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Producing Renewable Energy for America
Producing Renewable Energy for America
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Forward-Looking Statements
This presentation contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions. Forward-looking statements may include words or phrases such as management or the Company “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “should,” “will,” “goals,” and other words and terms of similar meaning. Statements regarding future events and developments and our future performance, including statements regarding completion of facilities under construction, closing pending acquisitions, expectations concerning our growth plans, related financings, and future financial results are forward-looking statements. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Although we believe that our expectations regarding future events are based on reasonable assumptions, any or all of the forward-looking statements in this presentation may turn out to be wrong. Actual events or results may differ materially from those indicated in such forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in the “Risk Factors” sections of our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K.
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Investment Highlights
• Significant near-term revenue ramp as two 50 million gallon ethanol plants begin production and Great Lakes merger/acquisition potentially closes within the next few months
• Efficient, low-cost producer with vertical integration corn supply strategy
• Disciplined growth strategy through targeted acquisitions
• Experienced management team with significant ownership stake
• One of the most attractive capacity valuations in the industry
• Fast-growing industry with strong bipartisan political support
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Industry Update
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Significant Growth Opportunity
•The US consumed approximately 137 billion gallons of gasoline in 2005 •Ethanol currently represents 3% of the gasoline market•Anticipated gasoline demand of 163 billion gallons per year by 2015•10% blend in 2015 – 16.3 billion gallons per year •Potential flex-fuel vehicle market (E85) in 2015 – additional 11.0 billion gallons per year
(1) Source: RFA, October, 2007(2) Includes 6.6 billion gallons of ethanol capacity under construction (Source: RFA, October, 2007)(3) Calculated at 10% of the projected 2015 gasoline market of 163.0 billion gallons (Source: EIA, 2006)(4) Calculated based on projected flex-fuel vehicles (FFV) in 2015 of 22 million, assuming 600 gallons of E85 used each year per FFV.
163.0
27.3
(BGY)
6.9
13.5
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Benefits of Adding Ethanol to GasolineEthanol Replacing MTBE as Fuel Additive
Ethanol valued as a clean, high-octane additive•Increases octane•Expands fuel•Burns cleaner•Reduces emissions
Ethanol viewed as a strategic blend component
Octane Values(3)
(1) Source: RFA, 2006(2) Source: EIA, 2006(3) Source: ACE, 2006
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5-Year Ethanol/Gasoline Prices
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
RBOB Wholesale Gasoline
US Average Ethanol Rack
Historically Ethanol Price Tracks Gasoline Price
Ethanol has averaged $0.39 over wholesale gasoline prices over the past five years
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6-Month Ethanol/Gasoline Prices
$1.25
$1.45
$1.65
$1.85
$2.05
$2.25
$2.45
$2.65
RBOB Wholesale Gasoline
US Average Ethanol Rack
Currently Ethanol Prices Are Discounted to Gasoline
Recently ethanol has traded at a $0.50 Recently ethanol has traded at a $0.50 discountdiscount to wholesale gasoline prices. to wholesale gasoline prices.
$0.50/gallon
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Currently Ethanol is “Buying” Market Share
• Blenders are capturing over $1 per gallon margin:– $0.51 per gallon blenders’ credit– $0.50 per gallon discount to gasoline
• Total economic benefit is nearly $7 billion based on industry capacity:– Blending infrastructure development should accelerate based on extremely
favorable project returns– Once infrastructure is built, higher demand should remain, even at more
normalized spreads to gasoline
• Long-term ethanol margins should improve:– Infrastructure development should improve ethanol prices relative to gasoline– Higher oil prices should increase gasoline refining margins – Corn prices have pulled back as growth in ethanol development has slowed
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Adequate Corn Supplies Expected
(1) Source: National Corn Growers and ProExporter, 2006; http://www.ncga.com/ethanolSource: NCGA, 2006
“NCGA conducted an analysis of future corn use dynamics. Because of increasing yields, acreage shifts, new technology and the
displacement effect of distillers grains, it seems feasible that corn growers could harvest a crop of 14-15 billion bushels by 2015-16.” (1)
•The USDA projects the 2007 corn crop to be about 13.3 billion bushels•Ethanol production will account for about 15% of demand•National Corn Growers projects 14.6 billion bushel crop by 2015(1)
•That level supports 15.9 BGY of ethanol production
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Company Update
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Company History
2006 2007
Construction at Shenandoah site begins
Raised $34.5mm in IPO
Essex Elevator
acquisition announced
Production began at
Shenandoah plant
2008
Production projected to
begin at Superior
plant
Construction at Superior site
begins
Great Lakes merger-
acquisition announced
Projected closing of
Great Lakes
acquisition
Raised $48mm in secondary
offeringBegan trading trading on NASDAQon NASDAQ
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Low-Cost Plant Locations
(1) Source: Center for Agricultural & Rural Development, Iowa State University Map shows Corn Basis on 8/6/07 Basis calculated from CBOT DEC futures prices 325.8 cents per bushel(2)Source: Iowa Corn Growers Association
Iowa Corn Basis(1)
Legend
GPRE Plant Locations
Operating Plants and Plants Under Construction (2)
O
-62.7 - -55.6
-55.6 - -48.5
-48.5 - -41.4
-41.4 - -34.3
-34.3 - -27.2
-27.2 - -20.1
-20.1 - -13.0
-13.0 - -5.9
-5.9 - -1.2
O
OO
OO
OO
O
O O
O
OO O
OOO
OO
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
O
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Experienced, Reliable Partners
DELTA T
Renewable Products
Marketing Group, LLC.
