Green Plains Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Amounts are in U.S. dollars; financial statement amounts are generally in millions unless noted. Green Plains produces ethanol and related products, provides agribusiness and energy services, and operates fuel storage and transportation assets through its consolidated partnership.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $781.4 million | $553.6 million |
| Operating income (loss) | $(47.9) million | $31.3 million |
| Net loss attributable to Green Plains | $(61.5) million; $(1.16) per share | $(6.5) million; $(0.17) per share |
| Adjusted EBITDA | $(27.8) million | $15.4 million |
| Cash from (used in) operations | $(162.5) million | $(37.0) million |
| Capital expenditures | $62.0 million | $31.5 million |
- Revenue rose 41%, primarily on higher prices for ethanol, distillers grains and corn oil and increased commodity trading revenue. Cost of goods sold rose 52%; revenue less cost of goods sold was approximately $8.9 million, versus $44.4 million a year earlier.
- Cash and cash equivalents were $509.2 million, restricted cash $95.1 million, and marketable securities $24.9 million at quarter-end. Current assets were $1.163 billion and current liabilities $580.7 million.
- Debt was approximately $903.8 million by book value, versus $722.7 million at December 31, 2021. The company reported $369.2 million of variable-rate debt. Debt fair value was approximately $1.024 billion.
- The company used $162.5 million in operating cash, with working capital movements including a $46.1 million inventory increase. Cash, cash equivalents and restricted cash together ended the quarter at $604.3 million.
Material changes and operating results
- Ethanol production segment operating loss widened to $51.2 million from $20.3 million; segment adjusted EBITDA was $(32.7) million versus $(1.8) million. The segment recorded a $13.2 million inventory valuation charge.
- Ethanol production was 196.3 million gallons, up 10.3%; average plant utilization was 83.1%, versus 71.1%. Management attributed the higher utilization largely to progress on plant modernization and upgrades.
- Agribusiness and energy services operating income decreased to $10.4 million from $13.3 million, primarily due to lower trading margins. Partnership operating income decreased to $11.8 million from $12.9 million.
- Q1 2021 included a $36.9 million gain on the sale of the Ord, Nebraska plant and a $22.1 million loss on extinguishment of convertible debt. These items affect comparison with Q1 2022; lower ethanol production margins also weighed on the current period.
- Derivative instruments had a material impact: the filing reports net losses of $6.0 million in revenue and $62.4 million in cost of goods sold during Q1 2022. Commodity price changes can cause hedge and physical positions to affect earnings in different periods.
Outlook, management commentary and risks
- Management described the quarter’s ethanol margin environment as weak, citing industry overproduction, higher ethanol stocks and COVID-variant-related weakness in driving demand. It noted that production may be reduced or operated below capacity if margins or construction needs warrant.
- Capital spending for the remainder of 2022 was estimated at $190–$240 million, primarily for Ultra-High Protein expansion and other projects. Three additional MSC protein technology installations were expected to become operational by mid-to-late 2022; the company planned broader deployment over subsequent years.
- Management estimated 2022 U.S. net ethanol exports at 1.3–1.5 billion gallons. Eight biorefineries had entered long-term carbon offtake agreements for a carbon capture project expected to be completed in 2024.
- On March 25, 2022, subsidiaries refinanced prior working-capital facilities with a five-year, $350 million sustainability-linked revolving facility maturing in 2027. The balance drawn at quarter-end was $305 million; the company reported $45 million available, subject to facility conditions.
- Management said it was in compliance with debt covenants at March 31 and believed it had sufficient working capital, but cautioned that sustained unprofitable operations could strain liquidity. Certain subsidiary assets are restricted from transfer to the parent.
- Key risks include volatile corn, ethanol, natural gas and coproduct prices; margin compression; commodity-market and counterparty exposure; potential margin calls; changes to renewable fuel mandates and E15 rules; and effects of geopolitical events, including the war in Ukraine. The filing also cites a $532.4 million value of contracted future commodity purchases and $31.4 million of storage and transportation commitments.
- The company reported ordinary-course litigation that it did not expect to have a material adverse effect. It disclosed $51.4 million of unrecognized tax benefits. No specific annual earnings or revenue guidance was provided.
Important facts for investors to verify
- Whether ethanol crush margins and the company’s cash use improved after quarter-end, given the Q1 operating loss and working-capital outflow.
- Progress, costs, timing and expected returns for Ultra-High Protein and other planned capital projects; compare actual remaining-2022 capital spending with the $190–$240 million estimate.
- Available borrowing capacity, covenant headroom, restrictions on subsidiary cash transfers and exposure to variable interest rates and commodity margin calls.
- Developments in RFS volumes, small refinery exemptions and E15 policy, and their effect on ethanol demand and margins.
- Actual realization of the expected ethanol export demand and carbon capture project timeline; these are forward-looking expectations, not guaranteed outcomes.