Green Plains Doubles Adjusted EBITDA to $118 Million on 45Z Credits

Green Plains (NASDAQ:GPRE) posted record adjusted EBITDA of $118 million for the third quarter of 2026, more than double the $53 million recorded a year earlier, even as revenue fell 2.5% to $496 million from $508 million. The gap between falling revenue and rising profit deserves scrutiny, and the company's own arithmetic explains most of it: $65 million of that EBITDA came from 45Z production tax credit value, net of discounts and associated costs, while the base business generated $53 million.

Net income attributable to the company rose to $85 million, or $1.03 per diluted share, from $12 million, or $0.17 per diluted share, in the third quarter of 2025. Chief Financial Officer Ann Reis attributed the revenue decline primarily to lower ethanol volumes following the sale of the Obion plant; higher volumes from continuing operations and higher weighted average selling prices partly offset it.

What drove the margin expansion?

Consolidated ethanol crush margin rose to $123 million, or $0.70 per gallon, from $60 million, or $0.30 per gallon, a year earlier. Chief Executive Officer Chris Osowski said the margin improved approximately $0.11 per gallon sequentially, with most of that gain coming from plant performance, commercial execution and other factors beyond the commodity environment. That claim — that management, not the market, produced the gain — is testable in coming quarters if margins hold.

Platform utilization recovered to approximately 95%, while production increased by 14 million gallons from the second quarter. Ethanol and renewable corn oil yields reached quarterly records, and energy use per gallon improved from a year earlier. The Madison plant, which had extended downtime in the second quarter, achieved its highest quarterly ethanol production in more than 15 years of operation, Osowski said.

Reis added a concrete payoff: improved yields lowered the plant's carbon intensity enough to qualify for a more favorable tax credit tier, generating approximately $6 million in additional credits during the quarter.

How solid is the tax-credit pipeline?

Green Plains signed an agreement in the fourth quarter to transfer a minimum of $250 million and a maximum of $325 million in gross face value of its 2026 tax credits. Buyers hold an option to purchase an additional $30 million, depending on how much the company generates.

Reis flagged the caveat herself: the face value is not a dollar-for-dollar contribution to adjusted EBITDA. Cash proceeds reflect a transfer discount, and related adjusted EBITDA is net of associated operating expenses. Face value, in plain words, is not cash.

The company held approximately $210 million in 45Z receivables at September 30. It expects to convert approximately $140 million of those receivables into cash during the fourth quarter and to monetize its third- and fourth-quarter production in the first half of 2027.

Osowski raised full-year guidance: Green Plains now expects $230 million to $250 million in carbon-related adjusted EBITDA for 2026, up from an initial expectation of approximately $188 million, and at least $250 million from its low-carbon platform in 2027. Both figures assume credit values hold.

The company also introduced its Farm Forward incentive program at Nebraska facilities, paying premiums of $0.05 to $0.25 per bushel depending on a farmer's carbon intensity score. Reis said it was too early to quantify the program's additional contribution — a rare admission of uncertainty alongside the raised guidance.

What does the fourth quarter hold?

Imre Havasi, senior vice president of trading and commercial operations, said the fourth quarter started well and that Green Plains expects gross margins to remain above historical averages, even though industry margins sit below levels seen during portions of the third quarter. Seasonal weakness in domestic ethanol demand and softer renewable corn oil values are being offset in part by lower corn futures prices, robust export sales and low natural gas costs.

He cautioned that delayed harvests and farmers' reluctance to sell after corn prices fell could affect physical corn availability — a supply risk worth watching into winter.

Havasi forecasts U.S. ethanol exports of more than 2.6 billion gallons in 2027, up from an estimated 2.4 billion to 2.5 billion gallons this year, with potential incremental growth in Asia and South America.

Where will the cash go?

Green Plains ended the quarter with $160 million in cash and $478 million in total debt. Capital expenditures ran approximately $12 million in the quarter and $29 million for the first nine months. Osowski said the company plans to address some convertible debt in early 2027 and expects growth capital spending to rise from the $20 million to $25 million figure an analyst cited for 2026. Projects include additional grain storage, oil recovery improvements and work to reduce natural gas consumption. The company will also weigh potential acquisitions and share repurchases against reinvestment in existing facilities, he said.

Every promise in this report — the raised carbon EBITDA guidance, the $140 million conversion target, the 2027 export forecast — rests on credit values, corn flows and margins that management does not control.