Green Plains Renewable Energy INC. (GPRE)

[Slashnuts]

GPRE's Oil Yields 32% Higher Than Valero's

GPRE Not Slowing/Shutting Plants Down Thanks To Earnings From Corn Oil

Here's the CC highlights from GERS' #1 largest customer.

In Q312, GPRE operated at 87%. They produced 161 million gallons of ethanol out of the 185 million gallon per quarter capacity.

"Our ethanol yield in the quarter was 2.84 gallons per bushel of corn, and we had a slight uptick in our yield on corn oil to .66 pounds per bushel."

"Increase in corn oil production year-over-year is attributable to improving our corn oil yield per bushel to 0.66 pounds compared to 0.50 pounds in 2011."

"With better margins and our plant maintenance shutdowns completed, we anticipate our fourth quarter production rate to be closer to about 92% or 93% of our expected operating capacity."

GPRE is projecting they'll operate at about 93% capacity in Q412. So while other producers like Valero are shutting plants down, GPRE is increasing production. http://www.bizjournals.com/sanantonio/news/2012/10/31/valero-idles-ethanol-plants-in.html

If you look at the fact that Valero is getting .5 pounds of oil per bushel and GPRE is doing .66 pounds, this may be the difference between being able to operate or not. With GPRE's oil yields 32% higher than Valero's, I wonder if this is the reason Valero has not installed the ICM AOS at the rest of their plants.(Remember they said they would study the possibility of it?)

Since GPRE is projecting an increase in operating capacity to 93% or 172 million gallons of ethanol, we can expect oil extraction to be right around 40 million pounds in Q412. That is unless of course extraction yields go higher. (172MG/2.84X.66)

GPRE predicts return to profitability in Q412
"We are approximately 60% locked for ethanol margins in the current quarter at profitable levels and even though the early harvest accelerated operating income from our agribusiness segment into the third quarter, I'm confident to say that our ongoing operations will return to profitability at the net income line in the fourth quarter."

GPRE not shutting plants down thanks to earnings from corn oil

"...we do a variable cost analysis literally every day, and so corn oil is part of that cost analysis. So we – based on that, we never really saw a time because of the earnings from corn oil that we needed to slowdown any further or shutdown our plants. While we reported separately, we do take it into consideration in our decisions we make to a slow or shutdown our production."

http://seekingalpha.com/article/966461-green-plains-renewable-energy-s-ceo-discusses-q3-2012-results-earnings-call-transcript?find=93%25&all=false

Farha Aslam - Stephens, Inc

Hi, can you guys hear me?

Todd Becker

Yes, we can.

Farha Aslam - Stephens, Inc


Great. Thanks. First question is on the ethanol group and balancing that with your corn oil. In the quarter, it looks like you definitely balanced production in ethanol with what you earned in corn oil extraction. Could you just share with us your strategy going forward, if you see a negative quarter, is that how you’re going to try and run the two segments?

Todd Becker

Yeah, what we do is, we actually look at – we do a variable cost analysis literally every day, and so corn oil is part of that cost analysis. So we – based on that, we never really saw a time because of the earnings from corn oil that we needed to slowdown any further or shutdown our plants. While we reported separately, we do take it into consideration in our decisions we make to a slow or shutdown our production.

Farha Aslam - Stephens, Inc

And so kind of going forward, if we see negative ethanol margins, but can we assume that you're going to slow down to the degree that corn oil offsets that?

Todd Becker

Well, we may not slowdown. It just depends on that related to variable cost related to corn oil. So, yes, and we look at all of that, but it doesn't actually mean that we slowdown in a negative environment.