Todd Becker - President, Chief Executive Officer Jerry Peters - Chief Financial Officer Jeff Briggs - Chief Operating Officer Steve Bleyl - Executive Vice President, Ethanol Marketing Jim Stark - Vice President.

Farha Aslam - Stephens, Inc Adam Samuelson - Goldman Sachs Laurence Alexander - Jefferies Tyler Etten - Piper Jaffray Ed Westlake - Credit Suisse Craig Irwin - ROTH Capital Partners Matt Farwell - Imperial Capital Eric Seeve - GoldenTree Asset.

Presentation:.

Good day and welcome to the Green Plains Fourth Quarter of Full Year 2014 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jim Stark. Please go ahead, sir..

Thanks, Randy. Welcome to our fourth quarter and fiscal year end 2014 earnings conference call. On the call today are Todd Becker, President and Chief Executive Officer; Jerry Peters, our Chief Financial Officer; Jeff Briggs, our Chief Operating Officer and Steve Bleyl, Executive Vice President of Ethanol Marketing.

We are here to discuss our quarterly financial and full year 2014 results and recent developments for Green Plains. There is a slide presentation for you to follow along with as we go through our comments today. You can find this presentation on our website at gpreinc.com, on the Investor page under the Events & Presentations link.

Our comments today will contain forward-looking statements, which are any statements made that are not historical facts. These forward-looking statements are based on the current expectations of Green Plains' management team, and there can be no assurance that such expectations will prove to be correct.

Because forward-looking statements involve risks and uncertainties, Green Plains' actual results could differ materially from management's expectations. Please refer to page 2 of the website presentation and our 10-K and other periodic SEC filings for information about factors that could cause different outcomes.

The information presented today is time sensitive and is accurate only at this time. If any portion of this presentation is rebroadcast, retransmitted, or redistributed at a later date, Green Plains will not be reviewing or updating this material. I will now turn the call over to Todd Becker..

Thanks, Jim and good morning and thanks for joining our call today. 2014 was a year of record achievements for Green Plains. We produced nearly 1 billion gallons of ethanol, 2.7 million tonnes of livestock feed, 235 million pounds of corn oil, while processing 10 million tonnes of corn.

This enabled the company to generate $159.5 million of net income for the year or $3.96 a share. Our platform generated over $100 million of non-ethanol operating income and certainly the $350 million of total EBITDA reported is a significant achievement for our company.

For the fourth quarter, we reported $42.2 million of net income or of $1.07 a share in earnings. We ended the year with $455 million in cash and only $7.6 million in net term debt. It was 18 months ago that we first talked to you about our goal of zero net term debt within three years, absent additional growth opportunities.

We did acquire to ethanol plants adding 230 million gallons of ethanol production and a 70,000 head cattle feedlot during these 18 months. So over this time, we have reduced net term debt by $233 million, while growing stockholder equity by $300 million. Today, our balance sheet is as strong as it has ever been.

Our view of 2014 is that it was a transformative year that has allowed us to take a significant step forward as we recapitalized the company through earnings, debt pay down, and the term loan B structure that was implemented. We believe this squarely positions us to move forward with our growth plans.

We hope that owners of Green Plains appreciate the longer term perspective and strategy we take in managing the business and not let the nearby volatility bore our vision of the future.

We have always told you in the right market condition Green Plains will prosper and set the company up to withstand most market conditions, but also allow us to accelerate our growth plans. Since 2008, the size and efficiency of our production platform was set up to yield the financial results reported in 2014.

Now I would like to turn the call over to Jerry to review our fourth quarter and full year financial performance and I will come back after Jerry's review to discuss our outlook heading into 2015..

Thank you, Todd. Good morning everyone. Our fourth quarter financial performance was the best in terms of earnings per share in our history, with $1.07 per diluted share on net income of $42.2 million compared to $0.65 per share on net income of $25.5 million last year.

Consolidated revenues were $830 million in the fourth quarter, which was up 16% from a year ago. Our ethanol production segment produced at 96% of its daily average production capacity, which is in line with the utilization rate for the full year.

In comparison to the fourth quarter of 2013, current quarter volumes sold for each of our primary commodities increased substantially, while average prices realized declined in a generally lower commodity price environment.

Volumes of ethanol sold increased 17% to almost 309 million gallons, while the average realized price per gallon was 4% lower than last year's fourth quarter.

The two ethanol plants acquired at the end of November 2013 accounted for the majority of the increase of about 33 million gallons of ethanol production year over year and was also the driver for the 20% increase in distillers grains production and a 24% increase in corn oil production compared to the fourth quarter of last year.

