Q1 2021 Green Plains Inc and Green Plains Partners LP Earnings Call

May 3, 2021

[music].

Okay.

Good morning, and welcome to the Green Plains, Inc, and Green Plains Partners first quarter earnings conference call volume in the company's prepared remarks instructions will be provided for Q&A. At this time all participants are in a listen only mode. I will now turn the conference call over to your host Phil Boggs Senior Vice President.

The relations Mr. Bob. Please go ahead.

Alright, Thank you and welcome everyone to Green Plains, Inc, and Green Plains Partners first quarter 2021 earnings call participants on today's call are Todd Becker, President and Chief Executive Officer, and Patrick Simpkins, Chief Financial Officer, a slide presentation available and you can find it on the investor page under the events and presentations link on both corporate websites.

During this call we won't be making forward looking statements, which are predictions projections or other statements about future events.

These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could materially differ because of factors discussed in today's press releases and the comments made during this conference call and in the risk factors section of our form 10-K form 10-Q, and other reports and filings with the Securities and Exchange Commission.

We do not undertake any duty to update any forward looking statement now.

Now I'd like to turn the call over to Todd Becker.

Thanks, Phil and good morning, everyone and thanks for joining our call today. The first quarter of 2021 has been truly transformative for our company as we executed across every phase of our transformation plan accelerating our path toward becoming a sustainable agricultural technology company.

Producing high value proteins, spurge oil and clean sugars combined with carbon capture and sequestration technology, which lowers the carbon intensity of our products. We highlighted the key events in our release earlier today, but the most important item is that we fully funded our total transformation plan during the quarter.

We have laid out several key verticals during the quarter and I will come back to each later on the call turning to the financial results. We reported a net loss of $6 5 million or <unk> 17 per diluted share in the quarter inclusive of a $36 $9 million gain related to the sale of the oil facility and a $22 million charge related to the extinguishment.

<unk> of convertible notes in conjunction with our capital raise.

Consolidated crush margins during the quarter averaged 11 per gallon up significantly from the prior year outperforming daily average market.

Adjusted EBITDA was $15 4 million, excluding the $36 $9 million gain achieving results that exceeded the daily spot margin generally available during the quarter underscores our abilities flexible flexibly adapt to the changing market around us and our Green Plains, one point or businesses.

The second quarter could exceed these results, but market volatility is something we remain prepared to contend with production gallons during the quarter were lower due to the polar vortex that hit much of the U S. During February.

Really important here is that as we transition to green plains to point out a strong one point oil platform as beneficial as we execute our plan.

Our AG and energy segment also performed well during the quarter, resulting in improved operating results year over year, driven by market volatility and our merchant trading and distribution businesses and our fuel racks natural gas storage and cornetto distribution platform.

Our ultra high protein business continued to exceed expectations at Shenandoah consistently delivering higher protein yields and increased corn oil yields which gives us ever increasing confidence as we deploy this technology at wood River and the further locations across our portfolio during the quarter, we produced a 58% protein products and full scale production and <unk>.

Reverted to our pet food partners early indications are very positive and how this product can be used achieving this was a highlight for us and has resulted in substantial feedback with end customers, including pad Aqua dairy poultry and swine regarding ration development.

We are excited to contribute a high value solution that meets the growing need for sustainable sustainable Ultra high protein feed ingredients.

I'm pleased to announce that during the period. We have also had several sub lots in the low 60% protein <unk> as well and we'll get back to you on more on that later in recent weeks, we have seen protein yields of four pounds per bushel and have seen cornetto yields consistently above one one pounds per bushel approaching the one two pounds, we expect to achieve with.

Flow equip MSC system, even more exciting is that our remaining post MFC distillers isn't great demand pricing at a slight premium.

<unk> traditional distillers grains.

The variability of this product has been significantly reduced and can be applied to rations in a different way than in the past yet another positive consequence of our transformation into the bio refinery platform of the future.

Construction at Wood River is progressing nicely and we anticipate it start up during the third quarter. Our balance sheet is in excellent shape and we are well positioned to continue accelerating our transformation.

We ended the quarter with $654 million in cash as well as $45 million remaining on our delayed draw term loan with Metlife.

All in all we closed on over $600 million in transactions, including the concurrent equity raise and convert transactions.

Raised capital through our financing with Blackrock and monetize our ord facility for $64 million.

Retiring over $170 million in debt.

Successfully executing on each of these transactions was a highlight of the quarter and has set us up well to achieve the goals and objectives. We have laid out again, our capital structure has fully funded the protein transformation that we have communicated to our shareholders.

Our project 24 initiative is nearing the finish line as Mount Vernon started up recently in construction at Madison is on track to be completed in the third quarter. We continue to evaluate our plans to complete the DNS upgraded York, we have already started to contract 2022 USP volumes as the York production is used.

A special quality in the market No final decision has been made our main focus going forward is around accelerating our protein technology deployment across our platform, which also benefits corn oil yields lastly, our upcoming carbon sequestration. If initiative offers great promise during.

During the quarter, we produced 178 million gallons of ethanol, which equates to a 71% utilization rate while production was slightly lower our quarter did financially benefit from a risk management position and strategic actions. We took in response to winter storm Yuri.

The macro industry data has continued to be structurally favorable as ethanol stocks have fallen below 20 million barrels, which is the lowest level coming into summer driving season since 2014.

Gasoline demand continues to improve as the country opens up and wider <unk> vaccine distribution enables people to feel more comfortable traveling led primarily by surface transportation.

Green Plains partners recorded in other stable quarter as its cash flows are protected by long term minimum volume commitments during the quarter, we delivered on our strategy to reduce debt and repaid an additional $37 $5 million of debt, including 27 million from the oil transaction now I would like to turn the call over to Patrick to review, both Green Plains, Inc, and Green Plains partners financial.

I'll come back later on the call to talk more specifically about our ongoing initiatives and how each vertical fits into our transformation plan Patrick.

Thank you Todd and good morning, everyone consolidated revenues were $553 6 million in the first quarter.

$79 $2 million or 12, 5% from the same period, a year ago with the change being driven by both lower production run rates as well as lower export volumes in our AG and energy segment.

For the quarter, our run rates were 71, 1% of capacity compared to 85, 9% run rate for the same period last year.

In the first quarter Green Plains realized a net loss of $6 $5 million or <unk> <unk> per share inclusive of a $36 $9 million gain related to sale of our oil facility and a charge of $22 $1 million related to the partial extinguishment of our 2022 convertible notes.

Adjusted EBITDA, which excludes the gain on sale of assets was 15 $4 million per the quarter significant oil crude from an adjusted EBITDA of $2 $7 million per the same period in 2020.

This change in performance was driven primarily by improvements in the consolidated crush margin in AG and energy contributions in 2021 compared to the prior year for the quarter, our SG&A cost for all segments was $23 5 million compared to $21 6 million.

Reported in Q1 of 2020 with the change attributable to the inclusion of fluid quip this year and higher insurance expenses generally.

Consolidated interest expense for the company was $31 7 million compared to $9 $7 million in the prior year. However, adjusting for the one time charge of $22 $1 million related to the convertible note transaction described earlier interest expense was in line with the prior year.

I also want to point out that our convertible debt with our convertible debt. We have adopted the new accounting guidance, which now reports our convertible debt with a notional value on the balance sheet and will no longer include a noncash accretion expense running through interest.

On slide nine of our Investor deck, we provided summary of our balance sheet highlights, we had $666 million of cash and working capital net of working capital financing at the end of the first quarter compared to $252 $1 million per the prior year quarter.

Liquidity position at the end of the quarter consisted of $654 $4 million in cash cash equivalents and restricted cash along with approximately $334 million available primarily under our working capital revolvers and delayed draw term loan. This amount also includes $4 $7 million available under the credit facility.

Partnership.

Capex for the first quarter was $31 $8 million, including approximately $2 8 million of maintenance Capex maintenance capex with a balance of $29 million being allocated to growth capital primarily related to our high protein and project 24 initiatives for 2021, depending on construction timing.

Capex is projected to be between 200 $225 million, including the completion of high protein technology at Wood River, the startup projects that will buy in volume as well as two additional sites.

Net capital for the year is expected to be about 20% to $25 million with roughly 50% of that spending coming over the next two quarters and the balance expected in Q4.

For Green Plains partners, we had 179 million gallons of throughput volume at our storage facilities.

During the quarter, which was down $62 6 million gallons or 26% from the first quarter of 2020 as a result of lower production rates at Green plains plants as well as the sale of Hereford and award.

For the quarter the partnership build trade group at the MVC level, which was amended to $217 7 million gallons of throughput after the sale of forward.

Accordingly, the partnership reported an adjusted EBITDA of $13 $8 million per per quarter up slightly from the $13 $4 million reported in the first quarter of 2020, mainly due to a 6% increase in throughput rates charged by GPP offset slightly by other ancillary costs.

The partnership's distributable cash flow was 11 $3 million per the quarter compared to $11 2 million at the same quarter of 2020.

On a 12 month basis, adjusted EBITDA was $54 $6 million distributable cash flow was $45 7 million and declared distributions were 11 $4 million.

Resulting in a $4 one three times coverage ratio for the first quarter and a four two times coverage ratio for the trailing 12 months our coverage ratio excludes any adjustments for acquired required principal payments amortized during the quarter now I would like to turn the call back over to Todd.

So thanks, Patrick so as we look back at the accomplishments of the first quarter, we saw a true acceleration of our transformation towards Green Plains two <unk>.

The technology required to execute was acquired higher protein <unk> and corn oil corn oil yields were achieved in the development of our first clean sugar facility was started. Additionally, we are partnering with summit carbon solutions to develop the world's largest carbon capture and sequestration project to capture and sequester up to 10 million tons of <unk>.

Oh two annually when we combine the potential of carbon capture with our initiatives in protein veg oils and sugar. We are excited about the future potential are.

Our business is lining up with a number of verticals that are interrelated and they can each help us maximize the value. We can achieve from a bushel of corn, we are deploying technology based around whole kernel solutions.

I didn't want to spend a little time on fluid quip and the important role oil play in our future as we expect it to be beneficial to green plains in a number of ways BC.

Besides our protein projects they have a great technology platform and business model. They have 93 total patents and patent applications that are owned and license. In addition in the first quarter of 2021, two new continuation patents were filed and more exciting is that they had three new patents issued during the quarter, one new patent for the MSC protein prop.

<unk>, one in Brazil, supporting their market, leading flex plant technology, and one in Canada relating to corn oil recovery and wet fractionation also during the fourth quarter of 2020 and additional patent was issued producing zine protein from the MSC protein products Zain is used from everything from chewing gum to Sealers for food. This is a high value low Val.

New protein and is difficult to make from traditional corn gluten meal. While this is very early in development. We have it on our R&D roadmap for 2021 to do some base testing and more validation flow.

Fluid Quip also has several third party projects underway with multiple F E. L. One and two engineering studies in various stages for various technology deployment. Finally, there in several late stage discussions related to new sales in various deployment of their IP and wet and dry plants. My point here is that we believe we have one of the global lead.

