Green Plains Inc. (GPRE): Business Model Canvas [10-2024 Updated]

Green Plains Inc. (GPRE) is at the forefront of the renewable energy sector, leveraging a robust business model canvas that showcases its innovative strategies and operational efficiencies. From ethanol production to sustainable aviation fuel partnerships, GPRE’s multifaceted approach emphasizes sustainability and advanced technology. Discover how this dynamic company navigates its key partnerships, activities, resources, and revenue streams to maintain a competitive edge in the ever-evolving energy landscape.

Green Plains Inc. (GPRE) - Business Model: Key Partnerships

Collaborations with Green Plains Partners for logistics and storage

Green Plains Inc. collaborates with Green Plains Partners to optimize logistics and storage capabilities. The partnership enables efficient transportation and storage of ethanol and its byproducts. As of September 30, 2024, Green Plains Partners had a term loan with an interest rate of 13.21%, which was used for funding working capital and capital expenditures.

Joint ventures with United Airlines and Tallgrass for sustainable aviation fuel

Green Plains has entered into joint ventures with United Airlines and Tallgrass Development to produce sustainable aviation fuel (SAF). The collaboration aims to enhance low-carbon fuel production, thereby addressing sustainability goals within the aviation sector. These joint ventures are part of a broader initiative targeting significant reductions in greenhouse gas emissions, with expectations to meet operational milestones in the coming years.

Partnerships with technology firms for advanced agricultural processes

Green Plains has established partnerships with various technology firms to advance agricultural processes. These collaborations focus on integrating innovative technologies to improve efficiency in ethanol production and enhance crop yields. For example, the company has committed to investing in technologies that support sustainable agricultural practices, which are essential for maintaining competitive advantages in the biofuels market.

Agreements with carbon capture solution providers to reduce emissions

Green Plains has agreements with Tallgrass High Plains Carbon Storage, LLC, aimed at developing carbon capture and sequestration projects at its Nebraska plants. The total commitments related to these construction projects amount to approximately $7.2 million as of September 30, 2024. Payments associated with these contracts are due monthly over a twelve-year period, contingent upon project milestones.

Partnership Type	Partner	Focus Area	Financial Commitment	Expected Completion
Logistics and Storage	Green Plains Partners	Efficient transportation and storage of ethanol	Term loan interest rate: 13.21%	N/A
Joint Venture	United Airlines, Tallgrass	Sustainable aviation fuel production	N/A	Ongoing
Technology Partnership	Various Technology Firms	Advanced agricultural processes	N/A	N/A
Carbon Capture Agreement	Tallgrass High Plains Carbon Storage	Carbon capture and sequestration	Commitment: $7.2 million	Expected completion: 2025

Green Plains Inc. (GPRE) - Business Model: Key Activities

Ethanol production and processing at multiple biorefineries

Green Plains operates a network of biorefineries with a total production capacity of approximately 1.1 billion gallons of ethanol annually. In the third quarter of 2024, the company produced 220.3 million gallons of ethanol, representing a 1.4% decrease from the 223.5 million gallons produced in the same quarter of 2023. The company utilized about 96.8% of its capacity during this period.

Key Metrics	Q3 2024	Q3 2023	% Change
Ethanol Production (thousands of gallons)	220,299	223,469	(1.4)%
Distillers Grains (thousands of equivalent dried tons)	489	514	(4.9)%
Renewable Corn Oil (thousands of pounds)	77,074	74,227	3.8%
Corn Consumed (thousands of bushels)	75,140	76,544	(1.8)%

Development of low-carbon biofuels and value-added products

Green Plains is actively engaged in developing low-carbon biofuels, focusing on Ultra-High Protein products and renewable corn oil. In the first nine months of 2024, the production of Ultra-High Protein increased by 23.6%, reaching 194,000 tons compared to 157,000 tons in the same period of 2023. This aligns with the company's strategy to enhance its product portfolio with value-added offerings that respond to market demand for sustainable fuel alternatives.

