Green Plains Partners LP 38 th Annual Raymond James Institutional Investors Conference March 8, 2017

Transcription

1 Green Plains Partners LP 38 th Annual Raymond James Institutional Investors Conference March 8, 2017

2 Jerry Peters Chief Financial Officer 1811 Aksarben Drive Omaha, NE

3 Forward-Looking Statements This presentation includes forward-looking statements that reflect management s current views of company performance, industry conditions and future economic environment. These statements are based on assumptions and various factors that are subject to risks and uncertainties. Green Plains has provided additional information about such risks and uncertainties that could cause actual results to differ materially from those expressed or implied in its reports filed with the Securities and Exchange Commission. Green Plains is not obligated nor intends to update its forward-looking statements at any time unless it is required by applicable securities laws. Unpredictable or unknown factors not discussed in this presentation could also have material adverse effects on forward-looking statements. Page 3

4 Green Plains Partners LP Formed in 2015 by Green Plains Inc. to provide fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses Primary vehicle to expand downstream logistics activities to support Green Plains growing energy services Green Plains is the general partner and 64.5% owner of the partnership; public owns remaining 35.5% Page 4

5 Partnership Assets Ethanol Storage Facilities 39 ethanol storage facilities located at or near Green Plains 17 ethanol plants with production capacity of 1.5 bgy ATKINSON ORD WOOD RIVER SUPERIOR OMAHA YORK CENTRAL CITY FAIRMONT LAKOTA SHENANDOAH Strategically located near major rail lines in nine U.S. states enabling transportation to diverse geographic areas Fuel Terminal Facilities Fuel terminal facilities at eight locations in seven southcentral U.S. states. Transportation Assets ~3,100 railcars and trucking capabilities GREEN PLAINS ASSETS CORPORATE HEADQUARTERS ETHANOL PRODUCTION FACILITIES GPP s ASSETS ETHANOL STORAGE FACILITIES BIOFUELS UNIT TRAIN TERMINAL BIOFUELS TERMINALING FACILITIES RAIL SYSTEMS NORFOLK SOUTHERN BNSF UNION PACIFIC CANADIAN NATIONAL OKLAHOMA CITY HEREFORD OTTER TAIL LITTLE ROCK RIGA BLUFFTON MADISON MOUNT VERNON LOUISVILLE OBION NASHVILLE HOPEWELL Assets with low operating capital requirements and useful life of 20+ years BOSSIER CITY COLLINS BIRMINGHAM Page 5

6 Partnership Advantages Long-term, fee-based commercial agreements generate stable, predictable cash flows Supported by minimum volume or take-or-pay capacity commitments Green Plains daily average production capacity utilization is approximately 95% Alignment with parent to grow distributions Multiple avenues for growth Commercial Agreements with Green Plains Trade (1) Agreement Storage and throughput services Terminal services (Birmingham) Railcar capacity (daily avg. gallons) 1) As of January 1, 2017 Minimum commitment Rate per gallon Remaining Term 1,186 mmgy $ years 33.2 mmgy $ years 90.6 mmg $ years Green Plains Production & Utilization History (% of capacity) (mmgy) 400 Accretive acquisitions Organic growth Development of downstream distribution services 100% 80% 60% 40% 20% 0% Production % of Capacity Production Capacity Page 6

7 Our Parent Green Plains Inc. Formed in 2004 as an ethanol producer with strategically located, operationally efficient production assets $1.3 billion of EBITDA from ; averaged 21 cents per gallon on 6.1 billion gallons of ethanol Growth through acquisitions of vertically integrated, commodity-processing businesses Second largest consolidated owner of ethanol production facilities in the world $2.5 billion in assets as of December 2016; $1.5 billion enterprise value EBITDA (in millions) US Ethanol Production Capacity (bgy) (1) $351 Top five producers account for 44% of overall production capacity ADM 1.7 POET 1.6 (2) $68 $130 $149 $116 $157 $127 $174 All Others 8.8 Green Plains 1.5 Valero 1.4 Flint Hills ) Source: Renewable Fuels Association 2) POET does not own 100% of all production capacity Page 7

8 Operating Segments Green Plains Inc. Ethanol Production Annual production capacity of 1.5 billion gallons of ethanol, 4.1 million tons of distillers, 345 million pounds of industrial corn oil Agribusiness & Energy Services Purchase 14.4 million tons of corn; 42 days of grain storage Merchant trading of 12+ commodities Food & Food Ingredients 73,000-head cattle feeding operation Fleischmann s Vinegar Company operations Partnership Fuel storage, transportation and logistics Green Plains moves meaningful volumes and positions across the agricultural and energy supply chain Page 8

