"We are pleased with our results considering the tight margin environment experienced during the third quarter," said Todd Becker, president and chief executive officer. "Based on the recent improvement in the forward curve for ethanol margins and current market fundamentals, we believe our fourth quarter operating income will exceed the third quarter of 2015."
With the formation of Green Plains Partners LP, Green Plains restructured its operating segments to create a separate reportable segment for the partnership. The partnership is included in the Green Plains’ consolidated financial statements, with public ownership reflected as a noncontrolling interest.
During the third quarter, Green Plains’ ethanol production totaled 215.6 million gallons, or approximately 83.8% of its daily average production capacity. As a result of additional intersegment transactions primarily relating to contractual arrangements with Green Plains Partners, the company has added financial disclosure concerning the consolidated ethanol crush margin, i.e. the gross margin earned before charges and fees paid to affiliates. The consolidated ethanol crush margin is operating income before depreciation and amortization from the ethanol production segment, including corn oil production, plus the partnership’s intercompany storage and transportation activities and other internal fees. The consolidated ethanol crush margin was $34.9 million, or $0.16 per gallon for the third quarter of 2015, compared to $82.8 million, or $0.34 per gallon for the same period in 2014.
"With our recent acquisition activity, we are putting our strong balance sheet to work for our shareholders," Becker said. "The purchase of ethanol plants in Hopewell and Hereford, along with expansion projects completed to date, will increase our production capacity to over 1.2 billion gallons per year. We believe each of these transactions will be accretive to earnings in the near term."
Revenues were $2.2 billion for the nine-month period ended September 30, 2015 compared to $2.4 billion for the same period of 2014. Net income attributable to Green Plains for the nine-month period ended September 30, 2015 was $10.7 million, or $0.27 per diluted share, compared to net income of $117.3 million, or $2.90 per diluted share, for the same period in 2014.
"Global demand for ethanol remains strong, with domestic blending occurring at a record pace and ethanol exports running approximately 6% ahead of last year," continued Becker. "For the third quarter, ethanol export sales were 21% of our production. We continue to see strong interest from a variety of countries for the ethanol, distillers grains and corn oil we produce."
Green Plains had $512.5 million in total cash and equivalents and $275.3 million available under committed loan agreements at subsidiaries (subject to borrowing base restrictions and other specified lending conditions) at September 30, 2015. EBITDA, which is defined as earnings before interest, income taxes, depreciation and amortization, for the third quarter 2015 was $36.3 million compared to $91.9 million for the same period in 2014.
2015 Third Quarter Business Highlights
In August, the board of directors of Green Plains Inc. declared a quarterly cash dividend of $0.12 per share on the company’s common stock. The cash dividend announced represents a 50% increase from the previous dividend and the second annual increase in the cash dividend paid to shareholders. Since the dividend was initiated in August 2013, the company has returned $22.0 million to shareholders.
In September 2015, the company repurchased 191,700 shares of common stock for approximately $4.0 million under its $100 million share repurchase authority.
As part of its Phase I ethanol production capacity expansion program, the company has added 35 million gallons of production capacity at a cost of $19.6 million through Oct. 1, 2015. The company anticipates adding another 30 million gallons of production capacity during the first quarter of 2016 and 20 million gallons of production capacity in the second quarter of 2016. The total cost of the Phase I expansion is estimated to be approximately $50 million, or $0.59 per gallon.
On Oct. 26, 2015, Green Plains announced that it had acquired an ethanol production facility in Hopewell, VA. Operating at full capacity, the facility’s dry mill ethanol plant will increase the company’s annual production capacity by approximately 60 million gallons. Production is expected to resume by the end of 2015 with corn oil processing expected to be operational during the second quarter of 2016.
On Nov. 2, 2015, Green Plains announced that it had signed a definitive agreement regarding the purchase of an ethanol production facility located in Hereford, TX with approximately 100 million gallons of annual production capacity. Under the terms of the agreement, Green Plains will acquire Hereford Renewable Energy, LLC for approximately $93.8 million, subject to customary closing adjustments, which includes $78.5 million for the ethanol production facility with the balance for working capital. The transaction is expected to close this month subject to customary closing conditions and regulatory approvals.
