BMO Farm to Market Conference. May 18, 2017

Transcription

1 BMO Farm to Market Conference May 18, 2017

2 Todd Becker President & Chief Executive Officer Green Plains Inc. NASDAQ: GPRE Green Plains Partners LP NASDAQ: GPP

3 Forward-Looking Statements This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Statements that do not relate strictly to historical or current facts are forward-looking, and include words such as anticipates, believes, estimates, expects, goal, intends, plans, potential, predicts, should, will, and other words with similar meanings in connection with future operating or financial performance of Green Plains Inc. (NASDAQ: GPRE) and its subsidiaries, including Green Plains Partners LP (NASDAQ: GPP). Such statements are based on the management's current expectations, which are subject to various factors, risks and uncertainties that may cause actual results, outcomes, timing and performance to differ materially from those expressed or implied. Green Plains may experience significant fluctuations in future operating results due to a number of economic conditions, including competition in the industries in which Green Plains operates; commodity market risks, including those resulting from current weather conditions; financial market risks; counterparty risks; risks associated with changes to federal policy or regulation; risks related to closing and achieving anticipated results from acquisitions; risks associated with the joint venture to commercialize algae production; and other risks detailed in Green Plains' reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2016, and subsequent filings with the SEC. Forward-looking statements do not guarantee future performance or results nor are they necessarily accurate indicators that such performance or results will be achieved. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Green Plains is not obligated to update, and does not intend to update, its forward-looking statements at any time unless it is required by applicable securities laws. Page 3

4 Green Plains Inc. Formed in 2004 as an ethanol producer History of growth through accretive acquisitions and disciplined risk management Vertically integrated, commodity-processing businesses Strategically located, operationally efficient production assets Meaningful volumes and positions 2nd largest ethanol producer in the world $1.3 billion of EBITDA from , averaged 21 cents per gallon on 6.1 billion gallons of ethanol EBITDA (in millions) $351 $2.4 billion in assets as of March 31, 2017, $1.8 billion enterprise value Four operating segments $68 $130 $149 $116 $157 $127 $ Page 4

5 First Quarter 2017 Highlights Financial performance Net loss of $3.6 million, or $(0.09) per diluted share EBITDA of $43.8 million, up $49.6 million over last year Consolidated ethanol crush margin was $37.7 million, or $0.12 per gallon Produced million gallons of ethanol; 877,000 tons of distillers grains and 75.4 million pounds of corn oil; yield was 2.88 gallons of ethanol per bushel of corn Export sales accounted for 20% of the company s ethanol production, 8% of distillers grains and 87% of corn oil Partnership maintained strong distribution coverage ratio of 1.19x for the last 12 months Announced plans to acquire cattle-feeding operations from Cargill for $36.7 million Page 5

6 Ethanol Production Segment 17 ethanol plants in 9 states 2,000 trucks of corn delivered per day Average yield of 2.88 gallons of ethanol per bushel of corn $80.0 $60.0 $40.0 $20.0 Operating Income Last 5 Quarters (mm) Produces 1.5 billion gallons ethanol, 4.1 million tons of distillers grains and 345 million pounds of industrial corn oil $0.0 $-20.0 $ Q-16 2Q-16 3Q-16 4Q-16 1Q-17 Fairmont, Minnesota ethanol production facility Page 6

7 Domestic Ethanol Production Capacity 213 ethanol plants in the U.S. capable of producing 15.8 billion gallons of ethanol annually Top producers and consumers by state in million gallons per year ,595 72% ,050 2, ,345 1, , , , ,000 of consumption in the Northeast production capacity in six states Source: Renewable Fuels Association Legend: Production in mmgy Consumption in mmgy 821 Page 7

8 Higher Ethanol Blends E15 is offered at 800+ retail stations in 29 states Major retailers are converting pumps to E15, offering a higher octane fuel at a lower price than E10 Blending an average of 11% ethanol would result in annual demand for 15.8 (1) million gallons, exhausting annual domestic production 11% blend rate = domestic production U.S. Retail Stations Selling E15 (2) ) Based on billion gallons per year of gasoline consumption 2) Source: Growth Energy as of April 28, YTD Page 8

9 Export Demand is Dynamic and Growing U.S. and Brazil produced 85% of the world s ethanol supply in million gallons of U.S. ethanol exported Mar YTD, up 55% from last year 1,045 mmg of U.S. ethanol exported in 2016, 17% of which was exported to China bg of ethanol exports Canada 6% Canada 19% Turkey 16% China 7% S Korea 7% Mexico 20% Brazil 38% ROW 11% ROW 39% UAE 5% India 19% Thailand 6% Philippines 8% Ethanol Exports DDGS Exports 3.0 million metric tons of U.S. DDGS exported Mar YTD, up 26% from last year Vietnam, third largest exporter in 2016, taking negligible volumes Source: RJ O Brien as of May 4, mmt of U.S. DDGs exported in 2016 Page 9

