Green Plains Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report; the supplied filing text does not provide standalone fourth-quarter results. Green Plains operates 11 ethanol biorefineries, alongside agribusiness and energy-services operations and its consolidated fuel-storage and logistics partnership.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $3.663 billion | $2.827 billion |
| Gross margin | $137.8 million | $202.1 million |
| Operating income (loss) | $(98.9) million | $25.5 million |
| Net income (loss), consolidated | $(103.4) million | $(44.1) million |
| Net loss attributable to Green Plains | $(127.2) million; $(2.29) per diluted share | $(66.0) million; $(1.41) per diluted share |
| Adjusted EBITDA | $(0.8) million | $87.4 million |
| Cash provided by operating activities | $69.7 million | $4.2 million |
Revenue increased 30%, but higher corn, utility, freight and chemical costs, along with weaker ethanol-production margins, drove the decline in gross margin and operating results. Ethanol-production segment operating loss widened to $117.8 million from $28.0 million. Agribusiness and energy services operating income rose to $36.4 million from $17.5 million; partnership operating income was $47.7 million versus $48.7 million.
Year-end cash and cash equivalents were $444.7 million, with $55.6 million of restricted cash and $235.0 million available under the committed revolving facility, subject to conditions. Net cash used in investing activities was $105.3 million; capital expenditures were approximately $212.4 million, principally for high-protein projects. Operating cash flow less capital expenditures was approximately negative $142.7 million. The company reported $634.8 million of debt on a book-value basis and was in compliance with debt covenants at year-end. A 10% increase in interest rates was estimated to increase annual interest cost by about $1.8 million.
Material changes and notable items
- Production utilization averaged approximately 91%, up from 77% in 2021. Ethanol sold rose to 872 million gallons from 751 million; distillers grains and renewable corn oil volumes also increased.
- 2022 results included a $27.7 million USDA Biofuel Producer Program grant in other income. Adjusted EBITDA excludes this grant; it is not a recurring operating-margin contribution.
- Green Plains refinanced certain working-capital facilities with a $350 million sustainability-linked revolver maturing in 2027; $115 million was drawn at year-end. The facility has financial covenants and pricing adjustments linked to sustainability criteria.
- The $64 million 4.00% convertible notes due 2024 and the remaining 4.125% convertible notes due 2022 were retired in 2022, principally through conversions or exchanges into common shares. The $230 million 2.25% convertible notes due 2027 remained outstanding.
- Management increased the valuation allowance against deferred tax assets. The company reported $63.9 million of federal research-and-development tax-credit carryforwards, while approximately $51.4 million of unrecognized tax benefits related to R&D credits were under audit.
Outlook, risks and contingencies
Management estimated 2023 capital spending of approximately $150 million to $250 million, including further deployment of MSC high-protein and CST glucose/dextrose technology and maintenance projects. Shenandoah’s commercial-scale CST project was expected to become operational in late 2023. The company did not provide specific earnings or margin guidance in the supplied filing text.
Key execution and market risks include volatile corn, natural-gas, ethanol and coproduct prices; potentially insufficient margins and production reductions; hedging and margin-call liquidity exposure; and uncertainty in demand, exports, RFS mandates, RIN values and clean-fuel policy. The company also identified construction, yield, customer demand and product-pricing risks for its value-added technology expansion. It had committed eight biorefineries to a 12-year carbon-offtake project, with the project’s anticipated completion date stated as 2024. Contractual obligations included $389.1 million of future commodity purchases and $23.6 million of storage and transportation commitments. Management said ordinary-course litigation was not expected to have a material adverse effect.
Most important facts for investors to verify
- Whether ethanol-production margins recover, including the movement in corn, natural gas, ethanol and coproduct prices, and the effects of hedging.
- Whether MSC and CST installations meet construction schedules, achieve projected yields, and secure customer demand at profitable prices.
- Actual 2023 capital spending and funding needs compared with the $150 million–$250 million estimate, given 2022 operating cash flow and capital expenditures.
- Available revolver capacity, covenant compliance, variable-rate debt exposure and the effect of any required subsidiary-level liquidity support.
- Resolution of the R&D-credit audit and whether deferred tax assets become realizable; distinguish the USDA grant from recurring performance.
- Progress and timing of the carbon-capture project, and final federal and state renewable-fuel rules affecting demand, credits and product value.