Our consolidated operating income for the quarter increased to $73.9 million versus $51.1 million a year ago, primarily as a result of the higher production levels in an overall better margin environment for ethanol production.

Turning to our segment results, ethanol production segment generated $63.3 million of operating income for the fourth quarter compared to $40.5 million last year. Before depreciation, the segment generated $76.9 million or $0.31 per gallon this quarter compared to $52.2 million or $0.24 per gallon in last year's fourth quarter.

For our other segments, we generated $23.9 million of non-ethanol operating income for the quarter, which was down $4.3 million from the fourth quarter in 2013.

This was comprised of an $8 million decrease in marketing and distribution, offset by a $1 million increase in operating income for corn oil production and a nearly $3 million increase in operating income from the agribusiness segment.

Marketing and distribution's lower performance was primarily related to a decline in income from crude oil transportation in 2014 versus 2013, as well as lower income from merchant trading activities. The increase in agribusiness is due to the addition of the cattle feedlot in June 2014 as well as higher income from our grain storage expansions.

On a consolidated basis, our income tax expense was $22.4 million for the quarter, which was an effective tax rate of approximately 34.6% for the quarter and approximately 36.3% for the full calendar year.

Earnings before interest, income taxes, depreciation and amortization or EBITDA was $90.7 million for the fourth quarter 2014 and for all of 2014 EBITDA totaled over $350 million. A quick review of the full-year results shows the capability of our platform, as the financial performance for 2014 is the best in our history.

Most significant is that our ethanol production generated $267 million of operating income before depreciation or approximately $0.28 per gallon. And as Todd mentioned earlier, we generated $103 million of non-ethanol operating income in total from corn oil production, marketing and distribution, and agribusiness segments.

On the balance sheet, looking at slide 8, you can see our goal to reach net term debt of zero is very attainable this year, amounts outstanding on our working capital financing increased over $200 million, with the increase mainly due to draws under our new $100 million revolver that is used to finance our cattle inventories.

In strong environments like this, like we are currently experiencing, this business requires significant working capital, so we were pleased to put this new source of liquidity in place. The facility is expandable as our inventory requirements grow.

While our consolidated working capital has expanded with our business, we have over $180 million available on our credit lines.

Total capital expenditures and acquisitions were approximately $85 million in 2014, including our feedlot acquisition, our grain storage expansion projects, selective milling technology installations and improvement projects at our ethanol plants.

We expect to spend a similar amount in 2015 with about $20 million of that for maintenance capex across all of our businesses and the rest for various growth projects. Maintenance capex for our ethanol production assets remain at about $0.01 a gallon. Now I will turn the call back over to Todd..

Thanks, Jerry. For the first quarter of 2015, with January completed, we are approximately 25% hedged in the remainder of the quarter. On the last earnings call, we indicated that we had done little work on the first quarter 2015 and the building starts and increased production rates put margins under pressure since then.

While the first quarter is under pressure, the second quarter margins are showing positive mid to high single digit EBITDA margin at all of our plants and some are even higher than that. By the way, this is not an uncommon forward curve and in the past 60 days before a quarter starts margins like this often translated into better margins overall.

Why is this? The main impetus as ethanol is a larger discount to gasoline April forward and through the summer, ethanol demand remained solid for both domestic and international markets. Ethanol is still the cheapest octane and oxygenate for blending into gasoline.

In addition, distillers grain values have risen steadily since China lifted the ban on imports at the end of December. Currently, distillers are trading approximately 110% to 130% to the relative value of corn. This will have a lagging effect on Green Plains or our margin structure.

We typically do not sell our distillers in the spot market as this has been too volatile over the last seven years. Distillers market has rallied since early December $30 to $50, but our sales book starts long before that as domestic integrators of any size do not book in the spot market.

So this really will not be fully realized in Q1 margins, it will be a drag to the optical spot margin. If we were a one plant operator it would be a different story, but when you sell 3 million tonnes per year you cannot be in the spot market for all of your volume.

The ethanol crush has also been held by lower natural gas cost and [indiscernible] costs we use in producing ethanol, all saving a few cents per gallon ahead on the curve. Overall Q1 is still weak, but there is time left in the quarter for some adjustments to happen. For the fourth quarter, we did export 15% of our ethanol production.

