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Green Plains Renewable Energy's CEO Discusses Q3 2011 Results - Earnings Conference Call

I will now turn the call over to Todd Becker.

Todd Becker

Thanks Jim. We’re glad you could join us on the call today. First of all, we had a strong performance from our non-ethanol production segment in Q3, generating $13.7 million or 40% of our segment’s operating income. We have now demonstrated that our goal of $50 million of non-ethanol operating income can be achieved, and we are looking for ways to further increase this contribution to the bottom line.

This is a culmination of our work over the last couple of years to minimize the ups and downs in the cyclical ethanol production segment. This will allow us to remain profitable and continue to service our debt and generate free cash flows during times of margin compression. Ethanol margins did show good improvement in Q3, when compared to Q2 2011, as we generated $20.9 million of operating income from the ethanol production segment; the highest level on a quarterly basis this year. For the tenth consecutive quarter, we reported profitable results with fully diluted earnings of $0.32 a share on net income of $12.4 million.

Corn oil, again, made a significant contribution to our profitability, generating $9.6 million of operating income in Q3. For the last three quarters, corn oil production has generated over $18 million of operating income for our company. The payback on this investment was less than a year, and as a reminder, the cash flow generated by this segment flows freely to the corporate entity and is unencumbered at the ethanol plant subsidiaries. Our Tennessee agribusiness operations have helped reduce some of the seasonality typically seen in this segment.

We saw an improvement in agribusiness in Q3, generating $2 million of operating income, which was $1.5 million better than Q3 2010. The business benefitted from an excellent Tennessee soft wheat harvest. Our grain storage expansion projects have also been completed, bringing our storage capacity to 37 million bushels overall. We are confident this will be an excellent investment for the long term. We produced and sold 185 million gallons of fuel-grade ethanol; 534,000 tons of distiller’s grains; and more than 32 million pounds of corn oil from our plants during Q3 2011.

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