10 Agribusiness & Energy Segment Purchase ~520 million bushels, or ~14.5 tons, of corn a year 60.3 million bushels, or 42 production days, of grain storage capacity $80.0 $60.0 $40.0 Operating Income Last 5 Quarters (mm) Purchasing ~60% of our corn directly from farmers Merchant trading of 12+ commodities $20.0 $0.0 $-20.0 $ Q-16 2Q-16 3Q-16 4Q-16 1Q-17 Corporate Headquarters in Omaha, Nebraska Page 10

11 Food & Ingredient Segment 255,000-head cattle feeding operation Fourth largest cattle feeder in the U.S. $80.0 $60.0 Operating Income Last 5 Quarters (mm) Fleischmann s Vinegar Company operations Food grade corn oil production $40.0 $20.0 $0.0 $ Q-16 2Q-16 3Q-16 4Q-16 1Q-17 $-40.0 Cattle feedlot in Kismet, Kansas Page 11

12 Cattle Feeding Operations We believe in the long term thesis in investing in protein businesses both animal and vegetable Recent feedlot acquisitions are expected to provide $30 million to $45 million of EBITDA annually starting in 2018 Transaction includes long-term supply agreement with Cargill Meat Solutions OUR STRATEGIC RATIONALLE?? Minimum 300,000 tons of DDGS demand our new largest customer Minimum 40 million pounds of corn oil also one of our largest customers Coming off cycle lows and has excellent profitability if managed correctly Leverages our supply chain, production platform and commodity management expertise Diversifies income stream Page 12

13 Why Cattle Feeding By 2050, 9.6B people will demand 75% more protein than currently available There is increasing pressure on the livestock sector to meet the growing demand for high-value animal protein Annual meat production is projected to increase from 263 million tons this year to 376 million tons by 2030 Strong positive relationship between the level of income and the consumption of animal protein, with the consumption of meat, milk and eggs increasing at the expense of staple foods As diets become richer and more diverse, the high-value protein that the livestock sector offers improves the nutrition of the vast majority of the world Beef cow inventory grew by over 1 million head in 2016 and is projected to grow another 850,000 head in 2017 Cattle producers throughout the U.S. retained more replacement heifers and delayed culling older cows to grow their herd With a growing cattle herd, beef production is projected to grow 4 percent in 2017 Sources: USDA, WHO, FAO and Beef2Live Page 13

14 Fleischmann s Vinegar Company Transaction completed on October 3, 2016 Purchase price of $250 million Retain current management team to run the business Largest industrial vinegar producer in the world Strategic rationale Takes advantage of our platform and expertise Adjacency that leverages our capabilities Extends our reach into higher margin food ingredient markets Supports expansion into development markets: pharma, food preservation, agriculture Value proposition Stable, predictable earnings stream Above average growth capability for clean-label products: all natural, organic, non-gmo Consistent earnings growth, above industry average due to operation scale and scope Page 14

15 Who would have thought?? Food grade ethanol 50 hours later. Page 15

16 Product Portfolio.and of course, and I bet you thought this is exactly what an ethanol producer manufactures. Page 16

17 Partnership Segment Formed in 2015 to provide fuel storage and transportation services Primary vehicle to expand downstream logistics activities to support Green Plains growing energy services Green Plains is the general partner and 64.5% owner of the partnership; public owns remaining 35.5% Operating Income Last 5 Quarters (mm) $80.0 $60.0 $40.0 $20.0 $0.0 1Q-16 2Q-16 3Q-16 4Q-16 1Q-17 $-20.0 $-40.0 Corporate Ethanol tanker Headquarters cars await in loading Omaha, Nebraska Page 17

18 Jefferson Terminal Project 50/50 joint venture to construct and operate intermodal export/import fuel terminal $55 million phase I development cost at Jefferson s existing Beaumont, Texas terminal Ethanol storage of 500,000 barrels; 4-5 separate tanks for 3-4 spec products, including domestic ASTM unit trains per month or ~1.1 million barrels projected for phase I Served by 3 Class I railroads with unit train offloading capability, blue and brown water barge access Page 18

19 Liquidity & Capital Five-Year Snapshot (in millions) Q Production capacity (in mmgy) 740 1,020 1,020 1,215 1,470 1,470 TTM Pro forma EBITDA (1) $ $ $ $ $ $ TTM Interest expense Gross debt , ,124.8 Working capital financing Term debt Cash and cash equivalents Net term debt Stockholder's equity $ $ $ $ $ $ Term debt / total capitalization 51.4 % 50.8 % 36.7 % 35.4 % 48.7 % 48.1 % Term debt / Pro forma EBITDA 3.6x 3.0x 2.2x 2.0x 3.0x 2.8x Pro forma EBITDA / Interest expense 3.8x 5.7x 5.4x 5.4x 5.2x 5.0x (1) Pro forma EBITDA based on estimated mid-cycle crush margins of $0.20 per gallon, average utilization of approximately 93% and TTM non-ethanol EBITDA Assets as of March 31, 2017 Debt as of March 31, 2017 Other Assets 16% Cash 12% Non-Ethanol Term Debt 11% Other 1% Readily Marketable Inventories 16% Plant Term Debt 37% Property & Equipment 49% Other Inventory & A/R 7% Working Cap Revolver 30% Convertible Notes 21% Total Assets: $2,421 million Total Debt: $1,124 million Page 19