In agricultural technology companies through the partnership with Blackrock operating Green Plains.

Now I'd like to walk through the vertical specifically protein oil carbon sugar and specialty alcohol some of which we've already covered that are important to our 2020 for guidance and protein our deployment of MSC technology is beginning to accelerate whatever wood river construction continues to be on track and on budget and are buying in Mount Vernon should break ground very soon.

We are in final conversations to choose a general contractor, which we believe can speed our ability to complete these projects more quickly than if we were build them ourselves and we are working quickly to wrap this up perhaps this important milestone up.

Once we choose a partner we plan to also announce the order and the schedule of our builds fluid quip sales channel continues to show strong interest from others in the industry that wanted to add protein technology to diversify the earnings streams.

We have a proven technology deployed it deployed at five U S plants and one in Brazil with two more U S plants, starting up this year Wood river in a previous fluid quip sales no. Other AG Tech company is achieving the speed to market and success in production.

Turning to corn oil the veg oil complex is continuing to accelerate price is higher or MSC technology helps deliver a structural advantage as we believe it can increase corn oil yields by 50% or more we continue to refine the operating parameters at Shenandoah and believe we will achieve one two pounds per bushel consistently and we are getting very close.

Delivering an increasing supply of low carbon intensity feedstock for the renewable diesel industry oil prices continue to move higher gives us a structural uplift to one point oil margins, which is very helpful and as a critical piece of our long term success and sugar, we believe that the clean sugar technology from fluid quip could be a true market disruptor. It enables.

Dry mill to produce dextrose for the growing biochemical synthetic biology, and bioplastics industry, while continue to continuing to produce valuable corn proteins and renewable corn oil the added flexibility of this technology add to our platform not only lessens our reliance on government biofuel policies, but opens the doors to.

<unk> upside potential as we tap new markets once unavailable to the dry milling space clean sugar deployment as an opportunity unique to green Plains and provides our bio refineries with value outside of Biofuels production are.

CFT installation of our New York Innovation Center is nearing completion and we are preparing for our first commercial shipments. Our goal is to work with these end customers and to select one of our existing fill those facilities for a full scale deployment of this innovative technology in the near future.

We believe by expanding clean sugar production, we can develop strong stable margins and cash flows helping to maximize the value created from a bushel of corn importantly, this clean sugar process has a carbon intensity, which is much lower than the same products produced at a traditional wet mill one of the most exciting new verticals launched during the quarter as our growing focus on carbon capture and sequestration.

Ration.

In February we announced our initial three locations to be included on a proposed carbon pipeline to sequester pure cotwo into geologic formations as a founding partner of the development company. We believe we will be able to benefit from the pipeline on top of the CFS income generated at each of the connected buy our refineries. We are excited to have him.

Last week debt due to the success of the early rounds that pipeline is being expanded into southwest, Iowa, and Nebraska, allowing us to add five more of our bio refineries to the project combined with nearly 70% of our capacity committed to this carbon pipeline.

With the opportunity to improve the Ci score our carbon intensity intensity of each of these products. It is a great opportunity. In addition, our remaining three locations Mount Vernon Madison and O'brien, our each potential candidates for direct injection carbon sequestration due to their proximity to suitable geologic formations more to come on this as well as we.

Explore the potential of each but I did want to mention this that we are exploring this path as well, while we have gone through our 2024 EBITDA targets on the past couple of calls I do think it's worth revisiting them. Once again here our protein initiative is anticipated to deliver a baseline.

15% to 20 per gallon of EBITDA contribution as the ultra high protein has deployed over the next couple of years with 958 million gallons of capacity. This has the potential to add a $140 million to a $190 million in annual EBITDA.

Global corn oil has already seen significant improvement in pricing and every <unk> 10 per pound that corn oil pricing improves that adds nearly $40 million in incremental EBITDA and we have seen these price has improved more than that since the beginning of 2021 alone.

With 75 million gallons of specialty alcohol capacity, we believe this business will contribute up to $50 million over fuel great economics, depending on the results. We are able to achieve as we go through full contracting cycles. There has been premium compression lately, but we have already contracted some 2022 volumes and believe this will be a long term.

Contributor in.

In sugar are clean technology clean sugar technology once in place could add a minimum of 67 per gallon of ethanol capacity or $37 million to a 100 million of EBITDA. If we convert 55 to 150 million gallons of capacity in the coming years. Finally, if we only consider a conservative 30 cent per gallon uplift due to.

<unk> low carbon fuel standard premiums that we split 50 50 with our pipeline.

Our 658 million gallons of committed capacity contribute can contribute over $90 million of incremental EBITDA.

So when you combine these initiatives we are on track to achieving over $300 million.

Of annual run rate EBITDA by 2024 prior to considering traditional crush margins and moving up from there as a carbon sequestration opportunity comes online and as we move up the J curve for protein and nutritional solutions. This puts us on track to a more predictable and more stable earnings and cash flows with double.

Gross margin percentage is much improved from the low single digit gross margin percentages as a commodity processor added to all of this stable economics from our legacy <unk> business are certainly enormously helpful as well in conclusion.

We have an impressive list of partners from high Ash economy to novozymes to optimal to osprey to summit to Syngenta to our pet food partner and many more under late stage development as we speak all wanting to help our products get to high value markets the value of our low carbon sustainable renewable and nutrition nutritious ingredients that matter plan.

<unk> is truly just getting started we're quickly we are quickly heading towards an inflection point in 2022 and Green Plains. Two <unk> is in sight, we are grateful for the support of our dedicated employees at it as it is through their efforts that we will complete this transformation as we look to delivering.

<unk> solutions for ingredients that matter, we remain focused on execution every day. Thanks for joining the call today and we can start the Q&A session.

Yes.

And thank you and as a reminder, please limit your questions no more than two at this time, Inc.

If you wish to ask additional questions. Please rejoin the queue to ask a question you will need to press star one on your telephone to John Your question press. The pound key please standby, we compile the Q&A roster and once again that is star one if you'd like to ask the question and our first question comes from Ken Zaslow from Bank of Montreal. Your line is.

No.

Hey, good morning, guys.

Okay.

Just a couple of questions one is if I.

Think about Shenandoah can you breakout what the margin structure was there.

And where that's going to go relative to the rest of the portfolio.

Yes, so in general terms, we sold the initial Shenandoah.

Volumes for the first two years when we started up last year and then for the 2020.

Non volumes as well at somewhere between 50 and $100 premium over soybean meal pricing for the products based on the $50 to 52% protein every.

$100 over soybean meal as <unk> per gallon, roughly and so somewhere between.

250 to $300 over lands at somewhere between 15% to 18 per gallon premium to current distillers grains at a 50% protein products.

So if I put that relative to your 11 cents per gallon youre seeing it.

What is the cash.

What is it.

Profit in that facility.

Well again, it's what we said is that.

The initial sales were made at about a 15 to 18 gallon profit our EBITDA margin and net facility makes approximately 80 million gallons a year.

So initially $12 million to $15 million.

Okay.

So net.

And then just don't understand the whole fluid equipment, but just.

There is no revenue sharing or there's no.

It comes from that over the time. This is not something that you kind of bake into the model is it just is there a reason for that or I, just don't understand the relationship that's fair too.

Yes so.

Once once produced the plant earned their.

Returns because they bought the package from from fluid quip.

A full technology package flow equip does have small ongoing revenue streams from each sale that they've made.

But in general fluid quip makes a margin on each sale.

And that's that's reported.

In the fluid quip busy.

Business, but now that we have.

Purchased acquire flow equipped with our partners and obviously that will be for the benefit of the partnership.

Okay and then my last question is if ethanol margins were completely flat.

Nothing changed.

There was zero in 2022.

What type of EBITDA would you be showing given what projects are done at what price is going to be done.

Can you just give us some context of how that would play out just assuming zero ethanol margin I know nobody believes that but let's just assume zero margin.

Then I'll leave it there.

Yes, we think in 2022.

<unk>.

With.

Four to five plants operating which is which is where we think we'll have potentially six plants operating.

It'll be about half of our platform or $4 to 500 million gallons.

And then on top of that.

Adding in.

Alcohol corn oil.

And.

And then the traditional zero margin on on the.

The ethanol business, if we just assume zero EBITDA.

As a $100 million to $200 million.

The model that we can put forward for 2022, but it's really just based on kind of completion dates and when that's why we believe 2022 is really our inflection point when we start to see 4% to six plants coming on and then obviously the rest in late 'twenty two 'twenty three come on but we think inflection comes in kind of mid 'twenty two.

And if you just do the calculus on that run rate basis.

15 cents per gallon on average four when we turn it on at a baseline protein of 50%.

2022, with zero based ethanol is $100 million to $200 million.

That's great. Thank you.

Yeah.

And thank you and our next question comes from Laurence Alexander from Jefferies. Your line is now open.

Good morning can you flesh out a little bit about how youre thinking about the <unk> opportunity.

Opportunity in partnerships and the bottlenecks there.

And would you consider investing in fermentation capacity because that appears to be a bottleneck with some of the industry.

Clearly facing.

Yeah.

How we're thinking about it is we've already been working with.

Dozens of customers potential customers that have either new technologies or technologies, where they have been buying from traditional wet mills that want to be involved with our low carbon dextrose and so.

And one of the one of the constraints, obviously is fermentation capacity and whether you look at last lactic acid or pls.

Or something or something else like that obviously fermentation is very important and then our fermentation.

It may be different than what some need but our fermentation also has some what others need so our.

Our goal is to first identify which customers.

Want to potentially colocate, which customers want to have a product that is shipped to them where they are at various stages of development. We can't just we're not just going to work with all just development companies because we do want to be selling product commercially in the market as well and we've had conversations with customers and confectionery all the way to to biochem and so.

It can be a combination of shipping it to the customer as well as potential co location opportunities at the sites, where we deploy the clean sugar technology as well.

We also know obviously as you said that fermentation is often a bottleneck and it's very expensive we have scale fermentation capability available, especially at plants when you deploy the.

The sugar technology, you will have less need for your fermentation capacity as well so I think there'll be some retrofitting there as well in the future, but right now were just working with customers.

On various sizes and various.

Times and they are in their evolution.

Two.

Access to this product and I think that's that's going to be something that we will have a strategic managed and mainly driven as well by our low carbon intensity of it.

And then.

<unk> pipeline.

Whats the timeframe if any.

<unk> taken a capital investment to increase the economics on that pipeline.

Yes, I think right now the pipeline is in process are still signing up.

The final amount to achieve 10 million tons of capacity if theyre not theyre already they are very close we've had significant.

They have had summit has had significant interest from everybody from ethanol producers to other emitters in the market and I think once one summit decide or gets to the point, where they are basically full in terms of the capacity needed. Then I think they will they will ultimately look.

It then raising their next round of capital to continue this to get it to a shovel ready project through engineering and and per.

