Exhibit 99.1
GREEN PLAINS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AND RELATED NOTES THERETO
Introduction and Basis of Presentation
On October 8, 2018, Green Plains Inc. (the “Company”) entered into an asset purchase agreement for the sale of three ethanol plants located in Bluffton, Indiana, Lakota, Iowa, and Riga, Michigan, and certain related assets from subsidiaries, to Valero Renewable Fuels Company, LLC (“Valero”) for the sale price of $319.8 million, including net working capital and other adjustments (the “Valero Transaction”). Correspondingly, the Company entered into a separate asset purchase agreement with Green Plains Partners LP (the “Partnership”) for $120.9 million (the “Partnership Transaction”) to acquire the related storage assets to be disposed of in the sale to Valero and convey 460 of the 3,500 railcars leased by the Partnership to the Company. The transactions were previously described in a Current Report of the Partnership on Form 8-K filed with the United States Securities and Exchange Commission on October 10, 2018. On November 15, 2018, the Company closed on both the Partnership Transaction and the Valero Transaction. The Company received as consideration from Valero approximately $319.8 million, while the Partnership received as consideration from the Company 8.7 million Partnership units and a portion of the general partner interest equating to 0.2 million hypothetical limited partner units to maintain the general partner’s 2% interest. In addition, the Partnership also received as additional consideration approximately $2.6 million in cash related to the present value gain on railcars transferred, subject to certain post-closing adjustments.
The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2018, of the Company is presented as if the Valero Transaction and the Partnership Transaction had occurred on September 30, 2018. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2018, and for the year ended December 31, 2017, are presented as if such events had occurred on January 1, 2017.
The unaudited pro forma condensed consolidated balance sheet and statements of operations included herein are for informational purposes only and are not necessarily indicative of the results that might have occurred had the Valero Transaction and the Partnership Transaction taken place on the respective dates assumed. Actual results may differ significantly from those reflected in the unaudited condensed consolidated pro forma financial statements for various reasons, including but not limited to, the differences between the assumptions used to prepare the unaudited pro forma condensed consolidated financial statements and actual results. The pro forma adjustments in the unaudited pro forma condensed consolidated balance sheet and the statements of operations included herein include the use of estimates and assumptions as described in the accompanying notes. The pro forma adjustments are based on information available to the Company at the time these unaudited pro forma condensed consolidated financial statements were prepared. The Company believes its current estimates provide a reasonable basis of presenting the significant effects of the Valero Transaction and the Partnership Transaction.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the accompanying notes in addition to the following:
•the historical financial statements of the Company as of and for the year ended December 31, 2017, and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017;
•the historical unaudited financial statements of the Company as of and for the nine months ended September 30, 2018, and the related notes included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
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GREEN PLAINS INC. AND SUBSIDIARIES | ||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||
AS OF SEPTEMBER 30, 2018 | ||||||||||||
(in thousands) | ||||||||||||
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| Pro Forma |
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| Green |
| Disposition of |
| Adjustments |
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| Pro Forma | ||||
| Plains Inc. |
| Ethanol Plants |
| (Note 2) |
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| Consolidated | ||||
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ASSETS | ||||||||||||
Current assets |
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Cash and cash equivalents | $ | 171,674 |
| $ | (3,622) |
| $ | 319,829 | (a) |
| $ | 224,320 |
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| (271,023) | (b) |
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| 218 | (c) |
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Restricted cash |
| 62,797 |
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| 8,252 |
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| - |
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| 54,545 |
Accounts receivable, net |
| 134,950 |
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| 4,314 |
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| - |
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| 130,636 |
Income taxes receivable |
| 13,211 |
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| - |
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| (15) | (d) |
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| 13,196 |
Inventories |
| 765,198 |
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| 30,514 |
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| - |
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| 734,684 |
Prepaid expenses and other |
| 15,529 |
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| 1,076 |
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| - |
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| 14,453 |
Derivative financial instruments |
| 24,254 |
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| 4,649 |
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| - |
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| 19,605 |
Total current assets |
| 1,187,613 |
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| 45,183 |
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| 49,009 |
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| 1,191,439 |
Property and equipment, net |
| 1,143,551 |
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| 184,476 |
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| - |
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| 959,075 |
Goodwill |
| 182,879 |
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| 6,188 |
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| - |
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| 176,691 |
Other assets |
| 170,791 |
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| 4,897 |
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| - |
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| 165,894 |
Total assets | $ | 2,684,834 |
| $ | 240,744 |
| $ | 49,009 |
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| $ | 2,493,099 |
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LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
Current liabilities |
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Accounts payable | $ | 155,663 |
| $ | 8,012 |
| $ | - |
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| $ | 147,651 |
Accrued and other liabilities |
| 47,955 |
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| 5,437 |
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| - |
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| 42,518 |
Derivative financial instruments |
| 41,725 |
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| 3,841 |
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| - |
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| 37,884 |
Short-term notes payable and other borrowings |
| 556,566 |
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| - |
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| (21,023) | (b) |
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| 535,543 |
Current maturities of long-term debt |
| 65,614 |
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| - |
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| - |
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| 65,614 |
Total current liabilities |
| 867,523 |
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| 17,290 |
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| (21,023) |
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| 829,210 |
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Long-term debt |
| 767,177 |
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| - |
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| (250,000) | (b) |
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| 523,933 |
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| 6,756 | (e) |
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Deferred income taxes |
| 21,764 |
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| 25,272 |
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| 3,713 | (d) |
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| 205 |
Other liabilities |
| 14,235 |
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| 4,662 |
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| - |
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| 9,573 |
Total liabilities |
| 1,670,699 |
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| 47,224 |
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| (260,554) |
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| 1,362,921 |
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Stockholders' equity |
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Common stock |
| 47 |
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| - |
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| - |
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| 47 |
Additional paid-in capital |
| 695,143 |
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| - |
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| - |
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| 695,143 |
Retained earnings |
| 276,083 |
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| 193,520 |
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| 309,563 | (f) |
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| 392,126 |
Accumulated other comprehensive loss |
| (17,176) |
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| - |
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| - |
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| (17,176) |
Treasury stock |
| (55,184) |
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| - |
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| - |
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| (55,184) |
Total Green Plains stockholders' equity |
| 898,913 |
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| 193,520 |
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| 309,563 |
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| 1,014,956 |
Noncontrolling interests |
| 115,222 |
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| - |
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| - |
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| 115,222 |
Total stockholders' equity |
| 1,014,135 |
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| 193,520 |
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| 309,563 |
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| 1,130,178 |
Total liabilities and stockholders' equity | $ | 2,684,834 |
| $ | 240,744 |
| $ | 49,009 |
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| $ | 2,493,099 |
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GREEN PLAINS INC. AND SUBSIDIARIES | ||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2017 | ||||||||||||
(in thousands, except per share amounts) | ||||||||||||
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| Pro Forma |
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| Green |
| Disposition of |
| Adjustments |
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| Pro Forma | ||||
| Plains Inc. |
| Ethanol Plants |
| (Note 2) |
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| Consolidated | ||||
Revenues |
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Product revenues | $ | 3,589,981 |
| $ | 421,866 |
| $ | - |
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| $ | 3,168,115 |
Service revenues |
| 6,185 |
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| - |
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| - |
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| 6,185 |
Total revenues |
| 3,596,166 |
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| 421,866 |
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| - |
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| 3,174,300 |
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Costs and expenses |
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Cost of goods sold (excluding depreciation and amortization expenses reflected below) |
| 3,301,587 |
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| 401,165 |
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| - |
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| 2,900,422 |
Operations and maintenance expenses |
| 33,448 |
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| 3,915 |
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| - |
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| 29,533 |
Selling, general and administrative expenses |
| 112,024 |
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| 6,084 |
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| - |
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| 105,940 |
Depreciation and amortization expenses |
| 107,361 |
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| 21,056 |
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| - |
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| 86,305 |
Total costs and expenses |
| 3,554,420 |
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| 432,220 |
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| - |
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| 3,122,200 |
Operating income (loss) |
| 41,746 |
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| (10,354) |
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| - |
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| 52,100 |
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Other income (expense) |
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Interest income |
| 1,597 |
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| 11 |
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| - |
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| 1,586 |
Interest expense |
| (90,160) |
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| - |
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| 18,621 | (g) |
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| (71,539) |
Other, net |
| 3,666 |
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| 2,759 |
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| - |
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| 907 |
Total other income (expense) |
| (84,897) |
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| 2,770 |
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| 18,621 |
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| (69,046) |
Income (loss) before income taxes |
| (43,151) |
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| (7,584) |
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| 18,621 |
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| (16,946) |
Income tax benefit (expense) |
| 124,782 |
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| 29,305 |
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| (7,020) | (d) |
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| 88,457 |
Net income |
| 81,631 |
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| 21,721 |
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| 11,601 |
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| 71,511 |
Net income attributable to noncontrolling interests |
| 20,570 |
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| 305 |
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| - |
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| 20,265 |
Net income attributable to Green Plains | $ | 61,061 |
| $ | 21,416 |
| $ | 11,601 |
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| $ | 51,246 |
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Earnings per share: |
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Net income attributable to Green Plains - basic | $ | 1.56 |
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| $ | 1.31 |
Net income attributable to Green Plains - diluted | $ | 1.47 |
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| $ | 1.27 |
Weighted average shares outstanding: |
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Basic |
| 39,247 |
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| 39,247 |
Diluted |
| 50,240 |
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| 50,240 |
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GREEN PLAINS INC. AND SUBSIDIARIES | ||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 | ||||||||||||
(in thousands, except per share amounts) | ||||||||||||
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| Pro Forma |
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| Green |
| Disposition of |
| Adjustments |
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| Pro Forma | ||||
| Plains Inc. |
| Ethanol Plants |
| (Note 2) |
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| Consolidated | ||||
Revenues |
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Product revenues | $ | 3,027,678 |
| $ | 330,850 |
| $ | - |
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| $ | 2,696,828 |
Service revenues |
| 4,546 |
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| - |
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| - |
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| 4,546 |
Total revenues |
| 3,032,224 |
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| 330,850 |
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| - |
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| 2,701,374 |
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Costs and expenses |
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Cost of goods sold (excluding depreciation and amortization expenses reflected below) |
| 2,835,344 |
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| 310,765 |
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| - |
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| 2,524,579 |
Operations and maintenance expenses |
| 23,564 |
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| 2,562 |
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| - |
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| 21,002 |
Selling, general and administrative expenses |
| 80,817 |
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| 4,138 |
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| (218) | (c) |
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| 76,461 |
Depreciation and amortization expenses |
| 84,010 |
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| 16,890 |
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| - |
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| 67,120 |
Total costs and expenses |
| 3,023,735 |
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| 334,355 |
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| (218) |
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| 2,689,162 |
Operating income (loss) |
| 8,489 |
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| (3,505) |
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| 218 |
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| 12,212 |
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Other income (expense) |
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Interest income |
| 2,136 |
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| 9 |
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| - |
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| 2,127 |
Interest expense |
| (67,548) |
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| - |
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| 15,016 | (g) |
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| (52,532) |
Other, net |
| 2,362 |
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| 1 |
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| - |
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| 2,361 |
Total other income (expense) |
| (63,050) |
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| 10 |
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| 15,016 |
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| (48,044) |
Loss before income taxes |
| (54,561) |
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| (3,495) |
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| 15,234 |
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| (35,832) |
Income tax benefit (expense) |
| 31,438 |
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| 5,429 |
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| (3,728) | (d) |
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| 22,281 |
Net income (loss) |
| (23,123) |
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| 1,934 |
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| 11,506 |
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| (13,551) |
Net income attributable to noncontrolling interests |
| 14,457 |
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| 238 |
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| - |
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| 14,219 |
Net income (loss) attributable to Green Plains | $ | (37,580) |
| $ | 1,696 |
| $ | 11,506 |
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| $ | (27,770) |
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Earnings per share: |
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Net loss attributable to Green Plains - basic | $ | (0.94) |
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| $ | (0.69) |
Net loss attributable to Green Plains - diluted | $ | (0.94) |
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| $ | (0.69) |
Weighted average shares outstanding: |
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Basic |
| 40,189 |
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| 40,189 |
Diluted |
| 40,189 |
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| 40,189 |
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GREEN PLAINS INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. | BASIS OF PRESENTATION |
See “Introduction” for more information regarding the basis of presentation for our unaudited pro forma condensed consolidated financial statements. For the purpose of this pro forma analysis, the sale price, including estimated working capital adjustments, have been allocated. Finalization of working capital adjustments is not expected to materially impact the adjustments shown above.
2. | PRO FORMA ADJUSTMENTS |
Adjustments under the heading “Pro Forma Adjustment” in the accompanying pro forma condensed consolidated financial statements represent the following:
(a) | Reflects cash received at closing on the sale of the ethonal plants, including working capital considerations. |
(b) | Reflects the actual re-payment of debt that occurred upon closing. |
(c) | Reflects the reversal of transaction costs incurred through September 30, 2018. |
(d) | Reflects the income tax impact related to interest savings as a result of repayment of debt. |
(e) | Reflects the write-off of a portion of debt issuance costs totaling $6.8 million, which is not presented in the pro forma condensed consolidated statement of operations as it is nonrecurring in nature and will not have a continuing impact on the Company. |
(f) | Reflects the impact on equity related to the cash received at closing on the sale of the ethanol plants, the gain on the sale of the ethanol plants of $96.6 million and the reversal of transaction costs incurred through September 30, 2018. The gain on the sale of the ethanol plants is not presented in the pro forma condensed consolidated statement of operations as it is nonrecurring in nature and will not have a continuing impact on the Company. |
(g) | Reflects the interest foregone as a result of repayment of debt. For the periods ended December 31, 2017 and September 30, 2018, the weighted average interest rate on the debt repaid was approximately 6.9% and 7.4%, respectively. |