Green Plains Stock

Green Plains Inc. (Green Plains) operates as a biorefining company maximizing the potential of existing resources through fermentation and patented agribusiness technologies.

The company continues the transition from a commodity-processing business to a value-added agricultural technology company creating sustainable, high-value ingredients from existing resources. To that end, the company is executing on a number of initiatives to develop and implement proven agricultural, food and industrial biotechnology systems that allow for product diversification, new market opportunities and production of additional value-added low-carbon ingredients, such as Ultra-High Protein, dextrose, renewable corn oil and more, as well as offering these technologies to the broader biofuels industry.

Green Plains Partners LP, a master limited partnership, is the company’s primary downstream storage and logistics provider since its assets are the principal method of storing and delivering the ethanol the company produce. As of December 31, 2023, the company owned a 48.8% limited partner interest, a 2.0% general partner interest and all of the partnership’s incentive distribution rights.

Segments

The company groups its business activities into the following three operating segments to manage performance:

Ethanol Production: The company’s Ethanol Production segment includes the production of ethanol, distillers grains, Ultra-High Protein and renewable corn oil at ten biorefineries in Illinois, Indiana, Iowa, Minnesota, Nebraska and Tennessee. At capacity, the company’s facilities are capable of processing approximately 310 million bushels of corn per year and producing approximately 903 million gallons of ethanol, 2.2 million tons of distillers grains and Ultra-High Protein, and 300 million pounds of renewable corn oil, a low-carbon feedstock for biodiesel and renewable diesel. The company is one of the largest ethanol producers in North America.

Agribusiness and Energy Services: The company’s Agribusiness and Energy Services segment includes grain procurement, with approximately 20.2 million bushels of grain storage capacity, and the company’s commodity marketing business, which markets, sells and distributes the ethanol, distillers grains, Ultra-High Protein and renewable corn oil produced at the company’s ethanol plants. The company also markets ethanol for a third-party producer, as well as buys and sells ethanol, distillers grains, Ultra-High Protein, renewable corn oil, grain, natural gas and other commodities in various markets.

Partnership: The company’s master limited partnership provides fuel storage and transportation services through owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses. The partnership’s assets include 24 ethanol storage facilities, two fuel terminal facilities and approximately 2,180 leased railcars.

Business Strategy

As part of the company’s transformation to a value-added agricultural technology company, the company began producing Ultra-High Protein using FQT's MSC technology in 2020 and is deploying this technology across various locations to help meet growing demand for protein feed ingredients and low-carbon renewable corn oil. As of December 31, 2023, the company had installed and was operating FQT MSC technology at five of the company’s biorefineries. Installation at additional biorefineries is expected over the course of the next few years, both at the company’s other locations and across the broader industry. The biorefineries producing Ultra-High Protein, a feed ingredient with protein concentrations of 50% or greater and yeast concentrations of 25%, also increase the production of renewable corn oil and produce other higher-value products, such as post-MSC distillers grains. The company successfully completed full scale 60% protein production runs using FQT's MSC system.

In September 2022, the company broke ground at its biorefinery in Shenandoah, Iowa, as the first location to deploy FQT's CST at commercial scale, which is expected to begin commissioning in the first quarter of 2024. FQT CST allows for the production of both food and industrial grade low-carbon glucose and dextrose at a dry mill ethanol plant to target applications in food production, renewable chemicals and synthetic biology. The company also anticipates modifying additional biorefineries to include FQT CST production capabilities to meet anticipated future customer demands.

In January 2023, Green Plains, United Airlines and Tallgrass formed a joint venture, Blue Blade Energy, to develop and then commercialize a novel ATJ SAF technology.

As part of the company’s carbon reduction strategy, the company committed its seven biorefineries in Nebraska, Iowa and Minnesota to carbon capture and sequestration projects through carbon pipeline transport, four with Summit Carbon Solutions and the company’s three Nebraska biorefineries with another provider, which will lower GHG emissions through the capture of carbon dioxide at each of these biorefineries, significantly lowering their CI. The company anticipates the completion of its three Nebraska biorefinery carbon capture projects in 2025, and the Summit Carbon Solutions projects in 2026. In addition, the company is collaborating with global partners to explore innovative options for carbon use, such as synthetic methane production at Madison and Obion. The company intends to sequester the carbon from fermentation at Mount Vernon as well.