9 Liquidity & Capital Five-Year Snapshot Green Plains Inc. (in millions) Production capacity (mmgy) 740 1,020 1,020 1,055 1,148 Pro forma EBITDA (1) $ $ $ $ $ Interest expense Gross debt ,108.9 Working capital financing Term debt Cash and cash equivalents Net term debt Stockholder's equity $ $ $ $ $ Term debt / total capitalization 51.4 % 50.8 % 36.7 % 35.4 % 48.7 % Term debt / Pro forma EBITDA 3.6x 3.0x 2.2x 2.0x 2.9x Pro forma EBITDA / Interest expense 3.8x 5.7x 5.4x 5.4x 5.5x (1) Pro forma EBITDA based on estimated mid-cycle crush margins of $0.20 per gallon, average utilization of approximately 93% and TTM non-ethanol EBITDA Assets as of December 31, 2016 Debt as of December 31, 2016 Other Assets 16% Cash 14% Non-Ethanol Term Debt 12% Other 1% Property & Equipment 47% Readily Marketable Inventories 14% Other Inventory & A/R 9% Working Cap Revolver 26% Plant Term Debt 40% Convertible Notes 21% Total Assets: $2,506 Million Total Debt: $1,109 Million Page 9

10 Ethanol Industry Overview

11 Domestic Ethanol Landscape U.S. is the world s largest producer of ethanol 213 ethanol plants in the U.S. capable of producing 15.8 bgy of ethanol 15.3 billion gallons produced and 14.2 billion gallons consumed in 2016, 9.9% of domestic gasoline supply Domestic demand forecast is billion gallons for 2017 RFS II mandate is 15.0 billion gallons for 2017 Domestic Supply and Demand (bgy) Top Global Ethanol Producers (2015) Demand U.S. Net Exports Production China 3% EU 5% Rest of world 6% Brazil 28% United States 58% P Source: U.S. Dept. of Energy, Energy Information Administration, U.S. Dept. of Agriculture, Renewable Fuels Association United States and Brazil accounted for ~86% of world ethanol production in 2015 Page 11

12 Domestic Ethanol Supply & Demand Industry Fundamentals (thousand barrels) (days) 26, , , , , , , ,000 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb Weekly U.S. Ending Stocks Total Days of Demand 23.1 million barrels of ethanol inventory, compared with 22.6 million barrels at the same time last year 22.5 production days of demand compared with 23.5 production days at the same time last year Source: Energy Information Administration as of February 24, 2017 Page 12

13 Domestic Gasoline Demand Ethanol Industry Drivers (million barrels per day) Year range Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (in bgy) U.S. gasoline consumption Source: EIA, Bloomberg as of February 24, 2017 Page 13

14 Ethanol Spread to RBOB Ethanol Industry Drivers Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 RBOB $1.73 $1.76 $1.77 $1.76 $1.75 $1.72 Ethanol $1.55 $1.56 $1.56 $1.56 $1.56 $1.55 Ethanol Price vs. RBOB ($0.18) ($0.19) ($0.21) ($0.20) ($0.19) ($0.17) Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 RBOB $1.59 $1.55 $1.53 $1.52 $1.52 $1.54 Ethanol $1.54 $1.53 $1.51 $1.51 $1.51 $1.51 Ethanol Price vs. RBOB ($0.05) ($0.02) ($0.02) ($0.01) ($0.01) ($0.03) Historic Ethanol Discount-Premium to RBOB $0.80 $0.60 $0.40 $0.20 $0.00 ($0.20) ($0.40) ($0.60) ($0.80) ($1.00) ($1.20) ($1.40) Source: CME Group as of February 28, 2017 Page 14

15 Cost Advantages of Ethanol Most economical oxygenate and octane enhancer Used to upgrade sub-grade fuel to regular or premium gasoline with 113 per gallon octane rating Saves ~$0.04 per gallon refining for CBOB Provides refiners RINs, which are currently trading at ~30 cents Enables refiners to remain competitive with non-obligated parties Ethanol vs Substitutes: Refiners Cost per Finished Gallon Sources Octane $1.20 $1.00 $0.80 $0.60 $0.40 Substitute pricing reflects current low demand and is not representative of pricing in high demand substitution scenario Gulf Coast 93 Benzene 101 Xylene 106 Ethanol 113 $0.20 $0.00 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Toluene 114 GC93 Toluene Ethanol Source: Bloomberg as of February 24, 2017 Page 15

16 Higher Ethanol Blends Ethanol Industry Drivers Major retailers are converting stations to E15; consumers are choosing cheaper gas Automakers have explicitly approved the use of E15 in more than 70% of 2016 models sold in the U.S. U.S. Retail Stations Selling E YTD Source: Renewable Fuels Association, 2017 data as of February 24, 2017 Page 16

17 Export Demand is Growing Ethanol Industry Drivers Global production was 25.6 billion gallons in 2015 Global demand has been growing 2-3% annually and projected to surpass supply in billion gallons, or ~7%, domestic ethanol exported in billion gallons anticipated in 2017 Domestic Ethanol Exports (million gallons) 1,400 1,200 1, P Source: Renewable Fuels Assoc., Energy Information Administration Page 17

18 Export Demand is Growing Ethanol Industry Drivers Corn-based ethanol is the most economical source of octanes in the world Equivalent value of sugar produced from corn is ~7 cents per pound based on $3.50 per bushel Rest of world 19% 2016 Ethanol Export Mix Brazil 26% 1,045 mmg of U.S. ethanol exported in 2016 ~80% went to five countries Philippines 5% India 8% 11.5 mmt of U.S. DDGs exported in 2016 ~70% went to six countries China 17% Canada 25% Price of Sugar per Pound 2016 Distillers Grains Export Mix $0.24 $0.22 $0.20 Rest of world 30% China 21% $0.18 $0.16 $0.14 $0.12 $0.10 Source: Bloomberg and RJ O Brien as of March 3, 2017 Thailand 7% Turkey 7% South Korea 8% Vietnam 10% Mexico 17% Page 18

19 Understanding Point of Obligation Potential Impact of Moving the Point of Obligation Limit E15 and higher blends by removing the economic incentive provided by RINS Disrupt the fuel and blending system built on the certainty of the RFS Undercut retailers promoting biofuel demand and create uncertainty Delay future RVO rulemaking as parties recalibrate a program that is working Increase the number of obligated parties across the supply chain Is the waiver for RVP a reasonable offset? RVP waiver is important for E15 and achievable through Congress Page 19

20 RINS are a Zero-Sum Game Understanding RINS Integrated Refiners with Limited Obligations Obligated parties with abundant capabilities and RIN generation Blending operations provide gasoline sellers access to RINS they do not need, which are offered for sale in the open market Examples: ExxonMobil, Shell, BP, Marathon Merchant Refiners with Limited Offsets Obligated parties with limited offsetting businesses, such as retail-wholesale blending or export program Business model does not limit downstream retail blending Examples: Valero, CVR, PBF, HollyFrontier, Calumet Excess RINs RIN Market RINs Shortage Blend Obligation Blend Demand Blend Obligation Blend Demand In aggregate, the excess equals the shortfall for market players, making this a zero-sum game Page 20

21 Focused on Growth

22 Jefferson Terminal Project 50/50 joint venture to construct and operate intermodal export/import fuel terminal $55 million phase I development cost at Jefferson s existing Beaumont, Texas terminal Ethanol storage of 500,000 barrels; 4-5 separate tanks for 3-4 spec products including domestic ASTM unit trains per month or ~1.1 million barrels projected for phase I Served by 3 Class I railroads with unit train offloading capability, blue and brown water barge access Page 22

23 Drop Down Acquisition Ethanol Storage Assets Green Plains Partners LP (partnership) Throughput gallons (mm) 236 Rate per gallon, net $0.047 Projected EBITDA (mm) $ % throughput X rate Drop down multiple 8.5x Purchase price of storage assets (mm) $90.0 EBITDA x drop down multiple Purchase price per gallon throughput capacity $0.38 Green Plains Inc. (sponsor) Acquisition price $237.0 Production gallons (mm) 236 Acquisition price per gallon $1.00 New asset price after drop down (mm) $147.0 acquisition price partnership purchase price New asset price per gallon $0.62 asset price after drop down Page 23

24 Adjusted EBITDA and DCF Green Plains Partners LP Three Months Ended Dec. 31, Twelve Months Ended Dec. 31, (in millions) (1) (1) Net income $16.4 $11.9 $56.8 $16.1 Interest expense Income tax expense (benefit) (0.1) (4.0) Depreciation and amortization Other Adjusted EBITDA Adjusted EBITDA attributable to others - (0.2) - (8.1) Adjusted EBITDA attributable to the partnership Less: Interest paid or payable Income taxes paid or payable (0.1) Maintenance capital expenditures Distributable cash flow (2) Distributable cash flow attributable to others (0.1) Distributable cash flow attributable to the partnership $17.8 $14.0 $62.7 $26.8 Distribution declared (3) $14.0 $13.0 $54.0 $26.0 Coverage ratio 1.27x 1.08x 1.16x 1.03x (1) Recast to include historical results of operations related to net assets acquired in a transfer between entities under common control. (2) Distributable cash flow is for periods after July 1, (3) Represents distributions declared for the applicable quarter and paid in the subsequent quarter. Page 24

25 Multiple Avenues for Growth Power of the MLP Platform Production growth by our parent Expand existing production capacity Acquire production assets Partnership has five-year right of first offer on selected assets Downstream distribution services development Acquire or build new downstream terminals Review opportunities for import/export operations Joint venture with Delek US to build a unit-train terminal in Little Rock, Arkansas Jefferson terminal development and potential drop down Page 25

26 Green Plains Inc. NASDAQ: GPRE Green Plains Partners LP NASDAQ: GPP