Our export volume was 14% of the total US ethanol exports for the quarter, which is twice the amount of the industry capacity that Green Plains represent. While we are not the exporter of record in many cases, the top three destinations for our gallons were the Far East, Brazil and Canada.

Export business has remained strong for us in the first quarter of 2015, with approximately 17% of the quarter's products sold for export and we continue to see interest in the second and third quarters of 2015. We have products all the way through September that is on the books today.

We believe that US ethanol exports will be in the range of 800 million to 1 billion gallons in 2015 and the year is off to a good start for the industry. The increase in Brazilian blend levels was not taken into consideration and the impact is still yet unknown, but this can give a positive inclination.

Lower gas prices have given bomb to overall gasoline demand as we continue to run near or above the five-year high averages. E15 is now available at 112 stations across 16 states with the goal of getting to 250 by the end of the year.

The industry continues to work with large and small retailers on transforming their stations to often brands like E15 as evidenced by this sheet announcement you recently saw. We expect more announcement like this coming in the future.

We added about 25,000 head of Green Plains on cattle and to our feedlot during the fourth quarter, bringing the total owned 47,000 of the 56,000 total head of cattle in the lot at the end of 2014.

As Jerry mentioned, we did put in $100 million revolver in place to finance the purchase of cattle and we had approximately $77 million drawn on that revolver as of December 31. This business so far has been accretive every single month that we have been in operation. For several years we have been adding to finding our growth strategy.

One of the questions we think about it is how to grow the business within our competitive strengths and lower our beta.

Up until this point, our growth has come from pursuing organic growth in our platform such as grain storage increases, adding corn oil and terminal distribution capabilities and finally getting more volume from our production plants. The opportunity is still that for more capacity increases within our system.

We have extra win capacity across our production platform of approximately 100 million gallons and can get to that production for under $0.75 per gallon on a brownfield expansion project. This can all be done without any need for new pathway approvals.

In the right, this will be highly accretive to our shareholders and we have embarked on a strategy now to go after those extra gallons. In addition, we have been very acquisitive over the last seven years. These opportunities have stayed within the energy and agricultural value chain that we base the company overall strategy on starting in 2008.

We added a merchant trading platform that benefits from physical trade flows around our platform, that performed very well in 2014 and finally we have enhanced all of our risk management capabilities. We have been patient and opportunistic waiting for the right acquisition targets that complement our portfolio.

We now have a full time Chief Development Officer whose focus is on acquisitive growth opportunities. We believe businesses that are in other agricultural production, our milling processes, nutrition, protein, and animal feed or other food or industrial grade oils are all possibilities.

We are focused on using our supply chain to start to exploit other opportunities available in energy and agriculture.

While we certainly appreciate the earnings power of the ethanol platform as illustrated in 2014, reducing volatility, lowering our beta, and increasing our multiple can only be done through a continued diversification within the adjacencies to our current business platform.

We recognize and hope that our stakeholders realize that we are running a marathon and not a sprint, we know that the long-term value of a diversified commodity portfolio provides a better and more predictable returns.

In closing, we have never been stronger, our balance sheet is solid, our focus is clear, and we will continue on the focus of long-term shareholder value creation. So thanks for joining us today and I will ask the moderator to start the question and answer session..

[Operator Instructions] And we’ll take our first question from Farha Aslam from Stephens Inc..

Farha Aslam:.

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We will now take over next question from Adam Samuelson from Goldman Sachs..

Adam Samuelson:.

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Steve Bleyl:.

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And we will now take our next question from Laurence Alexander from Jefferies..

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And we’ll take our next question from Brett Long from Piper Jaffray..

Tyler Etten:.

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We will now take our next question from Ed Westlake from Credit Suisse..

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We will now take over next question from Craig Irwin from ROTH Capital Partners..

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And we would take our next question from Matt Farwell from Imperial Capital..

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And we will take our last question from Eric Seeve from GoldenTree Asset..

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And with no further questions....

Thanks everybody for coming on the call today.

Obviously a lot of questions, we remain optimistic for the platform that we’ve built, we’re in the best financial shape we’ve ever been in, we have a strong balance sheet, we are close to our long-term target of zero net term debt which was a couple of years ago when we set it, we weren’t exactly sure when and how we would get there, but we thought by the end of 2015 and obviously very close on structurally almost there and we feel like we’re in a great position to go forward and grow the company and focus on that reducing our volatility, lowering our beta, increasing our multiple and generating more shareholder value over the long term.

So we appreciate you are jumping on the call and talk to your next quarter. Thanks..

This does conclude today’s conference. Thank you for your participation..