Green Plains Swings to Profit on Tax Credits, But Revenue Misses Estimates
GREEN PLAINS INC (NASDAQ:GPRE) reported a significant turnaround in profitability for its fourth quarter, driven largely by newly realized tax benefits. However, the ethanol producer's top-line results fell short of Wall Street's expectations, contributing to a muted initial market reaction.
The company reported net income attributable to Green Plains of $11.9 million, or $0.17 per diluted share, for the quarter ended December 31, 2025. This marks a stark reversal from a net loss of $54.9 million, or $(0.86) per share, in the same period a year ago. A key driver was the recognition of $27.7 million in value from 45Z production tax credits, recorded as an income tax benefit.
Earnings and Revenue Versus Estimates
The bottom-line result handily exceeded analyst expectations, while sales came in below forecasts.
- Earnings Per Share (EPS): Reported $0.17 vs. an estimated $0.0166.
- Revenue: Reported $428.8 million vs. an estimated $532.3 million.
The substantial revenue decline of 26.6% year-over-year was attributed to lower ethanol volumes sold and the cessation of a third-party ethanol marketing agreement in April 2025. The market's reaction in pre-market trading was slightly negative, with shares down approximately 1.1%, suggesting investors are weighing the strong profit beat against the weaker-than-expected sales performance and the one-time nature of a significant portion of the earnings benefit.
Key Operational and Financial Highlights
Beyond the headline numbers, the earnings release outlined several strategic developments that have reshaped the company's financial profile and operational focus over the past year.
- Strategic Portfolio Reshaping: The company completed the sale of its Obion, Tennessee plant for $170 million, using proceeds to eliminate $130.7 million in junior mezzanine debt. It also sold its 50% investment in GP Turnkey Tharaldson LLC for $24.3 million.
- Carbon Capture Initiatives: Carbon capture facilities at three Nebraska sites started up in Q4, significantly lowering their carbon intensity and positioning them to benefit from low-carbon fuel programs.
- Strengthened Balance Sheet: Green Plains successfully completed a $200 million convertible note exchange and subscription transaction in October 2025, enhancing financial flexibility. Total debt was reduced to $399.5 million as of year-end, with $230.1 million in cash and significant availability under a revolving credit facility.
- Segment Performance: The core ethanol production segment saw its consolidated ethanol crush margin swing to a positive $44.4 million from a negative $15.5 million in Q4 2024, bolstered by the 45Z tax credits. However, the agribusiness and energy services segment saw revenues drop 73.9% due to reduced third-party marketing activities.
Outlook and Forward Estimates
Management provided a specific outlook for the benefit of the 45Z tax credit program, expecting it to generate "at least $188 million of 45Z-related Adjusted EBITDA in 2026." This will be a critical metric for investors to monitor against future results.
Looking ahead, analyst estimates for the company's performance present a mixed picture:
- For Q1 2026, analysts expect an EPS loss of ($0.1326) on sales of $444.0 million.
- For the full year 2026, the current consensus estimates an EPS loss of ($0.1472) on sales of $2.05 billion.
The company's own 45Z EBITDA guidance suggests a substantial earnings tailwind, but the discrepancy with full-year analyst EPS estimates highlights uncertainty around underlying operational profitability and the accounting treatment of these credits going forward.
Conclusion
Green Plains' fourth quarter demonstrates a company in transition, successfully monetizing assets to fortify its balance sheet and beginning to capture value from its investments in lower-carbon production. The large beat on EPS, fueled by government incentives, is a positive near-term development. However, the revenue miss and the market's tepid reaction reflect concerns about core operational sales growth and the sustainability of earnings without such credits. The coming quarters will be crucial in showing whether the improved operational margins and strategic focus can translate into consistent fundamental profitability.
For a detailed look at historical earnings and future analyst estimates for Green Plains, visit the earnings estimates page for GPRE.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, nor does it recommend the purchase or sale of any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
