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Green Plains Renewable Energy's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Since the end of this quarter those returns have narrowed and we’ve begun to liquidate these higher inventory levels. Our plant has 16 million gallons or 380,000 of onsite storage and we took advantage of that holding inventories off the market.

In addition, we also had several long term offsite storage agreements in place and use those as well. Our strong liquidity position allowed us to take advantage of this opportunity. Excluding the onetime settlement charge, which generated, we generated $1.1 million of operating income before depreciation or about $0.01 per gallon in the ethanol production segment, this is certainly the low mark for profitability in this segment for us.

But considering, there were about 10 days during the quarter where margins were at or breakeven EBITDA, we feel that we took maximum advantage of what the market was offering. We saw some of the lowest spot margins in the industry had experienced in the recent history. We also came into the quarter with very little coverage for the margin. There is a reason for that and I’ll discuss that later in the call.

We did experience a better yield in our Ethanol Production segment, reaching 2.84 gallons of ethanol per bushel of corn on average. Some of this was due to slowing down production and some was from recent capital projects. We are working on more projects to continue improving conversion rates and I will again comment more on this later in the call.

The diversification was important for us again in this quarter as we generated $9 million of non-ethanol operating income from our corn oil production, Agribusiness, and marketing and distribution segments, all with a positive operating income in the quarter. While this $9 million contribution was lower than the fourth quarter of last year, I would like to remind you that our Agribusiness is somewhat seasonal and traditionally has a lower first quarter compared to the remaining three quarters of the year.

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