Green Plains Renewable Energy, Inc. (Green Plains Renewable Energy) has reported total revenues of $221.1 million for the first quarter of 2009, compared with the total revenues of $186.9 million in the previous quarter. It has also reported a net loss of $9.3 million, or $0.38 loss per share, for the first quarter of fiscal 2009, compared with the net loss of $2.02 million, or $0.24 loss per share, in the year-ago quarter.
The first quarter 2009 results were impacted by:
A one-time charge of around $4.6 million related to the termination of certain legacy agreements with outside marketers to sell Green Plains Renewable Energy’ ethanol production.
Decreased revenues and increased expenses related to an accelerated plant shutdown for repairs at the Bluffton, Indiana facility and operational issues at the Superior, IA facility, collectively affecting operating income by around $4.0 million.
As previously disclosed, Green Plains Renewable Energy’s terminated certain legacy agreements in January and February of 2009 to allow the company to market all of its own ethanol production through Green Plains Renewable Energy Trade Group. It is anticipated that these terminations will provide several long-term benefits, including mitigation of the risks of counterparty concentration; more efficient price risk management and acceleration of cash flow from ethanol sales. In addition, Green Plains Renewable Energy expects savings in marketing fees and lower leased railcar costs totaling $4.8 million per year for each of the next three years.
Operating income was negatively impacted by around $4.0 million for the quarter: $2.5 million and $1.5 million for Bluffton repairs and Superior operational issues, respectively. During March, a scheduled maintenance shutdown was accelerated at the Bluffton facility to address needed repairs and make long-term improvements to the distillation process. The Superior plant encountered several technology and design issues that limited the plant’s performance and reliability, specifically equipment failures related to production of dried distillers grains (DDG). As a result, Superior produced more wet distillers grains which have lower market values than DDG.
Cash flow, as measured by earnings before interest, income taxes, depreciation and amortization (EBITDA), was a negative $0.6 million for the quarter ended March 31, 2009. Green Plains Renewable Energy had $53.5 million in cash and equivalents and $18.2 million available under committed loan agreements at March 31, 2009.
I am pleased with the effort we made in a tough first quarter, but I am unhappy with the results, said Todd Becker, president and chief executive officer. Our quarterly results were negatively impacted by three one-time events, which eliminated profit margins we worked hard to achieve. The termination of the third-party ethanol sales agreements will provide on-going benefits through reduced costs and counterparty exposure. We believe that controlling the marketing and distribution of the ethanol we produce will provide long-term benefits that far outweigh the expense incurred in the first quarter.
The operational challenges we encountered at two of our plants during the quarter, while disappointing, often are a part of plant start-up. Both plants commenced operations during the last half of 2008, and are now back on-line and producing ethanol and distillers grains at capacity. We believe these equipment issues are non-recurring, Becker commented.
We were disappointed with the first quarter’s results as our risk managers, marketers and traders worked very hard to lock in favorable EBITDA margins in a challenging environment. In fact, the industry experienced one of the worst margin environments we have seen for a long time. However, the commodity prices we realized would have generated a positive EBITDA margin across all of our plants, continued Becker. We are optimistic as we have seen a general improvement in margins during the second quarter and our plants are running well after the upgrades and repairs that were made.