asset base focused on enhanced protein production and export supply chain maximization," the release read.

The program's five strategic objectives include: prove value of Green Plains' assets for our shareholders through strategic divestments; significantly reduce or eliminate term debt by the end of 2018 with sale proceeds; invest in high-protein process technology at the Shenandoah, Iowa, ethanol facility with other locations to follow; repurchase shares with remaining proceeds and free cash flow when market conditions are optimal; reduce controllable expenses $10 to $15 million on an annual run rate basis, starting in the third quarter.

"We have built a platform whose intrinsic value is not reflected in our market valuation," said Todd Becker, president and CEO. "To remedy this, we intend to optimize our portfolio. Our primary goals are to improve our share price and significantly reduce our debt levels."

"Future investments will be focused on protein production, streamlining our export supply chain to leverage our strong position and maximizing our returns at our export facility in Beaumont, Texas," continued Becker. "Assets that do not align with these goals will be divested to fund our capital needs in support of this strategy."

Green Plains has retained XMS Capital Partners as the lead advisor and Ocean Park to manage the process of certain assets.

Green Plains produced 280.4 million gallons of ethanol during the first quarter, down from 326.4 million for the same period in 2017. The consolidated ethanol crush margin was $15.3 million for the quarter profiled compared with $37.7 million in the first quarter 2017. The consolidated ethanol crush margin is the ethanol production segment's operating income before depreciation and amortization, which includes corn oil, plus intercompany storage, transportation and other fees, net of related expenses.

Net loss attributable to the company for the quarter profiled was $24.1 million compared with a net loss of $3.6 million for the first quarter 2017.

"Margins were weak in the first quarter, yet we expect demand for ethanol to improve domestically and internationally as we enter summer driving season," said Becker. "As we indicated in February, we limited production due to weak ethanol margins as well as major capital improvements at our plant in Madison, Illinois. We achieved a record yield of 2.89 gallons of ethanol per bushel of corn as a result of our efforts to continue driving efficiency in our ethanol production processes."

Becker furthered, "Margins remained volatile even though the industry exported over 500 million gallons of ethanol in the first quarter, keeping exports on pace for another record year in 2018 and industry stock levels lower than each of the two previous years during the same period. We anticipate domestic ethanol blending will grow this year as a result of increased gasoline demand, the ethanol price discount to wholesale gasoline and continued effort by industry to sell E15 year-round."