Risk management through hedging and commodity trading

To mitigate risks associated with volatile commodity prices, Green Plains employs a sophisticated risk management strategy that includes hedging activities. In Q3 2024, the company recorded net gains of $16.1 million from derivative financial instruments, despite facing losses of $4.2 million in its cost of goods sold. For the nine months ended September 30, 2024, revenues included net gains of $14.2 million, while costs reflected net losses of $9.9 million related to these hedging activities.

Commodity	Estimated Volume Requirements	Net Income Effect of 10% Price Change
Ethanol	903,000 gallons	$98,304
Corn	310,000 bushels	$99,487
Distillers Grains	2,200 tons	$22,347
Renewable Corn Oil	300,000 pounds	$8,893
Natural Gas	26,400 MmBTU	$4,630

Marketing and distribution of ethanol and co-products

Green Plains markets its ethanol and co-products to a diverse customer base, including major fuel blenders and distributors. In Q3 2024, the company's total revenues decreased by 26.2% to $658.7 million from $892.8 million in Q3 2023, primarily due to lower selling prices and volumes. Revenues from external customers in the ethanol production segment alone amounted to $563.6 million in Q3 2024, down from $774.3 million in the same quarter of the previous year.

Revenue Breakdown	Q3 2024	Q3 2023	% Change
Ethanol Production	$563,564	$774,321	(27.2)%
Agribusiness and Energy Services	$95,171	$118,449	(19.7)%
Total Revenues	$658,735	$892,770	(26.2)%

Green Plains Inc. (GPRE) - Business Model: Key Resources

Biorefineries

Green Plains Inc. operates ten biorefineries across the United States, with a combined capacity of approximately 1.1 billion gallons of ethanol annually. These facilities are strategically located to optimize logistics and supply chain efficiency.

Proprietary Technologies

The company utilizes proprietary technologies to enhance biofuel production, including advanced fermentation processes and innovative separations technologies. This intellectual property allows Green Plains to improve yield and efficiency in ethanol production.

Workforce and Management Expertise

Green Plains boasts a skilled workforce with deep expertise in agribusiness and biofuel production. The management team has extensive experience in the industry, enabling effective operational strategies and innovation.

Financial Position

As of September 30, 2024, Green Plains maintained a strong financial position with $227.5 million in cash and cash equivalents and $24.5 million in restricted cash. The company also had $228.5 million available under its committed revolving credit agreement, critical for funding operations and capital projects.

Key Resources	Details
Biorefineries	10 biorefineries across the U.S. with a capacity of 1.1 billion gallons of ethanol annually.
Proprietary Technologies	Advanced fermentation and separation technologies that improve production efficiency.
Workforce	Experienced team with expertise in agribusiness and biofuel production.
Financial Position	$227.5 million in cash and equivalents, $24.5 million in restricted cash, and $228.5 million available credit as of September 30, 2024.

Green Plains Inc. (GPRE) - Business Model: Value Propositions

Production of low-carbon, renewable fuels addressing market demands

Green Plains Inc. is a leader in the production of low-carbon renewable fuels. As of September 30, 2024, the company produced approximately 636,686 thousand gallons of ethanol, marking a 1.9% increase from the previous year. The production of renewable fuels aligns with market demands for sustainable energy solutions, particularly as regulatory frameworks increasingly favor low-carbon alternatives.

High-quality co-products like Ultra-High Protein for animal feed

Green Plains also specializes in producing high-quality co-products, such as Ultra-High Protein (UHP) for animal feed. For the nine months ended September 30, 2024, the company reported producing 194 thousand tons of UHP, which represents a 23.6% increase compared to the same period in 2023. This product is crucial for livestock nutrition, addressing the growing demand for protein-rich animal feed in the agricultural sector.

Commitment to sustainability and reducing carbon footprints

The company emphasizes its commitment to sustainability by focusing on reducing carbon footprints across its operations. Green Plains has implemented various initiatives aimed at lowering greenhouse gas emissions, including investments in carbon capture and sequestration projects. In 2024, the company estimated approximately $110 million in expenditures related to these sustainability projects.

