Ethanol Maker Green Plains Shares Plunge After Surprise Loss

Source: By Kim Chipman, Bloomberg • Posted: Sunday, February 13, 2022

Green Plains says supply-chain problems hurt ethanol volumes Stephens Inc. says shares may be choppy during strategic shift

Green Plains Inc. shares fell the most since April after the U.S. ethanol maker posted an unexpected loss, with supply disruptions denting production.

Supply-chain and permitting delays, as well as grain-bin damage at one location, weighed on results, the company said in its fourth-quarter earnings statement on Friday.

The surprise loss comes as the company attempts to move away from ethanol, shifting to become a maker of high-value ingredients made from corn for use in products such as pet food, candy and the growing renewable-chemicals industry. The idea is for ethanol to be merely a byproduct and cut reliance on an unpredictable U.S. market that remains largely tethered to policy decisions out of Washington.

“Our strategy for the fourth quarter and through 2021 was to protect our balance sheet and mitigate risk on the capital we had raised earlier in the year,” Chief Executive Officer Todd Becker said in a statement Friday. The company ended the year with over $685 million in cash and marketable securities, “allowing us to continue to deploy capital to strategic initiatives in our transformation plan,” he said.

Shares of Omaha, Nebraska-based Green Plains tumbled 8.6% to $30.11 at 10:45 a.m. in New York. They earlier fell as much as 9.7%, the most since April 7. The stock, which more than doubled last year, has lost about a quarter in value in the last three months.

“Results were surprisingly weaker than expected,” Stephens Inc. analyst Ben Bienvenu, who has an “overweight” rating on the stock, said in a note. “However, the story continues to be about transformation.”

Shares are likely to remain volatile until the second half of the year, when the “rubber meets the road” in the company’s overhaul plans, Bienvenu said.