Green Plains Inc. (NASDAQ:GPRE) (“Green Plains” or “the company”) has released its financial results for the fourth quarter and full year of 2024. The company reported a net loss of $54.9 million, or $(0.86) per diluted share, for the fourth quarter, compared to net income of $7.2 million, or $0.12 per diluted share, in the same period of 2023. Revenue for the quarter stood at $584.0 million, a decline from $712.4 million in the prior year. EBITDA for the quarter was $(18.9) million, contrasting with $44.7 million in Q4 2023.
Strategic Initiatives and Cost Reduction Measures
As Green Plains moves into 2025, it has initiated a corporate reorganization and cost-cutting program aimed at significantly reducing expenses. Todd Becker, President and CEO, stated that the company is targeting up to $50 million in annual savings. The first phase of this initiative has already implemented $30 million in ongoing cost improvements. Over the past few years, Green Plains has allocated capital strategically in sales, marketing, and innovation to bring its ingredients to market. Now, the company is transitioning from development to commercialization, which includes streamlining expenses.
A key component of this cost-saving effort involves idling the Fairmont, Minnesota, facility, which has faced persistent localized margin pressure due to flooding in the region. In addition, Green Plains has realigned its corporate and trade group SG&A functions, allowing the company to concentrate on high-value strategic initiatives as it prepares to launch its carbon strategy later in 2025.
Advantage Nebraska Strategy and Carbon Capture Developments
Green Plains’ “Advantage Nebraska” strategy remains on track, with significant progress in permitting, construction, and regulatory approvals. The company’s 287-million-gallon Nebraska platform is well-positioned to benefit from the 45Z Clean Fuel Production Credit. The recent update to the GREET model has been favorable to Green Plains’ assets, potentially improving financial outcomes beyond initial expectations. The company’s carbon capture operations in Nebraska are expected to commence in the second half of 2025, sequestering biogenic carbon dioxide. Management anticipates this will contribute significantly to valuation once the full impact is reflected in the share price.
Clean Sugar Technology and Market Expansion
During Q4 2024, Green Plains successfully launched operations at its clean sugar facility and produced on-spec product samples, which were sent to customers for validation. The company has also secured religious certifications and obtained the Iowa Food Processor license, a key milestone in its Food Safety System Certification (FSSC) audit. These achievements pave the way for the company’s low-CI dextrose to be included in various food and ingredient applications. However, to optimize plant efficiency, the company is addressing bottlenecks in wastewater capacity. The facility will operate at reduced rates, focusing on targeted production campaigns or temporary idling as needed. Green Plains remains confident that this technology is a global game changer and will provide long-term value to shareholders.
Future Financial Outlook and Market Dynamics
The company projects that the combined impact of cost reductions and carbon earnings from Nebraska could contribute up to $180 million in annualized earnings, even before factoring in ethanol, renewable corn oil (DCO), and its high-protein initiative. While the global and local protein markets are currently oversupplied, Green Plains’ high-protein production strategy continues to deliver earnings.
Additionally, DCO has emerged as an advantaged feedstock for renewable diesel production, as evidenced by its recent premium prices over soybean oil. Ethanol blending rates are also rising, and with several industry-wide plant idlings—including Fairmont—physical ethanol stocks are expected to improve throughout the year. These trends could create a more favorable market environment. The planned launch of Green Plains’ carbon capture initiative in the second half of the year is expected to further enhance the company’s margin structure.
Full-Year 2024 Highlights
- Completed the acquisition of the remaining interest in Green Plains Partners LP on January 9, 2024, streamlining operations and improving efficiencies.
- Partnered with Tharaldson Ethanol in Casselton, North Dakota, to launch the world’s largest MSC™ facility in Q2, boosting Ultra-High Protein production capacity to 430,000 tons annually.
- Commissioned a demonstration facility in York, Nebraska, integrating Fluid Quip Technologies’ MSC™ with Shell Fiber Conversion Technology (SFCT) in the first half of 2024.
- Executed construction agreements and procured major equipment to capture carbon at Central City, Wood River, and York facilities as part of the Advantage Nebraska strategy.
- Sold the unit train terminal in Birmingham, Alabama, to Lincoln Birmingham, LLC on September 30, 2024, using the proceeds to repay the Green Plains Partners term loan due in 2026.
- Initiated commercial operations at the Clean Sugar Technology™ facility in Shenandoah, Iowa, sending product samples for evaluation by potential customers.
Operational Performance
In Q4 2024, Green Plains’ ethanol production segment sold 209.5 million gallons of ethanol, slightly down from 215.7 million gallons in Q4 2023. The consolidated ethanol crush margin fell to $(15.5) million, compared to $53.0 million in the prior year. The decline was driven by lower selling prices for ethanol, distillers grains, and renewable corn oil, as well as lower volumes in the ethanol production segment. Conversely, the agribusiness and energy services segment experienced increased revenue due to higher ethanol and natural gas trading volumes.
Total consolidated revenue decreased by $128.4 million year-over-year. The net loss attributable to Green Plains widened by $62.2 million, while EBITDA declined by $63.6 million compared to Q4 2023. Interest expenses dropped slightly by $0.9 million. However, income tax expense increased to $7.0 million from an income tax benefit of $0.3 million in Q4 2023. This increase was primarily due to a tax settlement with the IRS covering tax years 2013-2018, resolving uncertainties related to Green Plains’ research and development tax credits.
Business Segments Overview
Green Plains operates through two primary business segments:
- Ethanol Production: Includes the production, storage, and transportation of ethanol, distillers grains, Ultra-High Protein, and renewable corn oil.
- Agribusiness and Energy Services: Encompasses grain handling, storage, commodity marketing, and merchant trading for ethanol, distillers grains, renewable corn oil, natural gas, and other commodities.
Following Green Plains’ acquisition of the remaining interests in Green Plains Partners LP, the partnership’s financials have been consolidated into the ethanol production segment. Revenue and operating results from fuel storage and transportation, previously classified under the partnership segment, are now included in ethanol production. Additionally, transactions between the partnership and Green Plains Trade for ethanol storage and transportation are now recorded within the ethanol production segment instead of being treated as third-party transactions.
