Green Plains Inc. (NASDAQ:GPRE) Q2 2016 Earnings Conference Call - Final Transcript

Aug 02, 2016 • 11:00 am ET


Green Plains Inc. (NASDAQ:GPRE) Q2 2016 Earnings Conference Call - Final Transcript


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Good day, everyone and welcome to the Green Plains Inc., and Green Plains Partners LP Second Quarter Results Conference Call. Today's call is being recorded.

At this time, I would like to turn the call over to Jim Stark. Please go ahead, sir.

Jim Stark

Thanks, Lynette. Welcome to the Green Plains Inc., and Green Plains Partners' second quarter 2016 earnings call. Participants on the call today are Todd Becker, President and CEO; Jerry Peters, our Chief Financial Officer, Jeff Briggs, our Chief Operating Officer and Steve Bleyl, Executive Vice President of Ethanol Marketing. There is a slide presentation for you to follow along. You can find this presentation on the investor page under the Events and Presentations link on both corporate websites.

During this call, we will be making forward-looking statements, which are predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in yesterday's earnings press releases and the comments made during this conference call and in the risk factors sections of our 10-Ks and Form 10-Qs and other reports and filings with the SEC.

You may also refer to Page 2 of the website presentations for information about factors that could cause different outcomes. Any reported returns of Green Plains Asset Management are not intended as an offering or solicitation in past performance is not indicative of future returns. We do not undertake any duty to update any forward-looking statements.

Now, I would like to turn the call over to Todd Becker.

Todd Becker

Thanks, Jim and good morning everyone, and thank you for joining us today. We reported a net income of $8.2 million or $0.21 a share. We also reported EBITDA of $47.7 million for the second quarter, which was our best quarterly performance since 2014. Obviously, we've a lot more gallons today, so that speaks to how the law of largest numbers can bring big gains from small increases in the cross margin. I remember, our acquisition cost of more gallons have been very opportunistic over the last couple of years.

As we had indicated on our last earning call, we did see a bounce back in our market and distribution segment and operating income. A higher operating income related to the timing of the forward business that was fully hedged during the first quarter and our corn oil, natural gas and distillers merchant business. And the segment is on track to be in a range of $25 million to $30 million of operating income for fiscal 2016. In addition, Green Plains Asset Management contributed to the quarter with a 5.18% return on asset under management.

Our agribusiness segment turned in its best operating quarterly performance since 2012, mainly driven by our cattle business. As the industry sees more feeder cattle availability, feeding margins have expanded. While last year was more of a breakeven environment for us, this year has seen a move back towards historic