Permitting and at that point, we will continue to make decisions.

Decisions on how far we want to invest.

In the in the project and then obviously.

Shippers have other rights to invest in and I think it's going to be a very successful.

Project, mainly because.

Summit has done a great job in terms of capturing significant capacity from this industry to sign up.

Thank you.

Yes.

Thank you and our next question comes from Adam Samuelson from Goldman Sachs. Your line is now open.

Hi, Thanks, good morning, everyone.

Good morning, Adam.

So Todd.

Todd I was hoping to maybe dig a little bit more on the commercialization of high protein.

And you gave some helpful color and your response to Ken's question on kind of how you've sold the Shenandoah tons for 2020 in 2021.

As we think about the higher protein.

Protein content that you've been able to realized at Shenandoah and we think about replicating that Atwood River <unk> and non burden et cetera down the road, how do we think about your ability to commercialize <unk>.

Net incremental protein content.

Timing of when do you think you cannot take agreement.

How much of the high pro would actually be able to be sold that those high values in those in those more premium markets and just thinking about the kind of real value capture opportunity as you move up the J curve.

Yes, we have a lot of confidence now that we can.

Get to a point too.

Produce.

Higher proteins at a steady state.

A lot of progress obviously since that announcement at 58 pro.

We've learned a lot we think both mechanically and biologically we can move up the protein scale of some of it is going to come from mechanics of things that we've learned and some of it will come from biology on other things that are interesting. We are working with customers. In every one of those verticals on different levels of protein that we talked about.

Other it's Pat Aqua, poultry swine or dairy and every and each of those customers have a different need our goal.

In 2022 and later in 2021 as.

Wood River comes up online is.

Is that we will probably end up.

Increasing our protein <unk>.

For the customers that we have on the books today, who are now in kind of final stages of of using the products that we sent them and figuring out ways to formulate around it around the prices as well and we are in several discussions about higher protein with higher protein cut.

Customers as well and using it in their ration so.

Our goal is to move as quickly as possible up to higher protein purity and have the customer support to do that I think we're making very good progress as we speak we are in as I said, we're in several studies several rash in several discussions.

And quite frankly, we're being guided from our pet in our Aqua customers to go straight to 50 day protein and don't stop and then and then let the market decide where they want to.

How it is going to be how it is going to be.

How it's going to be priced in terms of.

We need to we need to produce it consistently and so we're kind of making that decision. We don't want to give away free protein, but in order to get more expansive use on it you have to make the protein as well so.

But we are working with customers today on pricing when we come out of.

Wood River initial.

The initial startup and then where we want to take Shenandoah for the remainder of the year, but we have great confidence that.

We're going to be able to achieve steady state higher protein <unk>.

And we're being guided from our customers to go there as fast as we can.

That's really helpful and then just.

On the ethanol market and obviously.

Shenandoah helped to contribute to your margin performance in the first quarter. The industry backdrop seems to have gotten better given the state of inventories given kind of what we'd see broadly from industry crush margins I'm, just trying to think but you sounded a little bit more guarded about volatile market conditions I'm just trying to calibrate.

How to think about the base business actually performing arguably better given that industry backdrop and kind of what it would take to get your operating rates up.

Yes.

No listen we are every time a plant comes out of a shutdown or <unk>.

Project 24, obviously, we're still we're just coming out of Wood River Armscye Mount Vernon Project 24, Madison is still shut down.

And in general we got rid of.

And two other plants as well so but how we're looking at it right now is obviously.

First quarter, we did well through our through the ability to manage through some of these storms and our risk management programs that we had put in place prior to the quarter.

But in Q2 Q3 and Q4, obviously the one thing we're watching is the volatile movements in the agricultural markets and I think thats something that has to be considered while certainly on paper margins look as good or better than what we were able to achieve.

In the first quarter.

No.

Obviously with corn, moving up and ethanol, maybe not moving up quite as fast we're going to be we're going to be patient in terms of.

This cash.

Going out on a limb and saying, it's all going to be way better than Q1, because we performed so well in Q1, so I.

I think for US we're watching market billet volatility closely obviously ethanol hasnt moved up as fastest corner, we're trading at a premium to gasoline.

So the contribution from veg oils is very corn oil is very good and very helpful.

I'm still going to remain somewhat guarded in terms of Q2 until we kind of get further through Q2, thus far was started out okay.

But we just got to watch this corn market, a little bit and it's getting harder to buy physical corn as well I think that's something we're going to have to watch through the end of the marketing year.

The farmer whatever whatever the farmer has left us in tight hands a lot of its move to commercial almost at a record record pace, there's no incentive for anybody to carry corn through this inverse all the way. So obviously, it's being held for increasing and physical basis gains. So we're going to watch that closely as well.

So I'm just going to be guarded at this point over kind of Q2 Q3.

In general we're definitely we're definitely in a better place than we were this time last year and going into summer driving season, we are in a great.

I would say, though we are in a great.

Fundamental situation with ethanol stocks under 20 million barrels coming into summer driving season, we haven't seen that for seven years and that's something I think we're all enthusiastic about but obviously, we have to watch how we price versus competing liquid fuels, but in general our octane is still very cheap and overall.

We are optimistic Q4, obviously, we look out there.

To the best margins of the year on paper today, it's interesting.

And we're excited about that but again, we've got to make sure we have our physical corn procured and thats. The one thing we're working on.

Got it.

Really helpful color I'll pass it on thanks.

Thanks.

And thank you and our next question comes from Craig Irwin from Roth capital.

Hi, good morning, Thanks for taking my questions.

So most of the things that we're top of mind.

<unk> already been addressed at this point.

Todd maybe can you talk a little bit about the strategic opportunities for monetizing your corn oil.

For the next couple of years as HEICO comes online you're going to be one of the largest producers.

What is the favorite feedstock for <unk> credits into California.

Did see Phillips dip into the market and support.

Soy questionnaire that was in construction.

Is there an opportunity for you to do something strategic out there, maybe grab a little bit more value.

From your own production and simply.

Being exposed to spot, which does look like a very good thing at this point.

Yeah, the spot corn.

Got veg oil market, obviously is beneficial to this industry and we are a strategic feedstock for what I think is the renewable diesel phenomenon.

That's taking place even more exciting is how will the ci score of our product be changed when we sequester the carbon as well and I don't think theyre, taking that into consideration yet and how the Ci gets allocated.

As we roll flu equipped through our plants and through our customers.

By the fluid quip technology.

Youre getting an increase in corn oil and an increase in volumes and obviously that increases the overall margin for the plant, which is being taken into consideration we have had.

Sure.

We have had approaches in terms of how do we partner on supply agreements and those type of things at this point, we're being very patient in how we approach the market I mean, we're structurally still fundamentally friendly and optimistic on on veg oil pricing as we kind of move through 2021 and 2022.

The soy crush plant that was invested in bi.

Energy company to us actually.

It was.

I think an empowered our industry a bit to say that we're on the right track we have much lower Ci.

Corn oil or vegetable oil than what is soybean oil today, and so I think we fit very well, it's great that they did it but.

So I think it's actually more empowering for our industry to see that happen. It tells you that the story is intact and that security of supply is needed.

And if we find the right opportunity with the right partner for the right economics, we will absolutely be willing to commit our our corn oil.

And we'll have to wait and see if that happens or not but I think youre on the right track I think there will be strategic opportunities to monetize.

These flows in and provide some of these projects with security of supply and that's what it's going to be all about.

There will be times potentially with what's brewing in the soybean balance sheet and a tightness in the soybean balance sheet debt you could end up making a call to somebody to buy your feedstock and.

And there may not be any available and thats something going to have to watch out closely which I think is very beneficial to our industry and to veg oil is overall.

Excellent excellent.

I was hoping for.

Update on your.

Our relationship with Novozymes, what youre working on with them.

And what we can expect over the next number of quarters.

Very important relationship.

Yes, I mean, we have a lot of relationships that are providing lots of opportunities for us that even as we move up the protein purity levels and start to think about more innovation around this product because oftentimes people forget, it's 75% protein and 25% Houston within the east you can start to tailor that to.

Specific nutritional characteristics or needs of the end user and that's really where we spend a lot of time with Novozymes is really looking at their library of technologies that can be applied not just protein purity.

That is something thats been going on for many many fluid quip had been working with Novozymes. Many many years ago.

Long before we got involved in early evolution of the Novozymes technology, and so thats something thats been around for a while more importantly for US is really looking at how this product number one we can increase <unk>, but more so we can increase nutritional characteristics and quality. So that when an end user comes in and says.

Hey, I need more of this immuno acid can we tailor our products to express that our we need more of this nutritional characteristics can we tailor our products to express that nutritional characteristic that's the power of the relationship.

Partially protein purity, but really the east library that exists between.

Exists.

And available to US is really incredible to what we can do to start to tailor to tailor. This product this product and I think that that's really where a lot of value comes in Thats, where were working with each other a lot I would tell you fluid quip on its own is working on increasing protein purity as just mechanically. We think we can get we think we can get we can make some <unk>.

Progress there, but even more exciting now is to look at the post MST distillers. So we would traditionally we would have our distillers grains and now we're cutting off a piece of protein off of that and we would leave the rest of the distillers grains that are much more traditional what we're seeing now is our post MSC distillers grains.

Reduce the variability of this product in the use of nutritionists and the ration and we're starting to get premiums for the Shenandoah post MSC distillers grains, which we thought was going to happen actually Walter initially thought that this product.

Bring great great value and start to add in a whole another component to what flu equips technology can do but what's turning out is that this product is now is much more uniform and has started is starting to be respected again by nutritionist and the poultry space in the dairy space and also in the.

In the swine space, where they want to go straight to Shenandoah and start thinking of even wood River next on the post MSC distillers grain, which I think is really really a big opportunity for you start getting a premium on millions of tons and that starts adding up very fast and that was unexpected consequence that that we're very excited about as well.

Thanks for taking my questions.

And thank you and our next question comes from Jordan <unk> from <unk> Securities. Your line is now open.

Good morning, everyone.

Just kind of following up on Craig's question to start out on corn oil.

Given the need for low Ci feedstocks renewable.

Renewable diesel markets and elsewhere.

It makes sense for pretty much any ethanol producer to look to increase their corn oil yield so kind of as it relates to fluid quip technologies just wanted to get your thoughts on the capacity to license that technology out and what that might look like and then alongside that.

Potential for that investment that you've made in fluid quip is over the next few years to start to flow through and create some upside value beyond what you guys have laid out.

Yes, so in terms of corn oil I mean, besides the protein systems, which liberates more of the oil member and a 56 pound bushel of corn are somewhere between one eight and $1 nine pounds of oil.

And traditionally an ethanol plant would liberate and their corn oil systems <unk> seven percentage 0.8 pounds, maybe a little bit higher than that per bushel and so in the fluid quip process, we're able to now liberate up to another 50%, which gets US up we believe we will be very soon at one two pounds per bushel.

Just for the additional.

