Newsletter | April 2017
Note from Our General Manager:
2017 has begun on solid footing for the ethanol industry, with continued demand and stable input costs allowing a positive margin in the first quarter. Many have wondered about the political climate, and while we have weathered at least a bit of controversy about RFS (Renewable Fuel Standard) and Point of Obligation, the first few months have not proven to be disruptive. Emily Skor, CEO of Growth Energy spoke at the annual meeting in March and provided insight on the entire ethanol industry. We have been assured that President Trump is a supporter of renewable energy and will make sure that the EPA policies and agreements in place will be followed.
The industry concern currently is with regards to production. Many plants around the country completed production expansion projects during the last year, creating over 16 billion gallons of annual production capacity. This is more ethanol than can be consumed at current blending levels, with no significant increase in exports. The additional production capacity is all expected to be fully operational by June, and has caused some price uncertainty for the last half of 2017. We continually monitor the areas we serve and the market conditions in an effort to achieve the greatest value. Every year brings new challenges as well as opportunities, so history isn’t always a good indicator of what might lay ahead. We will continue to be diligent and efficient and provide the best return possible for our investors.
Did You Know?
In April we updated our Process Hazard Analysis. This is required to be done every 5 years by OSHA’s Process Safety Management regulations.
Did You Know?
There are 2,741 identifiably tagged pieces of equipment here at Show Me Ethanol.
Chillicothe, MO Senior Ag Students
On Wednesday April 19th, we had the honor of hosting a tour for 23 senior Ag students from Chillicothe, MO. These students chose to tour Show Me Ethanol as this is an area of interest in their career path after high school. Industry tours provide opportunities for students to gain exposure to potential careers and industries as part of the academic and career planning process.
With the changing times and trying to make things a little easier on everyone, we have made a change to the website as well as the company emails. The website is now www.smefuel.com. If you go to the old site it will still work but this is a little easier to remember. We are in the process of changing the company directory to reflect everyone’s new email addresses.
Show Me Ethanol is proud to announce that it has partnered with Aflac to offer their employees a range of supplemental insurance policies. These supplemental policies pay cash benefits to the employees for accidents, cancer and even hospital confinements on or off the job. It helps pay for everyday living expenses that health insurance doesn’t cover. Through our partnership, your company can also work with Aflac if you and 2-3 or more employees are interested. Your company can receive around a 50% discount and possibly save some tax dollars as well. The awesome thing is it costs your business zero dollars to offer this to employees. Our agent, Renee Jones, grew up on a farm and specializes in small businesses and rural farmers. If you would like more information or have questions, please feel free to call Renee Jones at (816)510-9653.
Q1 2017 Plant Update
Production in the first quarter remained very strong with 15.8 million gallons produced over 86 operating days. This is the equivalent to 65 million gallons per year rate. Corn consumption, corn oil production and DDGS production were higher due to the increased rates through the plant. We consumed over 5.5 million bushels of corn, produced 4.2 million pounds of corn oil, and 37,700 tons of DDGS during the quarter.
Our annual spring shutdown occurred March 13-16 during the quarter also. During this outage, we completed the required 10-year inspections of our ethanol storage tanks. Each tank was emptied, purged of residual ethanol, cleaned and the entire floor x-rayed to look for thin spots on the tanks. Four of the five tanks required minor repairs. Our staff did an excellent job coordinating and completing this task during the time scheduled with zero incidents or injuries.
In Q2 2017 we plan to continue to run at elevated rates through the spring. Due to cooling limitations we will likely lower output through the hottest parts of the
summer. We are working with an engineering firm to explore options that will increase the summertime cooling capacity to allow us to maintain high production rates through the hot months and expect a complete report by mid-May.
We wish all of our members a safe, productive, and successful planting season this spring!
New Air Permit
After nearly 9 years of operating under various construction permits, we had a new Part 70 operating air permit issued on April 10 by Missouri Department of Natural Resources. The new permit has many of the same conditions that were in the previous permits, but also adds some additional monitoring. There are many conditions within our permit, and some examples of those include daily monitoring of baghouse pressures to ensure they are performing correctly, only loading DDG trucks between the hours of 7am and 5pm, and being limited to 73 million gallons of ethanol production every 12 months. We are also limited in the amount of chemical compounds, such as acetaldehyde, we have in our emissions. However, by following the other conditions of our air permit, we fall well within parameters on our emissions. This new permit will stay in effect for 5 years, at which time we will need to renew it. During this period, if changes need to be made for any reason, such as if we were to add on a piece of equipment that changed our emissions, we will apply for a modification.
Safety & Environmental Coordinator
Financial Results for First Quarter Ended March 31, 2017
Net sales were $28.4 million for the first quarter of 2017, an increase of 22.1% when compared to $23.2 million for the first quarter of 2016.
Gross profit was $3.1 million for the first quarter of 2017, compared to $1.4 million for the first quarter of 2016.
Net income for the first quarter of 2017 was $1.0 million compared to $(0.5) million for the first quarter of 2016.
The following is the Income Statement for First Quarter 2017: