Green Plains Inc. has reported a third quarter net loss of $39 million due to the low margin environment. The company, however, said ethanol margins are showing improvement and efforts to improve plant operations are continuing.

Green Plains discussed the current state of the ethanol industry and efforts to improve plant efficiency in its third quarter results, released Nov. 5, and an associated earnings call, held the following day.

Todd Becker, president and CEO of Green Plains, opened the earnings call by noting that although third quarter results were driven by a weak ethanol margin environment, margins in the fourth quarter have improved and are currently positive.

Becker said Green Plains produced approximately 238.5 million gallons of ethanol during the third quarter, which equates to a utilization rate of approximately 84 percent. The consolidated crush margin for the quarter was negative 6 cents per gallon. Industry rationalization due to the extended negative margin environment, however, has resulted in plants shutting down or slowing production, he said, which has reduced inventories. “This culminated in a late Q3 margin improvement that has continued into the fourth quarter,” Becker said. Fourth quarter ethanol stocks so far are at the lowest level the U.S. has seen in more than two years, Becker added.

Becker also provided an update of Green Plains’ Project 24 initiative, which aims to reduce the company’s per-gallon operating expense to 24 cents. He said the company has completed the first Project 24 modification at its Wood River, Nebraska, facility. The plant restarted operations last week and is currently ramping up production. Becker said Green Plains believes improvements made at the plant will lower operating costs per gallon by 8 cents and lower natural gas usage by 25 percent, generating additional savings. The carbon intensity (CI) of the plant has also been lowered, which will allow the plant to take advantage of markets that pay premiums for low carbon fuels.

According to Becker, Green Plains has already begun work on the next three Project 24 upgrades, which should be complete in March or April of 2020. Once complete, the projects will allow approximately 360 million gallons, or nearly half of Green Plains’ non-ICM production capacity, to have a significantly lower operating cost per gallon.

Work is also progressing on the installation of high-protein feed technology at Green Plains’ plant in Shenandoah, Iowa. Construction on the project is currently expected to be complete in December, with product being available beginning in February, Becker said. He also noted Green Plains has opened an aquaculture laboratory and testing facility in Shenandoah and will begin feeding trials with the high protein feed and different species of fish soon.  

Overall, Green Plains reported net loss attributable to the company of $39 million, or a loss of $1.06 per diluted share, for the third quarter, compared to a net loss of $12.5 million, or a loss of 31 cents per diluted share, for the same period of last year. Revenues were $632.4 million, down from $789 million.