Extraction and liberation once you put in the MSC technology that still leaves six pounds per bushel or another 50% from there.

And.

It starts to have a diminishing return at lower prices, but a increasing return to higher prices. So going after the rest of that oil you don't want to change your final products in terms of that the post MSC distillers grains too much because by taking oil all of the oil out.

You May you may see some degrading value, but relative to where we're at at federal oil prices between 65 and 75.

You want to go after all the oil you can because the remaining products still has enough value to justify that so that's step one step two obviously is going after that 0.6 pounds and how are you going to do that and I think thats really kind of a bit of a holy Grail, but starting to make progress there to equip is starting to work on that solution I think others are.

As well as how to how to deliver a more oil out of the corn kernel, but you have to be careful as you get to a certain point you can start to degrade the value of the other products to greatly so we're going to kind of in that sweet spot of $1 two to kind of one five pounds per.

For bushel was kind of where we wanted to try to settle out and we're continuing to work on those solutions in terms of fluid quip.

When you look at that platform.

So we're very excited about it our partners are we are we think there is there is a lot of up there in terms of.

The true valuation of this technology company and the things that they are working on across multiple different platforms. Not just if you go on our website. It is not just a protein technology. If they are oil technologies. They got fractionation technology, they've got fiber technology, if you've got a lot of different technologies that are supply.

Good and put in many other plants, Besides green plains plant to try and increase profitability throughout throughout the ethanol plant, whether it's higher yields are are higher purity. So we think we're just getting started there. We think our development continues and we think the value of that company is only going to get greater in the future overall for ourselves and for our.

Partners.

Great. That's helpful and then to change gears a bit I just wanted to touch on your most up to date on GPP and potential there to.

Bring it back in house or refi or whatever you think.

Youre thinking about that entity.

Yeah. So GPP right now is pretty well focused on.

Paying down debt like we outlined.

And.

Making sure that we address the current maturity of this year, which we think only about $34 million will be remaining at the end of the year.

The utilize a combination of operating cash refinancings, and maybe strategic actions to repay those debt obligations.

I think we should have that in place hopefully in the next in the next couple of months, maybe by the end of the third quarter and.

We are unable to refinance them, we will look at other opportunities whether it's just restructuring the debt or other strategic actions. We can take we're very confident that we will achieve the goals that we've outlined for that for that platform and at this point. That's mainly what we are focused on today are our Birmingham facility continues to perform well there.

Have the MVC in place from Green Plains and at this point obviously.

By repaying the debt and eliminating.

The amortization of the heavy amortization, we think overall at some point.

Notwithstanding whatever the new debt structure will look like hopefully.

Increasing back the distribution as well maybe sometime in 2022, depending on where we end up with our new lenders.

On the refinancing so the at this point, that's what we're focusing on and as a standalone. It's doing it's doing just fine.

Great Nice results guys I appreciate it thank you very much.

And thank you and our next.

Our next question comes from then then new from Stephens. Your line is now open.

Hey, good morning, everybody.

Good morning, good morning ask.

To ask about the carbon capture and sequestration project I want to be clear on the timing I think you know as you would expect the project to be operational in 2024 is that sooner than you had previously expected or is that still on the same timeline.

And then along those lines do you have a sense yet of when you could start to work on applying for pathway for an updated Ci score from the California Lcs program.

Yes, I mean, I think summit guys have outlined a 2024 start date for shipments if they can get there. There's some things that obviously, we would want to try and accelerate.

But that's kind of the goal and I would say starting in 2024, and obviously continuing to build out as they bring on different <unk>.

Different geographics in the pipeline. In addition to that we are working on three direct inject sites.

<unk> and Mount Vernon and O'brien, where we would realized all of the economics from the 45 <unk> and the low carbon fuel standard credits. If there are any as well. So we're excited about about those as well and we're just getting started there we think we're in great locations geographically.

For there as well and so both of those are very exciting, but obviously lots to do in each of those in each of those parts what was the second question.

On a getting a revised Ci square for ethanol.

We sold them net accounts Rms yet.

Yes, so two.

The summit.

Sure.

Carbon guys the management team there.

<unk> done a lot of work on that prior to us signing up and becoming partners there as well and they send two plants.

And two plants got scores from carb.

Yeah.

And in a manner that if a sequestered their carbon what would happen to the carbon score and each of those plants very similar to the plants that we have going on in the pipeline and others have as well not just ourselves, but any shipper on the pipeline there have been two plants that.

Or basically the starting point that have gotten carbon score is cut in half. So they went from the end of the $60 to into the Thirty's.

And if you think about that.

You start to look at Ci scores of a vegetable oil based our corn oil base.

Renewable diesel and that's in the <unk> as well and obviously soybean oil based renewable diesel is in the 40% or the <unk> and then.

And then the other oil some of the waste oil is or even lower than that so so.

That's what really gave us the confidence which is when we saw the carb, scoring on Twos example, plants after sequestering carbon getting cut in half that really told us that we would be on the path to a low carbon biofuel.

And I think and I think that's going to be more interesting in the future, which is how does ethanol play in a low carbon fuel tank RNA low carbon fuel pump and the need for more ethanol as the world demand for lower carbon fuels and so I think that's not being taken into consideration in terms of the future of where how we.

Fit into the fuel tank, but I think it has to be taken into consideration because in quantity, we're going to be able to compete with the Brazilian imports.

To be able to compete with from a Ci standpoint, we'll be able to compete from a ci stance standpoint, with renewable diesel and as we expand <unk> across the United States multiple states.

Potentially national standard.

We will be well prepared when this pipeline comes online to have some of the lowest carbon biofuels that are made in the world.

Understood Thats great.

My second question is just revisiting kind of the core ethanol fundamentals as Adam noted in his Q&A.

The margins for the industry are much improved the F&B looks pretty good for the next.

Little while here with resurging demands.

We're driving.

I'm curious.

Todd I know, you said, you're a little bit more reticent or.

Cautiously optimistic.

Is there anything in that market, where if it did turn south in the next year or two that it would.

It would have an impact on your ability to self fund or fully funds this transformation debt.

<unk>.

Yes, and the other reason Im Radisson is because of the last three years, obviously cautiously optimistic was the only way to be but you saw at the last two years or three years and the challenges that oversupply faced in and you have to always keep in mind that were still not running at full capacity yet as an industry. So we'll have to watch that close.

In terms of how that impacts the.

Forward margin structure overall, but I think even more than that.

The price of oil price of the feedstocks were going to watch those very carefully as well so.

Im optimistic cautiously optimistic we're in great fundamental shape as an industry.

If the industry maintains its focus on his discipline to stay in that shape, but theres a lot of offline capacity that we have to watch very closely and so we've been our own worst enemy in the last several years and obviously, we're all optimistic now but.

I'm going to be a little bit more cautiously optimistic than maybe what what is out there today, we have not seen we've seen a little bit come back on the export market, but we haven't seen a resurgence in China, yet we saw a little of that earlier in the year. So but I think we're I think we're in a good place I'd rather be here than the alternative that's for sure.

And this is really where it gets into is a a strong or even a.

One point oil platform Thats just steady.

Is just so beneficial to our two point strategy.

We did everything based on zero contribution from ethanol EBITDA, just a zero baseline and our $2023 24 numbers are all zero baseline numbers. So just a steady ethanol industry would be final one point oil would be fine with us and right now where we're sitting basis of historical even worst market.

That we've ever been and it would be pretty hard too.

Not have the funding capacity to get all the way to the finish line, especially when.

We have four or five coming on in 2022 within a year from now or so and those just generating cash flows from day, one I mean, you turn on to our protein <unk>.

Production capacity on day, one they start to generate cash flow. So.

While.

Even if ethanol took a turn at this point I think we're in a place right now as a company where our balance sheet is in such great shape with significant liquidity and additional liquidity available.

It would be pretty tough for us to have anything get in our way at this point of executing successfully and to point out.

And even the fact that.

We've already we've already started to order for.

4% to five plants of long lead time equipment, we've got most of our other equipment.

On stuff that we needed to even get get in place locked in our pricing, obviously, we're watching to steal market closely but thats a small component of what we build and I think we're in pretty good shape, you know could there be escalating cost a little bit sure, but but the way that these projects are.

Structured.

We're trying to insulate it as best we can so it would be pretty tough for something to get in the way of a successful completion of our two point oil strategy at this point.

Yes, okay, great. Congrats on everything <unk> accomplished this quarter and good luck with the rest of the year.

Yes.

Thank you.

Our next question comes from Manav Gupta from Credit Suisse. Your line is now open.

Hey, guys on the carbon capture you indicated that.

Score drops from 60 to Turkey.

Almost 20 to 25 cents a gallon uplift.

You are indicating about 15 cents on your slide deck. So is that a transportation cost involved here and second question is.

One of your competitors was doing a similar project has been very clear that the carbon credits solely belong to it along with CFS credits I'm trying to understand in this case, we do an agreement with stomach Carlin instead of split on the ILS 45.

As this project takes off.

Yes, basically signing up on the pipeline as a shipper.

If you just want to be a shipper.

At no capital cost to you.

We're splitting the credits with summit, which is how the pipeline gets built that in 45 Q.

So just being a shipper the economics, obviously the return on the investment is very high because youre not putting any investment in and some it takes it takes the risk and obviously the plants that are signed up are great plants like ourselves and others that we all signed up for a very.

Free similar economics, and I think Thats, where it is.

It's a different type of project, but we're also not asking like nobody asked me.

For seven year take or pay offtake in an open season. So we wouldn't that's not going to be something we would have really wanted to get involved in so that's why the opportunity to get involved ourselves I would imagine all of the other shippers on the pipeline is that will commit the volume you.

<unk> build the pipeline and we'll share the economics and we're all partners with each other.

An incredible consortium that there's some guys have put together with incredible partners to ship on that pipeline.

The starting point and then obviously as you reduce the Ci score from 60 to 30 or 65% to 35 or whatever you're going to reduce it.

You take a look at that and Youre exactly right on the economics, it's about a 30 cents per gallon L. CFS credit, but that doesn't even include obviously.

Or is the voluntary market going to go to and where our other credit is going to be involved in and the shippers.

Some of the shippers again involved in those as well depending on their level of risk and so and then obviously.

We'll see what other Lcs schemes come in place. So in general I think it's from our standpoint.

If all we wanted to do was be a shipper on the pipeline we share in the economics. The great thing about summit line is that everybody can invest as well and start to share in those economics as well so.

It's a pretty exciting opportunity for us.

Okay and one quick follow up here is some of your peers took a lot of.

On high natural gas prices and debt ethanol facilities somehow you completely Dodge that bullet. If you can elaborate how was that how did you achieve that.

Well look we are we have a great natural gas team.

I have been here for many years, they've seen many cold snaps.

And the anticipated the cold snap and I think that was just something that we put protection in place for.

And remember it's winter and it gets cold that's the one thing for certain so and if you go back and look in the last five years.

We had two or three of these where you had your cold snaps and obviously its not.

To go back to the big polar vortex that happen.