Industries
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Management Team
WAYNE B. HOOVESTOL — Chief Executive Officer & DirectorMr. Hoovestol was elected to the board of Green Plains in March 2006. After attending North Dakota State University in Fargo, ND, and later the University of Minnesota, Mr. Hoovestol began operating Hoovestol Inc. and Major Transport, two transportation companies, in 1978. Mr. Hoovestol became involved with ethanol in 1995 as an investor and has served on the boards of two other ethanol plants.
JERRY L. PETERS — Chief Financial OfficerMr. Peters joined Green Plains in June 2007. Prior to working with GPRE, he served as Chief Financial Officer for ONEOK Partners, L.P. (formerly Northern Border Partners L.P.), a publicly traded partnership engaged in gathering, processing, storage, and transportation of natural gas and natural gas liquids. Prior to joining ONEOK Partners in 1985, Mr. Peters was employed by KPMG LLP as a certified public accountant. Mr. Peters holds a Bachelors degree in accounting from the University of Nebraska-Lincoln and an MBA in finance from Creighton University.
DOUG ARCHER — General ManagerMr. Archer joined Green Plains in August 2007. Prior to joining Green Plains, Mr. Archer worked as Controller for POET, one of the leaders in the ethanol industry. Prior to POET, Mr. Archer served for six years as VP of Operations /Finance for Citation Mfg., Inc., a manufacturer and distributor of various construction industry products. Mr. Archer is a graduate of Augustana College in Sioux Falls, SD where he received a B.A. in Business and minored in Computer Science.
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Shenandoah Plant Summary
Nameplate Capacity: 50 million gallons/year - expandable to 100 million
Builder: Fagen Inc.
Process Technology Provider: ICM, Inc.
Start of Construction: March 2006
First Grind: August 23, 2007
Transportation Capacity: 100 car rail capability; dual-scale truck capability
Employees: Approximately 35 employees
Achieved nameplate production level within 2 weeks of startup
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Superior Plant Summary
Nameplate Capacity: 50 million gallons/year – expandable to 100 million gallons
Builder: Agra Industries, Inc.
Process Technology Provider: Delta T, Inc.
Start of Construction: June 2006
Expected First Grind: First quarter 2008
Transportation Capacity: 100 car rail loop; dual-scale truck capability
Employees: Plant management hiring in process
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To be a consolidator in the ethanol industry by:• Providing professional management and developed infrastructure for efficient
ethanol production:– Corn procurement and logistics– Risk management– Ethanol marketing and logistics– Operations support– Access to financial capital– Project development– Research and development
• Providing liquidity to shareholders of privately-held single-plant ethanol companies• Targeted acquisitions at reasonable multiples
Strategic Direction
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Acquisition Summary – Great Lakes Cooperative
Company Overview: Full-service farm cooperative
• 14.5 million bushels of grain storage capacity• Grain, agronomy, feed & petroleum businesses• Approximately 100 employees • About 2,300 members
Purchase Price: Cash and stock-
• $12.5 million cash
• 451,000 shares
Announcement: August 15, 2007
Expected Closing: January 2008
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Business Highlights
• Seven sites within 50 miles of Superior ethanol plant
• Four mainline rail load-out facilities
• FY 2007 throughput: 18 million bushels corn, 6 million bushels soybeans
• FY 2007 revenues of $141 million
Vertical Integration Strategy
• Grain storage available to manage corn feedstock prices and supply
• Fertilizer, feed and petroleum businesses provide services to area producers
• 1,400 Co-op members will become GPRE shareholders and business partners
Acquisition Summary – GLC (cont.)
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Projected Production Capacity per Share
0
2
4
6
8
10
12
14
16
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GPRE VSE AVR USBE BIOF PEIX
Projected 2008 Capacity per Share (1)
(1)(1) Based on October 2007 Broadpoint Capital equity research report
GPRE is LEVERAGED TO ETHANOL ECONOMICS
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Enterprise Value / Gallon of Capacity
GPRE provides an ATTRACTIVE VALUE
Per Gallon
$1.49
$4. 47$4.70
$7.95
2.66
2.031.83
1.64 1.51
1.37
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
PEIX VSE AVR USBE GPRE BIOF
(1) Based on Broadpoint Capital equity research report and October 30, 2007 closing prices.
Based on Projected 2008 Year-end Production Capacity (1)
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Projected Sources and Uses of Funds for Each Plant
Shenandoah Superior
Estimated Sources of FundsNet Common Stock and Warrant Proceeds 37,119,000$ 48,317,000$ Economic Development Loan and Grant 400,000 - Interest Earned, Derivative Gains and Other, net 781,000 6,817,000 Term and Revolving Debt Financing 47,000,000 50,000,000
Total Estimated Sources of Funds 85,300,000$ 105,134,000$
Estimated Uses of FundsPlant Construction 60,456,000$ 79,605,000$ Site Costs 5,968,000 4,720,000 Railroad Costs 4,900,000 6,342,000 Fire Protection/Water Supply Costs 3,960,000 3,517,000 Rolling Stock Costs 240,000 350,000 Financing Costs and Capitalized Interest 1,476,000 1,800,000 Pre-Production Period Costs 800,000 800,000 Working Capital and Other Costs 7,500,000 8,000,000
Total Estimated Uses of Funds 85,300,000$ 105,134,000$
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Operating Results and Financial Condition
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Investment Recap
• Significant near-term revenue ramp
• Efficient, low-cost producer with vertical integration corn supply strategy
• Disciplined growth strategy through targeted acquisitions
• Experienced management team with significant ownership stake
• One of the most attractive capacity valuations in the industry
• Fast-growing industry with strong bipartisan political support
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Shenandoah Plant
