Green Plains Renewable Energy Inc. (



Q2 2011 Earnings Call

July 28, 2011 11:00 AM ET


Jim Stark – VP, Investor and Media Relations

Todd Becker – President and CEO

Jerry Peters – CFO


Mike Ritzenthaler – Piper Jaffray

Farha Aslam – Stephens Incorporator

Lucy Watson – Jefferies & Company

Brent Rystrom – Feltl

Matt Farwell – Imperial Capital

Luke Beltnick -TPG Credit

Paul Resnik – Resnik Asset Management



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Good day everyone, and welcome to the Green Plains Renewable Energy, Inc. Second Quarter 2011 Financial Results Conference Call. Today’s conference is being recorded. At this time, I like to turn the call over to Mr. Jim Stark. Please go ahead, sir.

Jim Stark

Thanks Jay. Welcome to our second quarter 2011 earnings call. On the call today is Todd Becker, President and Chief Executive Officer; Jerry Peters, our Chief Financial Officer; and Jeff Briggs, our Chief Operating Officer. We are here to discuss our second quarter 2011 financial results and the recent developments for Green Plains Renewable Energy.

There is a slide presentation for you to follow along with as we go through our comments today. You can find this presentation on our website at on the Investor page under the Events and Presentations link.

Our comments today will contain forward-looking statements which are any statements made that are not historical facts. These forward-looking statements are based on current expectations of Green Plains’ management team and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, Green Plains’ actual results could differ materially from management’s expectations.

Please refer to page two of the website presentation and our 10-K and other periodic SEC filings for information about factors that could cause different outcomes. The information presented today is time-sensitive and is accurate only at this time. If any portion of this presentation is rebroadcast, retransmitted, or redistributed at a later date, Green Plains will not be reviewing or updating this material.

I will now turn the call over to Todd Becker.

Todd Becker

Thanks Jim and thanks everybody joining on the call today. Over the last 10 profitable quarters, our strategy was to operate safely, diversify our earning, maintain our focus on disciplinary risk management and lower our operating cost per gallon. This is all to protect our shareholders during a times of ethanol margin compression and to prove we have a sustainable business during the cyclical downturn.

This explains what happened in the second quarter of 2011. We did earn $0.14 a share in the second quarter, which was a direct result of our diversification strategy where we earn enough from other segments to maintain profitability across the whole company.

Corn oil production made a significant contribution in our profitability generating $6.3 million of operating income and the sale of 21.5 million pounds of the product. Eight of our nine plants are in full production and the ninth plant will be producing corn oil by the end of the third quarter. We expect to be producing over 25 million pounds per quarter going forward with the additional plant and improved yield as we line out our equipment and debottleneck that process.

Because of the significant contribution corn oil makes to our business, we’ve broken it out as a segment for reporting purposes and remember we report corn oil as a net number after keeping our plants whole for the storage grains revenues and covering expenses related to the production of oil.

We again reported profitable segments across the board in this quarter, as we generated $22.6 million of operating income before corporate expenses. Total EBITDA for the quarter was approximately $30 million, which was also an improvement over the second quarter of last year. We sold and produced a record 184 million gallons of ethanol and a record 514,000 tons of the storage grain, which we sell for all segments from livestock as well as for export.

Even with the compressed margin environment, we’re successful in producing good results in our ethanol production segment. I’ll get into a broader discussion on margins later in the call. Year-to-date, our Agribusiness is performing in total as expected and we continue to work on driving up profitability by focusing on cost handle and margins.

We have taken some steps that should begin generating better result and believe that as we close our 2011, we will see a strong finish in the Agribusiness. We are finishing our Tennessee grain storage expansion and also have the opportunity to build an additional 1 million bushels space in Iowa which we have not yet reported. This will be in an expansion of our Gruver and Langdon facilities and should be ready for harvest.

In total, we should have 37 million bushels of own storage in our Agribusiness segment by the end of 2011. We did complete a small acquisition of a country elevator in Hopkins, Missouri in June that increased our grain storage capacity as well and we continue to actively pursue acquisition opportunities in this segment.

As I mentioned earlier, corn oil production is now its own segment, removed from the marketing and distribution group. We did see good growth opportunities in our Marketing and distribution segment as we focus on expanding Glen Star’s platform and as we become more active in the bio fuels and blended fuel markets. We believe the opportunities for downstream fuel distribution are substantial.

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