20 Operating Strategy Ample liquidity to support growth Partnership continues to unlock value for Green Plains Meaningful volumes and flexibility to respond quickly to market sensitivity History of accretive M&A Seasoned management with proven track record Capital allocation: Acquire related assets or add adjacencies to the portfolio Expand organically and implement proven processes Grow dividends Pay down debt Repurchase shares Leveraging our supply chain, production platform and expertise to serve food and fuel customers worldwide Page 20

21 Green Plains Inc. NASDAQ: GPRE Green Plains Partners LP NASDAQ: GPP

22 Appendix

23 Consolidated Crush Margin Green Plains Inc. For the three months ended Mar. 31, (in millions) (per gallon produced) Ethanol production: Operating loss $(6.6) $(29.5) $(0.02) $(0.12) Depreciation and amortization Total ethanol production 13.7 (13.7) 0.05 (0.05) Intercompany fees, net: Storage and logistics (partnership) Marketing and agribusiness fees Consolidated crush margin $37.7 $4.1 $0.12 $0.02 Page 23

24 Condensed Consolidated Balance Sheet Green Plains Inc. (in millions) Assets Mar. 31, 2017 Dec. 31, 2016 Current assets $919.9 $1,000.6 Property and equipment, net 1, ,178.7 Other assets Total assets $2,421.1 $2,506.5 Liabilities and Stockholders Equity Current liabilities $524.2 $594.9 Long-term debt Other liabilities Total liabilities 1, ,527.3 Total Green Plains stockholders equity Noncontrolling interests Total liabilities and stockholders equity $2,421.1 $2,506.5 Page 24

25 Consolidated Income Statement Green Plains Inc. (in millions, except per share amounts) For the three months ended Mar. 31, 2017 Mar. 31, 2016 Revenues $887.7 $749.2 Costs and expenses Operating income (loss) 17.4 (22.6) Other expense (18.1) (12.1) Income tax benefit Net income (loss) 1.6 (19.8) Net income attributable to noncontrolling interests Net loss attributable to Green Plains $(3.6) $(24.1) Net loss attributable to Green Plains per share diluted $(0.09) $(0.63) Page 25

26 Non-GAAP Reconciliation Green Plains Inc. (in millions) For the three months ended Mar. 31, 2017 Mar. 31, 2016 Net income (loss) $1.6 $(19.8) Interest expense Income tax benefit (2.4) (14.9) Depreciation and amortization EBITDA $43.8 $(5.8) Page 26

27 Selected Operating Data Green Plains Partners LP (in million gallons) For the three months ended Mar. 31, 2017 Mar. 31, 2016 Product volumes Storage and throughput services Terminal services Railcar capacity billed (daily average) Page 27

28 Condensed Consolidated Balance Sheet Green Plains Partners LP (in millions) Assets Mar. 31, 2017 Dec. 31, 2016 Current assets $22.8 $22.3 Property and equipment, net Other assets Total assets $93.3 $93.8 Liabilities and Partners Capital Current liabilities $18.6 $17.3 Long-term debt Other liabilities Total liabilities Total partners capital (63.1) (64.1) Total liabilities and partners capital $93.3 $93.8 Page 28

29 Consolidated Income Statement Green Plains Partners LP (in millions, except per unit amounts) For the three months ended Mar. 31, 2017 Mar. 31, 2016 Revenues, including from affiliates $27.2 $23.8 Operating expenses Operating income Other expense (1.2) (0.3) Income tax expense - (0.2) Net income $15.0 $12.2 Earnings per limited partner unit basic and diluted $0.46 $0.38 Page 29

30 Adjusted EBITDA and DCF Green Plains Partners LP (in millions) For the three months ended LTM ended Mar. 31, 2017 Mar. 31, 2016 Mar. 31, 2017 Net income $15.0 $12.2 $59.6 Interest expense Income tax expense Depreciation and amortization Other Adjusted EBITDA Less: Interest paid or payable Income taxes paid or payable Maintenance capital expenditures Distributable cash flow $16.2 $13.3 $65.5 Distribution declared (1) $14.3 $13.1 $55.2 Coverage ratio 1.13x 1.02x 1.19x (1) Represents distributions declared for the applicable quarter and paid in the subsequent quarter. Page 30