Before that we set ourselves up and protect ourselves against extreme polar vortex as every winter and so that's really how we were able to achieve those results and.

We're very proud of the team that was in place to be able to do that but much like we do whether it's in the corn market the ethanol markets, whether it's in the crush whether it's in whether it's in natural gas yearly. The one thing for certain is it's going to get cold and the other one thing for certain is we're going to get a corn crop planted and if we don't get it planted.

And then we want to protect against that as well. So I mean, there is we're always looking at all of the risk that we have as a company.

And investing some insurance capital into those risks, whether its corn, whether it's in corn oil whether it's in natural gas or whether it's in ethanol.

That's always who we have been in.

And we set ourselves up for a cold snap in this winter and we were able to protect the downside of that.

Thank you so much for taking my questions. Thank you very much.

Thank you and our net.

Next question comes from Selman <unk> from Stifel.

Your line is now open.

Thank you good morning, very much appreciate your comments earlier on Green Plains.

Just.

Thinking about the carbon sequestration opportunity you have there.

Evaluate and think about things do you see a role for Green Plains partners in that at all.

I think that's something that we've examined obviously we don't.

We're not the developer of the pipeline that summit carbon solutions were involved in it as a shipper and as a potential investor as well and as a partner and so it's okay.

It's a very nice to have.

Green Plains partners don't know how that will apply yet to the carbon.

Plan.

But obviously we were basically the last one other last mlps ever to go public.

If I recall I mean, I think there's one or two others, maybe maybe after us.

So theres a lot of Optionality there, but at this point carbon is still.

Early in his early in its development and how partners will end up playing are not playing in that is yet to be determined but certainly there is optionality there as well.

Alright, Thank you very much.

Thank you very much.

Thank you.

Our next question comes from Eric Stine from Craig Hallum. Your line is now open.

Everyone.

Good morning.

Just just quickly on the clean sugars I think in the past you've talked about conversation with 40 plus parties. There. So just curious where that stands and then secondly, I think in the past you've talked about debt by 2025 and Youre, hoping to have one small plant in one big plant online using the.

Clean sugars or per.

<unk> that is that still the plan.

Everything we've seen out of Europe. So far has been positive and has given us positive disposition to keep moving forward you have to remember this was already deployed commercially.

Much bigger plant and what we're doing at York, we brought it back to your to reengineer. It for our sites and then obviously start to roll that out so everything right now is on track.

For what we've talked about we are working with customers today as we speak.

We have customers that want to have all different types of uses including co location opportunities much like we've seen others that have dextrose with co location opportunities right next to that supply in general we think that what we're able to achieve at the price we're able to achieve it with the Ci score that it has is that we're at.

We are absolutely on the right track I think that.

So far everything we've seen out of York to date gives us great confidence that.

But this is going to be very exciting for green plains.

Yes.

Okay. Thank you.

Thank you very much.

And thank you.

Im showing no further questions I would now like to turn the call back over to Todd Becker for closing remarks.

Yes, thanks, everybody. Thanks for coming on the call I think what's really exciting for us as is our balance sheet is in great shape. We have fully funded our transformation. We are on a path that we outlined.

The ability to roll out. These construction projects is underway and I think we're going we're going to continue to be successful in innovating around protein purity and innovating around nutritional qualities everything is telling us we're heading in the right direction.

The <unk>.

<unk> that we've made in terms of increasing our <unk> and getting higher yields of those priorities and in increasing the value of the remaining projects just gives us more confidence that this is truly transformational for our company on top of that a solid stable. One oil platform is also very <unk>.

I know that was a concern.

Others, but in general on nothing we don't believe there is a lot that can stop US right now from from achieving our results and we're just going to continue down. This path. So we appreciate your support and we'll talk to you guys next quarter. Thank you.

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.

[music].

Good morning, and welcome to the Green Plains, Inc, and Green Plains Partners first quarter earnings Conference call. Following the company's prepared remarks instructions will be provided for Q&A at this time, all participants on a listen only mode.

Now I'll turn the conference call over to your host Phil Boggs Senior Vice President Investor Relations Mr. Bob. Please go ahead.

Alright, Thank you and welcome everyone to Green Plains, Inc, and Green Plains Partners first quarter 2021 earnings call participants on today's call are Todd Becker, President and Chief Executive Officer, and Patrick Simpkins, Chief Financial Officer, There's a slide presentation available and you can find it on the investor page under the events and presentations link on both corporate web site.

<unk>.

During this call we won't be making forward looking statements, which are predictions projections or other statements about future events.

Statements are based on current expectations and assumptions that are subject to risks and uncertainties.

We do not undertake any duty to update any forward looking statements.

Now I'd like to turn the call over to Todd Becker.

Producing high value proteins, veg oils, and clean sugars combined with carbon capture and sequestration technology, which lowers the carbon intensity of our products. We highlighted the key events in our release earlier today, but the most important item is that we fully funded our total transformation plan during the quarter. We have laid out several key verticals during the quarter I will come back to <unk>.

Each later on the call turning to the financial results, we reported a net loss of $6 $5 million or <unk> 17 cents per diluted share in the quarter inclusive of a $36 $9 million gain related to the sale of the oil facility and a $22 million charge related to the extinguishment of convertible notes in conjunction with our capital raise.

Consolidated crush margins during the quarter averaged 11 per gallon up significantly from the prior year outperforming in the daily average market.

Adjusted EBITDA was $15 4 million, excluding the $36 $9 million gain achieving results that exceeded the daily spot margin generally available during the quarter underscores our ability to be flexible flexibly adapt to the changing market around us and our Green Plains, one point of <unk> businesses.

The second quarter could exceed these results for market volatility is something we remain prepared to contend with production gallons during the quarter were lower due to the polar vortex that hit much of the U S. During February.

What is really important here is that we as we transition to green plains to point out a strong one point oil platform as beneficial as we execute our plan.

Our ultra high protein business continued to exceed expectations at Shenandoah consistently delivering higher protein yields and increased corn oil yields which gives us ever increasing confidence as we deploy this technology of wood River and the further locations across our portfolio during the quarter, we produced a 58% protein products and full scale production and <unk>.

Reverted to our pet food partners early indications are very positive on how this product can be used achieving this was a highlight for us and has resulted in substantial feedback with end customers, including pad Aqua dairy poultry and swine regarding ration development.

We are excited to contribute a high value solution that meets the growing need for sustainable sustainable Ultra high protein feed ingredients.

I am pleased to announce that during the period. We have also had several sub lots in the low 60% protein <unk> as well and we'll get back to you on more on that later in recent weeks, we have seen protein yields of four pounds per bushel and have seen corn oil yield consistently above one one pounds per bushel approaching the one two pounds, we expect to achieve.

With the flow of equip MSC system, even more exciting is that our remaining post MFC distillers is in great demand pricing at a slight premium to.

<unk> traditional distillers grains.

We ended the quarter with $654 million in cash as well as $45 million remaining on our delayed draw term loan with Metlife.

All in all we closed on over $600 million in transactions, including the concurrent equity raise and convert transactions.

Raised capital through our financing with Blackrock and monetize our oil facility for $64 million, while retiring over $170 million in debt.

Successful executing on each of these transactions was a highlight of the quarter and has set us up well to achieve the goals and objectives, we have laid out again.

Our capital structure has fully funded the protein transformation that we have communicated to our shareholders.

During the quarter, we produced 178 million gallons of ethanol, which equates to a 71% utilization rate while production was slightly lower our quarter did financially benefit from our risk management position and strategic actions. We took in response to winter storm Yuri.

The macro industry data has continued to be structurally favorable as ethanol stocks have fallen below 20 million barrels, which is the lowest level coming into summer driving season since 2014.

Gasoline demand continues to improve as the country opens up and wider <unk> vaccine distribution enables people to feel more comfortable traveling led primarily by surface transportation.

I'll come back later on the call to talk more specifically about our ongoing initiatives and how each vertical fits into our transformation plan Patrick.

Thank you Todd and good morning, everyone consolidated revenues were $553 6 million in the first quarter.

$79 $2 million or 12, 5% from the same period, a year ago with the change being driven by both lower production run rates as well as lower export volumes in our AG and energy segment.

For the quarter, our run rates were 71, 1% of capacity compared to 85, 9% run rate for the same period last year.

In the first quarter Green Plains realized a net loss of $6 5 million or <unk> 17 per share inclusive of a $36 $9 million gain related to sale of our oil facility and a charge of $22 $1 million related to the partial extinguishment of our 2022 convertible notes adjusted.

Adjusted EBITDA, which excludes the gain on sale of assets was 15 $4 million per the quarter significant oil crude from our adjusted EBITDA of $2 $7 million per the same period in 2020.

This change in performance was driven primarily by improvements in the consolidated crush margin in AG and energy contributions in 2021 compared to the prior year for the quarter, our SG&A costs for all segments was $23 5 million compared to $21 6 million.

Reported in Q1 of 2020 with the change attributable to the inclusion of fluid quip this year and higher insurance expenses generally.

I also want to point out that our convertible debt with our convertible debt. We have adopted the new accounting guidance, which now are core to our convertible debt as the notional value on the balance sheet and will no longer include a noncash accretion expense running through interest.

Our liquidity position at the end of the quarter consisted of $654 $4 million in cash cash equivalents and restricted cash along with approximately $334 million available primarily under our working capital revolvers and delayed draw term loan. This amount also includes $4 $7 million available under the credit facility.

This partnership.

Our capex is projected to be between 200 $225 million, including the completion of high protein technology at Wood River.

Start up projects that will buy and not volume as well as two additional sites maintenance capital for the year is expected to be about 20% to $25 million with roughly 50% of that spending coming over the next two quarters and the balance expected in Q4.

For Green Plains partners, we had 179 million gallons of throughput volume at our storage facilities.

During the quarter, which was down $62 6 million gallons or 26% from the first quarter of 2020 as a result of lower production rates at Green plains plants as well as the sale of Hereford in order for.

For the quarter the partnership build trade group at the MVC level, which was amended the $217 7 million gallons of throughput after the sale of ore Accordingly, the partnership reported and an adjusted EBITDA of $13 $8 million per per quarter up slightly from the $13 $4 million reported in the first quarter of 2020, mainly.

Due to a 6% increase in throughput rates charged by GPP offset slightly by other ancillary costs.

The partnership's distributable cash flow was $11 $3 million per the quarter compared to $11 $2 million at the same quarter of 2020.

On a 12 month basis, adjusted EBITDA was $54 $6 million distributable cash flow was $45 7 million and declared distributions were $11 $4 million.

<unk> and a 413 times coverage ratio for the first quarter and a 4.02 times coverage ratio for the trailing 12 months our coverage ratio excludes any adjustment required required principal payments amortized during the quarter now I would like to turn the call back over to Todd.

So thanks, Patrick so as we look back at the accomplishments of the first quarter, we saw a true acceleration of our transformation towards Green Plains. Two point all the technology required to execute was acquired higher protein <unk> and corn oil corn oil yields were achieved and the development of our first clean sugar facility was started.