In July 2023, the company announced a technology collaboration with Equilon Enterprises LLC, which allows the company to use FQT’s precision separation and processing technology with Shell Fiber Conversion Technology. The two technologies will combine fermentation, mechanical separation and processing, and fiber conversion into one platform. This has the potential to create a new process to liberate all available distillers corn oil bound in the fiber fraction of the corn kernel, generate cellulosic sugars for production of low-carbon ethanol, and enhance and expand available high protein to produce high-quality ingredients for global animal feed diets. The company’s collaboration is expected to complete the construction of a facility at Green Plains York and begin commissioning in early 2024.

Disposition of Atkinson Ethanol Plant

On September 7, 2023, the company completed the disposition of its Atkinson ethanol plant and sale of certain related assets and transfer of certain related liabilities. The divested assets were reported within the company’s ethanol production, agribusiness and energy services and partnership segments.

Operating Segments

Ethanol Production segment

Ethanol Plants

The company operates ten ethanol plants, located in six states, that produce ethanol, distillers grains, Ultra-High Protein and renewable corn oil.

The company’s business is directly affected by the supply and demand for ethanol and other fuels in the markets served by the company’s assets. Miles driven typically increase during the spring and summer months related to vacation travel, followed closely by the fall season due to holiday travel.

Corn Feedstock and Ethanol Production

The company’s plants use corn as feedstock in a dry mill ethanol production process. Each of the company’s plants requires on average approximately 31 million bushels of corn annually, depending on its production capacity.

The company’s corn supply is obtained primarily from local markets. The company uses cash and forward purchase contracts with grain producers and elevators to buy corn. The company maintains direct relationships with local farmers, grain elevators and cooperatives, which serve as the company’s primary sources of grain feedstock for all ten of the company’s ethanol plants. This allows the company to purchase much of the corn the company need directly from farmers throughout the year. Each of the company’s plants is also situated on rail lines or has other logistical solutions to access corn supplies from other regions of the country should local supplies become insufficient.

Distillers Grains

The company can produce three forms of distillers grains, depending on the number of times the solids are passed through the dryer system:

Wet distillers grains, which contain approximately 65% to 70% moisture, have a shelf life of approximately three days and is therefore sold to dairies or feedlots within the immediate vicinity of the company’s plants;

Modified wet distillers grains, which is dried further to approximately 50% to 55% moisture, have a shelf life of approximately three weeks and are marketed to regional dairies and feedlots; and

Dried distillers grains, which have been dried more extensively to approximately 10% to 12% moisture, have an almost indefinite shelf life and may be stored, sold and shipped to any market.

Ultra-High Protein

Ultra-High Protein is corn fermented protein produced by further processing of the spent grain mash from the beer column. The spent grain is processed using FQT’s MSC technology, which contains a series of screening equipment to remove fiber from the spent grain which is sent to the distillers grain dryer. The remaining product is washed and clarified into a wet protein stream, which is dried in a ring dryer to produce Ultra-High Protein meal with protein concentrations of 50% or greater.

Renewable Corn Oil

Across the company’s entire platform, the company extracts on average approximately 1.0 pound of renewable corn oil per bushel of corn used to produce ethanol. Industrial uses for renewable corn oil are primarily as a feedstock for renewable diesel and biodiesel. Additionally, it is also used as a livestock feed additive.

Natural Gas

Depending on production parameters, the company’s ethanol plants use on average approximately 27,500 BTUs of natural gas per gallon of production. The company has service agreements to acquire the natural gas the company needs and transports the gas through pipelines to the company’s plants.

Electricity

The company’s plants require on average approximately 0.9 kilowatt hours of electricity per gallon of production. Local utilities supply the necessary electricity to all of the company’s ethanol plants.

Water

While some of the company’s plants satisfy a majority of their water requirements from wells located on their respective properties, each plant also obtains drinkable water from local municipal water sources. Each facility either uses city water or operates a filtration system to purify the well water that is used for its operations. Local municipalities supply all of the necessary water for the company’s plants that do not have onsite wells. Most of the water used in an ethanol plant is recycled in the production process.