Innovative technologies improving efficiency and reducing waste

Green Plains leverages innovative technologies to enhance operational efficiency and minimize waste. The company's use of advanced data analytics and automation in its production processes has resulted in significant cost savings and improved margins. For instance, the operating income in the ethanol production segment increased by $11.3 million for the three months ended September 30, 2024, primarily due to improved operational efficiency.

Metric	Q3 2024	Q3 2023	% Change
Ethanol Production (thousands of gallons)	220,299	223,469	(1.4%)
Ultra-High Protein Production (thousands of tons)	69	61	13.1%
Renewable Corn Oil Production (thousands of pounds)	77,074	74,227	3.8%
Net Income (loss) Attributable to Green Plains ($ thousands)	48,200	22,311	116.4%
Adjusted EBITDA ($ thousands)	53,318	42,932	24.2%

These metrics exemplify Green Plains' focus on delivering value through innovative products and sustainable practices, reinforcing its position as a competitive player in the renewable fuels market.

Green Plains Inc. (GPRE) - Business Model: Customer Relationships

Long-term contracts with ethanol distributors and agricultural partners

Green Plains Inc. has established long-term contracts with various ethanol distributors and agricultural partners to ensure a stable supply chain and consistent demand for its products. As of September 30, 2024, the company reported a total of 636,686 thousand gallons of ethanol produced, reflecting a 1.9% increase compared to the previous year. This production capacity is supported by strategic partnerships that facilitate the procurement of feedstocks and distribution of ethanol and its co-products, such as distillers grains and renewable corn oil.

Engagement in sustainability initiatives with customers

Green Plains is actively involved in sustainability initiatives aimed at reducing the carbon footprint of its operations. The company has committed to investing approximately $110 million in carbon capture and sequestration projects to enhance its biofuel production's sustainability. Additionally, the company’s products, particularly renewable fuels, are designed to meet increasing regulatory standards and customer demand for low-carbon alternatives.

Providing tailored solutions for feedstock and biofuel needs

Green Plains offers tailored solutions to meet the diverse feedstock and biofuel needs of its customers. The company produces various co-products, including 1,421 thousand equivalent dried tons of distillers grains and 194 thousand tons of ultra-high protein. These products are customized based on customer specifications, enabling Green Plains to adapt to different market demands and enhance customer satisfaction.

Building trust through transparency in operations and product quality

Green Plains emphasizes transparency in its operations, which fosters trust with customers. The company maintains rigorous quality control processes and provides detailed information regarding its production methods and product specifications. In the nine months ended September 30, 2024, the company reported an adjusted EBITDA of $53.3 million, representing a 24.2% increase year-over-year, which underscores its commitment to operational excellence and product quality.

Key Metrics	2024 (Nine Months Ended Sept 30)	2023 (Nine Months Ended Sept 30)	% Change
Ethanol Production (thousands of gallons)	636,686	625,102	1.9%
Distillers Grains (thousands of equivalent dried tons)	1,421	1,454	(2.3%)
Ultra-High Protein (thousands of tons)	194	157	23.6%
Renewable Corn Oil (thousands of pounds)	217,425	206,927	5.1%
Adjusted EBITDA (in millions)	$53.3	$42.9	24.2%

Green Plains Inc. (GPRE) - Business Model: Channels

Direct sales to fuel distributors and agricultural businesses

Green Plains Inc. primarily engages in direct sales to fuel distributors and agricultural businesses, providing ethanol and co-products like distillers grains and renewable corn oil. In the nine months ended September 30, 2024, Green Plains produced 636,686 thousand gallons of ethanol, with revenues affected by lower selling prices, resulting in a decrease of $606.4 million compared to the same period in 2023.

Partnerships with logistics firms for efficient distribution

Green Plains has established partnerships with logistics firms to enhance distribution efficiency. This collaboration aids in the transportation of their products, particularly ethanol and co-products. The company utilizes a network that includes rail and truck transportation to optimize delivery to customers across various regions. As of September 30, 2024, Green Plains reported net cash used in operating activities of $3.0 million, reflecting improvements in operational efficiency.

Online platforms for market insights and trading opportunities

Green Plains leverages online platforms to provide market insights and trading opportunities for its customers. These platforms allow customers to track market trends and make informed purchasing decisions. The company's agribusiness and energy services segment, which includes trading activities, generated revenues of $301.8 million for the nine months ended September 30, 2024.

Participation in industry trade shows and conferences for visibility

Green Plains actively participates in industry trade shows and conferences to enhance its visibility within the market. These events serve as a platform for networking, showcasing products, and discussing industry trends. The company’s strategic focus on visibility helps in maintaining relationships with distributors and expanding its market reach.

Channel Type	Details	Recent Performance Metrics
Direct Sales	Sales to fuel distributors and agricultural businesses	Ethanol production: 636,686 thousand gallons (9M 2024)
Partnerships	Collaborations with logistics firms for distribution	Net cash used in operations: $3.0 million (9M 2024)
Online Platforms	Market insights and trading opportunities	Agribusiness segment revenues: $301.8 million (9M 2024)
Trade Shows & Conferences	Participation for visibility and networking	Active engagement in industry events

Green Plains Inc. (GPRE) - Business Model: Customer Segments

Ethanol marketers and distributors in the fuel industry

Green Plains Inc. primarily serves ethanol marketers and distributors, providing them with ethanol produced from its biorefineries. In the third quarter of 2024, Green Plains reported ethanol production of 220.3 million gallons, a slight decrease of 1.4% from the previous year. The revenues from the ethanol production segment for the same period were $564.6 million, down from $775.5 million in the third quarter of 2023. This reflects a 27.2% decline in revenues largely due to lower selling prices.

Livestock producers using Ultra-High Protein in feed

Green Plains targets livestock producers by supplying Ultra-High Protein and distillers grains as high-value feed ingredients. In the third quarter of 2024, the production of Ultra-High Protein increased by 13.1% to 69,000 tons compared to the previous year. The revenues from distillers grains for the same period were $72.7 million, a decrease from $87.2 million in 2023. This segment is critical for livestock producers seeking cost-effective nutritional solutions for their feed programs.

Companies seeking sustainable aviation fuel solutions

Green Plains is positioning itself in the sustainable aviation fuel market, responding to increasing demand for eco-friendly fuel alternatives. The company is expanding its production capabilities to include the development of sustainable aviation fuel, leveraging its expertise in ethanol production. The U.S. ethanol production averaged 1.07 million barrels per day in the third quarter of 2024, which supports the supply chain for sustainable fuel.

Agricultural businesses needing grain procurement and management

Agricultural businesses represent another key customer segment for Green Plains, particularly in grain procurement and management. The company had corn consumption of 218.2 million bushels for the nine months ended September 30, 2024, showing a slight increase from the previous year. The agribusiness and energy services segment generated revenues of $282.5 million during the same period, down from $384.6 million in 2023. This decline reflects the challenges in the market but highlights the ongoing need for efficient grain management solutions.

Customer Segment	Key Metrics	Revenue (Q3 2024)	Revenue (Q3 2023)	% Change
Ethanol Marketers	Ethanol Production (MM Gallons)	220.3	223.5	-1.4%
Livestock Producers	Ultra-High Protein Production (Thousands of Tons)	69	61	+13.1%
Sustainable Aviation Fuel	U.S. Ethanol Production (Million Barrels/Day)	1.07	1.04	+3.1%
Agricultural Businesses	Corn Consumption (Million Bushels)	218.2	215.1	+1.4%
Agribusiness and Energy Services	Revenue	$282.5 million	$384.6 million	-26.5%

Green Plains Inc. (GPRE) - Business Model: Cost Structure

Significant operational costs for raw materials like corn

For the nine months ended September 30, 2024, Green Plains Inc. incurred a total cost of goods sold of $1.75 billion, with $1.50 billion attributed to the ethanol production segment. The cost of corn alone was impacted by lower weighted average prices, resulting in decreased costs of $467.4 million compared to the previous year. Corn costs increased by $20.6 million due to higher corn volumes processed.

Maintenance and depreciation of biorefineries and equipment

Depreciation and amortization expenses for the ethanol production segment were $62.5 million for the nine months ended September 30, 2024, down from $69.6 million in the same period of 2023. This decrease was primarily due to certain assets becoming fully depreciated. Additionally, maintenance costs are significant, although specific figures are not disclosed, they fall within the overall cost of goods sold which totaled $580.6 million for the three months ended September 30, 2024.

Marketing and distribution expenses for ethanol and co-products

Marketing expenses for the ethanol production segment are included in the overall operational costs. The total revenues from the ethanol production segment for the nine months ended September 30, 2024, were $1.60 billion, with a gross margin of $94.1 million. Distribution costs, including transportation and logistics, are essential but not separately itemized in the financial statements, which aggregate these costs under the cost of goods sold.

Research and development costs for innovative production technologies

Research and development expenses were approximately $3.4 million related to the Biofuel Producer Program for the nine months ended September 30, 2023. Additionally, Green Plains has committed $110 million for carbon capture and sequestration projects expected to occur in 2024 and 2025, showcasing a focus on innovative production technologies.

Cost Type	Cost Amount (in millions)	Period
Cost of Goods Sold (Total)	$1,750	Nine Months Ended September 30, 2024
Cost of Corn	$467.4 (decrease)	Compared to Previous Year
Depreciation and Amortization	$62.5	Nine Months Ended September 30, 2024
Research & Development	$3.4	Nine Months Ended September 30, 2023
Capital Expenditures for Carbon Projects	$110	Estimated for 2024 and 2025

Green Plains Inc. (GPRE) - Business Model: Revenue Streams

Sales of ethanol and related co-products like distillers grains

For the three months ended September 30, 2024, Green Plains Inc. generated revenues of $563.6 million from ethanol production, down from $774.3 million in the same period in 2023, marking a decrease of 27.2%. For the nine months ended September 30, 2024, ethanol revenues totaled $1.592 billion, compared to $2.199 billion in 2023, reflecting a 27.6% decline. The sales of distillers grains contributed $72.7 million for the three months and $219.6 million for the nine months ended September 30, 2024.

Period	Ethanol Revenue (in millions)	Distillers Grains Revenue (in millions)
Q3 2024	$563.6	$72.7
Q3 2023	$774.3	$81.3
9M 2024	$1,592.3	$219.6
9M 2023	$2,198.7	$325.9

Income from carbon credits and sustainability initiatives

Green Plains has been actively involved in carbon credit trading and sustainability initiatives. The company reported gains from carbon credits, contributing approximately $19.2 million to revenues for the nine months ended September 30, 2024. This aligns with the company's strategic focus on reducing carbon emissions and enhancing sustainability practices.

Revenue from technology licensing and partnerships

Green Plains has also leveraged its technology through licensing agreements. The company reported $3.4 million in revenue from technology licensing and partnerships for the nine months ended September 30, 2024. This reflects an increase in collaboration with other firms aiming to enhance biofuel production efficiency and reduce environmental impact.

Hedging gains from commodity trading and risk management activities

For the three months ended September 30, 2024, Green Plains reported hedging gains amounting to $16.1 million, while for the nine months, the gains totaled $14.2 million. These gains stem from the company's use of derivative financial instruments to manage price volatility associated with its raw materials and sales.

Period	Hedging Gains (in millions)
Q3 2024	$16.1
9M 2024	$14.2

Article updated on 8 Nov 2024

Resources:

1. Green Plains Inc. (GPRE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Green Plains Inc. (GPRE)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Green Plains Inc. (GPRE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.