Additionally, we are partnering with some carbon solutions to develop the world's largest carbon capture and sequestration project to capture and sequester up to 10 million tons of Cotwo annually. When we combine the potential of carbon capture with our initiatives in protein veg oils and sugar, we are excited about the future potential.

I did want to spend a little time on fluid quip and the important role oil play in our future as we expect it to be beneficial to green plains in a number of ways BC.

<unk>, one in Brazil, supporting their market, leading flex plant technology, and one in Canada relating to coronary oil recovery and wet fractionation also during the fourth quarter of 2020 and additional patent was issued producing zine protein from the MSC protein products Zain is used from everything from chewing gum to Sealers for food. This is a high value low Val.

New protein and is difficult to make from traditional corn gluten meal.

This is very early in development, we have it on our R&D roadmap for 2021 to do some base testing and more validation flow.

Fluid Quip also had several third party projects underway with multiple F E. L. One and two engineering studies in various stages for various technology deployment. Finally, there in several late stage discussions related to new sales in various deployment of their IP and wet and dry plants. My point here is that we believe we are one of the global <unk>.

Leading agricultural technology companies through the partnership with Blackrock operating Green Plains.

Wood River construction continues to be on track and on budget and are buying in Mount Vernon should break ground very soon we are in final conversations to choose a general contractor, which we believe can speed our ability to complete these projects more quickly than if we were build them ourselves and we are working quickly to wrap this up perhaps this important milestone up.

We have a proven technology is applied it deployed at five U S plants and one in Brazil with two more U S plants, starting up this year Wood river in a previous fluid quip sales no. Other AG Tech company is achieving this speed to market and success in production.

In sugar, we believe that the clean sugar technology from fluid quip could be a true market disruptor. It enables a dry mill to produce dextrose for the growing biochemicals synthetic biology, and bioplastics industry, while continue to continuing to produce valuable corn proteins and renewable corn oil the added flexibility of this technology adds.

Our platform not only lessens, our reliance on government biofuel policies, but opens the doors to significant upside potential as we tap new markets once unavailable to the drive <unk> space clean sugar deployment as an opportunity unique to green Plains and provides our bio refineries with value outside of Biofuels production.

Our CST installation of our New York Innovation Center is nearing completion and we are preparing for our first commercial shipments. Our goal is to work with these end customers and to select one of our existing <unk> facilities for a full scale deployment of this innovative technology in the near future. We believe by expanding clean sugar production, we can develop strong stable margins.

Cash flows helping to maximize the value created from a bushel of corn importantly, this clean sugar process has a carbon intensity, which is much lower than the same products produced at a traditional wet mill one of the most exciting new vertical launch during the quarter as our growing focus on carbon capture and sequestration.

<unk> announced last week that due to the success of the early rounds. The pipeline is being expanded into southwest, Iowa, and Nebraska, allowing us to add five more of our bio refineries to the project combined with nearly 70% of our capacity committed to this for carbon pipeline with the opportunity to improve the Ci score our carbon intensity intense.

City of each of these products. It is a great opportunity. In addition, our remaining three locations Mount Vernon Madison and O'brien, our each potential candidates for direct injection carbon sequestration due to their proximity to suitable geologic formations more to come on this as well as we explore the potential of each but I did want to mention this that we are exploring this path.

As well, while we have gone through our 2024 EBITDA targets on the past couple of calls I do think it's worth revisiting them. Once again here our protein initiative is anticipated to deliver a baseline.

15% to 20 per gallon of EBITDA contribution as the ultra high protein has deployed over the next couple of years.

958 million gallons of capacity. This has the potential to add a $140 million to $190 million in annual EBITDA.

Renewable corn oil has already seen significant improvement in pricing and every <unk> 10 per pound that corn oil pricing improves that adds nearly $40 million of incremental EBITDA and we have seen these price has improved more than that since the beginning of 2021 alone.

<unk> contributor.

Sugar are clean technology, Queen sugar technology once in place could add a minimum of <unk> 67 per gallon of ethanol capacity are $37 million to 100 million of EBITDA. If we convert 55 to 150 million gallons of capacity in the coming years. Finally, if we only consider a conservative 30 cent per gallon uplift due to potential.

Low carbon fuel standard premiums that we split 50 50 with our pipeline.

Our 658 million gallons of committed capacity contribute can contribute over $90 million of incremental EBITDA. So when you combine these initiatives we are on track to achieving over $300 million.

Of annual run rate EBITDA by 2024.

Prior to considering traditional crush margins and moving up from there as a carbon sequestration opportunity comes online and as we move up the J curve for protein and nutritional solutions. This puts us on track to a more predictable and more stable earnings and cash flows with double digit gross margin percentages much improved from the low sing.

<unk> gross margin percentages as a commodity processor.

Added to all of this stable economics from our legacy <unk> business are certainly enormously helpful as well in conclusion.

We have an impressive list of partners from high Ash economy to novozymes to optimal to osprey to summit to Syngenta to our pet food partner and many more under late stage development as we speak all wanted to help our products get to high value markets the value of our low carbon sustainable renewable and nutritious nutritious ingredients that matter.

As it is through their efforts that we will complete this transformation as we look to delivering a whole kernel solutions for ingredients that matter. We remain focused on execution every day. Thanks for joining the call today and we can start the Q&A session.

And thank you and as a reminder, please limit your questions no more than two at this time, if you wish to ask additional questions. Please rejoin the queue to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, we compile the Q&A roster and once again.

One if you'd like to ask the question and our first question comes from Ken Zaslow from Bank of Montreal Your line.

<unk> has no debt.

Hey, good morning, guys.

Ken.

Just a couple of questions one is if I.

Think about Shenandoah can you breakout what the margin structure was there.

And where that's going to go relative to the rest of the portfolio.

Yes, so in general terms, we sold the initial Shenandoah.

Volumes for the first two years when we started up last year and then for the 2020.

Non volumes as well at somewhere between 50 and $100 premium over soybean meal pricing for the products based on the $50 to 52% protein every.

$100 over soybean meal as <unk> per gallon roughly.

So somewhere between.

250 to $300 over land at somewhere between 15% to 18 per gallon premium to current distillers grains at a 50% protein products.

So if I put that relative to your 11 cents per gallon youre seeing it.

What is the.

Kevin.

The profit in that facility.

Well again, what we said is that.

The initial sales were made at about a 15 to 18 gallon profit our EBITDA margin and net facility makes approximately 80 million gallons a year.

Officially $12 million to $15 million.

Okay.

So net.

And then just don't understand the whole fluid equipment, but just.

There's no revenue sharing or there's no.

It comes from that over time. This is not something that you kind of bake into the model is it just is there a reason for that or I, just don't understand the relationship that's fair too.

Yes so.

Once once produced the plant earned their.

Returns because they bought the package from from fluid quip.

A full technology package flow equip does have small ongoing revenue streams from each sale that they've made.

But in general fluid quip makes a margin on each sale.

And that's that's reported.

In the fluid quip busy.

Business, but now that we have.

Purchased acquired flow equipped with our partners and obviously that will be for the benefit of the partnership.

And then my last question is if ethanol margins were completely flat.

Nothing changed.

There was zero in 2022.

What type of EBITDA would you be showing given what projects are done and what price is going to be done in can you just give us some context of how that would play out just assuming zero ethanol margin I know nobody believes that but let's just assume zero margin.

And I'll leave it there.

Yes, we think in 2022.

<unk>.

With.

Four to five plants operating.

Which is where we think we will have potentially six plants operating.

It'll be about half of our platform, our $4 to 500 million gallons.

And then on top of that adding.

Adding in.

Alcohol corn oil.

And.

And then the traditional zero margin on on the.

The ethanol business, if we just assume zero EBITDA.

A $100 million to $200 million.

And if you just do the calculus on that run rate spaces.

15 cents per gallon on average four when we turned it on at a baseline protein of 50%.

2022, with zero based ethanol is $100 million to $200 million.

That's great. Thank you.

And thank you and our next question comes from Laurence Alexander from Jefferies. Your line is now open.

Good morning can you flesh out a little bit about how you were thinking about the <unk> opportunity.

Opportunity in partnerships and the bottlenecks there.

And would you consider investing in fermentation capacity because that appears to be a bottleneck with some of the industry.

Clearly facing.

Yes.

How we're thinking about it is we've already been working with.

And one of the one other constraints, obviously is fermentation capacity and whether you look at last lactic acid or pls.

Or something or something else like that obviously fermentation is very important and then our fermentation.

It may be different than what some need but our fermentation also has some what others need so our goal is to first identify which customers.

<unk> to potentially co locate which customers want to have a product that is shipped to them where they are at various stages of development. We can't just we're not just going to work with all just development companies because we do want to be selling product commercially in the market as well and we've had conversations with customers and confectionery all the way to to biochem.

So it can be a combination of shipping it to the customer as well as potential co location opportunities at the sites, where we deploy the clean sugar technology as well.

We also know obviously as you said that fermentation is often a bottleneck and it's very expensive we have scale fermentation capability available, especially at plants when you deploy the.

The sugar technology, you will have less need for your fermentation capacity as well so I think there'll be some retrofitting there as well in the future, but right now we're just working with customers.

On various sizes and various.

Times and they are in their evolution.

To.

Access to this product and I think that's that's going to be something that we will have a strategic manager and mainly driven as well by our low carbon intensity of it.

And then.

<unk> pipeline.

Whats the timeframe if any are considering doing taking a capital investment to increase the economics on that pipeline.

Yes, I think right now other pipeline is in process of still signing up.

The final amount to achieve their 10 million tons of capacity if theyre not theyre already they are very close we've had significant.

They have had summit has had significant interest from everybody from ethanol producers to other emitters in the market and I think once once summit decide or gets to the point, where they are basically full in terms of the capacity needed. Then I think they will they will ultimately look.

And then raising their next round of capital to continue this to get it to a shovel ready project through engineering and <unk>.

Permitting and at that point, we will continue to make decisions.

Decisions on how far we want to invest.

In the in the project and then obviously.

Shippers have other rights to invest in and I think it's going to be a very successful.

Project, mainly because.

Summit has done a great job in terms of capturing significant capacity from this industry to sign up.

Thank you.

Yes.

Thank you and our next question comes from Adam Samuelson from Goldman Sachs. Your line is now open.

Hi, Thanks, good morning, everyone.

Good morning, Adam.

So Todd.

Todd I was hoping to maybe gain a little bit more on the commercialization of high protein.

And you gave some helpful color in response to Ken's question on kind of how you've sold the Shenandoah tons for 2020 in 2021.

As we think about the higher protein.

Protein content that you've been able to realized at Shenandoah and we think about replicating that at wood River and O'brien and non burden et cetera down the road, how do we think about your ability to commercialize <unk>.

Net incremental protein content.

Timing of when you think you cannot take agreement.

How much of the high pro would actually be able to be sold.

Those high values in those in those more premium markets I'm, just thinking about the kind of real value capture opportunity as you move up the J curve.

Yes, we have a lot of confidence now that we can.

Get to a point too.

Produce.

Higher proteins at a steady state.

A lot of progress obviously since that announcement at 58 pro.

We've learned a lot we think both mechanically and biologically we can move up the protein scale of some of it is going to come from mechanics of things that we learned that some other to come from biology on other things that are interesting. We are working with customers and every one of those verticals on different levels of protein that we talked about.

Other it's Pat Aqua, poultry swine or dairy and every and each of those customers have a different need.

Our goal.

In 2022 and later in 2021 as.

Wood River comes up online.

Is that we will probably end up.

Increasing our protein purity.

For the customers that we have on the books today, who are now in kind of final stages of.

Using the products that we sent them and figuring out ways to formulate around it around the prices as well and we are in several discussions about higher protein with higher protein <unk>.

Customers as well and using it in their ration so.

And quite frankly, we're being guided from our pet in our Aqua customers to go straight to 50, a protein and don't stop and then and then let the market decide where they want to.

How it is going to be how it is going to be.

How it's going to be priced in terms of just we need to we need to produce it consistently and so we're kind of making that decision. We don't want to give away free protein, but in order to get more expansive use on it you have to make the protein as well so.

But we are working with customers today on pricing when we come out of.

Wood River.

Initial startup and then where we want to take Shenandoah for the remainder of the year, but we have great confidence that we're going to be able to achieve steady state higher protein charities.

And we're being guided from our customers to go there as fast as we can.

That's really helpful. And then just on the ethanol market and obviously Shannon.

Shenandoah helped to contribute to your margin performance in the first quarter.

Industry backdrop seems to have gotten better given the state of inventory given kind of broadly from industry crush margins I'm, just trying to think but you sounded a little bit more guarded about volatile market conditions I'm just trying to calibrate.

How.

How to think about the base business actually performing arguably better given that industry backdrop and kind of what it would take to get your operating rates up.

No listen we are every time a plant comes out of a shutdown or.

Project 24, obviously, we're still we're just coming out of Wood River Armscye, Mount Vernon and project 24, Madison is still shut down.

In general we got rid of.

And two other plants as well so but how we're looking at it right now is obviously.

First quarter, we did well through our through the ability to manage through some of these storms and our risk management programs that we had put in place prior to the quarter.

But in Q2 Q3 and Q4, obviously the one thing we're watching is the volatile movements.

In the agricultural markets and I think thats something that has to be considered while certainly on paper margins look as good or better than what we were able to achieve.

In the first quarter.

Obviously with corn, moving up and ethanol, maybe not moving up quite as fast we're going to be we're going to be patient in terms of.

Kind of going out on a limb and saying, it's all going to be way better than Q1, because we performed so well in Q1 so.

I think for US we're watching margaretville with volatility closely obviously ethanol hasnt moved up as fastest corner, we're trading at a premium to gasoline.

So the contribution from veg oils is very corn oil is very good and very helpful.

But I'm still going to remain.

Somewhat guarded in terms of Q2 until we kind of get further through Q2, thus far was started out okay.

But we've just got to watch this corn market, a little bit and it's getting harder to buy physical corn as well I think that's something we're going to have to watch through the end of the marketing year.

The farmer whatever whatever the farmer has left us in tight hands a lot of it has moved to commercial almost at a record record pace, there's no incentive for anybody to carry corn through this inverse all the way. So obviously, that's being held for increasing and physical basis gains. So we're going to watch that closely as well.

So I'm just going to be guarded at this point over kind of Q2 Q3.

But in general we're definitely we're definitely in a better place than we were this time last year and going into summer driving season, we're in a great.

I would say, though we are in a great fundamental situation with ethanol stocks under 20 million barrels coming into summer driving season, we haven't seen that for seven years and that's something I think we're all enthusiastic about but obviously we have to watch.

We price versus competing liquid fuels, but in general our octane is still very cheap.

And overall, we're <unk>.

Optimistic Q4, obviously, we look out there.

To the best margins of the year on paper today, it's interesting and and we're excited about that but again, we got to make sure we have our physical corn procured and thats. The one thing we're working on.

Got it.

Really helpful color I'll pass it on thanks.

Thanks.

And thank you and our next question comes from Craig Irwin from Roth capital.

Hi, good morning, Thanks for taking my questions.

So most of the things that we're top of mind hub.

Already been addressed at this point, but Todd.

Todd maybe can you talk a little bit about the strategic opportunities for monetizing your corn oil over the next couple of years as hydro comes online you're going to be one of the largest producers.

What is the debt.

Favorite feedstock for Lcs credits into California.

Did see Phillips dip into the market and support.

Soy questionnaire that was in construction.

Is there an opportunity to introduce something strategic out there, maybe grab a little bit more value.

Some from from your own production than simply.

Being exposed to spot, which does look like a very good thing at this point.

Yeah, the spot corn spot veg oil market, obviously is beneficial to this industry and we are a strategic feedstock for what I think is the renewable diesel phenomenon.

But as we roll flu equipped through our plants and through our customers that buy the fluid quip technology youre going to an increase in corn oil and an increase in volumes and obviously that increases the overall margin for the plant, which is being taken into consideration we have had.

Sure.

Optimistic on on Veg oil pricing as we kind of move through 2021 and 2022.

The soy crush plant that was invested in.

Hi.

Energy company to us actually.

I think an empowered our industry a bit to say that we're on the right track we have much lower Ci.

Corn oil or vegetable oil than what is soybean oil today, and so I think we fit very well, it's great that they did it but to US I think it is actually more empowering for our industry to see that happen. It tells you that the story is intact and that security of supply is needed and if we find the right opportunity with the right path.

For the right economics, we will absolutely be willing to commit our our corn oil.

And we will have to wait and see if that happens or not but I think youre on the right track I think there will be strategic opportunities to monetize.

These flows in and provide some of these projects with security of supply and that's what it's going to be all about because there will be times potentially with what's brewing in the soybean balance sheet and a tightness in the soybean balance sheet debt you could end up making a call to somebody to buy your feedstock and.

And there may not be any available and thats something were going to have to watch closely which I think is very beneficial to our industry and to veg oil is overall.

Excellent excellent.

I was hoping for.

Update on your <unk>.

Our relationship with Novozymes, what youre working on with them.

And what we can expect over the next number of quarters.

Very important relationship.

Specific nutritional characteristics are needs of the end user and that's really where we spend a lot of time with Novozymes is really looking at their library of technologies that can be applied not just protein purity.

That is something thats been going on for many many fluid quip had been working with Novozymes. Many many years ago.

Partially protein purity, but really the east library that exists between.

That would exist.

And available to US is really incredible to what we can do to start to tailor to tailor. This this product and I think that that's really where a lot of value comes in and that's where we're working with each other a lot I would tell you fluid quip on its own is working on increasing protein purity as just mechanically.

We think we can get we think we can get we can make some progress there, but even more exciting now is to look at the post MST distillers. So we would traditionally we would have our distillers grains and now we're cutting off a piece of protein off of that and we will leave the rest of the distillers grains that are much more traditional what we're seeing now is <unk>.

Our post MSC distillers grains has reduced the variability of this product in the use of nutritionists and their ration and we're starting to get premiums for the Shenandoah post MSC distillers grains, which we thought was going to happen actually Walter initially thought that this.

Product would bring great great value and start to add in a whole another component to what flu eclipse technology can do but what's turning out is that this product is now is much more uniform and has started is starting to be respected again by nutritionist and the poultry space in the dairy space.

And also in the in the swine space, where they want to go straight to Shenandoah and start thinking of even wood River next on the post MSC distillers grain, which I think is really really a big opportunity for us start getting a premium on millions of tons and that starts adding up very fast and that was unexpected consequence that debt. We're very excited.

Cited about as well.

Thanks for taking my questions.

And thank you and our next question comes from Jordan Levy from <unk> Securities. Your line is now open.

Good morning, everyone.

Just kind of following up on Craig's question to start out on corn oil, we assume that given the need for low Ci feedstocks.

The diesel markets and elsewhere.

Sense for pretty much any ethanol producer to look to increase their corn oil yield so kind of as it relates to fluid quip technologies just wanted to get your thoughts on.

The capacity to license that technology out and what that might look like and then alongside that whats the potential for that investment that you've made in fluid quip is over the next few years to start to flow through and create some upside value beyond what you guys have laid out.

Okay.

Yes, so in terms of corn oil I mean, besides the protein systems, which liberates more of the oil memory.

56 pound bushel of corn are somewhere between one eight and $1 nine pounds of oil.

And traditionally an ethanol plant would liberate and their corn oil.

Systems, <unk> seven percentage 0.8 pounds, maybe a little bit higher than that per bushel.

In the fluid quip process, we're able to now liberate up to another 50%, which gets US up we believe we will be very soon at one two pounds per bushel just through the additional.

Extraction elaboration once you put in the MSC technology that still leaves six pounds per bushel or another 50% from there.

And.

You May you may see some degrading value, but relative to where we're at at federal oil prices between 65 and 75.

As well as how to how to deliver a more oil out of the corn kernel, but you have to be careful if you get to a certain point you can start to degrade the value of the other products to greatly so we're going to kind of in that sweet spot of $1 two to kind of one five pounds per bushel is kind of where we want to try to settle out and we're continuing to work on those solutions in terms of fluid quip.

<unk>.

When you look at that platform.

The true valuation of this technology company and the things that they're working on across multiple different platforms. Not just if you on our web site. It's not just a protein technology. They have oil technologies. They got fractionation technologies, they've got fiber technologies. They got a lot of different technologies that are supply.

<unk> and put in many other plants, Besides green plains plant to try and increase profitability throughout throughout the ethanol plant, whether it's higher yields are are higher priorities. So we think we're just getting started there. We think our development continues and we think the value of that company is only going to get greater in the future overall for ourselves and for our.

Partners.

Great. That's helpful and then to change gears a bit I just wanted to touch on your most up to date on GPP and potential there to.

Bring it back in house, a refi or whatever you think.

Youre thinking about that entity.

Yes, so GPP right now is pretty well focused on.

Paying down this debt like we outlined.

And.

Making sure that we address the current maturity of this year, which we think only about $34 million will be remaining at the end of the year.

The utilize a combination of operating cash refinancings, and maybe strategic actions to repay those debt obligations.

I think we should have that in place hopefully in the next in the next couple of months, maybe by the end of the third quarter and.

We are unable to refinance them, we will look at other opportunities whether it's just restructuring the debt or other strategic actions. We can take we're very confident that we will achieve the goals that we've outlined for that for that platform and at this point that that's mainly what we are focused on today are our Birmingham facility continues to perform well there.

Have the MVC in place from Green Plains and at this point obviously.

By repaying the debt and eliminating.

The amortization of the heavy amortization, we think overall at some point.

Notwithstanding whatever the new debt structure will look like hopefully.

Increasing back the distribution as well maybe sometime in 2022, depending on where we end up with our new lenders.

On the refinancing so the at this point, that's what we're focusing on and as a standalone. It's doing it's doing just fine.

Great Nice results guys I appreciate it thank you very much.

And thank you and our.

Our next question comes from Ben <unk> from Stephens. Your line is now open.

Hey, good morning, everybody.

Good morning, Tamara ask.

To ask about the carbon capture and sequestration project I want to be clear on the timing I think you know as you would expect the project to be operational in 2024.

That sooner than you had previously expected or is that still on the same timeline.

And then along those lines do you have a sense yet of when you could start to work on applying per pathway for an updated Ci score from the California Lcs program.

Yes, I mean, I think summit guys have outlined a 2024 start date for shipments if they can get there. There are some things that obviously, we would want to try and accelerate.

But that's kind of the goal and I would say starting in 2024, and obviously continuing to build out as they bring on different different geographics in the pipeline in addition to that.

We are working on three direct inject sites.

Madison, Mount Vernon and O'brien, where we would realized all of the economics from the 45, <unk> and the low carbon fuel standard credits. If there are any as well. So we're excited about about those as well and we're just getting started there we think we're in great locations geographically.

For there as well and so both of those are very exciting, but obviously lots to do in each of those in each of those parts what was the second question.

On a getting a revised ci score for ethanol.

Total net accounts are actually yet.

Yes, so two.

The summit.

Carbon guys the management team there.

<unk> done a lot of work on that prior to us signing up and becoming partners there as well and they send two plants.

And two plants got scores from carb.

Yes.

A manner that if a sequestered their carbon what would happen to the carbon score and each of those plants very similar to the plants that we have going on in the pipeline and others have as well not just ourselves, but any shipper on the pipeline there have been two plants that.

Or basically the starting point that have gotten carbon scores cut in half. So they went from the end of the $60 to into the <unk> and <unk>.

And if you think about that.

To look at Ci scores of a vegetable oil based our corn oil base.

Renewable diesel and that's in the <unk> as well and obviously soybean oil based renewable diesel is in the 40% or the <unk> and then.

And then the other oil some of the waste oils are even lower than that so so that's what really gave us the confidence which is when we saw the carb, scoring on Twos example, plants after sequestering carbon getting cut in half that really told us that we would be on the path to a low carb.

<unk> biofuel.

And I think and I think that's going to be more interesting in the future, which is how does ethanol play in a low carbon fuel tank RNA low carbon fuel pump and the need for more ethanol as the world demands a lower carbon fuels and so I think that's not being taken into consideration in terms of the future of where how we.

Fit into the fuel tank, but I think it has to be taken into consideration because in quantity, we're going to be able to compete with the Brazilian imports.

To be able to compete with from a Ci standpoint, we'll be able to compete from a ci stance standpoint, with renewable diesel and as we expand <unk> across the United States to multiple states.

Potentially national standard.

We will be well prepared when this pipeline comes online to have some of the lowest carbon biofuels that are made in the world.

Understood Thats great.

My second question is just revisiting kind of the core ethanol fundamentals as Adam noted in his Q&A.

The margins for the industry are much improved the F&B looks pretty good for the next.

Little while here with resurging demand.

We're driving.

I'm curious.

I know you said, you're a little bit more reticent or.

Cautiously optimistic.

Is there anything in that market, where if it did turn south in the next year or two that it would.

It would have an impact on your ability to self fund our fully funds this transformation debt.

<unk>.

Yes, and the other reason I am Radisson is because of the last three years, obviously cautiously optimistic was the only way to be but you saw at the last kind of two or three years and the challenges that oversupply faced in and you have to always keep in mind that were still not running at full capacity yet as an industry. So we'll have to watch that close.

In terms of how that impacts the.

Forward margin structure overall, but I think even more than that.

The price of oil price of the feedstocks are going to have to watch those very carefully as well so.

Im optimistic cautiously optimistic we're in great fundamental shape as an industry.

I'm going to be a little bit more cautiously optimistic than maybe what what is out there today, we have not seen we've seen a little bit come back on the export market, but we haven't seen a resurgence in China, yet we saw a little bit that earlier in the year. So but I think we're I think we're in a good place I'd rather be here than the alternative that's for sure.

And this is really where it gets into is a a.

Drawn or even a.

One point oil platform Thats, just steady is just so beneficial to our two point strategy.

That we've ever been and it would be pretty hard too.

Not have the funding capacity to get all the way to the finish line, especially when.

We have four or five coming on in 2022 within a year from now or so and those just generating cash flows from day, one I mean, you turn on to our protein <unk>.

Production capacity on day, one they start to generate cash flow. So.

While.

Even if ethanol took a turn at this point I think we're in a place right now as a company where our balance sheet is in such great shape with significant liquidity and additional liquidity available that it would be pretty tough for us to have anything get in our way at this point of executing successfully and to point out.

And even the fact that.

We've already we've already started to order for free.

Four to five plants of long lead time equipment, we've got most of our other equipment.

Stuff that we needed to even get get in place locked in our pricing obviously, we're watching the steel market closely but thats a small component of what we build and I think we're in pretty good shape, you know could there be escalating cost a little bit sure, but but the way that these these.

Our projects are structured we are trying to insulate it as best we can so it would be pretty tough for something to get in the way of a successful completion of our two point strategy at this point.

Okay, great. Congrats on everything we accomplished this quarter and good luck with the rest of the year.

Thank you.

And our next question comes from Manav Gupta from Credit Suisse. Your line is now open.

Hey, guys on the carbon capture you indicated that yes.

Score dropped some 60 day, Turkey, that's almost 20% to 25 cents a gallon uplift.

You are indicating about 15 cents on your slide deck. So is that a transportation cost involved here and second question is.

One of your competitors was doing a similar project has been very clear that the carbon credits solely belong blip along with CFS credits I'm trying to understand in this case video in agreement with stomach, Scotland is that a split on the ILS 45, Youll ask this tragic takes off.

Yes, basically signing up on the pipeline as a shipper.

If you just want to be a shipper.

No capital cost to you.

Splitting the credits with summit, which is how the pipeline gets built that into 45 Q.

So just being a shipper the economics, obviously the return on the investment is very high because you're not putting any investment in and some it takes it takes the risk and obviously the plants that are signed up are great plants like ourselves and others that we all signed up for a very similar economics, and I think thats, where it is.

It's a different type of project, but we're also not asking like nobody asked me for.

<unk> seven year take or pay offtake in an open season. So we wouldn't that's not going to be something we would have really wanted to get involved and so thats why the opportunity to get involved ourselves.

I would imagine all of the other shippers on the pipeline is that will commit the volume.

We will build the pipeline and we'll share the economics and we're all partners with each other.

An incredible consortium that there's some guys have put together with incredible partners to ship on that pipeline.

The starting point and then obviously as you reduce the Ci score from 60 to 30 or 65% to 35 or whatever you're going to reduce it.

You take a look at that and Youre exactly right and the economics, it's about a 30 cents per gallon L. CFS credit, but that doesn't even include obviously.

Or is the voluntary market is going to go to and where our other credit is going to be involved in and the shippers.

Some of the shippers again involved in those as well depending on their level of risk and so and then obviously.

We'll see what other <unk> schemes come in place. So in general I think it's from our standpoint.

If all we wanted to do is be a shipper on the pipeline we share in the economics. The great thing about summit line is that everybody can invest as well and start to share in those economics as well so.

It's a pretty exciting opportunity for us.

Okay and one quick follow up here is some of your peers took a lot of.

On high natural gas prices and debt ethanol facilities somehow you completely Dodge that bullet. If you can elaborate how was that how did you achieve that.

Well look we are we have a great natural gas team.

I have been here for many years, they've seen many cold snaps.

And the anticipated the cold snap and I think that was just something that we put protection in place for remember it's winter when it gets cold that's the one thing for certain so and if you go back and look in the last five years.

We had two or three of these where you had your cold snaps and obviously it's not.

Go back to the big polar vortex that happen.

Before that we set ourselves up and protect ourselves against extreme polar vortex as every winter and so that's really how we were able to achieve those results and.

And we're very proud of the team that was in place to be able to do that but much like we do whether it's in the corn market the ethanol markets, whether it's in the crush whether it's in whether it's in natural gas yearly.

The one thing for certain is it is going to get cold and the other one thing for certain is we're going to get a corn crop planted and if we don't get it planted and we want to protect against that as well. So I mean, there is we are always looking at all of the risk that we have as a company.

And and investing some insurance capital into those risks whether its corn, whether it's in corn oil whether it's in natural gas or whether it's in ethanol and that's always who we have been in and we set ourselves up for a cold snap in this winter and we were able to protect the downside of that.

Thank you so much for taking my questions. Thank you very much.

Thank you and our next question comes from settlement.

From Stifel.

That is now open.

Thank you good morning, very much appreciate your comments earlier on Green Plains.

Just thinking about the carbon sequestration opportunity you have there as you evaluate and think about things do you see a role for Green Plains partners in that at all.

Yes.

I think that's something that we've examined obviously we don't.

We're not the developer of the pipeline that summit carbon solutions were involved in it as a shipper and a potential investor as well and as a partner and so it's.

It's a very nice to have.

Green Plains partners don't know how that will apply yet to the carbon.

Plan.

But obviously we were basically the last one other last mlps ever to go public.

If I recall I mean, I think there's one or two others, maybe maybe after us.

So theres a lot of Optionality there, but at this point carbon is still.

Early in his early in its development and how partners will end up playing are not playing in that is yet to be determined but certainly there is optionality there as well.

Alright, Thank you very much.

You very much.

And thank you.

Our next question comes from Eric Stine from Craig Hallum. Your line is now open.

Good morning, everyone.

Good morning.

Just just quickly on the the clean sugars I think in the past you've talked about conversation with 40 plus parties.

So just curious where that stands and then secondly, I think in the past you've talked about debt by 2025 and Youre, hoping to have one small plant in one big plant online using the clean sugars.

Producing that is that still the plan.

Everything we've seen out of Europe. So far has been positive and has given us positive disposition to keep moving forward you have to remember this was already deployed commercially.

Much bigger plant and what we're doing at York, we brought it back to Europe to reengineer. It for our sites and then obviously start to roll that out so everything right now is on track.

For what we've talked about how we are working with customers today as we speak.

We are absolutely on the right track I think that.

So far everything we've seen out of York to date gives us great confidence that.

But this is going to be very exciting for green plains.

Okay. Thank you.

Thank you very much.

And thank you.

I am showing no further questions I would now like to turn the call back over to Todd Becker for closing remarks.

The <unk>.

I know that was a concern.

Of others, but in general nothing we don't believe there is a lot that can stop US right now from from achieving our results and we're just going to continue down. This path. So we appreciate your support and we'll talk to you guys next quarter. Thank you.

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.

Q1 2021 Green Plains Inc and Green Plains Partners LP Earnings Call

Request a DemoDemo

GPRE

Green Plains

Earnings