Agribusiness and Energy Services segment

The company’s Agribusiness and Energy Services segment includes grain storage at the company’s ethanol plants of approximately 20.2 million bushels.

The company buys bulk grain, primarily corn, from area producers; and provides grain drying and storage services to those producers. The grain is used as feedstock for the company’s ethanol plants.

Seasonality is present within the company’s agribusiness operations. The fall harvest period typically results in higher handling margins and stronger financial results during the fourth quarter of each year (year ended December 2023).

Through Green Plains Trade, the company markets the ethanol the company and a third party produce to local, regional, national and international customers. The company also purchases ethanol from independent producers for pricing arbitrage. The company sells to various markets under sales agreements with integrated energy companies; retailers, traders and resellers in the United States and buyers for export to Brazil, Canada, Philippines, India, Europe and other international markets.

The company markets distillers grains and high protein ingredients to local, domestic and international markets through Green Plains Trade. The bulk of the company’s demand is delivered to geographic regions that do not have significant local corn, distillers grains or high protein ingredients production. The company sells to international markets indirectly through exporters. Access to diversified markets allows the company to sell product to customers offering the highest net price.

Also, through Green Plains Trade, the company’s renewable corn oil is sold primarily to renewable diesel and biodiesel plants and, to a lesser extent, feedlot and poultry markets. The company transports its renewable corn oil by truck to locations in a close proximity to the company’s ethanol plants primarily in the southeastern and midwestern regions of the United States. The company also transports renewable corn oil by rail and barges to national markets, as well as to exporters for shipment on vessels to international markets.

Through Green Plains Trade, the company provides marketing services of natural gas to the company’s ethanol plants and to other third parties including the procurement of both the pipeline capacity and natural gas. The company also enhances the value by aggregating volumes at various storage facilities, which can be sold to either the plants or various intermediary markets and end markets.

The company’s railcar fleet consists of approximately 680 leased hopper cars to transport distillers grains and Ultra-High Protein, 70 leased hopper cars to transport corn and approximately 150 leased tank cars to transport renewable corn oil. The initial terms of the lease contracts are for periods up to five years and the weighted average remaining lease terms on these cars was approximately 2 years as of December 31, 2023.

Partnership segment

The company’s Partnership segment provides fuel storage and transportation services through 24 ethanol storage facilities located at or near the company’s ten ethanol plants, two fuel terminal facilities located near major rail lines, and a leased railcar fleet and other transportation assets.

Transportation and Delivery

Most of the company’s ethanol plants are situated near major highways or rail lines to ensure efficient product movement. The company is able to move product from its ethanol plants to bulk terminals via truck, railcar or barge. The company also manages the logistics and transportation requirements of its customers to improve the company’s fleet’s efficiency.

Deliveries within 150 miles of the company’s plants and the partnership’s fuel terminal facilities are generally transported by truck. Deliveries to distant markets are shipped using major U.S. rail carriers that can switch cars to other major railroads, allowing the company’s plants to ship product throughout the United States and to international export terminals.

As of December 31, 2023, the partnership’s leased railcar fleet consisted of approximately 2,180 railcars with an aggregate capacity of 65.4 mmg. The company expects the partnership’s railcar volumetric capacity to fluctuate over the normal course of business as the existing railcar leases expire and the company enters into or acquires new railcar leases.

Terminal and Distribution Services

Ethanol is transported from the partnership’s terminals to third-party terminal racks where it is blended with gasoline and transferred to the loading rack for delivery by truck to retail gas stations. The partnership owns and operates fuel holding tanks and terminals, and provides terminal services and logistics solutions to markets that do not have efficient access to renewable fuels. The partnership owns and operates fuel terminals at two locations in two states with combined storage capacity of approximately 6.7 mmg and throughput capacity of approximately 480 mmgy. The company also has 24 ethanol storage facilities located at or near the company’s ten ethanol plants with a combined storage capacity of approximately 23.1 mmg to support current ethanol production capacity of approximately 903 mmgy.

Regulatory Matters

The company employs maintenance and operations personnel at each of the company’s facilities, which are regulated by the Occupational Safety and Health Administration.

History

The company, an Iowa corporation, was founded in 2004. It was incorporated in 2004. The company was formerly known as Green Plains Renewable Energy, Inc. and changed its name to Green Plains Inc. in 2014.