Green Plains Shares Plunge 24% After Q4 Loss, Cost-Cutting Plan Announced

Green Plains Inc. (NASDAQ: GPRE) shares plummeted 24% to a four-year low of $6.62 on Friday, following the company's announcement of weak fourth-quarter results and a cost-cutting plan. The stock's decline is a significant departure from its historical volatility, with shares not trading this low since May 2020.

The company reported a net loss of $54.9 million, or $0.86 per diluted share, for the last three months of 2024, compared to a profit of $7.2 million, or $0.12 per diluted share, in the same quarter a year ago. Analysts had expected a smaller loss of just $0.35 per share. Revenue sank 18% during the quarter to $584 million, below analyst projections for $630 million.

Green Plains' weak performance can be attributed to several factors:

1. Lower average selling prices on ethanol, distillers grains, and renewable corn oil, as well as lower volumes on ethanol and distillers grains sold within the ethanol production business.
2. Costs that did not decrease as heavily as revenue, with lower margins within the ethanol production business denting the bottom line.
3. Industry headwinds, including oversupplied protein markets and volatile ethanol margins.

In response to these challenges, Green Plains announced a corporate reorganization and cost reduction initiative aimed at reducing expenses on an ongoing basis. The company targets up to $50 million in annual savings, with $30 million already implemented. This initiative includes idling the Fairmont, Minnesota facility due to sustained localized margin pressure from flooding in the region.



The company's 'Advantage Nebraska' carbon strategy remains on track, with key milestones achieved in permitting, construction, and regulatory guidance. Nebraska pipeline partner received six Class VI Carbon Capture and Sequestration well permits in Wyoming, acquired all necessary rights of way for the laterals, and began construction to connect the Nebraska plants to the Trailblazer mainline. The updated GREET model appears more favorable than initially projected, potentially providing stronger financial benefits.

Green Plains' cost reduction initiatives, combined with carbon earnings from Nebraska, could achieve a combined $180 million annualized contribution to the company's future earnings before considering ethanol, renewable corn oil, and high protein initiatives. However, the company's renewable corn oil segment shows strength, commanding premium prices over soybean oil for renewable diesel production.



In conclusion, Green Plains' shares plummeted 24% following weak fourth-quarter results and the announcement of a cost-cutting plan. The company's performance reflects broader industry headwinds, but its aggressive response through a $50 million cost reduction initiative signals a decisive strategic pivot. The 'Advantage Nebraska' carbon strategy remains on track, with the potential for significant financial benefits. However, the company's near-term challenges and the recent stock price decline raise concerns about its ability to execute on its transformation plan.