Green Plains Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the supplied text does not provide a clear standalone fourth-quarter income statement or cash-flow result. Unless stated otherwise, amounts below are for the full year and comparisons are to 2022.
Business context
Green Plains produces ethanol and related co-products, markets agricultural and energy commodities, and provides fuel storage and transportation services. It operates ten biorefineries with approximately 903 million gallons of annual ethanol capacity. Its strategy is to move from commodity processing toward higher-value agricultural ingredients and technology, including Ultra-High Protein and low-carbon sugars.
Financial and operating performance
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $3.296 billion | $3.663 billion |
| Gross margin | $191.9 million | $137.8 million |
| Operating income (loss) | $(61.6) million | $(98.9) million |
| Net income (loss), including noncontrolling interests | $(76.3) million | $(103.4) million |
| Net loss attributable to Green Plains | $(93.4) million; $(1.59) per diluted share | $(127.2) million; $(2.29) per diluted share |
| Adjusted EBITDA (non-GAAP) | $45.5 million | $(0.8) million |
| Cash provided by operating activities | $56.3 million | $69.7 million |
| Capital expenditures | $108.5 million | $212.6 million |
Revenue declined 10%, mainly from lower average selling prices and lower volumes for ethanol, distillers grains and renewable corn oil, plus weaker trading margins. Higher ethanol-production margins improved the operating loss and adjusted EBITDA, partly offset by lower agribusiness trading margins and lower USDA grant income. Ethanol production-segment gross margin rose to $64.6 million from $1.8 million; that segment still recorded a $66.9 million operating loss, compared with a $117.8 million loss in 2022. Agribusiness and energy services operating income fell to $28.1 million from $36.4 million, while partnership operating income was $46.9 million versus $47.7 million.
Average plant utilization was approximately 89%, compared with 91% in 2022. Ethanol sold fell to 840.8 million gallons from 872.1 million; Ultra-High Protein sold increased to 223,000 tons from 67,000 tons. Consolidated gross margin was approximately 5.8% of revenue, versus 3.8% in 2022; operating margin remained negative at approximately 1.9% of revenue.
Liquidity, debt and capital
At December 31, 2023, cash and cash equivalents were $349.6 million and restricted cash was $29.2 million. The company reported $251.0 million available under its committed revolving credit agreement, subject to restrictions and lending conditions. Total debt was approximately $604.7 million, including $106.0 million of short-term borrowings and $498.8 million of long-term debt before unamortized issuance costs and current maturities. Variable-rate debt was $161.9 million; management estimated a 10% increase in interest rates would raise annual interest cost by approximately $1.7 million. Subsidiary financing restrictions limited access to approximately $126.8 million of net assets. The company reported compliance with debt covenants at year-end.
Cash and restricted cash together declined to $378.8 million from $500.3 million. Investing cash outflow was $106.9 million and financing cash outflow was $71.0 million. Management estimated 2024 capital spending of approximately $125 million to $150 million, expected to be funded with cash on hand and operating cash flow. The quarterly common-stock dividend remains suspended; no common shares were repurchased in 2023.
Material changes, outlook and risks
- Strategic review: The board initiated a review of alternatives to enhance shareholder value, potentially including acquisitions, divestitures, a merger or sale, partnerships and financings. There is no set timetable or assurance of a transaction. A February 2024 cooperation agreement with a large shareholder established standstill and voting obligations.
- Partnership merger: On January 9, 2024, Green Plains completed its acquisition of the publicly held Green Plains Partners units for approximately $143.1 million in total consideration, including $29.2 million cash and $113.9 million in stock. The units are no longer publicly traded. The 2023 financial statements still reflect public unitholders’ noncontrolling interest.
- Projects and growth: Shenandoah’s commercial Clean Sugar Technology project was expected to begin commissioning in early 2024; the York technology collaboration with Shell was also expected to begin commissioning in early 2024. Seven biorefineries are committed to carbon-capture projects, with three Nebraska projects anticipated in 2025 and Summit Carbon Solutions projects anticipated in 2026. These schedules and anticipated returns depend on execution, permits, infrastructure and regulatory incentives.
- Market and policy exposure: Results are highly sensitive to the spread between corn and natural-gas costs and prices for ethanol and co-products. Key risks include volatile commodity prices, hedging liquidity and margin calls, product-market acceptance and yields for new technologies, biofuel mandates and incentives, carbon-capture policy, competition from other feedstocks and fuels, and possible lower transportation-fuel demand.
- Unusual items: The Atkinson plant sale produced a $4.1 million pretax gain. A Wood River incident caused an approximately $9.5 million operating loss in 2023 after insurance proceeds. USDA Biofuel Producer Program grants were $3.4 million in 2023, compared with $27.7 million in 2022. Merger-related transaction costs were $5.1 million in 2023.
- Other exposures: The company disclosed approximately $51.4 million of unrecognized tax benefits related to research and development credits under audit; it could not estimate a potential adjustment. Ordinary-course litigation was not expected by management to have a material adverse effect. The auditor gave an unqualified opinion on the financial statements and internal controls; management also concluded controls were effective.
Important facts for investors to verify
- Review the full financial statements and notes for segment results, derivative positions, debt maturities, covenant terms and the company’s non-GAAP adjusted EBITDA reconciliation.
- Assess whether operating margins and cash generation can support planned capital spending and debt service, particularly given commodity volatility and variable-rate borrowings.
- Track delivery, cost, production yields, customer demand and realized premiums for Ultra-High Protein, Clean Sugar Technology and carbon-capture projects.
- Monitor the strategic review for any board-approved action, and confirm the completed partnership merger’s effects on share count, liquidity and ownership.
- Follow the research-credit tax audit and changes to fuel, carbon-capture and clean-fuel regulations that could affect demand, margins or expected project economics.